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HomeMy WebLinkAboutAgenda Statement 1985/08/06 Item 5 COUNCIL AGENDA STATEMENT Item 5 Meeting Date 8/6/85 ITEM TITLE: Public Hearing: Issuance of multi-family revenue bonds a. Resolution /c-/ - Authorizing the sale of not-to-exceed $24 million principal amount of multi-family housing revenue bonds (Eucalyptus Grove Project) 1985 series, subject to subsequent approval of related documents b. Resolution /X/02-f"4" Authorizing approval of fee agreement for bond counsel SUBMITTED BY: Community Development Directorths Vote: Yes No X ) REVIEWED BY: City Manager ft: ),,fa On April 24, 1984, the City Council approved Resolution 11602 which constituted an inducement resolution for multi-family revenue bonds in an amount not to exceed $13 million for financing the EucalyptusnGrove emApartments project at E�� Street and Flower. On April 23, 1985, the inducement resolution to a bond amount not to exceed $24 million. 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 not-to-exceed $24 million for the financing of the project. t bonds, is required by federal tax law tax-exempt the issuance of p Additionally, the Council is asked to adopt a resolution approving an agreement with Jones Hall Hill & White to provide bond counsel services for Apartments the Eucalyptus Grove RECOMMENDATION: That the Council : (1 ) Accept the report and conduct a public hearing on the Eucalyptus Grove Apartments project; (2) Adopt the resolution authorizing the sale of g revenue bonds not-to-exceed $24 million principal amount of mult y approval of related Grove Apartments project, subject to subsequent app documents. (3) Adopt the resolution approving fee agreement for Bond Counsel . BOARDS/COMMISSIONS RECOMMENDATION: On February 9, 1983, the Human Relations Commission considered a Community Development staff report on the Redevelopment Agency s Low- and Moderate-Income Housing Fund use. The Commission endorsed a 5-point strategy in their report which included use of the funds in conjunction with mortgage ,revenue bond financing. /4- ' Page 2, Item 5 Meeting Date 8/6/85 DISCUSSION: The bond proceeds would be used to provide funds to make a loan to Eucalyptus Grove International to finance Eucalyptus Grove Apartments project at "E" Street and Flower Street. The project density bonus of the statetlawt project, made possible in part under Y bonus prov The issuance of the bonds is in the public ff affordable housing the for reservation 1 ower-income 20 percent of the project units as for households, and 5 percent of the project units as affordable housing moderate-income households. The reservation tax-exempt - and requirements and dedensitycbonusostate lawtrrequirements.fe a Coo Cooperation Agreement (attached) , is a document to be The draft Housing p ro property owner and the City which specifies the affordability between the p P approval project.affordability requirements and rental status requirements of the projec . t Although the agreement umen will aelatergdate, it the isCouncil includedfor andrdiscussed at this the other bond documents at a time in order to inform the Council casesof exceeds, conditions.eralpublic agpurpose incorporates, and in some requirements for tax-exempt bond eligibility. In summary, the agreement, similar to that recently entered into with Terra Nova Associates, stipulates the following: (1) All 376 units will remain rentals for a period of no less than 10 years. 39 The affordable units, being 27 two-bedroom low-income units, 9 (2) 9 studio low-income units, one-bedroom low-income units, two-bedroom moderate-income units 10 one-bedroom oa moderate-income units, and 3 studio moderate-in come units wi bffordabl erentals as the duration of for a period of bo d f than years and as long any outstanding (3) The affordable units will have rent ceilings as follows: (a) thl income Two-bedroom low-income units: 25 percent of the mon Y of a 4-person household in the low-income category (annual income/ $22,000, monthly income/$1 ,835, rent $459) . 