HomeMy WebLinkAbout01/06/1998, 4 - HOUSING AUTHORITY REQUEST FOR CONDUIT FINANCINGcouncil Wn,D.s �_ 8
j acEnaa 12Epo1Zt Item Nu.kr
C I T Y O F S A N L U I S O B I S P 0
FROM: Bill Statler, Director of Finance V?
SUBJECT: HOUSING AUTHORITY REQUEST FOR CONDUIT FINANCING
CAO RECOMMENDATION
Adopt a resolution approving the issuance of multi - family housing revenue bonds on behalf of
the Housing Authority for their Brizzolara apartments project.
DISCUSSION
Background
As set forth in Exhibit A, the Housing Authority is requesting that the City issue multi - family
housing revenue bonds through the California Statewide Communities Development Authority
(CSCDA) to assist in financing their Brizzolara apartments project. The CSCDA is a joint
powers authority created by the League of California Cities and the California State Association
of Counties to serve as an issuing agency for conduit financings like this one. The City joined
the CSCDA in July of 1994.
According to the Housing Authority, this project will create 30 affordable units for seniors and
persons with disabilities: 27 one - bedroom units and 3 two - bedroom units. Continuing support
for this project is consistent with the City's previous commitment of $1.0 million in Community
Development Block Grant funds over the next six years in repaying a Section 108 loan for this
project. We expect this project will be considered by the Architectural Review Commission in
February or March of 1998. This will be a joint venture partnership with the Bay Development
Group. Supplemental information on this relationship is provided in Exhibit B.
City's Conduit Financing Policy
Under the City's debt financing and management policies (Exhibit C), consideration of a request
for conduit financing is generally a two -step process:
® First asking the Council if they are interested in considering the request, and establishing
the groundrules for evaluating it.
8 And then returning with the results of this evaluation, and recommending approval of
appropriate financing documents if warranted.
This two -step approach ensures that the issues are clear for both the City and applicant, and that
key policy questions are answered. However, due to timing constraints, the Housing Authority
has requested that these issues be addressed in one meeting on January 6, 1998.
.2-1-1
Council Agenda Report — Housing Authority Request for Conduit Financing
Page 2
Given the close and ongoing working relationship that the City has with the Housing Authority,
and the clear relationship of this project in meeting the City's adopted housing affordability
goals, we believe a "one- step" process will be adequate in addressing the City's criteria for
assisting with conduit financings, summarized as follows:
■ The City's bond counsel will review the terms of the financing, and render an opinion
that there will be no liability to the City in issuing the bonds on behalf of the applicant.
■ There is a clearly articulated public purpose in providing the conduit financing.
■ The applicant is capable of achieving this public purpose.
Our bond counsel's (Jones Hall) opinion providing assurance that there will be no liability to the
City in issuing these bonds is provided in Exhibit D. As discussed above, we believe there is a
clearly articulated public purpose in providing the requested conduit financing to the Housing
Authority, and that they are capable of achieving this public purpose.
CONCURRENCES
The Department of Community Development concurs with this request.
FISCAL IMPACT
There is no adverse fiscal impact associated with this financing. The cost of the Jones Hall
opinion (time and materials, not to exceed $1,000) will be paid from the bond proceeds.
ALTERNATIVES
■ Do not approve the requested financing.
purpose of this financing and the City's
recommended.
Given the clear relationship between the
adopted housing goals, this option is not
■ Defer consideration of the request. Due to the time requirements for this financing, this
option is not recommended.
