HomeMy WebLinkAbout- - TEFRA Hearing and Resolution Approving - 7/3/2012CITY COUNCIL AGENDA REPORT
MEETING DATE: JULY 3, 2012 ITEM NUMBER:
SUBJECT: TEFRA HEARING AND RESOLUTION APPROVING THE ISSUANCE OF BONDS BY
THE CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY
DATE: JUNE 25, 2012
FROM: FINANCE DEPARTMENT /ADMINISTRATION
PRESENTATION BY: BOBBY YOUNG, FINANCE & I.T. DIRECTOR
FOR FURTHER INFORMATION CONTACT: BOBBY YOUNG, FINANCE & I.T. DIRECTOR
(714) 754-5243
RECOMMENDED ACTION
Adopt resolution approving the issuance of Bonds by the California Statewide Communities
Development Authority for the Tower on 19th, on behalf of 19th Street Affordable, LP.
BACKGROUND
The City has received a request from the California Statewide Communities Development Authority
("CSCDA") to conduct a public hearing as required by the Internal Revenue Code in order to issue
tax-exempt revenue bonds (the "Bonds") in an aggregate amount not to exceed $37 million on
behalf of 19th St. Affordable, LP (the "Borrower").
The Borrower will use the proceeds of the Bonds to finance the acquisition and rehabilitation of the
Tower on 19th ("the Project") located at 678 W. 19th Street, in the City of Costa Mesa ("the City").
The 269 unit senior property, currently known as Bethel Towers, consists of studio, one bedroom
and two bedroom units for low-income seniors. The proposed renovation will include extensive
structural and life safety upgrades. A complete seismic retrofit of the building will be performed,
fire sprinklers will be added to all common areas and units, and fire and life safety systems will be
upgraded. The renovation will also include a remodel of all lobby, office and common areas. Unit
renovations will include new cabinets, countertops, flooring, lighting and fixtures in 100% of the
Property's kitchens and baths. All windows will be replaced and the building exterior will be
repainted. Elevator and other mechanical systems will be replaced or repaired. The Project is to
be owned by the Borrower and managed by The John Stewart Company.
The property will be owned by a single asset limited partnership whose general partner will be
AHCDC, Inc, a California 501(c)(3) organization,
affordable housing in California. The sponsor
Communities. The partners of Reiner Communi
units of affordable multifamily housing through
credits and tax exempt bonds.
whose focus is the creation and preservation of
and developer of the property will be Reiner
es have preserved and rehabilitated over 3,500
)ut California utilizing low income housing tax
ANALYSIS
The Bonds would be tax-exempt private activity bonds for the purposes of the Internal Revenue
Code and, as such, require the approval of the elected body of the governmental entity having
jurisdiction over the area where the project to be financed is located. The City will not be under
any obligation to repay the Bond indebtedness.
In order for CSCDA to issue such Bonds, the City must (1) conduct a public hearing allowing
members of the public to comment on the proposed Project, and (2) approve of CSCDA's issuance
of Bonds on behalf of the proposed financing. Although CSCDA (not the City) will be the issuer of
the tax-exempt revenue bonds for the Project, the financing cannot proceed without the City, as
the governmental entity having jurisdiction over the site, approving of the CSCDA's issuance of
indebtedness.
CSCDA is a California joint powers authority, organized and existing under the laws of the State of
California (specifically, California Government Code Section 6500 and following), and is sponsored
by the League of California Cities and the California State Association of Counties. Under the
California Government Code, cities and counties are authorized to form by agreement a
governmental entity that combines the powers of such entities to perform certain governmental
functions specifically outlined in the Agreement. With respect to the Authority, over 500 California
cities, counties and special districts have entered into and executed the Agreement to become a
member of the Authority, including the City of Costa Mesa. The Authority is authorized to assist in
the financing of 501(c)(3) nonprofit projects.
FISCAL REVIEW
There is no direct or indirect financial impact to the City of Costa Mesa as a result of this proposed
financing. CSCDA will issue tax-exempt revenue bonds on behalf of the Borrower. The Bonds are
payable solely out of the revenues derived by the Project. No financial obligations are placed on
the City for project financing costs or debt repayment.
LEGAL REVIEW
The City Attorney has reviewed this report.
CONCLUSION
In conclusion, the Council is respectfully requested to hold the host jurisdiction public hearing
regarding the issuance of private activity bonds pursuant to Section 147(f) of the Internal Revenue
Code, approve the issuance of the bonds, by the California Statewide Communities Development
Authority.
Representatives from California Communities Development Authority, Reiner Communities and the
property owner will be available to answer any questions regarding the Project. Feel free to
contact me directly if you have questions or need additional information.
BOBBY YOUNG
Finance and I.T. Director
Attachment 1 — Notice of Public Heari
Attachment 2 — Resolution
2