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2024-05-08 HHAC Special Agenda Packet
Date:Wednesday, May 8, 2024 Time:4:00 p.m. Location:Urbana, Clubhouse 393 H Street, Fourth Floor Chula Vista, CA 91910 Housing and Homelessness Advisory Commission Special Meeting Public Comments: Public comments may be submitted to the Housing and Homelessness Advisory Commission in the following ways: In-person comments during the meeting. Join us for the Housing and Homelessness Advisory Commission meeting at the time and location specified on this agenda to make your comments. Each person will be allotted three (3) minutes to address the Commission. • Submit an eComment. Visit www.chulavistaca.gov/boardmeetings, locate this meeting, and click the comment bubble icon. Click on the item you wish to comment on, then click "Leave Comment." • Mail or email comments. Submit comments via email to HHAC@chulavistaca.gov or by mail to Housing and Homelessness Advisory Commission, 276 Fourth Ave, Chula Vista, CA 91910. • The commenting period will close three (3) hours before the meeting. All comments will be made available to the Commission and the public. Accessibility: Individuals with disabilities are invited to request modifications or accommodations in order to access and/or participate in a meeting contacting the Housing and Homelessness Advisory Commission office of the City Attorney Department Staff at HHAC@chulavistaca.gov (California Relay Service is available for the hearing impaired by dialing 711) at least forty-eight hours in advance of the meeting. Pages 1.CALL TO ORDER 2.ROLL CALL Commissioners Carlseen, Paddock, Pacheco, Montoya-Cesena, Robinson Opeodu, Whitsell, Vice Chair Merino, and Chair Cabral. 3.CONSENT CALENDAR (Items 3.1 through 3.XX) The Commission will enact the Consent Calendar staff recommendations by one motion, without discussion, unless a Commissioner, member of the public, or staff requests that an item be removed for discussion. If you wish to speak on any item, please fill out a "Request to Speak" form and submit it to the Secretary prior to the meeting or submit an electronic comment per the instructions on page one of this agenda. 3.1 Approval of 1/24/2024 Meeting Minutes 4.PUBLIC COMMENTS Persons may address the Commission on any subject matter within the Commission’s jurisdiction that is not listed as an item on the agenda. State law generally prohibits the Commission from discussing or taking action on any issue not included on the agenda, but, if appropriate, the Commission may schedule the topic for future discussion or refer the matter to staff. If you wish to speak on any item, please fill out a "Request to Speak" form and submit it to the Secretary prior to the meeting or submit an electronic comment per the instructions on page one of this agenda. 5.ACTION ITEMS The Item(s) listed in this section of the agenda will be considered individually by the Commission and are expected to elicit discussion and deliberation. If you wish to speak on any item, please fill out a "Request to Speak" form and submit it to the Secretary prior to the meeting or submit an electronic comment per the instructions on page one of this agenda. 5.1 Presentation by Deputy City Manager Courtney Chase 5 Keeping Chula Vista Safe, Clean and Well-Maintained, A Status Update on Measure P Action: Hear the presentation. City of Chula Vista Housing and Homelessness Advisory Commission May 8, 2024, Agenda Page 2 of 87 5.2 Chula Vista Housing Authority Multi-Family Mortgage Revenue Bond Policies 30 Pursuant to the California Debt Limit Allocation Committee Regulation 5031(c), the Chula Vista Housing Authority, as an issuer of multifamily mortgage revenue bonds must have written policies setting forth its bond issuance procedures and post-issuance compliance procedures. Staff is proposing to update such policies at this time to provide the Housing Authority with better oversight of bond issuance and comply with governing laws. Action: Commission provide an advisory recommendation to the Chula Vista Housing Authority to update the Multi-Family Mortgage Revenue Bond Policies 5.3 Funding Commitment for Permanent Supportive Housing Units at 610 Paseo Del Rey 84 In response to a Request for Proposals, Wakeland Housing and Development Corporation (“Developer”) is being recommended for $4,000,000 in HOME Investment Partnership (“HOME”) and HOME American Rescue Plan Program (“HOME-ARP”) funds towards the construction costs, to support creation of new affordable permanent supportive rental housing for very low-income households located at a property located at 610 Paseo Del Rey (“Project”). Approval of the recommended actions will enable Developer to assemble the necessary financing for the Project. Action: Commission provide an advisory recommendation to the City Council to provide financial assistance, in an amount up to (or not to exceed) $4,000,000, for the construction of the Project. OTHER BUSINESS 6.STAFF COMMENTS Homeless Policy Update Summary of Housing Task Force Meetings & Recommendations Summary of Housing Policy Package to go to Council on 5/21/24 7.CHAIR'S COMMENTS 8.COMMISSIONERS' COMMENTS City of Chula Vista Housing and Homelessness Advisory Commission May 8, 2024, Agenda Page 3 of 87 9.ADJOURNMENT to the special meeting of the Housing and Homelessness Advisory Commission on July 24, 2024. Materials provided to the Housing and Homelessness Advisory Commission related to any open-session item on this agenda are available for public review by contacting the Housing and Homeless Services Department at HHAC@chulavistaca.gov. City of Chula Vista Housing and Homelessness Advisory Commission May 8, 2024, Agenda Page 4 of 87 Keeping Chula Vista Safe, Clean and Well -Maintained A Status Update on Measure P Presented by: Courtney Chase, Deputy City Manager Page 5 of 87 City of Chula Vista Housing and Homelessness Advisory Commission May 8, 2024, Agenda Background on Measure P ½ Cent Sales Tax on Retail Sales Voter Approved on November 8, 2016 Collection Began April 1, 2017 10-Year Period, Set to Expire in 2027 Instituted the Citizens’ Oversight Committee Established the Infrastructure, Facilities and Equipment Expenditure Plan which established the most critical priority items for funding Key Highlights Page 6 of 87 City of Chula Vista Housing and Homelessness Advisory Commission May 8, 2024, Agenda Evaluation of City Infrastructure Page 7 of 87 City of Chula Vista Housing and Homelessness Advisory Commission May 8, 2024, Agenda Background on Measure P Approved Expenditure Plan Priorities Pave, maintain and repair residential streets and fix potholes Upgrade or replace aging police, fire and 911 emergency response facilities, vehicles and equipment Replace storm drains to prevent sinkholes Upgrade irrigation systems to conserve water and save energy Make essential repairs to older libraries, senior center and recreation centers Improve our Traffic Signal Systems Page 8 of 87 City of Chula Vista Housing and Homelessness Advisory Commission May 8, 2024, Agenda 42%City Infrastructure Projects Replacement of the City network & upgrades to telecommunications has allowed for Smart City functionality which reduces traffic congestion and associated carbon emissions, enhances energy savings in City buildings, provides advanced citizen engagement through the capabilities of virtual City Hall, and enables enhanced security at City parks and other locations. City Network Upgrade Over 300 residential street segments were in failing condition and required major rehabilitation and repairs at costs significantly more than typical preventative maintenance. Measure P funding allowed for major asphalt replacement and rehabilitation on these streets placing them into a sustainable cycle of preventative maintenance for years to come. Residential Street Rehab & Repair Measure P has funded a multitude of much- needed upgrades and repairs at Chula Vista's largest park, covering nearly 60 acres, including reconstruction of the basketball courts, bleachers, picnic benches, and drinking fountains; expansion of ADA access; and new restroom facilities. Rohr Park Renovation Page 9 of 87 City of Chula Vista Housing and Homelessness Advisory Commission May 8, 2024, Agenda 42%City Infrastructure Projects Measure P funding has allowed for the rehabilitation of more than 160 Corrugated Metal Pipe (CMP) locations including storm drain repairs of over 19,000 linear feet outside the right of way. Drainage Funding from Measure P has been utilized to