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HomeMy WebLinkAboutCD TEFRA - 55 Fairfax Street____________________________________________________________________________________ FOR CITY CLERK ONLY Council Meeting: 01/22/2019 Disposition: Resolution 14626 Agenda Item No: 6.a Meeting Date: January 22, 2019 SAN RAFAEL CITY COUNCIL AGENDA REPORT Department: Community Development Prepared by: Paul A. Jensen Community Development Director City Manager Approval: ______________ TOPIC: "TEFRA" PUBLIC HEARING FOR TAX-EXEMPT FINANCING - 55 FAIRFAX STREET SUBJECT: PUBLIC HEARING AND CONSIDERATION OF RESOLUTION APPROVING ISSUANCE OF A REVENUE NOTE BY THE CALIFORNIA MUNICIPAL FINANCE AUTHORITY FOR THE PURPOSE OF PROVIDING FINANCING FOR A RESIDENTIAL RENTAL HOUSING FACILITY KNOWN AS CASA VISTA APARTMENTS AT 55 FAIRFAX STREET, PURSUANT TO THE TAX AND EQUITY FISCAL RESPONSIBILITY ACT (“TEFRA”); FILE NO. P18-017 EXECUTIVE SUMMARY: Pursuant to the Tax and Equity Fiscal Responsibility Act (TEFRA), on November 19, 2018, the City Council conducted a public hearing and adopted Resolution No. 14602. This City Council action approved the issuance of a revenue note by the California Municipal Finance Authority for the Casa Vista Apartments located at 55 Fairfax Street. The revenue note was approved for issuance to the property owner, Alto Station, Inc. Since this action by the Council, the City has been informed that there has been a change in the property ownership from Alto Station, Inc. to Casa Vista Housing LLC. Therefore, a new public hearing (TEFRA hearing) is required to approve the issuance of a revenue note to the new ownership entity. RECOMMENDATION: Hold a public hearing and adopt a resolution approving the issuance of a Note for financing of a loan for the Casa Vista Apartments. BACKGROUND: The Casa Vista Apartments is a 40-unit multi-family residential rental development that is located at 55 Fairfax Street. Constructed in 1964, the 40 units are contained in two, two-story buildings. The 1.4-acre property is also developed with surface parking, along with a central courtyard containing a swimming pool and recreation room. The Casa Vista Apartments is owned by Casa Vista Housing LLC (BRIDGE Housing Corporation), a California non-profit benefit corporation. BRIDGE Housing Corporation owns and manages affordable housing projects throughout California. One hundred (100) percent of the units in the Casa Vista Apartments are affordable to households qualifying in the low-income category (50 to SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 2 80 percent of the median income in Marin County). These units are guaranteed as affordable through 2057. BRIDGE Housing Corporation has applied to the California Municipal Finance Authority (CMFA) to be its issuer for tax-exempt financing for this property. The CMFA was created in 2004 to promote economic, cultural and community development through the financing of economic development and charitable activities in California. The CMFA was formed to assist local jurisdictions with the issuance of taxable and tax-exempt bonds aimed at improving the standard of living in California. The Casa Vista Apartments project application to CMFA is expected to be financed in an amount not-to- exceed $4,000,000 in the form of a tax-exempt revenue note (Note) authorized under the Tax and Equity Fiscal Responsibility Act (“TEFRA”). The proceeds of the Note will be used for/on the subject property by BRIDGE Housing Corporation to: a) refinance outstanding debt; b) finance certain, needed capital improvements to the subject property; and c) provide working capital and/or to fund reserves. In order for the Note to qualify as tax-exempt, the Internal Revenue Code requires that an “applicable elected representative” of a governmental unit, the boundaries of which include the site at which the housing project is located, must hold a public hearing on the issuance of the Note and then approve the issuance of the Note. In this case, the City is the applicable governmental unit and the City Council is the elected representative that must hold the public hearing and approve issuance of the Note by the CMFA. As noted above, on November 19, 2018, the City Council held a TEFRA hearing and adopted Resolution 14602, which approved the issuance of a revenue note to the then property owner, Alto Station, Inc. As the ownership entity has changed (Casa Vista housing LLC), a new, second TEFRA hearing must be held and the same action is required by the City Council. Except for the change in ownership, there are no other changes to the structure of the refinancing. However, as a portion of the property financing was subsidized by former San Rafael Redevelopment Agency bonds, the refinancing will require the modification of two subordination agreements that were initially executed in 2001. The modification of these two agreements is being administered by staff and will be signed for execution by the City Manager. ANALYSIS: The public hearing and approval of the resolution by the City Council will assist in the financing sought by BRIDGE Housing Corporation, as it will fulfill the requirements of the Federal tax code, but otherwise these actions have no direct impact on the City of San Rafael or the subject property in that: 1.The Note will not constitute a debt or liability for the City, and the loan evidenced by the Note will be payable from funds provided from loan payments by BRIDGE Housing Corporation. 