ATTACHMENTS
Resolution approving the issuance of multi - family housing revenue bonds by the California
Statewide Communities Development Authority
Exhibits
A. Request from the Housing Authority for conduit financing
B. Supplemental information on the Bay Development Group
C. City's conduit financing policy
D. Opinion from the City's bond counsel on our liability for this project
RESOLUTION NO. (1998 Series)
A RESOLUTION OF THE COUNCIL OF THE CITY OF SAN LUIS OBISPO
APPROVING THE ISSUANCE OF MULTIFAMILY HOUSING REVENUE BONDS
BY THE CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY
WHEREAS, the California Statewide Communities Development Authority (the
"Authority") is authorized pursuant to the provisions of California Government Code Section 65.00
et seq. and the terms of an Amended-and Restated Joint Exercise of Powers Agreement, dated as of
June 1, 1988 (the "Agreement'), among certain local agencies throughout the State of California,
including the City of San Luis Obispo (the "City"), to issue revenue bonds in accordance with
Chapter 7 of Part 5 of Division 31 of the California Health and Safety Code for the purpose of
financing multifamily rental housing projects; and
WHEREAS, the San Luis Obispo Non -Profit Housing Corporation, in conjunction with
Bay Development Group, LLC (collectively, with any related entity, the 'Borrower ") has requested
that the Authority issue multifamily housing revenues bonds in an aggregate principal amount not
to exceed $4,000,000 (the 'Bonds ") for the purpose of providing financing for the acquisition,
construction and development of a 30 -unit multifamily residential rental project for seniors,
handicapped and disabled persons at the intersection of Nipomo and Brizzolara Streets, San Luis
Obispo, California; and
WHEREAS, the Bonds will be "private activity bonds" for purposes of the Internal
Revenue Code of 1986 (the "Code "); and
WHEREAS, pursuant to Section 147(f) of the Code, prior to their issuance, private activity
bonds are required to be approved by the "applicable elected representative" of the governmental
units on whose behalf such bonds are expected to be issued and by a governmental unit having
jurisdiction over the entire area in which any facility financed by such bonds is to be located, after a
public hearing held following reasonable public notice; and
WHEREAS, there has been published, at least 14 days prior to the date hereof, in a
newspaper of general circulation within the City, a notice that a public hearing regarding the Bonds
would be held on the date hereof; and
WHEREAS, such public hearing was conducted on said date by the City Council, at which
time an opportunity was provided to interested parties to present arguments both for and against the
issuance of the Bonds; and
WHEREAS, the members of this City Council (this "Council') are the applicable elected
representatives of the City; and
WHEREAS, it is intended that this resolution shall constitute the approval of the issuance
of the Bonds required by Section 147(f) of the Code and Section 9 of the Agreement;
WHEREAS, the proposed bonds will be payable solely from revenues received by the
Authority from the Borrower and the City will have no financial liability for the financing of the
project, and neither the faith and credit nor the taxing power of the City is pledged to the payment
of the principal of; premium, if any, or interest on the proposed bonds;
NOW, THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE CITY OF SAN
LUIS OBISPO AS FOLLOWS:
SECTION 1. The above recitals are true and correct.
SECTION 2. The Council hereby approves the issuance of the Bonds by the Authority. It
is the purpose and intent of the Council that this resolution constitute approval of the Bonds for the
purposes of (a) Section 147(f) of the Code by the applicable elected representative of the
governmental unit having jurisdiction over the area in which the project is located, in accordance
with said Section 147(0, and (b) Section 9 of the Agreement.
SECTION 3. The officers of the City are hereby authorized and directed, jointly and
severally, to do any and all things and to execute and deliver any and all documents that they deem
necessary or advisable in order to carry out, give effect to and comply with the terms and intent of
this resolution and the financing approved hereby.
SECTION 4. The City Clerk shall forward a certified copy of this Resolution to:
Ana Marie del Rio, Esq.
Orrick, Herrington & Sutcliffe LLP
Old Federal Reserve Bank Building
400 Sansome Street
San Francisco, California 94111
SECTION 5. This resolution shall take effect immediately upon its passage.
Upon motion of
and on the following roll call vote:
AYES:
NOES:
ABSENT:
the foregoing resolution was adopted this
ATTEST:
Bonnie Gawf, City Clerk
APPROVED AS TO FORM:
r 4 ea ( g 13ac -Li
Jeffrey 0. Jorgensen, City Attorney
seconded by
day of
Mayor Allen Settle
WM
Ll-7
L 0
Housing Authority
of the City of
San Luis Obispo
December 3, 1997
Mr. William Statler
Director of Finance
City of San Luis Obispo
990 Palm Street
San Luis Obispo, CA 93401
Dear Bill:
Exhibit fr
[WLL1.dlLMO
WM[NMT {)
487 Leff Street Post Office Box 1289 San Luis Obispo CA 93406 -1289
(805) 543 -4478 fax (805) 543 -4992
Executive Director-Secretary
George J. Moylan
As per our conversation of Monday I am asking that you inform the
City Council of our plans to use the services of the California
Statewide Communities Development Authority, which the City holds
membership in, to bond the Brizzolara Street development.
We are told that to do so the Council is required to hold a public
hearing and adopt a resolution. You indicated'that in following
City policy this is normally a two -step policy. However, given the
timing constraints of the pooled bonding process, and the fact that
the Council has already held it's only meeting in December, we have
a need to accomplish this dual goal at the January 6th meeting.