repair over 7,640 damaged sidewalk locations exhibiting moderate -to- small heave displacements including the replacement of 130 sidewalk panels throughout the city. Sidewalks Measure P funding has allowed for traffic signal modifications and upgrades to 11 existing signalized intersections. These upgrades improve visibility, provide for protected left turn movements, and replaced failing and outdated traffic signals at various locations citywide. Traffic Signals Page 10 of 87 City of Chula Vista Housing and Homelessness Advisory Commission May 8, 2024, Agenda Public Safety Projects $30 million in Measure P funding has facilitated major rehabilitation of Fire Stations throughout the City-Including the design and construction of new Fire Stations 3 and 5 and reconstruction of Fire Station 1, improving emergency services and response times in the community. Fire Facilities and Equipment Funding from Measure P has secured a new $1.4 million PremierOne Computer Aided Dispatch (CAD) System, a critical component of the 911 emergency service framework, ensuring that the system remains stable and reliable with expanded technological capabilities directly impacting response times and officer safety. Police Dispatch Center 37% Page 11 of 87 City of Chula Vista Housing and Homelessness Advisory Commission May 8, 2024, Agenda Public Facility Renovations The Loma Verde Community Center underwent a $22.5 million renovation and has a new multi-purpose gymnasium, dance rooms, crafts room, fitness room, game room, restrooms, two new pools and splash pad, shower/changing rooms, and classrooms. Loma Verde Community Center The Chula Vista Civic Center Library opened its doors in 1976, and thanks to Measure P, the City has been able to address significant infrastructure repairs including replacing the roof, restroom renovations for ADA access, and electrical/HVAC upgrades. All with the focus of increasing access to services and materials for the public. Civic Center Library 21% Page 12 of 87 City of Chula Vista Housing and Homelessness Advisory Commission May 8, 2024, Agenda Community Facilities Page 13 of 87 City of Chula Vista Housing and Homelessness Advisory Commission May 8, 2024, Agenda Parks, Fields & Courts Page 14 of 87 City of Chula Vista Housing and Homelessness Advisory Commission May 8, 2024, Agenda Energy & Water Page 15 of 87 City of Chula Vista Housing and Homelessness Advisory Commission May 8, 2024, Agenda Public Safety Page 16 of 87 City of Chula Vista Housing and Homelessness Advisory Commission May 8, 2024, Agenda Storm Drains Page 17 of 87 City of Chula Vista Housing and Homelessness Advisory Commission May 8, 2024, Agenda Streets Page 18 of 87 City of Chula Vista Housing and Homelessness Advisory Commission May 8, 2024, Agenda Sidewalks Page 19 of 87 City of Chula Vista Housing and Homelessness Advisory Commission May 8, 2024, Agenda Measure P Financials 22% Current Expenditure Allocation 37%42% City Infrastructure Projects Public Safety Public Facility Renovations $165.5M 10Y Expected (2016) $244.8M 10Y Projected Actual v. Projected Revenues Sales Tax Revenues were originally estimated to generate $16 million per year Updated 2023 revenue estimates are projected to generate >$25 million per year The Infrastructure, Facilities and Equipment Plan includes long -term financing of approximately $70.8 million from the issuance of bonds via Resolution 2017-089 on June 6, 2017, in order to expedite the most critically needed repairs or replacements of citywide infrastructure. City has paid down the bond debt principal by 49% ($34.7 million) as of FY22-23 Page 20 of 87 City of Chula Vista Housing and Homelessness Advisory Commission May 8, 2024, Agenda Measure P Citizens’ Oversight Committee Meeting:4th Thursday Quarterly (Jan, Apr, Jul, Oct) The committee is comprised of nine members consisting of five At-Large members, with at least one from each Council district, and four Designated members selected from candidates brought forward by select nominating authorities. The main function of the Measure P Citizens’ Oversight Committee (COC) is to review and report on City compliance with the provisions of Measure P, particularly with respect to the City’s accounting and expenditure of Measure P revenues. David Garcias (Term Exp. 2025) Chair: Page 21 of 87 City of Chula Vista Housing and Homelessness Advisory Commission May 8, 2024, Agenda Measure P Citizens’ Oversight Committee Meeting:4th Thursday Quarterly (Jan, Apr, Jul, Oct) The main function of the Measure P Citizens’ Oversight Committee (COC) is to review and report on City compliance with the provisions of Measure P, particularly with respect to the City’s accounting and expenditure of Measure P revenues. Specific duties include: Review and comment on each year’s Finance Department Report, Measure P Spending Plan, and Auditor Report. Prepare an annual report regarding the Finance Department Report for presentation to the City Council at a Public Meeting Work with City staff to identify and apply ‘best practices’ for tracking and reporting on Measure P revenues and expenditures relative to other City revenue and expenditures. Role & Function The committee is comprised of nine members appointed to four-year terms, consisting of five At-Large members, with at least one from each Council district, and four Designated members selected from candidates nominated by the following Nominating Authorities: Chula Vista Chamber of Commerce Alliance of Californians for Community Empowerment San Diego & Imperial Counties Labor Union San Diego Taxpayers Association Parks and Recreation Commission Sustainability Commission David Garcias (Term Exp. 2025) Chair: About Page 22 of 87 City of Chula Vista Housing and Homelessness Advisory Commission May 8, 2024, Agenda Maintaining Local Funding without Raising Taxes Funding is set to expire, unless voters choose to renew it. To continue upgrading and maintain streets, underground storm drains and other local infrastructure the City is considering a November 2024 ballot measure to renew this source of funding for an additional 10 years at the current rate, without raising taxes. Page 23 of 87 City of Chula Vista Housing and Homelessness Advisory Commission May 8, 2024, Agenda Continued Funding Could be Used To: Fix potholes and pave and maintain local streets Clean up trash and litter along streets sidewalks and in other public areas Keep existing parks and recreations facilities safe, clean, and well-maintained Repair infrastructure including sidewalks, curbs and storm drains Make improvements to roads and intersections to better manage traffic congestion on City streets Repair or replace aging underground stormwater pipes that are at risk of collapse and creating sinkholes Address homeless encampments and increase cleanup efforts Page 24 of 87 City of Chula Vista Housing and Homelessness Advisory Commission May 8, 2024, Agenda Fiscal Accountability and Local Control Required public disclosure of all spending Essential purchases such as groceries, prescription medicine, diapers, and feminine hygiene products would continue to be exempt from sales tax All funds must stay local in Chula Vista and no funds can be taken away by the State Renewal of local funding at current rates, with no increase to local sales tax Any local funding measure would include fiscal accountability requirements, including: Page 25 of 87 City of Chula Vista Housing and Homelessness Advisory Commission May 8, 2024, Agenda Ballot Measure Planning Voter Survey Election Timing Tax Rate Political Landscape Non-Advocacy Communication Existing comms Informational mailers / digital ads Internal and external audiences Seek feedback Refine proposal Community readiness? Ballot Resolution/ Ordinance 75 words Projects & Programs Ballot Argument & Signers Official Vote (>88 days before Election) Volunteer leaders Fundraising Website/Social Endorsements Grassroots Lawn Signs Mailers Digital Ads Get Out the Vote © 2023 We are Here Nov 2024 election: Council Action Summer 2024 Page 26 of 87 City of Chula Vista Housing and Homelessness Advisory Commission May 8, 2024, Agenda "By successfully leveraging and investing our Measure P revenue to fund our priority infrastructure needs, the City has delivered on their promise to maintain a stronger, safer Chula Vista and improving the quality of life for our residents and visitors. " -DAVID GARCIAS CHAIR, MEASURE P CITIZENS OVERSIGHT COMMITTEE Page 27 of 87 City of Chula Vista Housing and Homelessness Advisory Commission May 8, 2024, Agenda Delivering on the Promise... Page 28 of 87 City of Chula Vista Housing and Homelessness Advisory Commission May 8, 2024, Agenda QUESTIONS Page 29 of 87 City of Chula Vista Housing and Homelessness Advisory Commission May 8, 2024, Agenda Chula Vista Housing Authority Multifamily Mortgage Revenue Bond Policies Adopted by HA Resolution 2018-01 Revised 04-30-2018 and 05/21/2024 The City of Chula Vista expands the supply of affordable housing by issuing multifamily mortgage revenue bonds through the Chula Vista Housing Authority (“Housing Authority”), as allocated by the California Debt Limit Allocation Committee (“CDLAC”). Since 1993, the Housing Authority has issued mortgage revenue bonds to private developers to finance low- and moderate-income housing for families. Pursuant to CDLAC Regulation 5031(c), as an Issuer of bonds, the Housing Authority must have written policies setting forth its bond issuance procedures and post-issuance compliance procedures in conformance with the governing laws and regulations. 