25 percent of the monthly income (b) One-bedroom low-income unit: P of a 2-person household in the low-income (annual income/$17,600, monthly income/$1 ,467, 25 percent of the monthly income of a (c) Studio low-income units: p one-person household in the low-income rent/$321 (annua income/$15,400, monthly income/$1 , , 25 percent of a 4-person (d) Two-bedroom moderate-income moderate-income category (annual household in the income/$33,000, monthly income/$2,750, rent/$688) . Page 3, Item 5 9 Meeting Date 8/6/85 monthly (e) One-bedroom moderate-income units: income income of a 2-person household in the he oderate- category (annual income/S26,400, monthly income/$2,200, rent/$550) . (f) Studio moderate-income the of a one-person househo d in he moderate-income category (annual income/$23,100, monthly income/ $1 ,925, rent/$481 ). (4) Affordable units will be restricted to occupancy by households at or below the annual income levels indicated in paragraph 3 above. (5) Income and rent restrictions will be adjusted in accordance with changes in the HUD published a rea (6) Documentation of income and en and auditing will will be the Aright of the uired of the property owner, and monitoring City. It should be noted that the affordable estricts on sfromdmarket fates tatnthms households do not represent a tangible These restricted units are offered in satisfaction s relationship h of density i incomes bonus provisions of state law. In the future, rents changes, these units could prove to be a beneficial exaction. Loan The Housing Cooperation Agreement will be CooniontAgreement bond issue property Agreement. A violation of the Housing p erat owner or his or her successors would e an event for be imposed by dtheuTrusteerunderLthe Agreement. A number of penalties cou Loan Agreement, including making the entire loan balance immediately due and payable. Because there have been some last minute h changes in the documentci for the structuring have the bond issue credit enhancement, approval . Approval s have not been finalized by the developer and the underwriter. Those douments will be bond soon the attached forwarded Council Council approval of of the bond i ssue by th those documents. The agreement with Jones Hall Hill & White to provide bond counsel services g provided on this issue. Jones will reimburse that firm for legal services p the City it $77,500 for their Hall Hill & White will receive a fefrom not the to bond exceed their services. The fee is payable solely payment for therefore not obligated to Jones Hall Hill & White for pay services. FISCAL IMPACT: All costs of issuance wi 11 bode pai by ro e the for pro and from bon proceeds or developer fees. The bonds aid by Eucalyptus Grove International and will not constitute a liability repaid or obligation to the City. compliance with the Housing staff costs i wi Agreement. Those costs monitoring be reimbursed from the Low Housing Cooperation A9 and Moderate-Income Housing Fund salary appropriations. WPC 1204X ! COUNCIL AGENDA STATEMENT Item 5 Meeting Date 8/6/85 ITEM TITLE: Public Hearing: Issuance of multi-family revenue bonds a. Resolution /0)-/a3 3 Authorizing the sale of not-to-exceed $24 million principal amount of multi-family housing revenue bonds (Eucalyptus Grove Project) 1985 series, subject to subsequent approval of related documents b. Resolution /9?/ay Authorizing approval of fee agreement for bond counsel SUBMITTED BY: Community Development Director` hs Vote: Yes No X ) REVIEWED BY: City Manager On April 24, 1984, the City Council approved Resolution 11602 which constituted an inducement resolution for multi-family revenue bonds in an amount not to exceed $13 million for financing the Eucalyptus Grove Apartments project at "E" Street and Flower. On April 23, 1985, the Council amended that inducement resolution to a bond amount not to exceed $24 million. 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 not-to-exceed $24 million for the financing of the project. The hearing is required by federal tax law governing the issuance of tax-exempt bonds. Additionally, the Council is asked to adopt a resolution approving an agreement with Jones Hall Hill & White to provide bond counsel services for the Eucalyptus Grove Apartments issue. RECOMMENDATION: That the Council : (1 ) Accept the report and conduct a public hearing on the Eucalyptus Grove Apartments project; (2) Adopt the resolution authorizing the sale of not-to-exceed $24 million principal amount of multi-family housing revenue bonds for Eucalyptus Grove Apartments project, subject to subsequent approval of related documents. (3) Adopt the resolution approving fee agreement for Bond Counsel . BOARDS/COMMISSIONS RECOMMENDATION: On February 9, 1983, the Human Relations Commission considered a Community Development staff report on the Redevelopment Agency's Low- and Moderate-Income Housing Fund use. The Commission endorsed a 5-point strategy in their report which included use of the funds in conjunction with mortgage revenue bond financing. by the CiLy of Chub Vista, C iiicr:lia Dated tr � r Page 2, Item 5 Meeting Date 8/6/85 DISCUSSION: The bond proceeds would be used to provide funds to make a loan to Eucalyptus Grove