HomeMy WebLinkAbout2012/12/11 Item 25C H U L A V I S T A
HOUSING ,r.
AUTHORITY ~.
AGENDA STATEMENT
DECEMBER 11, 2012, Item Z`J
RESOLUTION OF THE HOUSING AUTHORITY OF THE
ITEM TITLE: CITY OF CHULA VISTA AUTHORIZING THE ISSUANCE
OF [TS MULTIFAMILY HOUSING REVENUE BONDS IN
`ONE OR MORE SERIES IN A CUMULATIVE AND
AGGREGATE PRINCIPAL AMOUNT NOT TO EXCEED
$21 tvttLttorr FOR THE PURPOSE OF-FINANCING THE
ACQUISITION AND REHABILITATION OF THE
CONGREGATIONAL TOWER MULTIFAMILY RENTAL
HOUSING PROJECT; APPROVING AND AUTHORIZING
THE EXECUTION AND DELIVERY OF ANY AND ALL
DOCUMENTS NECESSARY TO ISSUE THE BONDS,
COMPLETE THE TRANSACTION AND IMPLEMENT THIS
RESOLUTION, AND RATIFYING AND APPROVING ANY
ACTION HERETOFORE TAKEN IN CONNECTION WITH
THE BONDS
SUBMITTED BY: ASSISTANT CITY MANAGER DEVELOPMENT
SERVICES DIRECTO
REVIEWED BY: CITY MANAGER
4/STHS VOTE: YES. ~ NO
SUMMARY
The City of Chula Vista has received a request from Retirement Housing Foundation
("Applicant") to consider the issuance of tax exempt obligations to finance the
rehabilitation of 186 existing affordable units at the Congregational Towers Apartments
(the "Project"). The. Congregational Towers Apartments are located at 288 F Street in
northwest Chula Vista. The rehabilitation will improve the property and extend the term
of the affordable rents.
The Applicant has applied for an allocation of tax credits and tax-exempt private activity
bonds for multi-family projects from the California Debt Limit Allocation Committee
(CDLAC) and is requesting that the Housing Authority of the City of Chula Vista be the
conduit bond issuer for an aggregate amount not to exceed $21 million. The application
was approved by CDLAC on November 14, 2012. The bond allocation and tax credit
contributions will be used to substantially finance the Project.
25-1
DECEMBER l1; 2012, Item ~
Page 2 of 6
At this time, the City Council is asked to approve the issuance, sale, and delivery of
multi-family housing revenue bonds by the Housing Authority after a bond allocation is
received from CDLAC.
Resolutions and bond documents presented for the Housing Authority's consideration have
been prepared by Stradling Yocca Carlson & Rauth, serving as bond counsel for the City of
Chula Vista and its Housing Authority.
ENVIRONMENTAL REVIEW
The Environmental Review Coordinator has reviewed the proposed activity for compliance
with the California Environmental Quality Act (CEQA) and has determined that the activity is
not a "Project" as defined under Section 15378 of the State CEQA Guidelines; therefore,
pursuant to Section 15060(c)(3) of the State CEQA Guidelines the activity is not subject to
CEQA. Thus, no environmental review is necessary. _ _
RECOMMENDATION
It is recommended 'that the Housing Authority adopt the resolution 'authorizing the
issuance, sale and delivery of Multi-family Housing Revenue Bonds (Congregational
` Tower Apartments} in a combined aggregate principal amount not to exceed $x21 and
approving in substantial form related documents, and authorizing official action related
thereto.
BOARDS/COMMISSION RECOMMENDATION
On August 29, 2012, the Housing Advisory Commission voted to recommend the bond
financing of Congregational Towers as an affordable rental community.
DISCUSSION
The Applicant
Community Congregational Development Corporation (a development corporation
created by the Congregational Church) currently owns and operates the Congregational
Towers Apartment project located at 288 F Street. Retirement Housing Foundation, a
nonprofit service agency organized under section 501(c)(3) of the Internal Revenue
Service Code, is proposing to create a new partnership with Community Congregational
Development Corporation. The new partnership will be named Congregational Tower
Partners, LP. The current property owner has successfully operated the property for 39
years. The new partner; Retirement Housing Foundation, operates 161 communities
across the United States in 29 states, the Virgin Islands and Puerto Rico, and has created
over 16,000 units of affordable rental housing.
