HomeMy WebLinkAboutAgenda Statement 1985/02/26 Item 4 COUNCIL AGENDA STATEMENT
Item 4
Meeting Date 2/26/85
ITEM TITLE: Public Hearing: Issuance of multi-family housing revenue bonds
a . Resolution /4746, Authorizing the sale of $10,200,000
principal amount of Multi-Family Housing Revenue Bonds (Terra
Nova Associates project) Series 1985, approving Indenture of
Trust, Loan Agreement, Regulatory Agreement, Housing
Cooperation Agreement and related documents and Official
Statement and authorizing official action
SUBMITTED BY: Community Development Direct /5ths Vote: Yes No x )
REVIEWED BY: City Manager ,.1
On April 24, 1984, the Council approved Resolution No. 11603 which constituted
an inducement resolution for multi-family housing revenue bonds in an amount
not to exceed $11 million for financing of the Terra Nova Villas apartment
project. At this time, the Council is asked to hold a public hearing on the
question of whether the City should issue bonds in the amount of $10,200,000
for the financing of the project. The hearing is required by Federal Tax Law
governing the issuance of tax-exempt bonds. The Council is asked to approve a
bond resolution authorizing the issuance of the bonds.
Additionally, the Council is asked to approve a Housing Cooperation Agreement
with Terra Nova Associates to stipulate the affordability requirements for
units in the Terra Nova Villas Project.
Finally, the Council is asked to approve an Agreement with Jones Hall Hill &
White to provide bond counsel services for the Terra Nova Associates issue.
RECOMMENDATION: That the Council :
1 . Accept the report and conduct the public hearing on the Terra Nova
Associates project.
2. Approve the resolution authorizing the sale of $10,200,000 principal
amount of multi-family housing revenue bonds (Terra Nova Associates
project) series 1985, approving related documents, and authorizing
official action.
BOARDS/COMMISSIONS RECOMMENDATION: On February 9, 1983, the Human Relations
Commission considered a Community Development Department staff report on the
Agency's Low and Moderate Income Housing Fund use. The Commission endorsed
the 5-point strategy in the report, which included use of the fund in
conjunction with Mortgage Revenue Fund Financing.
Page 2, Item 4
Meeting Date 2/2b/85
DISCUSSION:
The bond proceeds would be used to provide funds to make a loan to Terra Nova
Associates to finance Terra Nova Villas apartment project at 440 East "H"
Street. The project, under construction with conventional interim financing,
is a 232-unit family apartment project. The approval and issuance of the
bonds was delayed to coincide with the conversion to permanent financing after
completion of construction, which is anticipated in late Spring of 1985.
The issuance of the bonds is in the public interest due to the reservation of
20% of the project units as affordable housing for lower income households.
The 46 subject units are partial satisfaction of the low and moderate income
housing requirement placed on the Terra Nova Subdivision by the City Council .
The Housing Cooperation Agreement, attached to the Resolution, is a document
to be executed between the property owner and the City which specifies the
affordability requirements and rental status requirements of the project. The
agreement incorporates and in some cases exceeds the Federal public purpose
requirements for tax-exempt bond eligibility. In summary, the agreement,
similar to that recently entered into with Medici Equities for the Canterbury
Court project, together with Federal Treasury bond issue regulations,
stipulates the following:
1 . All 232 units will remain rentals for a period of no less than 10 years.
2. The affordable units, being 25 two-bedroom units and 21 one-bedroom units,
will be affordable rentals for a period of no less than ten years and as
long as the duration of any outstanding bond financing.
3. Those affordable units will have rent ceilings as follows:
a. One bedroom units: 30% of the monthly income of a two-person
household in the low income category (annual income/$17,600, monthly
income/$1 ,467, monthly rent/$440).
b. Two bedroom units: 30% of monthly income of a four-person household
in the low income category (annual income/$22,000, monthly
income/$1 ,835, monthly rent/$550) .
4. The affordable units will be restricted to occupancy by households at or
below the annual income levels indicated in 3 above.
5. Income and rent restrictions will be adjusted in accordance with changes
in the HUD published area median income.
6. Documentation of the income and rent restrictions will be required of the
property owner, and monitoring and auditing will be the right of the City.
Page 3, Item 4
Meeting Date 2/2b/3b
The Housing Cooperation Agreement has been incorporated in the bond issue Loan
Agreement, and violation of the Housing Cooperation Agreement by the property
owner or his or her successors would be an event of default under the Loan
Agreement. A number of penalties could be imposed by the trustee under the
Loan Agreement, including making the entire loan balance immediately due and
payable.
The Bond Indenture, Loan Agreement, and Regulatory Agreement are bulky
documents and were therefore not reproduced for distribution to the City
Council. They are available to the Council in the Community Development
Department.
The Agreement with Jones Hall Hill & White to provide bond counsel services
will reimburse that firm for legal services being provided on this issue.
Jones Hall Hill & White will receive a fee of $42,750 for their services.
That fee is payable solely from the bond proceeds; the City is therefore not
obligated to Jones Hall Hill & White for payment for their services.
FISCAL IMPACT: All cost of issuance of bonds are paid for from bond
proceeds or developer fees. The bonds will be secured by the project and
repaid by Terra Nova Associates and will not constitute a liability or
obligation to the City.
Some staff costs will be associated with monitoring compliance with the
Housing Cooperation Agreement. Those costs will be reimbursed from the Low
and Moderate Income Housing Fund salary appropriations.
WPC 1067X
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