International to finance Eucalyptus Grove Apartments project at RE" Street and Flower Street. The project would be a 376-unit family apartment project, made possible in part under density bonus provisions of the state law. The issuance of the bonds is in the public interest due to the reservation of 20 percent of the project units as affordable housing for lower-income households, and 5 percent of the project units as affordable housing for moderate-income households. The reservation of the affordable low- and moderate-income housing units satisfies federal tax-exempt status requirements and density bonus state law requirements. The draft Housing Cooperation Agreement (attached) , 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. Although the agreement will be brought to the Council for formal approval with the other bond documents at a later date, it is included and discussed at this time in order to inform the Council of its intended conditions. 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 Terra Nova Associates, stipulates the following: (1 ) All 376 units will remain rentals for a period of no less than 10 years. (2) The affordable units, being 27 two-bedroom low-income units, 39 one-bedroom low-income units, 9 studio low-income units, 6 two-bedroom moderate-income units 10 one-bedroom moderate-income units, and 3 studio moderate-income units will be affordable rentals for a period of no less than 10 years and as long as the duration of any outstanding bond financing; (3) The affordable units will have rent ceilings as follows: (a) Two-bedroom low-income units: 25 percent of the monthly income of a 4-person household in the low-income category (annual income/ $22,000, monthly income/$1 ,835, rent $459). (b) One-bedroom low-income unit: 25 percent of the monthly income of a 2-person household in the low-income category (annual income/$17,600, monthly income/$1 ,467, rent/$367). (c) Studio low-income units: 25 percent of the monthly income of a one-person household in the low-income category (annual income/$15,400, monthly income/$1 ,283, rent/$321 ) . (d) Two-bedroom moderate-income units: 25 percent of a 4-person household in the moderate-income category (annual income/$33,000, monthly income/$2,750, rent/$688) . �/' Page 3, Item 5 Meeting Date 8/6/85 (e) One-bedroom moderate-income units: 25 percent of the monthly income of a 2-person household in the moderate-income category (annual income/S26,400, monthly income/$2,200, rent/$550) . (f) Studio moderate-income unit: 25 percent of the monthly income of a one-person household in the moderate-income category (annual income/$23,100, monthly income/ $1 ,925, rent/$481 ). (4) Affordable units will be restricted to occupancy by households at or below the annual income levels indicated in paragraph 3 above. (5) Income and rent restrictions will be adjusted in accordance with changes in the HUD published area median income. (6) Documentation of income and rent restrictions will be required of the property owner, and monitoring and auditing will be the right of the City. It should be noted that the affordable units reserved for moderate-income households do not represent a tangible restriction from market rates at this time. These restricted units are offered in satisfaction of the density bonus provisions of state law. In the future, if the relationship of incomes and market rents changes, these units could prove to be a beneficial exaction. The Housing Cooperation Agreement will be incorporated in the bond issue Loan Agreement. A violation of the Housing Cooperation Agreement by the property owner or his or her successors would be an event for 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. Because there have been some last minute changes in the financial structuring of the bond issue credit enhancement, the official documents for the issue have not been finalized by the developer and the underwriter. Those documents will be prepared soon and be forwarded to the Council for approval . Approval of the bond issue by the attached resolution is subject to Council approval of those documents. The agreement with Jones Hall Hill & White to provide bond counsel services will reimburse that firm for legal services provided on this issue. Jones Hall Hill & White will receive a fee not to exceed $77,500 for their services. The 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 costs of issuance of bonds are paid for from bond proceeds or developer fees. The bonds will be secured by the project and repaid by Eucalyptus Grove International 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 1204X