HomeMy WebLinkAboutAgenda Statement 1983/07/12 Item 10 COUNCIL AGENDA STATEMENT /)Item �
Meeting Date 74;83
ITEM TITLE: Ordinance c;14G1- Authorizing the Financing of Residential
Rental Properties through the Issuance of
Industrial Development Bonds NCfi AN ADFPTION
SUBMITTED BY: City Attorney
(��5t s o e: es o x )
The existing ordinance of the City of Chula Vista establishing an
Industrial Development Authority to issue revenue bonds for the
financing of industrial and commercial development in the interest
of public health, safety and welfare limits the scope of such
projects to industrial or commercial structures. It is now
desired to expand the definition of "project" in said ordinance so
that it would also include residential real property for family
units for rental purposes.
RECOMMENDATION: That the City Council adopt the ordinance
amending Ordinance No. 1970 relating to the
the financing of residential rental properties
through the issuance of industrial develop-
ment bonds.
BOARD/COMMISSION RECOMMENDATION: N/A
DISCUSSION:
On February 9, 1982, the City Council adopted Ordinance No. 1970
establishing an Industrial Development Authority to issue revenue
bonds for industrial and commercial development in the interests
of the public health, safety and welfare. By its terms, as
contained in the definition section, "project" meant only real
property located within the City and improved with an industrial
or commercial structure.
It is now proposed by the Housing Coordinator of the City of Chula
Vista that the definition of "project" be expanded to permit
multi-family housing projects to be financed thereunder.
Permitting such bond issues would be consistent with the Action
Plan of the City' s Housing Element, which calls for assisting
affordable housing projects, for sale and for rent, through the
use of tax-exempt bonds. The City is currently awaiting the
allocation from the State to issue Single-Family Mortgage Revenue
Bonds for "for sale" units. And the Community Development
Department has been approached by a number of developers who wish
to participate in bond financing for multi-family "for rent"
units. It is perceived that "for rent" housing offers the
greatest opportunity for lower income households, and such housing
has been a particular goal of the City.
Form A-113 (Rev. 11/79)
Page 2, Item No. ,ke` /
Meeting Date 7/5783
Issuing tax exempt bonds for multi-family development holds
benefit for both the developer and the City. Through a bond, a
developer can obtain both interim and permanent financing at a
rate below market financing. The City benefits by enhancing the
supply of affordable housing for its residents by reducing the
overall project 's cost per unit and as a result of the federal tax
exemption requirement that 20% of the units be occupied by
households with incomes at or below 80% of the median income. All
units must remain rentals for ten years, and the 20% rule applies
for those ten years.
The anticipated process is as follows :
1. The City Council amends the Industrial Development Bond
Ordinance to allow multi-family rental housing bond
issues.
2. Interested developers submit proposals for affordable
housing projects which would be assisted by tax-exempt
financing . The proposals are evaluated for feasibility
and for benefit to low income households. At this time,
further assistance through the Redevelopment Agency Low
Income Housing Fund is evaluated.
3. Recommending projects are brought to the City Council for
consideration and possibly for adoption of inducement
resolutions under the authority of the Industrial Develop-
ment Bond Ordinance.
4. Bonds are structured and issued with the City' s tax-
exempt status and with no liability to the City.
5. Multi-family rental housing units are built and maintained
for ten years, with a minimum of 20% of those units
occupied by lower income households.
The firm of Jones Hall Hill & White, who has served as bond
counsel in the structuring of industrial development bond use in
the City of Chula Vista, has prepared an amendment to the
ordinance expanding the definition of "project" which would enable
revenue bonds to be issued for the financing of residential rental
properties.
FISCAL IMPACT: N/A
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