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HomeMy WebLinkAboutAgenda Statement 1984/04/24 Item 11a-c COUNCIL AGENDA STATEMENT Item 11. a.b,c Meeting Date 4/24/84 ITEM TITLE: Report: Tax-exempt financing for multi-family housing development (a) Resolution "Le e02-Authorizing the issuance of revenue bonds for the purpose of providing financing for multi-family rental housing development by Morgan Gardner Subdivision (b) Resolution //6 D 3 Authorizing the issuance of revenue bonds for the purpose of providing financing for multi-family rental housing development by Terra Nova Associates (c ) Resolution f/ © Authorizing the issuance of revenue bonds for the purpose of providing financing for multi-family rental housing development by Appel Development Corporation SUBMITTED BY: Community Development Directo t// 5 s Vote: Yes No X ) REVIEWED BY: City Manager, fl On June 28, 1983, the City Council amended the Industrial Development Authority Ordinance to allow issuance of multi-family mortgage revenue bonds as a tool to promote affordable housing. In discussion of that action, the City Council asked that a policy be formulated to apply to such financing assistance, and it was determined that such a policy should be brought forward when it could be considered in conjunction with specific projects seeking tax-exempt financing. Several requests have been received from multi-family rental housing developers for tax-exempt financing, and a policy has been drafted. RECOMMENDATION: Accept the report establishing policy for multi-family tax-exempt financing and approve resolutions authorizing issuance of multi-family mortgage revenue bonds. BOARDS/COMMISSIONS RECOMMENDATION: On February 9, 1983, the Human Relations Commission considered a report to the Agency on the Low and Moderate Income Housing Fund and endorsed the techniques recommended in the report, including the issuance of tax-exempt multi-family mortgage revenue bonds. DISCUSSION: Please see the attached report on multi-family bond financing. In summary, the recommendations made in the report are as follows: • Page 2, Item 11 , a,b,c Meeting Date 4/24/84 Policy: 1 . Require that 20 percent of the units be affordable as under Federal regulation. 2. Require bond-financed projects to limit rents on affordable units to 30 percent of the monthly income of households at 80% of median income, adjusted for bedroom size. 3. Require term of rental and affordability to be equal to the bond term, except that the minimum term is 20 years. If the bond term is less than 20 years, but at least 10 years, allow for a waiver of the term of rental and affordability after expiration of the bond if the property owner demonstrates to the City Council that no comparable rates are available for refinancing and that comparable financing would be required to maintain project feasibility. 4. Require the developer to enter into a Cooperative Agreement with the City which would require the property owner to submit semi-annual certified rent roles which reveal rent rates and household income for all affordable units, to agree to an audit at owner's cost if the City feels an audit is indicated by review of the rent role, and to retain for each affordable-unit occupancy a tenant income declaration sheet and certain income verifications as required by the City. Projects: Approve Inducement Resolutions for Morgan-Gardner Subdivision, Terra Nova Associates, and Appel Development Corporation. Subsequent to the approval of any of the Inducement Resolutions, bond documents and agreements and a Cooperative Agreement between the City and the developer assuring public benefit will be brought forward to the Council . The inducement to developers to build additional rental housing in Chula Vista and to provide a percentage of those units to low income households creates a benefit for the economic health of the City. Housing will be provided for income categories which supply the vital work force for the City's economy. For example, using the affordability assumptions applied to the bond issue, it can be estimated that approximately 55% of CVEA employees would qualify for occupancy of the affordable units (below $19,000 for a family of three) and 88% would be in an income category likely to look to the market rate rental units for housing (below $24,000 per year for a family of three). A review of salary data for job classifications among office workers and manufacturing industry employees indicates a similar pattern. Finally, it should be noted that the request for tax-exempt financing for Canterbury Court, the 207-unit senior rental project at Third Avenue and "C" Streets, has been withdrawn, the developer having obtained alternative financing so that construction could commence. FISCAL IMPACT: The recommended