To bring you and the Council up -to -date on the development please
be advised we have acquired the property, relocated eight of the
sixteen tenants, and plan to be before the Architectural Review
Commission within the next 30 to 45 days. We plan on constructing
30 units, 27 1- bedroom and 3 2- bedroom apartments, on the site. We
expect a mix of occupants similar to our successful Marvin Gardens
development on Laurel Lane and Orcutt Road. As with Marvin Gardens
the actual owner of the development will be our affiliate, San Luis
Obispo Non - Profit Housing Corporation with us, the Housing
Authority, being the management agent.
I have met with the neighboring Homeownership Association and have
their support in ridding the neighborhood of a dysfunctional
eyesore.
Finally, also as per our Monday discussion, I have reviewed
Ordinances No. 1256 (1994 Series) and No. 1200 (1991 Series) as to
transportation, water and wastewater impact fees. I see nothing in
those ordinances which would specifically exempt the Authority or
its non - profit affiliate from those fees. My recollection is that
such an exemption was granted in the case of Marvin Gardens and
Ironbark Apartments, our last two tax credit developments. In
addition to the high cost of land in San Luis Obispo this
development is a particularly expensive one because of the
additional acquisition, relocation and demolition costs.
y s�_
J
Add that to the practical elimination of the 9% tax credit for our
county by the California Tax Credit Allocation Committee and you
are left with an extremely difficult development to "pencil out ".
Because of this we will need every fee waiver possible to bring
this development to occupancy. Thus please advise on the method of
securing exemptions from the above two ordinances.
Drafts of the legal notice and the resolution to be adopted at the
meeting of January 6th, copy of correspondence enclosed, have
already been provided by Bond Counsel to the City Clerk and City
Attorney. The only amendment I would make to those documents is to
expand upon the word "seniors" to read "seniors, handicapped and
disabled" which is consistent with both Federal law and what we
have found to be the need at Marvin Gardens. I am making both the
City Clerk and City Attorney aware of that suggested change.
Sincerely,
"Jc 9)?'
George J. Moylan
Executive Director
cc: Bonnie Gawf
Jeff Jorgensen
/V-6P
C1ec- 2.3 -97 11:16A HOUS =N^ AUTH OF SLO
M E M C R A N D U M
December 23, 1997
TO: Bill Statler, City of San Luis Obispo
e
FROM: Georg "J. Moylan, Housing Authority
SUBJECT: Bay Deveicpment Group, iLC
805 - -43 4992 P. 01
Exhibit
You have asked as _.ne iden�ity of -he above.
Since we built Poinse =tia Street Apartments almost ten _years ago
have relied on Atty. Sabelhaus of Sacramenre for -�:ax creci..
and other specialLzed housing advice. He has seen us t rcuct
Poinsettia Street, Marvin Gardens and = ror_bark P.partments. He __
representing us c_: the Brizzolara Street Apartments. He has beer.
associated with Michael Schulte, first as an attorney employee a-:
later as an associate when Michael moved to Fresno and established
Bay Developmen� Group.; LLC.
in this particular case, in order to secure the best possible
terms, Pat and Mic: ^ae' are combining clients to produce one bc-.d
issue which will sup_;ort several developments. Ours being one of
those developments. Thus the phrase in the Resolution, "San L•;_s
Obispo Non - Profit Ccrporatl.on in conjunction wiLh Bay Developmenz
C=roup, LLC . . "
However, it shcu_ld be understood that other than the bondir_!
function Say Development Group, TIC will have r_ involvement w_-t.
Brizzolara Street Apartments. The apartments will be owned by Say_
Luis Obispo Ni - Profit Hcusing Corporation and managed by the
Housing Author o= the City of San LL:._s Obispo. The same
arrangement tha= i� _r -= _'.� ^_e at Poinsettia Street, Marvin
r_�_' -=
and zronbark Apart^e�
DEC. 23 ' 9' :2:36 COW-MUNI CAT 7ON Nc:25 PAGE. 1
POLICIES AND OBJECT.- ZS Exhibit
BUDGET AND FISCAL POLICIES
1. The City will generally conduct financings on a competitive basis. However, negotiated financings may
be used due to market volatility or the use of an unusual or complex financing or security structure.
J. The City will seek an investment grade rating (BaaBBB or greater) on any direct debt and will seek
credit enhancements such as letters of credit or insurance when necessary for marketing purposes,
availability, and cost - effectiveness.
K. The City will monitor all forms of debt annually coincident with the City's Financial Plan preparation
and review process and report concerns and remedies, if needed, to the Council.
L. The City will diligently monitor its compliance with bond covenants and ensure its adherence to federal
arbitrage regulations.
