Item 5 - Conduit Financing for the Poway Commons Apt. Affordable Housing Proj.DATE:
TO:
FROM:
CONTACT:
SUBJECT:
Summary:
AGENDA REPORT CityofPoway
February 4, 2020
Honorable Mayor and Members of the City Council
Robert Manis, Director of Development Services fM
Marie Sanders, Senior Management Analyst �
(858) 668-4637 I msanders@poway.org
CITY COUNCIL
Conduit Financing for the Poway Commons Affordable Housing Project
In March 2019, the Poway Housing Authority entered into an Affordable Housing and Property
Disposition Agreement with Poway Commons, LLC to construct a senior affordable housing project
(''The Project") that will be developed as part of the Poway Commons development project.
The Project is expected to be financed in an amount not to exceed $12,000,000 of tax-exempt revenue
bonds by the California Municipal Finance Authority (CMFA). Pursuant to the Tax and Equity Fiscal
Responsibility Act (''TEFRA"), the City of Poway must approve the use of tax-exempt bonds for the
financing of the project at a public hearing, providing members of the community an opportunity to
speak in favor of or against the proposal.
Recommended Action:
It is recommended that the City Council take public input, close the public hearing and adopt the
Resolution.
Discussion:
Poway Commons Affordable CIC, LP (the "Borrower'') and Chelsea Investment Corporation (the
"Developer'') as the general partner, is seeking to acquire $12,000,000 in tax-exempt bonds issued by
CMFA to finance the acquisition, construction, improvement and equipping of the Project located at
the northwest corner of Civic Center Drive and Tarascan Drive, as part of the Poway Commons
development project. The Project does not require any financial assistance from the City of Poway or
the Poway Housing Authority. Additionally, the City will not accept liability or responsibility for the
project or the repayment of the bonds. All financing documents will contain clear disclaimers that the
bonds are not obligations of the City of Poway or the State of California.
In order for all or a portion of the bonds to qualify as tax-exempt bonds, the City of Poway must
conduct a public hearing providing an opportunity for the members of the community to speak in
favor of or against the use of tax-exempt bonds for the financing of the Project. Prior to this TEFRA
hearing, notice was provided to the communi ty via two postings in the Poway News Chieftain.
1 of 4 February 4, 2020, Item #5
CALIFORNIA MUNICIPAL FINANCE AUTHORITY:
The CMFA was created on January 1, 2004 pursuant to a joint exercise of powers agreement to
promote economic, cultural and community development, through the financing of economic
development and charitable activities throughout California. To date, over 300 municipalities,
including the City of Poway, have become members of CMFA.
The CMFA was formed to assist local governments, non-profit organizations and businesses with the
issuance of taxable and tax-exempt bonds aimed at improving the standard of living in California. The
CMFA's representatives and its Board of Directors have considerable experience in bond financings.
Environmental Review:
This item is not subject to California Environmental Quality Act (CEQA) review. The Project entitlements
have already been approved at a public hearing, where the appropriate CEQA findings were made.
Fiscal Impact:
The bonds to be issued by the CMFA for the Project will be the sole responsibility of the Borrower, and
the City will have no financial, legal, moral obligation, liability or responsibility for the Project or the
repayment of the bonds for the financing of the Project. All financing documents with respect to the
issuance of the bonds will contain clear disclaimers that the bonds are not obligations of the City or
the State of California but are to be paid for solely from funds provided by the Borrower.
The Board of Directors of the California Foundation for Stronger Communities, a California non-profit
public benefit corporation (the "Foundation"), acts as the Board of Directors for the CMFA. Through its
conduit issuance activities, the CMFA shares a portion of the issuance fees it receives with its member
communities and donates a portion of these issuance fees to the Foundation for the support of local
charities. With respect to the City of Poway, it is expected that a portion of the issuance fee attributable
to the City will be granted by the CMFA to the general fund of the City. Such grant, estimated to be
approximately $5,000, may be used for any lawful purpose of the City.
Public Notification:
A Notice of Public Hearing was published in the Poway News Chieftain on January 23, and January 30,
2020.
