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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