M. The City will maintain good communications with bond rating agencies about its financial condition.
The City will follow a policy of full disclosure on every financial report and bond prospectus (Official
Rtatrmnn4)
CONDUIT FINANCINGS
A. The City will consider requests for conduit financing on a case -by -case basis using the following criteria:
I. The City's bond counsel will review the terms of the financing, and render an opinion that there
will be no liability to the City in issuing the bonds on behalf of the applicant.
2. There is a clearly articulated public purpose in providing the conduit financing.
3. The applicant is capable of achieving this public purpose.
B. This means that the review of requests for conduit financing will generally be a two -step process: first
asking the Council if they are interested in considering the request, and establishing the groundrules for
evaluating it; and then returning with the results of this evaluation, and recommending approval of
01 appropriate financing documents if warranted. This two -step approach ensures that the issues are clear
for both the City and applicant, and that key policy questions are answered.
The workscope necessary to address these issues will vary from request to request, and will have to be
determined on a case -by -case basis. Additionally, the City should generally be fully reimbursed for our
costs in Wluating the request; _ however, this should also be determined on case -by -case basis.
HUMAN
A. The budget will fully appropriate the resources needed for authorized regular staffing and will limit
programs to the regular staffing authorized.
B. Staffing and contract service cost ceilings will limit total expenditures for regular employees, temporary
employees, and independent contractors hired to provide operating and maintenance services.
C. Regular employees will be the core work force and the preferred means of staffing ongoing, year -round
program activities that should be performed by full -time City employees rather than independent
contractors. The City will strive to provide competitive compensation and benefit schedules for its
authorized regular work force. Each regular employee will: E
B -17 y X ;.
QVAPJ wa P. ADAMS
67EPEMN a CA4AJ.EGGIQ
THOM" A. DOWNEY
tiDREW 4 BAY 1 ,m
-0QURTb BY L JOWW
CEMISTOP1 w 3L LYNOB
WnJ-ZAM a MADMOK
DAVID J. M=
DAVID A. WA TOn
XZN'N'R= I JONES, = eovNne
William C. Statler
Director of Finance
:ity of San Luis Obispo
990 Palm Street
P.O. Box 8100
JOKE S HALL
PROFESSIONAL LAW G08POAATIO__ •
ATT0RA- =y9 AT LAW
December 23, 1997
San Luis Obispo, California 93403 -8100
Exhibit D
6606A "0R_"aA
=0L==2\ 11. FLOOR
6AN FRAN crsco. CA "106
T>w= «C \'8
"m 091-6760
VACS= -
14161 Oa1•D ?&4
HOXIMAOX http�//aww.jhhw.wm
e-mail: cadamsQjhhw.com
Re' ° Qsed Tax-ExeWRt FinanCiZlz For Briz7QlaYa.&mrtWents
Dear Bill:
At your request; we have reviewed drafts of various documents submitted to us in
connection with the -o: oposed financing of a multifamily housing project known as the
Brizzolara Apartments ct" ?. The Pr
=u� oject will be ow-ned by one San Luis Obispo :tion-
rofit Housing Development Cornora. on in conjunction with a for - profit development entity.
,Financing for the Project wi'_1 e- provided `rom the proceeds of tax - exempt bonds in the
maximum principal amount of $4,000,000 (the "Bonds ") to be issued by the Californiz
Statewide Communities Development Authority (the "Authority"). We have reviewed the
Notice of Public Hearing wi,ic :: has been prepared by Orrick Herrington & Sutcliffe LLP, as
bond counsel to the Authority, and the proposed Resolution to be considered by the City
Council at its meeting on I nuary b, 1998. Although we have not received drafts of the
Indenture of Trust, Loan Agreement and other bond documents, we are ggenerally familiar with
the forms of these documents inasmuch as we have worked on other multifamily housing bond
transactions with the Aut;.Iority and with the Orrick firm, y g
The scope of ou_- ngasement has been, and until the Peal issuance of the Bonds ':):, = ^e
uthority will continue cc be, to act as - ounsel to the City for the sole purpose of ensuring that
.ie City's interests are protecte� n the finPncing, and that the City does not assume any
substantive financial liability or obligations in connection with the financing of the Project or
otherwise in connection with the delivery of the Bonds. We do not undertake to review
independently the validity of the underlying agreements or any matters relating to the tax -
exemption of interest on the Bonds, or to analyze the credit quality of the financing.