The Property
The project is an existing 186 unit affordable complex originally financed through the
Department of Housing and Urban Development (HUD). After the renovations the
community will include anew, larger community room, rooms for arts and crafts, central
laundry, outside garden patio area, and a computer lab for all residents.
25-2
DECEMBER 11, 2012, Item 2~
Page 3 of 6
The Proposal
The project is thirty-nine years old and in need of rehabilitation to ensure continued long
terrri use and viability. To take advantage of tax credits, the existing owner, Community
...Congregational Development Corporation, will sell the project to a new partnership
named Congregational Tower Partners, LP, a California limited partnership that. will
acquire -and rehabilitate the property' using bond financing and tax credits. The new
' partnership; Congregational Towers Partners, LP, consists of Retirement Housing
Foundation, Community Congregational Development Corporation and a tax credit
equity investor as the Limited Partner to be determined later.
The scope of the proposed renovation includes full apartment interior renovations, new
roof, mechanical systems, electrical system, plumbing system, and other exterior finishes.
-The main floor will have an increase of approximately 2,000 square feet to include a
lounge/library, adjoining recreational/media room, and additional bathrooms.
Improvements will also be made to the parking lot and landscaping.
Incomeand Rent'Restrictions
' For .the bond funding, Section 142 (d) of the Internal Revenue Services Code requires
either a, minimum of 20 percent of the rental units in the Project to be available for
occupancy by persons or families whose income does not exceed 50 percent of the area
median income (AMI) for the San Diego Primary Metropolitan Statistical Area, or
alternatively, at least 40 percent of the rental units are required to be available for
occupancy by persons `or families whose income does not exceed 60 percent of the AMI.
In each case, the units are to be made available at affordable rents established by the
applicable State law.
A total of 38 units must be affordable for very low income households at 50 percent of
AMI, or at least 75 units for low income households at 60 percent of AMI.
Congregational Towers Apartments will continue to operate the entire project as an
affordable project, with' 184 units affordable to lower income. households (2 units are
managers' units). The bond regulatory agreement will restrict 184 units for low income
households at b0 percent of AML The bond restricted rents will be based upon HUD
income limits established for the year.
The Project also has an existing Section 8 financing contract with HUD. This allows the
tenants to pay only 30% of their income, with HUD payirig the remaining portion of the
rent. The applicant_has applied for a Section 8 rent increase based on post rehabilitation
market rent which will increase the Studio rent to $1,200 and the One Bedroom to
$1,375. The request will not increase the amount currently paid by the tenants.
Unit Description No. of
Units Target Income
Level ~ Maximum
Rent Tenant
Pa s - _
OBd/1Ba 124 60%AMI $844 30%oftheir income
1 Bd/1 Ba 60 60%AMI $904 30%oftheir income'
1 Bd/1 Ba 1 Mana er - -
2 Bd/1 Ba
Total Restricted 1
186 Manager
~~~;~,f-€~,»~~"'~~ ~w. a``~'° -
rt=`;` ~n.,u;C~? -
r~~~, t~~. ,.nil" `"lt~'_ . -~~rf
25-3
i
DECEMBER 11, 2012, Item `L5
Page 4 of 6
The Project proposes to maintain the income and rent restrictions for Congregational
Towers for a period not less than fifty-five years, exceeding the 30-year term of the
., bonds. The income and rent restrictions outlined above are to be incorporated into the
Regulatory Agreement for the bonds, which will be recorded against the property.
Compliance with the income and rent restrictions will be subject annually to a regulatory
- - audit and annual tax credit certification. Compliance with strict property management
'policies and procedures will ensure that income and rent restrictions will be maintained
for the full 55-year compliance period.
Proposed Financinff of Project
The Property Owner will be using Tax Exempt Multi-Family Revenue Borids and Low
' Income Housing Tax Credit financing to support the majority of the estimated $39.9
million cost of the Project. Retirement Housing Foundation has requested the Housing
Authority consider the issuance of $20.9 million in unrated tax exempt bonds. The tax
exempt bonds will be acquired by Citi Bank under a private placement structure and Citi
'will then provide a construction and permanent loan. Retirement Housing Foundation
will also apply for approximately $11 million in Low Income Housing Tax Credits. The
permanent Bonds and Tax Credits would cover almost 80 percent of the estimated cost.
The balance is expected to be provided by seller financing. HUD will allow the financing
- and provide a 20 year Section 8 contract for the property.