action does not involve the expenditure of any City funds. WPC 0835X COUNCIL AGENDA STATEMENT Item 11_ a,b,c Meeting Date 4/24/84 ITEM TITLE: Report: Tax-exempt financing for multi-family housing development (a) Resolution /74', 0 0Z---Authorizing the issuance of revenue bonds for the purpose of providing financing for multi-family rental housing development by Morgan Gardner Subdivision (b) Resolution // 0 Authorizing the issuance of revenue bonds for the purpose of providing financing for multi-family rental housing development by Terra Nova Associates (c) Resolution // o Authorizing the issuance of revenue bonds for the purpose of providing financing for multi-family rental housing development by Appel Development Corporation SUBMITTED BY: Community Development Directo PL 5 s Vote: Yes No X ) REVIEWED BY: City Manager (/• On June 28, 1983, the City Council amended the Industrial Development Authority Ordinance to allow issuance of multi-family mortgage revenue bonds as a tool to promote affordable housing. In discussion of that action, the City Council asked that a policy be formulated to apply to such financing assistance, and it was determined that such a policy should be brought forward when it could be considered in conjunction with specific projects seeking tax-exempt financing. Several requests have been received from multi-family rental housing developers for tax-exempt financing, and a policy has been drafted. RECOMMENDATION: Accept the report establishing policy for multi-family tax-exempt financing and approve resolutions authorizing issuance of multi-family mortgage revenue bonds. BOARDS/COMMISSIONS RECOMMENDATION: On February 9, 1983, the Human Relations Commission considered a report to the Agency on the Low and Moderate Income Housing Fund and endorsed the techniques recommended in the report, including the issuance of tax-exempt multi-family mortgage revenue bonds. • DISCUSSION: Please see the attached report on multi-family bond financing. In summary, the recommendations made in the report are as follows: Page 2, Item 11 , a,b,c Meeting Date 4/24/84 Policy: 1 . Require that 20 percent of the units be affordable as under Federal regulation. 2. Require bond-financed projects to limit rents on affordable units to 30 percent of the monthly income of households at 80% of median income, adjusted for bedroom size. 3. Require term of rental and affordability to be equal to the bond term, except that the minimum term is 20 years. If the bond term is less than 20 years, but at least 10 years, allow for a waiver of the term of rental and affordability after expiration of the bond if the property owner demonstrates to the City Council that no comparable rates are available for refinancing and that comparable financing would be required to maintain project feasibility. 4. Require the developer to enter into a Cooperative Agreement with the City which would require the property owner to submit semi-annual certified rent roles which reveal rent rates and household income for all affordable units, to agree to an audit at owner's cost if the City feels an audit is indicated by review of the rent role, and to retain for each affordable-unit occupancy a tenant income declaration sheet and certain income verifications as required by the City. Projects: Approve Inducement Resolutions for Morgan-Gardner Subdivision, Terra Nova Associates, and Appel Development Corporation. Subsequent to the approval of any of the Inducement Resolutions, bond documents and agreements and a Cooperative Agreement between the City and the developer assuring public benefit will be brought forward to the Council. The inducement to developers to build additional rental housing in Chula Vista and to provide a percentage of those units to low income households creates a benefit for the economic health of the City. Housing will be provided for income categories which supply the vital work force for the City's economy. For example, using the affordability assumptions applied to the bond issue, it can be estimated that approximately 55% of CVEA employees would qualify for occupancy of the affordable units (below $19,000 for a family of three) and 88% would be in an income category likely to look to the market rate rental units for housing (below $24,000 per year for a family of three). A review of salary data for job classifications among office workers and manufacturing industry employees indicates a similar pattern. Finally, it should be noted that the request for tax-exempt financing for Canterbury Court, the 207-unit senior rental project at Third Avenue and "C" Streets, has been withdrawn, the developer having obtained alternative financing so that construction could commence. FISCAL IMPACT: The recommended action does not involve the