276 FOURTH AVENUE • BLDG C • CHULA VISTA • CA • 91910 • (619) 691-5047 • FAX (619) 585-5698 www.chulavistaca.gov/housing Page 30 of 87 City of Chula Vista Housing and Homelessness Advisory Commission May 8, 2024, Agenda Chula Vista Housing Authority Summary 1 Chula Vista Housing Authority Multifamily Mortgage Revenue Bond Policies Summary Federal, state, and local legislation authorizes issuance of mortgage revenue bonds (“Bonds”) by local governments to finance the development, acquisition, construction and rehabilitation of multifamily housing rental projects (a “Project” or “Projects”) by a private property owner/developer, also known as the “Project Sponsor”. The interest on the Bonds is exempt from federal and state taxation. As a result, Bonds provide below market financing for qualified multifamily rental projects located in the City of Chula Vista (the "City”). This program (“Bond Program”) is administered by the Housing Authority and uses tax-exempt mortgage revenue bonds (“Bonds”) issued by the Housing Authority. There is no direct liability of the City or the Housing Authority in connection with the issuance or repayment of the Bonds. There is no pledge of the City’s or Housing Authority’s faith, credit, or taxing power and the Bonds do not constitute general obligations of the City or Housing Authority because the security for repayment of the bonds is limited to Project revenue and other sources specified in the documentation for the financing of the Project. Project loans are, in most cases, structured as a real estate loan, with the obligation to repay the bonds secured by a first deed of trust on the Bond-financed property. The program is self-supporting with the owner responsible for the payment of all costs of issuance and other costs and repayment of the obligations. Our mission is to build strong families and to strengthen the social and physical fabric of the Chula Vista community by creating and sustaining decent, safe living foster home and affordable environments to stability and in neighborhood empowering diverse residents the the and our as change agents for their quality of life. Page 31 of 87 City of Chula Vista Housing and Homelessness Advisory Commission May 8, 2024, Agenda Chula Vista Housing Authority Summary 2 The goals of the Bond financing program include: Preserving and increasing availability of quality affordable rental housing; Encouraging economic integration within residential neighborhoods; and Maintaining and enhancing a quality living environment for residents of affordable housing communities and the surrounding properties. All Projects requesting mortgage revenue Bond issuance are subject to the requirements in these guidelines. The Housing Authority reserves the right to make exceptions, at its sole discretion when deemed necessary. The Housing Authority guidelines and policies are subject to change. Page 32 of 87 City of Chula Vista Housing and Homelessness Advisory Commission May 8, 2024, Agenda Chula Vista Housing Authority Issuer 3 Issuer The Chula Vista Housing Authority (the “Housing Authority”) shall be the issuer of all Bonds financing Projects within the City, except as provided below. Bonds for Projects are intended to be non-recourse conduit financing in which the Housing Authority or the City will not be responsible for the repayment of debt. The Housing Authority and City will consider other issuing agencies as follows: CSCDA and Other ConduitsOutside Issuers Project Sponsors considering the use of any Bond issuers other thant the Housing Authority (“Outside Issuers”) should contact Housing Authority staff and obtain advance written approval prior to proceeding with the Project. The required Housing Authority public hearing for approval of Bonds by Outside Issuers will be held only if the Project Sponsor can demonstrate that an Outside Issuer is required to ensure project viability, such as when a financing proposal is part of a pooled issuance involving projects located in multiple jurisdictions and such pooled issuance results in significantly lower project costs. Any approvals by the Housing Authority on behalf of an Outside Issuer will include a provision that the owner, operator, or manager of the proposed project will not change without the prior written approval of the Housing Authority.The Housing Authority may agree to the issuance of Bonds by the California Statewide Community Development Authority (“CSCDA”) or a similar issuing conduit provided that the Housing Authority is not making a loan or grant to the Project and the Project is one of multiple projects being financed by the Project Sponsor through such issuing conduit agency in the same California Debt Limit Allocation Committee (“CDLAC”) round under a similar financing program so as to result in economies of issuance or financial feasibility of the projects. Special Circumstances Another agency may issue Bonds when merited by special circumstances of the Project and attendant financing. Where the Housing Authority is not the issuer of Bonds for a PrIoject, it shall be the Housing Authority’s policy to require such Outside Issuersthe issuer to assume full responsibility for issuance and on-going compliance of the Bond issue with federal tax and state laws.applicable state and federal laws. Where feasible, however, the City of Chula Vista/Housing Authority shall seek to hold a “The Equity and Fiscal Responsibility Act of 1986” hearing, better known as the “TEFRA Hearing” for such Project. Formatted: Font color: Custom Color(RGB(95,118,180)), Character scale: 90%, Formatted: Heading 1, Space Before: 0 pt Formatted: Font color: Custom Color(RGB(95,118,180)), Character scale: 90% Formatted: Font color: Custom Color(RGB(95,118,180)), Character scale: 90%, Formatted: Heading 1, Right: 0", Space Before: 0 pt, Line spacing: single Formatted: Not Expanded by / Condensed by Formatted: Not Expanded by / Condensed by Formatted: Not Expanded by / Condensed by Formatted: Not Expanded by / Condensed by Formatted: Not Expanded by / Condensed by Formatted: Not Expanded by / Condensed by Formatted: Not Expanded by / Condensed by Formatted: Not Expanded by / Condensed by Formatted: Not Expanded by / Condensed by Formatted: No underline, Underline color: Auto, Font color: Auto Formatted: Font color: Auto Formatted: Not Expanded by / Condensed by Formatted: No underline, Underline color: Auto, Font color: Auto Formatted: Font color: Auto Formatted: Not Expanded by / Condensed by Formatted: Not Expanded by / Condensed by Formatted: Indent: Left: 0" Formatted: Right: 0.23", Space Before: 2.45 pt Page 33 of 87 City of Chula Vista Housing and Homelessness Advisory Commission May 8, 2024, Agenda Chula Vista Housing Authority Public Benefit 4 Public Benefit Each Project to be financed must demonstrate tangible public benefits to the community in which it resides before the Housing Authority is willing to act as an issuer for tax-exempt multifamily mortgage revenue Bonds. These benefits must conform to all federal and state requirements for tax-exempt multifamily mortgage revenue Bonds. Affordability for Rental Projects To ensure a public benefit, Project Sponsors must set aside a minimum number of the units in each project for lower income households. These units must be rented to, or held available for rent to, Vvery Llow - Iincome or Llow Iw-income tenantsHouseholds. The restricted units must proportionately reflect the mix of all units in the project, be distributed throughout