2.As noted above, the Internal Revenue Code mandates that the public hearing be conducted before the Note is issued for all or a portion of the Note to qualify as tax-exempt, therefore the City conducts the public hearing merely as an accommodation to the property owner. The City will not be the issuer of the Note, nor will it be responsible for financing evidenced by the Note. 3.The issuance of the Note will have no impact on, nor would it change the current affordability status of the 40 residential units. Rather, the issuance of the Note will foster a pay-down of the outstanding debt and would be used to finance needed capital improvements to the subject property. SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 3 4.The action on this request qualifies for an Exemption from the provisions of the California Environmental Quality Act (CEQA) Guidelines pursuant to Section 15061(b). This CEQA provision states that as a “general rule,” CEQA applies only to projects and actions which have the potential to cause a significant, physical environmental effect on the environment. COMMUNITY OUTREACH: Consistent with TEFRA and the provisions of the San Rafael Municipal Code, a notice of this public hearing was published in the Marin Independent Journal 15 days prior to the hearing. A copy of the notice is attached (Attachment 2). FISCAL IMPACT: The City’s review and action on this request has no fiscal impact on the City of San Rafael. As discussed above, the issuance of the Note for financing will not constitute a debt or liability of the City. OPTIONS: The City Council has the following options to consider on this matter: 1.Adopt the attached resolution as recommended by staff. 2.Continue the matter and direct staff to return with more information. 3.Do not adopt the resolution. RECOMMENDED ACTION: Adopt a resolution approving the issuance of a Note to provide financing for the Casa Vista Apartments. ATTACHMENTS: 1.Resolution 2.Public Hearing Notice ATTACHMENT 1 1 RESOLUTION NO. 14626 A RESOLUTION OF THE SAN RAFAEL CITY COUNCIL REAPPROVING THE ISSUANCE OF A REVENUE NOTE BY THE CALIFORNIA MUNICIPAL FINANCE AUTHORITY FOR THE PURPOSE OF PROVIDING FINANCING FOR CASA VISTA APARTMENTS, AND APPROVING AND AUTHORIZING THE EXECUTION AND DELIVERY OF DOCUMENTS IN CONNECTION THEREWITH AND WITH THE REDEMPTION OF RELATED FORMER REDEVELOPMENT AGENCY BONDS WHEREAS, on September 27, 2001, the San Rafael Redevelopment Agency (the “Former Agency”) issued $3,000,000 principal amount of Variable Rate Demand Multifamily Housing Revenue Bonds (Fairfax Street Apartments), Series 2001 A (the “2001 Bonds”) pursuant to an Indenture, dated as of September 1, 2001 (the “Indenture”), between the Former Agency and U.S. Bank Trust National Association, as trustee, and loaned the proceeds of the Bonds (the “2001 Loan”) to Alto Station, Inc., a California nonprofit public benefit corporation (the “Borrower”) to provide financing for Casa Vista Apartments, formerly known as Fairfax Street Apartments (the “Project”) located at 55 Fairfax Street in the City of San Rafael (the “City”); WHEREAS, the Borrower is transferring the Project to Casa Vista Housing LLC, a California limited liability company (the “Buyer”) sponsored by BRIDGE Housing Corporation (“BRIDGE”), and in order to provide funds for the refinancing and rehabilitation of the Project, the California Municipal Finance Authority (the “Authority”) is borrowing funds from SAHI TEBS II LLC (“SAHI”), and is delivering to SAHI its Multifamily Housing Revenue Note (BRIDGE Portfolio Financings – Casa Vista Apartments), 2019 Series B (the “2019 Note”) to evidence the borrowing, and the Authority will be loaning the proceeds of the 2019 Note to the Buyer; WHEREAS, on November 19, 2018, the City Council adopted Resolution No. 14602 (the “Approving Resolution”), approving the issuance by the Authority of the 2019 Note, following the conduct by the City Council of a public hearing regarding the financing represented by the 2019 Note for purposes of (a) the Internal Revenue Code of 1986, as amended (the “Code”), and (b) Section 4 of the Joint Exercise of Powers Agreement Relating to the California Municipal Finance Authority, dated as of January 1, 2004 (the “Agreement”), to which Agreement the City is a party; and WHEREAS, the Notice of Public Hearing and the Approving Resolution both