expenditure of any City funds. WPC 0835X COUNCIL AGENDA STATEMENT Item 11. a.b,c Meeting Date 4/24/84 ITEM TITLE: Report: Tax-exempt financing for multi-family housing development (a) Resolution /%/4'e Authorizing the issuance of revenue bonds for the purpose of providing financing for multi-family rental housing development by Morgan Gardner Subdivision (b) Resolution //‘' Authorizing the issuance of revenue bonds for the purpose of providing financing for multi-family rental housing development by Terra Nova Associates (c ) Resolution //6‘11/Authorizing the issuance of revenue bonds for the purpose of providing financing for multi-family rental housing development by Appel Development Corporation SUBMITTED BY: Community Development Directo 5 s Vote: Yes No X ) REVIEWED BY: City Manager/ fl On June 28, 1983, the City Council amended the Industrial Development Authority Ordinance to allow issuance of multi-family mortgage revenue bonds as a tool to promote affordable housing. In discussion of that action, the City Council asked that a policy be formulated to apply to such financing assistance, and it was determined that such a policy should be brought forward when it could be considered in conjunction with specific projects seeking tax-exempt financing. Several requests have been received from multi-family rental housing developers for tax-exempt financing, and a policy has been drafted. RECOMMENDATION: Accept the report establishing policy for multi-family tax-exempt financing and approve resolutions authorizing issuance of multi-family mortgage revenue bonds. BOARDS/COMMISSIONS RECOMMENDATION: On February 9, 1983, the Human Relations Commission considered a report to the Agency on the Low and Moderate Income Housing Fund and endorsed the techniques recommended in the report, including the issuance of tax-exempt multi-family mortgage revenue bonds. DISCUSSION: Please see the attached report on multi-family bond financing. In summary, the recommendations made in the report are as follows: Page 2, Item 11 , a,b,c Meeting Date 4/24/84 Policy: 1 . Require that 20 percent of the units be affordable as under Federal regulation. 2. Require bond-financed projects to limit rents on affordable units to 30 percent of the monthly income of households at 80% of median income, adjusted for bedroom size. 3. Require term of rental and affordability to be equal to the bond term, except that the minimum term is 20 years. If the bond term is less than 20 years, but at least 10 years, allow for a waiver of the term of rental and affordability after expiration of the bond if the property owner demonstrates to the City Council that no comparable rates are available for refinancing and that comparable financing would be required to maintain project feasibility. 4. Require the developer to enter into a Cooperative Agreement with the City which would require the property owner to submit semi-annual certified rent roles which reveal rent rates and household income for all affordable units, to agree to an audit at owner's cost if the City feels an audit is indicated by review of the rent role, and to retain for each affordable-unit occupancy a tenant income declaration sheet and certain income verifications as required by the City. Projects: Approve Inducement Resolutions for Morgan-Gardner Subdivision, Terra Nova Associates, and Appel Development Corporation. Subsequent to the approval of any of the Inducement Resolutions, bond documents and agreements and a Cooperative Agreement between the City and the developer assuring public benefit will be brought forward to the Council . The inducement to developers to build additional rental housing in Chula Vista and to provide a percentage of those units to low income households creates a benefit for the economic health of the City. Housing will be provided for income categories which supply the vital work force for the City's economy. For example, using the affordability assumptions applied to the bond issue, it can be estimated that approximately 55% of CVEA employees would qualify for occupancy of the affordable units (below $19,000 for a family of three) and 88% would be in an income category likely to look to the market rate rental units for housing (below $24,000 per year for a family of three). A review of salary data for job classifications among office workers and manufacturing industry employees indicates a similar pattern. Finally, it should be noted that the request for tax-exempt financing for Canterbury Court, the 207-unit senior rental project at Third Avenue and "C" Streets, has been withdrawn, the developer having obtained alternative financing so that construction could commence. FISCAL IMPACT: The recommended action does not involve the expenditure of any City funds. WPC 0835X / //e '