the project, and have the same floor area, amenities, and access to project facilities as market-rate units. To be eligible for tax-exempt financing,Eligible Projects must meet the following affordability requirementsprovide a minimum of: Federal Twenty percent (20%) of units shall be affordable to those Vvery Llow I-income Hhouseholds at fifty percent (50%) or below the Housing Authority Median Income, adjusted for household size. For the purposes of the Bond Program, “Very Low Income Households” shall be as defined in Section 50105 of the California Health and Safety Code. OR Forty percent (40%) of the units shall be affordable to those Llow -Iincome households at sixty percent (60%) or below the Housing Authority Median Income, adjusted for household size. For the purposes of the Bond Program, “Low Income Households” shall mean the 60% Income Level for San Diego County, adjusted for household size, as published annually by the California Tax Credit Allocation Committee (“CTCAC”). State A minimum of ten percent (10%) of the units affordable to those Vvery Llow I-income households at fifty percent (50%) or below the Housing Authority Median Income, adjusted for household size, at specified rent levels. Project owners must certify their tenants’ eligibility annually or as otherwise required by the Housing Authority in the applicable Regulatory Agreement. If a tenant is no longer eligible, the next available unit (if federal tax credits apply to the project, in the building in which the unit was located) must be rented to a new eligible tenant and the current tenant’s rent can be raised to a market level. A unit occupied only by students may not count towards the very low and low-income unit set-aside requirement. Page 34 of 87 City of Chula Vista Housing and Homelessness Advisory Commission May 8, 2024, Agenda Chula Vista Housing Authority Public Benefit 5 Affordability definitions are based on the AMI for the County of San Diego as established by the U.S. Department of Housing and Urban Development. The median income is subject to change annually. Page 35 of 87 City of Chula Vista Housing and Homelessness Advisory Commission May 8, 2024, Agenda Chula Vista Housing Authority Public Benefit 6 Rent Restrictions For purposes of the Housing Authority’s Bond Program, the maximum rent calculations for those units required as the minimum set-aside for very low or low-income households and those required by the adopted CDLAC Resolution may not exceed the applicable rent limit set forth by the California Tax Credit Allocation Committee (“CTCAC”) for the corresponding income category.one-twelfth of 30% of 50% of Area Median Income (“AMI”) for very low-income households or one-twelfth of 30% of 60% of AMI, adjusted for appropriate household size, as further defined in Section 50053 of the California Health and Safety Code. For the purposes of setting rents, “Appropriateimputed households size” is determined as set forth under under Section 34312.3 (c)(1)(B) and (c)(2)(B) of the California Health and Safety Code consistent with Section 42 (g)(2)(C) of the Internal Revenue Code (the “Code”), and as is consistent with under Section 34312.3 (c)(1)(B) and (c)(2)(B) of the California Health and Safety Code. Section 42 (g)(2)(C) of the Code requires states that in calculating rents, occupancy of units is assumed to be one (1) person in the case of a unit lacking a separate bedroomstudio unit, and one and one-half (two 1.5) persons per bedroom for a unit containing one or more separate bedroomsin a one-bedroom unit, three persons in a two- bedroom unit, four persons in a three-bedroom unit, and five persons in a four-bedroom unit. Maximum rents are further reduced by a utility allowance for tenant-paid utilities in the amounts determined by the Housing Authority. In the event tax-exempt bonds are used with Low-Income Housing Tax Credits, or any public funds, the more restrictive rents shall apply. If a set-aside unit is occupied by a household receiving a tenant-based rental subsidy such as a Section 8 Housing Choice Voucher, the gross rent may exceed the applicable unit restrictions as long as the household is receiving at least one dollar ($1) in federal subsidy.The maximum rent amounts will also apply to the contract rent if Housing Choice Voucher (HCV) tenants occupy the set-aside units. Term of Rental and Affordability Restrictions The Project must remain as rental housing and continuously meet the affordability requirements for the longest of (a) the Qualified Project Period (as defined in Internal Revenue Code of 1986), (b) such period as may be required by CDLAC (typically, 55-years from the date of the original issuance), (c) as long as the Bonds remain outstanding, or (d) such period as may be required, in the opinion of the City’s or Housing Authority’s Bond Counsel, to meet federal or state law. The City and/or Housing Authority reserve the right to impose additional affordability restrictions if the City or Housing Authority determines it is necessary to be competitive in the state allocation process or in compliance with applicable State laws. The affordability covenant remains in effect for not less than the agreed upon term, which may continue beyond the Qualified Project Period. It is intended that the affordability term will remain in effect beyond the retirement of the Bonds and expiration of any loan agreements. Projects that are financed with Low-Income Housing Tax Credits or any other public funds will be required to meet the requirements of TCAC or the more restrictive requirements of the applicable financing sources. Page 36 of 87 City of Chula Vista Housing and Homelessness Advisory Commission May 8, 2024, Agenda Chula Vista Housing Authority Public Benefit 7 A Bond Regulatory Agreement (“Regulatory Agreement”), consistent with the requirements of Section 5220 of the CDLAC regulations, containing the rental and affordability restrictions and all other commitments outlined in the CDLAC resolution and its Exhibits, to be incorporated and made an attachment of the Regulatory Agreement, will be recorded against the property and must be complied Page 37 of 87 City of Chula Vista Housing and Homelessness Advisory Commission May 8, 2024, Agenda Chula Vista Housing Authority Public Benefit 8 with by subsequent owners, as the Regulatory Agreement is a covenant that runs with the land. The Regulatory Agreement will be terminated upon expiration of restrictions or in the event of casualty loss or foreclosure, and the subsequent retirement of Bonds as a result of foreclosure. Project Sponsors must regularly verify compliance with the affordability terms outlined within the applicable Regulatory Agreement(s). The Housing Authority reserves the right to impose additional restrictionsreporting requirements to ensure ongoing compliance. State law requires advance notice and other requirements upon the termination of the affordability requirements. Some requirements also place restrictions on the sale of previously affordable housing projects. In addition, at the conclusion of the required affordability period, the rent of those “in-place” tenants will continue to be governed by the applicable affordability restriction, so long as those tenants continue to live in the development. Page 38 of 87 City of Chula Vista Housing and Homelessness Advisory Commission May 8, 2024, Agenda Chula Vista Housing Authority Priority Projects 7 Priority Projects Projects must consist of complete rental units, including kitchens and bathrooms. Projects are considered on a priority basis. They include Projects that will be instrumental to neighborhood turn- around, provide significant public benefit and preserve existing affordable housing. Affordable housing priorities: Preservation Preservation of projects which are currently publicly subsidized, but at risk of losing affordability restrictions due to sale, termination, or public subsidy reductions. Recapitalization Substantial rehabilitation of projects with affordability restrictions, including Projects that have reached the expiration of their 15-year tax credit compliance period, but only in conjunction with new mortgage revenue bonds, tax credits, and/or other affordable housing resources to the greatest extent feasible. Balanced Communities Housing New construction to meet the Balanced Communities Policy of the City of Chula Vista’s Housing Element. Rehabilitation and new production Substantial rehabilitation of other projects and new construction of affordable housing