contemplated that the Borrower would continue to own the Project following the issuance of the 2019 Note, and because the Buyer will now own the Project upon the issuance of the 2019 Note, the City Council has held a new public hearing regarding the 2019 Note and the related financing of the Project, acknowledging that the Buyer will own the Project, and the City Council now desires to reapprove the issuance by the Authority of the 2019 Note; and WHEREAS, in connection with the transfer of the Project by the Borrower to the Buyer, the Borrower would like to prepay the 2001 Loan resulting in a redemption of the 2001 Bonds, so that a deed of trust securing the repayment of the 2001 Loan and related agreements may be released; WHEREAS, in connection with the issuance of the 2001 Bonds, the Borrower and the Former Agency entered into a Regulatory Agreement and Declaration of Restrictive Covenants 2 (the “2001 Regulatory Agreement”), which 2001 Regulatory Agreement places various restrictions on the operation of the Project required under California and federal tax law applicable t o the Bonds; WHEREAS, in connection with the delivery of the 2019 Note, the Authority and the Buyer will be entering into a new Regulatory Agreement and Declaration of Restrictive Covenants (the “2019 Regulatory Agreement”), which will place restrictions on the operations of the Project for a term at least as long as the restrictions in the 2001 Regulatory Agreement; WHEREAS, the City, as successor to the housing assets of the Former Agency, has succeeded to the rights and obligations of the Former Agency under the Indenture and under the 2001 Regulatory Agreement; WHEREAS, the Authority has agreed to make the City and the owners of the Bonds third party beneficiaries of the 2019 Regulatory Agreement so that they can enforce the provisions of the 2019 Regulatory Agreement against the Buyer; WHEREAS, in light of the aforementioned provisions of the 2019 Regulatory Agreement, the Buyer has requested that the City enter into an agreement to terminate the 2001 Regulatory Agreement so that the City can obtain the benefits of the 2019 Regulatory Agreement, but not have the obligation to continue to monitor the Project as is contemplated by the 2001 Regulatory Agreement; and WHEREAS, in order to allow for the continued affordability of the Project to low income tenants and to facilitate the acquisition and rehabilitation by the Buyer of the Project, the City is amenable (a) to entering into a termination agreement (the “Termination Agreement”) terminating the 2001 Regulatory Agreement, and (b) executing documents to facilitate the repayment of the 2001 Loan and the redemption of the 2001 Bonds, all as provided in this Resolution. NOW, THEREFORE, BE IT RESOLVED, by the City Council of the City of San Rafael, as follows: Section 1. The City Council hereby reapproves the issuance of the Note by the Authority. It is the purpose and intent of the City Council that this Resolution constitute approval of the issuance of the Note (a) by the “applicable elected representative” in accordance with section 147(f) of the Code, and (b) by the City Council in accordance with section 4 of the Agreement. Section 2. The Council hereby approves the transfer of the Project by the Borrower to the Buyer. Section 3. The termination agreement relating to the 2001 Regulatory Agreement (the “Termination Agreement”), in the form on file with the City Clerk, is hereby approved, and the Mayor, the City Manager and the Finance Director (each, a “Designated Officer”), each acting alone, are hereby authorized to execute the Termination Agreement in such form, together with such changes as may be approved by the official executing the Termination Agreement for the City upon consultation with counsel to the City, and the execution thereof by a Designated Officer to be conclusive evidence of such approval. Section 4. The Designated Officers, the City Clerk and all other appropriate officials of the City are hereby authorized and directed to execute such other agreements, documents and certificates as may be necessary to facilitate and effect the transfer of the Project by the Borrower 3 to the Buyer, the prepayment of the 2001 Loan, the redemption of the 2001 Bonds, and the termination of the 2001 Regulatory Agreement all as contemplated by this Resolution; provided, however that any costs or expenses of the City in connection therewith are paid for by the Buyer or the Borrower. Section 5. The adoption of this Resolution shall not obligate the City or any department thereof to (i) provide any financing for the Housing Facility; (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 improvement or operation of the Housing Facility; (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 6. This Resolution shall take effect immediately upon its passage and adoption. I, LINDSAY LARA, City Clerk of the City of San Rafael, hereby