Attachments:
A.City Council Resolution
Reviewed/ Approved By:
Assistant City Manager
Reviewed By:
Alan Fenstermacher
City Attorney
Approved By:
City Manager
2 of 4 February 4, 2020, Item #5
RESOLUTION NO. 20-XXX
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
POWAY, CALIFORNIA, APPROVING THE ISSUANCE OF THE
CALIFORNIA MUNICIPAL FINANCE AUTHORITY MULTIFAMILY
HOUSING REVENUE BONDS IN AN AGGREGATE PRINCIPAL
AMOUNT NOT TO EXCEED $12,000,000 FOR THE PURPOSE
OF FINANCING OR REFINANCING THE ACQUISITION,
CONSTRUCTION, IMPROVEMENT AND EQUIPPING OF
POWAY COMMONS AND CERTAIN OTHER MATTERS
RELATING THERETO
WHEREAS, Poway Commons Affordable CIC, LP (the “Borrower”) a partnership of which
Chelsea Investment Corporation (the “Developer”) or a related person to the Developer is the
general partner, has requested that the California Municipal Finance Authority (the “Authority”)
adopt a plan of financing providing for the issuance of exempt facility bonds for a qualified
residential rental project pursuant to Section 142(a)(7) of the Internal Revenue Code of 1986 (the
“Code”) in one or more series issued from time to time, including bonds issued to refund such
exempt facility bonds in one or more series from time to time, and at no time to exceed
$12,000,000 in aggregate principal amount (the “Bonds”), to finance or refinance the acquisition,
construction, improvement and equipping of a senior multifamily rental housing project located at
the northwest corner of Civic Center Drive and Tarascan Drive, Poway, California (the “Project”);
WHEREAS, pursuant to Section 147(f) of the Code, the issuance of the bonds by the
Authority must be approved by the City of Poway (the “City”) because the Project is located within
the territorial limits of the City;
WHEREAS, the City Council of the City of Poway (the “City Council”) is the elected
legislative body of the City and is required to approve the issuance of the bonds under Section
147(f) of the Code;
WHEREAS, the Authority has requested that the City Council approve the issuance of the
bonds by the Authority in order to satisfy the public approval requirement of Section 147(f) of the
Code and the requirements of Section 4 of the Joint Exercise of Powers Agreement Relating to
the California Municipal Finance Authority, dated as of January 1, 2004 (the “Agreement”), among
certain local agencies, including the City; and
WHEREAS, pursuant to Section 147(f) of the Code, the City Council has, following notice
duly given, held a public hearing regarding the issuance of the bonds, and now desires to approve
the issuance of the bonds by the Authority.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Poway as
follows:
SECTION 1: The foregoing recitals are true and correct.
SECTION 2: The City Council hereby approves the issuance of the bonds by the
Authority. It is the purpose and intent of the City Council that this Resolution constitute approval
of the issuance of the bonds by the Authority, for the purposes of (a) Section 147(f) of the Code
and (b) Section 4 of the Agreement.
3 of 4 February 4, 2020, Item #5ATTACHMENT A
SECTION 3: The issuance of the bonds shall be subject to the approval of the Authority
of all financing documents relating thereto to which the Authority is a party. The City shall have
no responsibility or liability whatsoever with respect to the bonds.
SECTION 4: The adoption of this Resolution shall not obligate the City or any
department thereof to (i) provide any financing to acquire or construct the Project or any
refinancing of the Project; (ii) approve any application or request for or take any other action in
connection with any planning approval, permit or other action necessary for the acquisition,
construction, rehabilitation, installation or operation of the Project; (iii) make any contribution or
advance any funds whatsoever to the Authority; or (iv) take any further action with respect to the
Authority or its membership therein.
SECTION 5: The City Manager is hereby authorized and directed, jointly and severally,
to do any and all things and to execute and deliver any and all documents which 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 transaction approved hereby.
SECTION 6: This resolution shall take effect immediately upon its adoption.
PASSED, ADOPTED AND APPROVED at a Regular Meeting of the City Council of the
City of Poway, California, on the 4th day of February, 2020 by the following vote, to wit:
AYES:
NOES:
ABSENT:
DISQUALIFIED:
______________________________
Steve Vaus, Mayor
ATTEST:
________________________________
Faviola Medina, CMC, City Clerk
4 of 4 February 4, 2020, Item #5