including low- income, mixed income, or workforce housing, with preference to projects in census tracts where the poverty rate is less than 30 percent; projects that meet revitalization goals. Page 39 of 87 City of Chula Vista Housing and Homelessness Advisory Commission May 8, 2024, Agenda Chula Vista Housing Authority Loan Terms & Conditions 8 Loan Terms & Conditions The terms and conditions of mortgage revenue bond loans shall be in accordance with CDLAC and TCAC requirements and the requirements of the lending institution specific to the Project. The following represents general terms. Maximum/Minimum Loan Amount The bond issuance and related loan amounts for individual projects are based upon project costs, interest rates, revenues available to pay debt service and the appraised value of the Project being financed. The Housing Authority may consider multiple properties as part of a single bond financing on a case by case basis. Interest Rate The effective Mortgage Rate is the aggregate of the applicable bond rate and the add-on fees charged under the program, such as lender, trustee, issuer’s fee, etc. The bond rate, for fixed rate bonds, is determined at the time of a bond sale and the resulting mortgage is typically below conventional mortgage rates. Loan Term The Project loans generally reflect a 30-year amortization schedule, although the bond maturity may be shorter. Affordability Term The affordability term is the lesser of 55 years or the longest affordability period of other financing sources, and is enforced through a recorded regulatory agreement. Page 40 of 87 City of Chula Vista Housing and Homelessness Advisory Commission May 8, 2024, Agenda Chula Vista Housing Authority Application Requirements 9 Application Requirements The Housing Authority requires each Project Sponsor complete a Housing Authority application. Applications must be submitted for all Projects seeking Bond financing where the Housing Authority will act as issuer or where the Housing Authority will sponsor or hold a TEFRA hearing. This includes all new money issuances requiring an allocation of bond authority from the California Debt Limit Allocation Committee (CDLAC), new 501(c)(3) issues, and refunding of existing bond issues. Applications must be submitted at least 90 days before the relevant CDLAC application deadline to allow enough time for Housing Authority review and approval. Applications that do not need CDLAC approval must be submitted at least 90 days before the desired Bond closing date. Any information provided in the application must be considered public information by State law. Chula Vista Affordable Housing Application Relocation Plan, if applicable – As required by CDLAC regulations (Section 5211 “Tenant Relocation”) if low-income tenants will receive a rent increase exceeding five percent (5%) of their current rent, then a relocation plan is required to address economic displacement. The relocation plan should be consistent with the Uniform Relocation Assistance and Real Property Acquisition Policy Act (42 U.S.C. 61). Project Sponsor Qualifications, Experience and Performance Project Sponsors, or its general partners, including administrative and managing general partners, or a principal in each, are required to have previous experience in the development and ownership of multifamily rental affordable housing projects. Housing Authority staff will review and approve the qualifications of the Project Sponsor and all partners in the ownership entity. As part of the Affordable Housing Application, Project Sponsors are required to submit: Proposed or executed organizational documents of the Project Sponsor and ownership entity, including a detailed description of the role of each, if separate entities, throughout the regulatory period of the Project; and Evidence of successfully participating in at least two projects over ten units in size and subject to a recorded regulatory agreement for at least three years prior to the application. The Housing Authority may require evidence projects have maintained positive operating cash flows and that all required reserves have been funded throughout the ownership period. Project Sponsors who are unable to meet qualifications and experience requirements will be required to partner with an entity that does have the necessary experience. Page 41 of 87 City of Chula Vista Housing and Homelessness Advisory Commission May 8, 2024, Agenda Chula Vista Housing Authority Application Requirements 10 The Housing Authority will NOT consider an application from a Project Sponsor if the following conditions exist: Failure to use an allocation from CDLAC; Out of compliance with or in default of the terms of any other City/Housing Authority financings or loans. Bonds & Tax Credits Due to Internal Revenue Service (IRS) limitations applicable to the fees charged by issues of tax-exempt bonds where the bond purchaser and the tax credit investor are the same or related entities, the Housing Authority will not issue bonds for Projects where the tax credit investor is all the same or a related entity to the bond purchaser. Exceptions may be granted on a case-by-case basis, at the discretion of the Housing Authority. Page 42 of 87 City of Chula Vista Housing and Homelessness Advisory Commission May 8, 2024, Agenda Chula Vista Housing Authority The Process 11 The Process Application Applications must be submitted for all Projects seeking Bond financing where the Housing Authority will act as issuer or where the Housing Authority will sponsor or hold a TEFRA Hearing. Housing staff will review the application for feasibility. The Housing Authority reserves the right to require an independent study of any proposed Project, with all associated costs to be borne by the Project Sponsor. Determination of Readiness In its review of the submitted application, Housing staff shall determine if the project is in a state of sufficient “readiness” to proceed with the CDLAC application process. This includes the status of the Project in terms of the development process. All Projects must be in compliance with the City’s land use requirements and adopted plans. In general, a Project will be deemed “not ready” if the administrative or discretionary planning approvals will not be completed by the time of the CDLAC application. Issuance Deposit At the time of application, the Project Sponsor must pay an “Issuance Deposit” of $3,500 to fund preliminary costs incurred by the Housing Authority and its consultants. The remaining balance of the Issuance Fee shall be paid upon the closing of the Bonds. The Issuance Deposit is nonrefundable, unless the Housing Authority declines the proposed financing. If the financing goes forward, the fee will be applied to offset the Issuance Fee as a required cost of issuance at Bond closing. The Issuance Deposit may be waived by the Housing Authority Director or his designee. The Housing Authority Director or his designee may issue a waiver of the issuance deposit upon written request by the Project Sponsor along with evidence or other information establishing payment of such fee would impact the financial feasibility of the Project. The Housing Authority Director may approve, partially approve or deny such waiver within 10 business days of such request by providing written notification to the Project Sponsor. Project Sponsor’s Development Team Project Sponsors must submit a Disclosure Statement, identifying of all parties authorized to negotiate on behalf of the development entity, and identification of the development team responsible for the Project and credentials provided for the development team. The development team must include team members with a successful record of accomplishment in developing at least one affordable rental housing project of the type and scale proposed. Bonds should be placed with investors who are experienced in municipal securities investing and analysis or real estate credit underwriting. Page 43 of 87 City of Chula Vista Housing and Homelessness Advisory Commission May 8, 2024, Agenda Chula Vista Housing Authority The Process 12 To the extent that consultants/contractors will be providing services on behalf of a Project Sponsor related to the requirements of these Policies, the Project Sponsor shall provide the Housing Authority with a written statement describing their relationship with the consultant/contractor and any rights the consultant/contractor has to income and obligations generated from any proposed bond issuance activity. Project