The URL can be used to link to this page

Home My WebLink About10/04/1982M I N U T E S ADJOURNED REGULAR MEETING OF THE CITY COUNCIL CITY OF SAN LUIS OBISPO MONDAY, OCTOBER 4, 1982 - 12:10 P.M. COUNCIL HEARING ROOM, CITY HALL, 990 PALM STREET SAN LUIS OBISPO, CALIFORNIA STUDY SESSION ROLL CALL Councilmembers Present: GlennaDeane Dovey, Ron Dunin, Robert Griffin, Allen Settle and Mayor Melanie C. Billig Absent: None City Staff Present: Paul Lanspery, Administrative Officer; George Thacher, City Attorney; Pamela Voges, City Clerk; Toby Ross, Community Development Director; Rudy Muravez, Finance Director 1. SIERRA ALTA VILLAGE PROJECT Council considered a draft inducement resolution providing tax - exempt bonding for financing of a multi - family rental housing development (Sierra Alta Village) located at 97 Stenner Street. •Paul•Lanspery, Administrative Officer, clarified staff was not recom- mending formal adoption of the inducement resolution at this time, but rather the Council review now and consider at a future Council meeting. Rudy Muravez, Finance Director, briefly reviewed the project (File No. 410 -998) and stated that although a number of technical details were still required to be worked out between the city and developer, staff had submitted an inducement resolution for the Council to review; he was requesting Council authorize staff to negotiate an agreement with a bond counsel to proceed with the project. He explained that all costs prior to bond issuance were to be insured by the developer and all costs subsequent to bond issuance were covered by the proceeds of the bond; therefore, there would be no cost to the city. Additionally, since the bonds were issued as revenue bonds with the project rents assigned to the bond holders as security, the credit.of the city was not pledged. In essence the city was lending its tax exempt financing status,to the developer in return for a.commitment of .20% of the units to low income housing, or 16 units out of a total of 80 units. Steven R. Brock, Executive Vice President of Kings County Capital, Inc., and the developer, introduced the underwriter Joseph H. Torrence with Shearson /American Express; David L. Sileiva from Hanford; and Don Tuley, co -owner in the project. He briefly reviewed the project and stated the total financial commitment was.$8 million. Approximately:$6,500,000 would go into mortgages, with $875,000 being dedicated to a debt service reserve,iand $625,000 going.to.a special insurance, a reserve require- ment, legal costs, marketing cost, etc. Their project would consist of 80 condominium units built to condominium standards from the very start and being either a ten or 20 -year term financing.: He explained this relates directly to more favorable conventional and /or tax exempt City Council Minutes Monday, October 4, 1982 . - 12:10 p.m. Page 2 rates in a ten -year market. Apartments are highly sensitive to financing rates and currently 20 or 30 -year mortgage rates were not feasible. The _ project would provide 20 percent of the units for low- income housing. He reiterated the city would have no financial obligation but would be lending their tax exempt credit status only and no liability to be incurred. If the Council were to approve the inducement resolution, he would recommend Ken Jones from Jones, Hall, White and Associates for the bond counsel and Joseph Torrence as the underwriter from Shearson /American Express. Joseph Torrence, underwriter with Shearson /American Express, also reviewed the financial implications of the project and stated the liability would fall to the financial institution and not be a liability of the city. The project is expected to have a triple A security rating, which would also give it a lower interest rate. He explained the lender makes an additional one and one -half of the interest rate of the bond rating. George Thacher, City Attorney, questioned if the owner could sell the property during the life of the bond and further, who held the first deed of trust. Joseph Torrence explained the property must be held in rental status for a minimum of ten years and was in essence a master mortgage owned by the developer. Councilman Dunin questioned how the 20 percent of the low- income housing units would be dealt with if they were unable to carry themselves. Steve Brock explained that the developer would then be forced to subsidize those units. Upon question, Mr. Brock stated that affordable-housing has certain guidelines for establishing the rent and that is what they would be using to make that determination. Councilman Dunin requested clarification of the type of housing units. Steve Brock explained they would be primarily for Cal Poly students. He would like no more than four people per unit. This could also include students with families. Councilman Dunin stated his primary concern was what would happen to those people who had rented the units, and after the first ten years the condominiums are put up for sale. He would like the displacement issue spelled out. Steve Brock explained the units would be available to anyone who was interested; however, this arrangement generally tended to weed -out other types of people when there are several students in a complex such as this. Upon question, Rich Chubon stated the sponsor determines the low income eligibility. If this was violated in any manner, the developer would lose his loan as this would be a default circumstance. Councilwoman Dovey questioned if the developer would be willing to allow the Housing Authority to act as the enforcement officer. Rich Chubon stated the Housing Authority, if agreeable with the developer, would be willing to refer the persons on the income eligible list but did not feel they should be acting as the administrators. Steve Brock stated this would be acceptable and could be put as a part of the agreement. Councilman Griffin questioned whether or not the developers had spoken with Cal Poly and there was a new ruling which would allow this type of project to be sponsored by Cal Poly as well, and he would be willing to get this information to the developer for review. 1 1 1 City Council Minutes Monday, October 4, 1982 - 12:10 p.m. Page 3 Mayor Billig questioned what the auxillary facilities were to be. Steve Brock explained there would be a swimming pool and game room; there could be tennis courts and an all- sports court if they were successful in getting the Mobile Oil property. After brief discussion it was moved by Councilman Griffin, seconded by Councilman Settle, to continue the item for additional staff report including additional project details, consulting with bond counsel, pros and cons for the city, displacement of tenants and final draft inducement resolution; hearing to be scheduled for October 26. Motion carried, all ayes.. C O M M U N I C A T I O N S Councilman Settle requested Council get back to him with regard to their voting preferences for those resolutions to go before the League of California Cities at the Annual League Meeting. There being no further business to come before the City Council, Mayor Billig adjourned the meeting at 1:35 p.m. i i (Pamela Voges, ty Clerk APPROVED BY COUNCIL: 10/26/82 M I N U T E S REGULAR MEETING OF THE CITY COUNCIL CITY OF SAN LUIS OBISPO TUESDAY, OCTOBER 5, 1982 -.7:00 P.M. COUNCIL CHAMBERS, CITY HALL, 990 PALM STREET SAN LUIS OBIPPO, CALIFORNIA PLEDGE OF ALLEGIANCE -ROLL CALL Councilmembers Present: GlennaDeane Dovey, Ron Dunin, Robert Griffin, Allen Settle and Mayor Melanie C. Billig Absent: None City Staff Present: Paul Lanspery, Administrative Officer; Geoff Grote, Assistant Administrative Officer; George Thacher, City Attorney; Pamela Voges, City Clerk; Toby Ross, Community Development Director; Wayne Peterson, City Engineer; Mike Dolder, Fire Chief; Don Englert, Police Captain; Dave Romero, Public Services Director; Glen Matteson, Associate Planner - -_ ---------------------------------------------------------------- C O N S E N T I T E M S C -1 CLAIMS AGAINST THE CITY On motion of Councilman Dunin, seconded by Councilman Settle, the claims against the City for the month of October 1982 be approved and ordered