certify that the foregoing Resolution was duly and regularly introduced and adopted at a regular meeting of the City Council of said City held on Tuesday, the 22nd day of January 2019, by the following vote, to wit: AYES: COUNCILMEMBERS: Bushey, Colin, Gamblin & Mayor Phillips NOES: COUNCILMEMBERS: None ABSENT: COUNCILMEMBERS: McCullough LINDSAY LARA, City Clerk Marin Independent Journal 4000 Civic Center Drive, Suite 301 San Rafael, CA 94903 415-382-7335 legals@marin ij .com 2070419 CITY OF SAN RAFAEL CITY OF SAN RAFAEL CITY CLERK, ROOM 209 1400 FIFTH AVENUE, SAN RAFAEL, CA 94901 SAN RAFAEL, CA 94915-1560 PROOF OF PUBLICATION (2015.5 C.C.P.) STATE OF CALIFORNIA County of Marin I am a citizen of the United States and a resident of the County aforesaid: I am over the age of eighteen years, and not a party to or interested in the above matter. I am the principal clerk of the printer of the MARIN INDEPENDENT JOURNAL, a newspaper of general circulation, printed and published daily in the County of Marin, and which newspaper has been adjudged a newspaper of general circulation by the Superior Court of the County of Marin, State of California, under date of FEBRUARY 7, 1955, CASE NUMBER 25566; that the notice, of which the annexed is a printed copy (set in type not smaller than nonpareil), has been published in each regular and entire issue of said newspaper and not in any supplement thereof on the following dates, to-wit: 01/04/2019 I certify (or declare) under the penalty of perjury that the foregoing is true and correct. Dated this 4th day of January, 2019. Signature PROOF OF PUBLICATION r.BP?-11/10/16 ATTACHMENT #2 Legal No. 0006275591 CITY OF SAN RAFAEL NOTICE OF PUBLIC HEARING DATE/TIME: Tuesday, January 22, 2019 at 7:00 p.m. LOCATION: City Council Chambers, 1400 Fifth Avenue, San Rafael, CA PURPOSE: The San Rafael City Council will hold a public hearing in connection with the pro-posed Issuance by the California Municipal Fi-nance Authority (the "Authority") of Its reve-nue note (the "Note") evidencing a borrowing in an amount not to exceed $4,000,000. Pro-ceeds of the borrowing evidenced by the Note will be loaned to Casa Vista Housing, LLC, a California limited Liability Company ("Casa Vista"). The proceeds will be used by Casa Vista to refinance outstanding debt of Casa Vista, to finance certain capital Improvements, to provide working capital and/or to fund re-serves, all with respect to the 40-unit multi-family residential rental faclllty owned by Ca• sa Vista currently known as Casa Vista Apart-ments located at 55 Fairfax Street #27, APN 008-03b-04 in the City (the "Housing Facility"). The Housing Facility is currently managed by BRIDGE Prorerty Management Company. All or a portion o the rental units In the Housing Fa-cility are being, and will continue to be, rented to persons and families of low and very low in-come. The Note will not constitute a debt or liability of the City, the State of California (the "State") or any political subdivision thereof, other than the Authority, and the loan evidenced by the Note will be payable from funds provided from loan repayments by Casa Vista. Neither the faith and credit nor taxing power of the City, the State or any political subdivision thereof, including the Authority, will be pledged to the payment of the prindpai or prepayment pre-mium, if any, or interest on the Note. The issu-ance of the Note will not directly, Indirectly or contingently obligate the City, the State or any political subdivision thereof to levy or to pledge any form of taxation or to make any ap-propriation for its payment. The Authority has no taxing power. The City Council ls conducting the public hear-Ing as an accommodation to Casa Vista. The City will not be the Issuer of the Note and takes no responslblllty for the financing evi-denced by the Note. Those wishing to comment on the proposed fi-nancing and the location and nature of the Housing Facility may either appear In person at the public hearing or submit written com-ments, which must be received by the City pri-or to tne hearing. The action on this request qualifies for an Ex-emption from the provisions of the California Environmental Quality Act (CEQA) Guidelines pursuant to Sectlon 15061(b), whlch states that as a "general rule," CEQA applies only to proj-ects and actions which have the potential to cause a significant, physical environmental ef-fect on the environment. IF YOU CANNOT ATTEND: Written comments should be sent to Lindsay Lara, City Clerk, City of San Rafael, P.O. Box 151560, San Rafael, CA 94915-1560, City of San Rafael, 1400 Fifth Avenue, Room 209, San Ra-fael, CA 94901. FOR MORE INFORMATION: More information regarding the Housing Facili-ty may be obtained from Katherine Fleming, Vice President of Portfolio for BRIDGE Housing corporation, telephone (415) 321-4009. SAN RAFAEL CITY COUNCIL LINDSAY LARA CITY CLERK, CITY OF SAN RAFAEL No. 13 Jan. 4 2019