Sponsors must not have a record of violation of Fair Housing and Employment Practice laws or regulations or of affordability clauses in recorded regulatory agreements of the City or other housing agencies or of discrimination. The Housing Authority shall approve each team member proposed by the borrower and reserves the right to require an independent study of the Project, at the sole cost of the Project Sponsor. Housing Authority Bond Counsel & Financing Team The Housing Authority shall reserve the right to select and approve the municipal advisor, underwriter (if applicable), and bond counsel for the financing. The Housing Authority’s municipal advisor, underwriter, and bond counsel shall be selected as provided for by the City’s Charter and attendant Municipal Code and City requirements. Bond counsel and the municipal adviser specifically represent the interests and concerns of the Housing Authority and the City in ensuring the integrity of the bond transaction. The Project Sponsor will reimburse these costs at bond closing. The Project Sponsor may, at its own expense, add additional members to the finance team to represent its interests. Housing Authority Municipal Advisor The municipal advisor for each transaction will prepare a feasibility study considering the economics of the financing, including: evaluation of the financial strength of the project; assumptions regarding income and expense; sources of security bonds in addition to a mortgage on the project; the Project Sponsor’s financial situation and experience in operating and managing multifamily rental projects; marketability of the bonds; and rights and resources of parties to the transaction in the event of default. Further, the municipal advisor will provide finance advice on all relevant issues to best protect the interests of the Housing Authority and the City. Housing Authority Bond Counsel Bond counsel will prepare the necessary legal documentation for the bonds, including provisions regarding compliance with any applicable continuing disclosure requirements, provide and opinion regarding compliance with any applicable continuing disclosure requirements, provide an opinion regarding the validity of the bonds and their tax-exempt status (if applicable), and provide legal advice on relevant issues to best protect the interest of the Housing Authority and the City, including but not limited to the project monitoring requirement for federal tax, State Law and CDLAC purposes. Page 44 of 87 City of Chula Vista Housing and Homelessness Advisory Commission May 8, 2024, Agenda Chula Vista Housing Authority The Process 13 Bond Underwriter/Remarketing Agent/Private Placement Purchaser The Project Sponsor shall select the construction and permanent lender/bond purchaser and the method of selling bonds for a given transaction subject to the requirements set forth herein and the approval of the Housing Authority. Except as provided in these Policies the Housing Authority will not allow a bond transaction where the tax credit investor is also the bond purchaser or a related party thereto. The practice of allowing the Project Sponsor to propose the lender and bond structure is intended to create an incentive for qualified financial firms to actively work the Project Sponsor to structure and present feasible financing proposals that meet program requirements. In the event the Project Sponsor has not identified a proposed financing structure for a given transaction, the Housing Authority will select an underwriter, lender or private placement purchaser through a request for proposals process. Bond Trustee/Fiscal Agent The Housing Authority shall select the Bond Trustee or fiscal agent (a financial institution designated by the Housing Authority as the custodian of funds and official representative of bondholders). Housing Authority Consideration In consideration of an application to CDLAC for a Bond allocation and the issuance of Bonds by the Housing Authority, the City and the Housing Authority must complete certain actions. Inducement Resolution A Bond inducement resolution (“Inducement Resolution”) will be drafted and approved by the Housing Authority. This is a conditional expression through the public record of the Housing Authority’s “official intent” to issue Bonds for a Project in order to induce others to provide project financing and is required for tax-exempt financing under Treasury Regulation Section 1.150-2(e). Adoption of the inducement resolution establishes, through the public record, the date from which project costs incurred may be determined to be eligible for financing under the Program with proceeds of tax-exempt bonds. Additionally, the Inducement Resolution authorizes the filing of an application to CDLAC on behalf of the Project Sponsor. Adoption of the Inducement Resolution does not represent any commitment by the Housing Authority, City, or the Project Sponsor to proceed with the financing. The Housing Authority retains absolute and unfettered discretion over the issuance of Bonds through adoption of a resolution authorizing such issuance. Adoption of the inducement resolution does not authorize any subordinate financing by the Housing Authority of the City. Furthermore, the adoption of the inducement resolution shall not be construed to signify the Project complies with the planning, zoning, subdivision and building laws and ordinances of the City or suggests that the Housing Authority or the City will grant any such approval, consent or permit that may be required in connection with the development of a given project. Page 45 of 87 City of Chula Vista Housing and Homelessness Advisory Commission May 8, 2024, Agenda Chula Vista Housing Authority The Process 14 TEFRA Hearing and Approval In accordance with the Tax Equity and Fiscal Responsibility Act (TEFRA) of 1982 and Section 147(f) of the Internal Revenue Code of 1986, the issuance of Bonds must be approved by representatives of the governmental unit with jurisdiction over the area in which the project is located. The TEFRA Hearing will be conducted as a public hearing by the City Council on a date specified in a notice published at least 14 days in advance of the TEFRA hearing in a newspaper of general circulation within the City. The purpose of the public hearing is to provide an opportunity for interested persons to express their views on the proposed Bond issuance and on the nature and location of the Project. City’s Disclosure As a related entity of the City, the Housing Authority will adhere to the City’s Debt Issuance Policies (City Council Policy 220-05) as it may be amended from time to time, which applies to publicly offered bonds. The Housing Authority will present offering statements and disclosure documents for review and approval, as appropriate, by the City. Final Approval Staff Report If recommended for financing by CDLAC, the City’s Housing Department and Housing Authority’s Legal Counsel (including Bond Counsel) will proceed with a recommendation and all necessary documents for final approval of the Bond issuance by the Housing Authority. The report to the Housing Authority shall specify the approvals that are recommended, provide background on the project being financed, describe the financing structure, indicate any exceptions to the City’s investment policy, and describe the financing documents to be approved. The staff report should indicate if a separate City or Housing Authority financial assistance is being provided. However, the terms of that loan should be discussed in a separate staff report which, whenever possible, shall be submitted for the same agenda. The staff report may note that the Bond issue is contingent upon certain other approvals and may identify certain issues to be resolved at a later time. Substantially Final Documents The Housing Authority shall approve documents that are “substantially final” documents. Documents are in “substantially final” form if they identify the final security provisions and financing structure for the transaction. The Housing Authority’s Legal Counsel (including Bond Counsel) shall determine whether documentation is in substantially final form. CDLAC Applications for Bond Allocation Tax-exempt bonds (except 501(c)(3) bonds) require an allocation of Bond authority from CDLAC. To receive the allocation, the Housing Authority must submit an application to CDLAC on behalf of the Project Sponsor. The Inducement Resolution authorizes the submission of an application to CDLAC. The application must