Based on our review of the Notice and the Resolution, and based on our familiarity with
the Authority's standard documentation used on similar transactions, we believe that the Bond
documents will contain previsions which adequately protect the City's interests and ensure that
the City does not assume -any substantive financial obligations or responsibilities in respect of
the financing. We will cor := thi oreliminary conclusion in writing *ollowing our review of the
DEC. 23 ' 97 ,717E: '.3 i 3 CON7V.0 \: CA -:ON \_ : 27 PACE. 2 �_/
William C. Statler
December 23, 1999
page 2
final executed documents, in the interim, we would recommend that the City Council procee
with the hearing and ccnsideration of the Resolution on at its meeting on January 6, if that be
the desire of the Coun- -".
Please let me k--:: •rr ii we can be of further help to you in this *_matter.
ANTI
DEC. 23 '97 , -:;r; 13::3 CO'.NUKICAT?O\ N -:27 PACE.3 lel—/O
SAN LUIS OBISPO COUNTY
ramaib-me
'Tele
i South Higuera • Post Office Box 112 • San Luis Obispo, California 93406-0112 • (805) 781-7800
In the Superior Court of The State of California
In and for the County of San Luis Obispo
AFFIDAVIT OF PUBLICATION
DV# 16886-0-5
City of SLO
STATE OF CALIFORNIA,
County of San Luis Obispo
I am a citizen of the United States and a resident of
the County aforesaid; I am over the age of eighteen
and not interested in the above entitled matter, I am
now, and at all times embraced in the publication
herein mentioned was, the principal Berk of the
printers and publishers of the SAN LUIS OBISPO
COUNTY TELEGRAM -TRIBUNE, a newspaper of
general circulation, printed and published daily,
Sundays excepted, at the City of San Luis Obispo in
the above named county and state; that notice at
which the annexed clippings is a true printed copy,
was published in the above-named newspaper and
not in any supplement thereof - on the following
dates, to -wit: December 22, 1997
that said newspaper was duly and regularly
ascertained and established a newspaper of general
circulation by Decree entered in the Superior Court
of San Luis Obispo County, State of California, on
June 9, 1952, Case #19139 under the provisions of
Chapter 1, Division 7, Title of the Government Code
of the State of California.
I certify (or declare) under the penalty of perjury that
the foreabino is true and correct.
Clerk)
Date: l3gRember 22, 1997
credit nor the taxing pow Those wishing to Com. CITY
CE
•er of the City, the Issuer, mertt :on. the Proposed
the _State of California financing and the nature `LUIS
any !polltioal subdivision of the Proleh t -may either Dated Y
thereof is pledged to the appear id person at' -the ,1997
payment of the principal public, hearing or submit 0�.7y 1
of, prooilumr if arty, or written comments, which
intetW on the Bonds, nor must be mceived by the
shah •the City or the
4e-4ble or obligat
IMMCFLY4 pay ffie' 'Principe
premium, 8 any, or.
Sdn est on the Bonds.
-CEBonds will be
PU NoTf UC HEARING solely from revenue
(REGARDING ISSUANCE card Wthe Issuer
OF the Borrower.
MULTIFAMILY HOUSING
REVENUE BONDS
NOTICE IS HEREBY
GIVEN that at its regular
meeting to be held at 7:001
p.m.. or as soon thereaft-
er as the matter can be
heard. on Tuesday. Janu
ary 6, 1998. in the Council
Chambers of City Ha1L
990 Palm Street San Luis
Obispo, California, the
City Council of the City of
'San. *Luis Obispo ithe
"City") will conducts
public hearing as required
'by Section 1471n of the
.Internal Revenue Code of
1986, at which it wto hear
and consider information
concerning the Proposed
issuance by the California
Statewide Communities
Development Authority
(the'Issuer') on behalf of
the City of multifamily
housing revenue bonds
'the "Bonds") to.finance
the acquisition, construc-
tion and development of a
30 unit multifamily rental
housing project for sen-
ors, handicapped and
disabled person located
at the intersection of Ni -
porno and Brizzolara
Streets in San Luis Obis-
po, California, and known
as the Brizzolara Apart-
ments (the "Project'). The
Project will be owned and
operated by the San Luis
Obispo Non -Profit HOtra-
ing Development Corpo-
ration in conjunction with
Bay Development Group,
'LLC, a California limited
liability company, or an
affiliated entity (collective.
ly. the "Borrower'). The
Bonds will be issued in an
aggregate amount not ex-
ceed 54:000,000.
Neither the faith and
of, ments should be sent to
ter the City of San Luis Obis -
Rte po, 990 Palm Street San
ble Luis Obispo, California
re- 93401; Attention: Bonnie