Bond Documents
At this time, the Authority is being asked to approve in "substantial form all documents
related to the bond issuance. These documents are listed below and most are on file in the
Office of the City Clerk instead of being attached to this report due to their substantial
length.
• The Bond Regulatory Agreement specifies the regulations for the useand operation of
the Project (see Attachment 2),,
• The Trust Indenture for the Bonds specifies the terms and conditions for the issuance
and selling of the Bonds and the use of bond proceeds (see Attachment 3).
• The Loan Agreement for the Bonds specifies the terms and conditions of the Loan
financing for the project (see Attachment 4).
• The Bond Purchase Agreement describes the terms of the Bonds Purchase between the
Issuer and the Purchaser (see Attachment 5).
DECISION MAKER CONFLICT
Staff has reviewed the property holdings of the Housing Authority and has found no
' property holdings within 500 feet of the boundaries of the property which is the subject
of this action. Staff is not independently aware, nor has staff been informed by any
Housing Authority member, of any other fact that may constitute a basis for a decision
maker conflict of interest in this matter.
25-4
DECEMBER 11, 2012, Item
_ Page 5 of 6
CURRENT YEAR FISCAL IMPACT
Bond financing is a .self-supporting program with the borrower responsible for the
payment of all costs of issuance and other costs and repayment of the bonds. All costs
related to the issuance of the bonds will be paid for from bond proceeds. The bonds will
be secured by the project and will not constitute a liability to or obligation of the City or
Housing Authority.
The City of Chula Vista Housing Authority will receive compensation fox its services in
preparing the. bond issuance by charging an origination fee of 1/8 of 1% of-the bond
issuance, approximately $27,278.
ONGOING FISCAL IMPACT
. All costs related to rthe issuance of the bonds will be paid for from bond proceeds or
profits. The bonds will be secured by the project and will not constitute a liability to or
obligation of the City or Housing Authority.
The City of Chula Vista Housing Authority will receive compensation for ongoing
monitoring compliance of the regulatory restrictions from an annual administrative fee of
approximately $27,278 paid bythe borrower.
ATTACHMENTS
1. Locator Map'
2. Bond Regulatory Agreement
3. Trust Indenture
4. Loan Agreement
5. Bond Purchase Agreement
Prepared by.' Amanda Mills, Housing Manager, Development Services Department, Housing Division
25-5
25-6
RESOLUTION NO.
RESOLUTIQN OF THE HOUSING AUTHORITY OF THE
CITY,QF CHULA VISTA AUTHORIZING THE ISSUANCE OF
ITS MULTIFAMILY HOUSING REVENUE BONDS IN ONE
OR MORE SERIES IN A CUMULATIVE AND AGGREGATE
PRINCIPAL AMOUNT NOT TO EXCEED $21 MILLION FOR
THE PURPOSE OF FINANCING THE ACQUISITION AND
REHABILITATION pF THE CONGREGATIONAL TOWER
MULTIFAMILY RENTAL HOUSING PROJECT; APPROVING
AND AUTHORIZING THE EXECUTION AND DELIVERY OF
ANY AND ALL DOCUMENTS NECESSARY TO ISSUE THE
BONDS, COMPLETE THE TRANSACTION AND
IMPLEMENT THIS RESOLUTION, AND RATIFYING AND ,
APPROVING ANY ACTION HERETOFORE TAK_ EN IN
CONNECTION WITH THE BONDS
WHEREAS, pursuant to the Housing Authorities Law, Chapter 1 of Part 2 of Division 24 of
the California Health and Safety Code ("Housing Authorities Law"), the Housing Authority of the
City of Chula Vista, a public body corporate and politic organized, existing and operating pursuant to
the Housing Authorities Law, ("Authority") is empowered to issue revenue bonds for the purpose of
financing the acquisition; construction, rehabilitation, refinancing', development, and- operation of
'`multifamily rental housing, and to issue bonds for the purpose of refunding bonds previously issued
by Authority; and
WHEREAS, Congregational Tower Partners, L.P., a California limited partnership (the
' ' "Developer"), intends to acquire and rehabilitate a 186-unit project on that certain real property
located at 288 F. Street, in the City of Chula Vista, California (together, "Project'); and
WHEREAS, the Developer has requested Authority to issue tax-exempt multifamily housing'
revenue bonds and loan the proceeds of the bonds to the Developer to finance the acquisition,
' rehabilitation and equipping through completion of the Project, and
WHEREAS', Authority, by action of its Board of Commissioners'(the "Board"), desires to
assist the Developer and to increase the supply of affordable housing by making a portion of the units
in the Project available for low and very low income persons or families, and in order to accomplish
.such purposes it is desirable for Authority to provide for the issuance of the bonds and financing of
the Project; and
WHEREAS, Authority will loan the proceeds of the bonds to the Developer; and
WHEREAS,-Government Code Section 8869.85 requires a local agency to file an application
with the California Debt'Limit Allocation Committee ("Committee") prior to the issuance of tax-
exempt multifamily housing revenue bonds and the Authority has filed such an application; and
25-7
Resolution No.