demonstrate readiness to proceed with Bond financing and compliance with applicable CDLAC regulations. Project Sponsors approved by CDLAC to receive an allocation of the Page 46 of 87 City of Chula Vista Housing and Homelessness Advisory Commission May 8, 2024, Agenda Chula Vista Housing Authority The Process 15 State ceiling on qualified tax-exempt bonds must be prepared to use those allocations to issue Bonds within 90 days. The Project Sponsor must pay all required CDLAC fees in advance of application submittal. Housing Authority to File The Housing Authority is the applicant to CDLAC for each Project to be financed with tax-exempt Bonds issued by the Housing Authority. Submittal of the application is at the discretion of the Housing Authority, not the Project Sponsor. The Housing Department will submit all applications to CDLAC on behalf of Project Sponsors. The Housing Authority will not file a Project Sponsor’s CDLAC application unless the Project Sponsor had provided the Housing Authority with the CDLAC Performance Deposit and the Housing Authority’s Issuance Deposit. Project Sponsor to Prepare Application Each Project Sponsor shall take responsibility for preparing the CDLAC application for its Project with input from Housing Authority representatives, including its financing team and bond counsel. Performance Deposit At the time of application to CDLAC, the Project Sponsor must deposit with the Housing Authority one half of one percent (0.05%) of the requested allocation (or such other amount as may be required by CDLAC) as a performance deposit. The deposit will be returned to the Project Sponsor according to CDLAC procedures; the deposit is subject to reversion to CDLAC should the financing not close accordingly. Project Sponsors are advised to read CDLAC regulations. Bond Sale and Closing Timing The Bond sale and closing may commence only after the Housing Authority authorizes the Bond issue, including the distribution of a Preliminary Official Statement, if applicable. Investment Agreements If authorized by the Housing Authority, the Project Sponsor, through its representative, which may include the underwriter or municipal advisor, may solicit investment agreement providers for the purpose of reinvesting Bond proceeds and revenues. The investment agreement providers must meet the Housing Authority’s requirements and the requirements in the Bond resolution and trust indenture for the Bonds. The Housing Authority’s Bond counsel and the municipal advisor shall review the investment agreement solicitation forms, the eligible providers, and the investment agreements. Page 47 of 87 City of Chula Vista Housing and Homelessness Advisory Commission May 8, 2024, Agenda Chula Vista Housing Authority The Process 16 Housing Authority Indemnity The Project Sponsor shall be required to provide to the Housing Authority, as a part of Bond documentation, an indemnity agreeing to defend and indemnify the Housing Authority, its members, officers, agents, employees, against any claim, judgment or settlement costs arising out of or involved in the financing, or in any of the documentation related thereto and the Project and volunteers to reimburse for all costs, expenses and attorney fees, in issuing the bonds and monitoring the Project. Page 48 of 87 City of Chula Vista Housing and Homelessness Advisory Commission May 8, 2024, Agenda Chula Vista Housing Authority Types of Bonds 17 Types of Bonds The Housing Authority may issue either tax-exempt or taxable bonds (which includes notes or other debt instruments), or both. Taxable bonds would generally be issued only in combination with tax- exempt bonds. Tax-Exempt Private Activity Bonds For all tax-exempt financing, bond and related loan amounts will be subject to the procedures of CDLAC. Private Activity Bonds Private activity bonds require an allocation of bond authority from CDLAC. To get the allocation, the Housing Authority must submit an application to CDLAC on behalf of the Project Sponsor. Submittal of the application is at the discretion of the Housing Authority, not the Project Sponsor. The Project Sponsor must pay all required CDLAC fees in advance of application submittal. 501(C)(3) Private Activity Bonds The Housing Authority may issue bonds described in Section 145 of the federal tax code on behalf of qualified not-for-profit organizations (“501(c)(3) bonds”). The interest on these 501(c)(3) bonds are tax- exempt and the bonds do not require an allocation from CDLAC. However, 501(c)(3) bonds cannot be used with the Low-Income Housing Tax Credit Program (LIHTC). Taxable Bonds The interest on taxable bonds is not exempt from either federal or state taxation. These bonds are not subject to federal volume "cap" limitations and therefore do not require an allocation from CDLAC. Taxable bonds can be used in combination with LIHTC. Taxable bond issues must meet all applicable requirements of State law requirements governing the Housing Authority’s authority to issue bonds and these Policies and Procedures (including rating requirements) and any such added regulations which may, from time to time, be promulgated by the Housing Authority. Bond Rating and Credit Enhancement The Authority requires that bonds for which it acts as issuer have a minimum rating in the “A” category, or its equivalent, or better by Standard and Poor’s (equivalent Moody’s or other bona fide agency rating also acceptable), except as noted below, OR the bonds be privately placed with a “sophisticated investor” as defined by the Housing Authority. The Housing Authority reserves the right to impose these minimum requirements on bond issues for which the Housing Authority issues bonds, or the Housing Authority or City holds a TEFRA hearing. A preferred way of obtaining the required rating on the Bonds is through credit enhancement. Additional outside credit support may be provided in a number of forms, including a letter of credit Page 49 of 87 City of Chula Vista Housing and Homelessness Advisory Commission May 8, 2024, Agenda Chula Vista Housing Authority Types of Bonds 18 (LOC), mortgage backed security (MBS), collateral pledge, bond insurance, etc., by rated, financial strong private institutions, such as government sponsored entities (including the Federal National Mortgage Association [Fannie Mae] or Federal Home Loan Mortgage Corporation [Freddie Mac]), other government insured mortgage programs, or other qualified credit enhancement providers. The form of credit enhancement must provide for a minimum rating in the “A” category by Standard and Poor’s (or the equivalent). The bond rating must be obtained by the closing of the bond issue. As the primary source of security for the repayment of the bonds, the credit enhancement provider will review and approve the borrower (credit, financial capability, experience, etc.) and the Project and its feasibility, including the size of the loan and the terms or repayment, using their own underwriting criteria. Fixed rate bonds can be issued without credit enhancement if the proposed financing structure results in the required minimum rating on the bonds. However, bonds issued without credit enhancement will only be sold to Qualified Institutional Buyer (“QIBs”) as defined under Rule 144A of the Securities Act of 1933 and in minimum $250,000 denominations, unless waived by the Housing Authority Director in his sole discretion. The Housing Authority Director or his designee may issue a waiver of the requirements of a QIB or minimum denominations upon written request by the Project Sponsor along with evidence or other information establishing justification. Upon consultation with its municipal advisor and legal counsel, the Housing Authority Director may approve, partially approve, or deny such waiver within ten (10) business days of such request by providing written notification to the Project Sponsor. Private Placement The bond rating requirement is waived if the entire bond issue is privately placed with QIBs or institutional “accredited investors,” (as defined in Sections 501(a)(1), (2), (3) or (7) of Regulation D promulgated under the Securities Act of 1933 or an entity in which all of the equity owners meet the requirements of at least one such subsection). It is the Housing Authority’s intent that bonds are placed with those investors who are experienced in investing in unrated municipal securities and can conduct their own analysis of real estate credit underwriting. Bonds must be sold in minimum $250,000 denominations, unless