Page 2
WHEREAS, the Committee has allocated approximately $21 million of the State of
California 2012 State ceiling for private activity bonds under Section 146 of the Internal Revenue
Code of 1986 to the Project; and
WHEREAS, there have been prepared and presented to the Board for consideration at this
meeting the forms of various documents for the Bonds, as more fully described herein; and
WHEREAS, it appears that each of the documents and .instruments' described herein now
before this meeting is'in a substantially appropriate form and is' an appropriate instrument to be
executed and delivered for the purposes intended.
NOW, THEREFORE, THE BOARD OF COMMISSIONERS OF THE HOUSING
' AUTHORITY OF THE CITY OF CHULA VISTA DOES HEREBY RESOLVE, ORDER AND
DETERMINE AS FOLLOWS:
L Authorization of Bonds. In accordance with the Housing Authorities Law and
pursuant to the Indenture (hereinafter defined), Authority authorizes issuance of bonds designated as
"Housing Authority of the City of Chula Vista Multifamily Housing Revenue Bonds (Congregational
.Tower) Series 2013A" in one or more series in a cumulative and aggregate principal amount not to
exceed $21 million (collectively,-the "Bonds"), with an interest rate or rates, a maturity date or dates
and other terms as provided ih the Indenture as finally executed for the Bonds. The Bonds shalt be in
substantially the form set forth in and otherwise in accordance with'the Indenture, and shall be
executed on behalf of Authority by the manual or facsimile signature of the Chair of the Board of
Commissioners of the Authority (the "Chair") or the Executive Director of the Authority (the
"Executive Director"), and the manual or facsimile seal of the Authority shall be impressed or
'reproduced thereon and the Bonds shall be attested by the manual or facsimile signature of the
Secretary of the Board of Commissioners of the Authority ("Secretary").
2. Approval of Indenture, The form of Trust Indenture pursuant to which the Bonds
'may be issued ("Indenture"), by and between the-Authority and U.S. Bank National Association, as
Trustee (the "Trustee"), in substantially the form on file with the Secretary, is hereby approved. The
Chair, the Executive Director, and their authorized designee(s) (each, an "Authorized Officer") are
authorized to execute, and the Secretary is authorized to attest, the Indenture in substantially said
form, with such additions thereto and changes therein as the Authorized Officer may approve or
recommend in accordance with Section 8 hereof, The date; maturity date or dates, interest rate or
rates, interest payment dates, denominations, form, registration privileges, manner of-execution,
place of payment, terms of redemption, and' other terms of the Bonds shall be as provided in the
Indenture as finally executed.
3. Approval of ReQUlatory Agreement. The form of that certain Regulatory Agreement
and Declaration of Restrictive Covenants ("Regulatory Agreement"), among the Authority, the
Developer and Tiustee, in substantially the fotYrt on file with the Secretary, is hereby approved. Any
Authorized Officer is authorized to execute, and the Secretary is authorized to attest, the Regulatory
Agreement, in substantially said form, with such additions thereto and ~ changes thereim as such
Authorized Officer may approve or recommend in accordance with Section 7 hereof.
4. Approval of Loan Agreement. The form of Loan Agreement relating to the Bonds
("Loan Agreement"), by and between Authority and the Developer, in substantially the-form on fle~
with the Secretary, is hereby approved. Any Authorized Officer is authorized to execute, and the
Resolution No.
Page 3
Secretary is authorized to attest, the Loan Agreement, in substantially said form, with such additions
thereto and changes therein as such Authorized Officer may approve or recommend in accordance
with Section 7 hereof.
5. Approval of Loan Documents. The form of Construction Funding Agreement, by
and among the Developer, Trustee and Citibank, N.A., as Bondholder Representative (the
"Bondholder Representative") relating to the Bonds ("Construction Funding Agreement"), in
substantially the form on file with the Secretary, and solely to the extent it relates to the terms of the
Bonds and as necessary to implement this Resolution, is hereby approved. Any Authorized Officer is
authorized to execute ahddeliver, and the Secretary is authorized to attest, any and all certificates,
agreements and other documents ancillary to the Loan Agreement; including, but not limited to, the
Note, in the form approved by the City Attorney, as general counsel to Authority ("General
Counsel") and by special counsel and bond counsel to the Authority 'and City on these matters,
SCradling Yocca Carlson & Rauth (together, "Special CoupseP') in accordance with Section 7 hereof.
6. Approval of Bond Purchase Agreement. The form of Bond-Purchase Agreement; by
and among the Authority, the Developer and the Bondholder Representative (the "Bond Purchase
Agreement"), in substantially the form on file with the Secretary is hereby approved. Any
Authorized Officer is authorized to execute, and the Secretary is authorized to attest, the Bond
Purchase Agreement, in substantially said form, with such additions thereto and changes therein as
such Authorized Officer may approve or recommend in accordance with Section 7 hereof.
7. Approval of Chances to Documents. Any Authorized Officer executing a document
approved herein, in consultation with General Counsel and Special Counsel, is authorized to approve
and make such modifications, changes or additions to the Indenture, the Regulatory Agreement, the
Loan Agreement, the Bond Purchase Agreement or other documents as may be necessary or
advisable, and the approval of any modification, change or addition to any of the aforementioned
agreements shall be evidenced conclusively by the execution and delivery thereof by such
Authorized Officer and approval as to form by General Counsel and Special Counsel. Further, any
Authorized Officer, acting alone, is authorized to execute any assignment agreement related to any
mortgage note, mortgage, deed of trust or other document related to the loan made to the Developer
from the proceeds of the Bonds.
8. Actions Ratified and Authorized. All actions heretofore taken by the officers;
employees and agents of Authority with respect to the issuance and sale of the Bonds are approved,
confirmed and ratified, and the officers, employees and agents of Authority are authorized and
directed, for and in the name and on behalf of Authority, to do any and all things and take any and all
actions and execute and deliver any and all certificates, agreements and other documents, including,
but not limited to, Yhose documents described in the Indenture, Loan Agreement, Construction
Funding Agreement, the Bond Purchase Agreement and the other documents herein approved, which
they, or any of them, may deem necessary or advisable in order to consummate the lawful issuance
and delivery of the Bonds and to effectuate the purposes thereof and of the documents herein
approved in accordance with this resolution and resolutions heretofore adopted by the Governing
Board. In the event that the Secretary is unavailable to sign any document related to the Bonds, any
Deputy Secretary of the Authority may sign on behalf of the Secretary.
9. Further Consents Approvals and Other Actions. All consents, approvals, notices,
orders, requests and other actions permitted or required by any of the documents authorized by this
Resolution or otherwise appropriate in the administration of the Bonds and'the lending program
25-9
Resolution No. 1
Page 4
financed thereby, including without limitation any of the foregoing that may be necessary or
- ~ desirable in connection with any amendment of such documents, any transfer of the Project, any
substitution of security for the Bonds, or any redemption of the'Bonds may be taken or given by the
- Chair or. the Executive Director, and the Chair or the Executive-Director are hereby authorized and
directed to give any such consent, approdal, notice, order or request and to take any such action
- which such officer may deem necessary or desirable to further the purposes of this Resolution.
10. Conflicting Resolutions Repealed. ~ As to the Bonds, all prior resolutions or parts
thereof, if any, in conflict herewith are, to the extent ofsuch conflict, repealed.
11. Severability. If any section, paragraph or provision of this Resolution shall be held to
be invalid or unenforceable for any reason, the invalidity or unenforceability of such section,
paragraph or provision shall not affect any remaining sections, paragraphs or provisions of this
Resolution. _
12. -Effectiveness of Resolution and Date Thereof. This Resolution shalt take effect upon
its adoption.
l3. Ce_rtification. The .Secretary shall certify to the passage and adoption of this
Resolution.
Presented by Approved as to form by
Gary Halbert, AICP; PE
Assistant CityManager/Director of
Development Services
%~~'~ ~.
t
Glen R. Googins
City Attorney
25-10