waived by the Housing Authority Director in his sole discretion. Unless approved by the Housing Authority, the bonds may not be held at any time by more than 15 investors. The Housing Authority reserves the right to require that a trustee or fiscal agent participate in privately placed bond transactions. All purchasers (including purchasers of participation interest in the bonds) would be required to sign an investor letter (“Investor Letter”) certifying the investor’s sophistication to understand the risk associated with the purchase of the debt instrument and restricting transfer of the bond issue to other Page 50 of 87 City of Chula Vista Housing and Homelessness Advisory Commission May 8, 2024, Agenda Chula Vista Housing Authority Types of Bonds 19 accredited or qualified investors in denominations of $250,000 and greater. While the note remains unrated, its transferability will be restricted to QIBs or institutional accredited investors who sign an Investor Letter and who would represent to the Housing Authority that they are accredited investors or QIBs, are buying for investment and not for resale, and have made due investigation of the information they would deem material in connection with the purchase of the bonds. Page 51 of 87 City of Chula Vista Housing and Homelessness Advisory Commission May 8, 2024, Agenda Chula Vista Housing Authority Use of Bonds 20 Use of Bonds Bonds issued may be used for both construction or rehabilitation and permanent financing. Bond proceeds may be used for costs of land acquisition (up to twenty-five percent (25%) of tax-exempt bond proceeds), construction rehabilitation, improvements, architectural and engineering services, construction interest, loan fees and other capital costs of the project incurred up to sixty days prior to the bond inducement date. Limitations on Use of Bonds Bond proceeds cannot be used to acquire property from a related party, as defined in CDLAC Regulations Section 5000, to the buyer. No more than 2 percent (2%) of the tax-exempt bond proceeds can be used to finance costs of issuance, such as the services of the financing team members, rating and printing of bonds, costs related to bond allocation, etc. Pursuant to federal tax-exempt requirements, if bonds are used for acquisition and rehabilitation, an amount equal to at least 15 percent (15%) of the portion of the acquisition costs of the building and related equipment financed with the proceeds of the bonds must be used for rehabilitation of the Project. The loans are assumable upon transfer of the Project with the approval of the credit enhancement provider or bond purchaser, and the Housing Authority Director or Assistant Director. Page 52 of 87 City of Chula Vista Housing and Homelessness Advisory Commission May 8, 2024, Agenda Chula Vista Housing Authority Costs of Issuance 21 Costs of Issuance The Multifamily Revenue Bond program is self-supporting. Project Sponsors must pay all costs of issuance at bond closing, including, but not limited to, bond counsel, underwriter, trustee and municipal advisor fees, as well as rating agency fees. Any deposits will be credited toward the cost of issuance at closing. Only two percent (2%) of the proceeds of a tax-exempt bond issue may be used to pay costs of issuance. Costs over two percent (2%) must be paid from other sources secured by the Project Sponsor including, potentially, the proceeds of taxable bonds. Housing Authority Fees TEFRA Hearing Fee The City of Chula Vista shall charge a fee of $3,500 for the administrative costs associated with holding a TEFRA hearing relating to a Project. The fee shall be payable prior to the date that notice of the TEFRA hearing is published. No separate TEFRA hearing fee shall be charged if the City or Housing Authority is issuing the bonds for the Project. Issuance Fee The Housing Authority provides its services to a limited segment of the public, more specifically housing developers, to obtain unique services and substantial economic benefits available to them only under the State of California’s tax-exempt bond program to issue the debt, not the least of which may be financing at interest rates substantially lower than conventional financing interest rates, if such rates are available, and/or the ability to obtain financing without equity compensation to the lender. In consideration of its application to the State and issuance of tax-exempt bonds for the financing of such private projects that have a qualified public benefit and economic benefit to the Project Sponsor, the Housing Authority receives compensation for its services in preparing bond issuances by charging an up-front fee payable at bond closing. The Issuance Fee shall be in an amount equal to 20 basis points (0.20%) of the total original principal amount of the bonds (both tax-exempt and taxable) to be issued, with a minimum fee of $15,000. The Issuance Fee shall not exceed the amount otherwise allowed by the Internal Revenue Service (“IRS”) for tax-exempt bonds. An Issuance Deposit of $3,500 will be collected at the time of application submission. The Issuance Deposit is nonrefundable unless the Housing Authority or CDLAC declines the proposed financing. The Issuance Fee Deposit is applied to the Issuance Fee at closing. The Issuance Deposit shall be applied to the Issuance Fee at closing. Page 53 of 87 City of Chula Vista Housing and Homelessness Advisory Commission May 8, 2024, Agenda Chula Vista Housing Authority Costs of Issuance 22 All remaining Issuance Fees will be collected at the closing of the bond issue except for issues requiring State of California volume cap. Issuance Fees for applications requiring State volume cap will be collected at the time of application submission to the State. No other fees will be collected unless and until the project financing closes, with the exception of projects requiring allocation of State volume cap. For projects requiring volume cap, the entire Issuance Fee is forfeited if the financing fails once the volume cap has been awarded by the State. If the application is withdrawn by the Project Sponsor, after submission to the State, but prior to the award of allocation, all fees except the Issuance Fee Deposit are refundable. Annual Administrative Fee The Housing Authority shall charge an annual fee (“Annual Administrative Fee”) to cover its ongoing costs associated with administration and oversight of outstanding bond issues and monitoring of regulatory restrictions (e.g. financial and site monitoring, and annual reporting) for bond issues required throughout the Qualified Project Period and until expiration of the CDLAC Compliance Period. The Annual Administrative Fee shall be in an amount equal to $13,000 for those Projects with 50 units or less, $17,000 for projects of 51 to 199 units and $21,000 for those projects of 200 units or more. Under no circumstances shall the Ongoing Issuer Fee exceed any limitation under Section 148 of the federal tax code. The first year Annual Administrative fee shall be paid at bond closing. Thereafter, the ongoing Annual Administrative will be due and payable, without the requirement for any invoice to be delivered to the Project Sponsor, in advance in equal semi-annual installments by January 15th and July 15th each year. The Annual Administrative fee will be paid throughout the CDLAC Compliance Period and as specified within the Regulatory Agreement, even if bonds are fully repaid prior to the expiration of the compliance period. The Housing Authority Annual Administrative fee shall be paid “above the line,” i.e., on a parity with bond debt service and trustee fees. This parity provides the greatest assurance that the Housing Authority’s fee will be paid, although it may reduce the amount that the Project Sponsor’s lender may be willing to underwrite. Additional monitoring fees may be charged for monitoring affordable housing units not governed by the Regulatory Agreement. Other Fees Additional fees may be applicable on a case-by-case basis for certain issues that arise that are outside the normal bond issuance process. Examples of such fees are, but not limited to, an IRS audit associated with bond issuance. The Housing Authority shall not be liable for any such fees and the sole responsibility of these other fees that may arise shall be the sole responsibility of the Project Sponsor. Page 54 of 87 City of Chula Vista Housing and Homelessness Advisory Commission May 8, 2024, Agenda Chula Vista Housing Authority Costs of Issuance 23 For staff time incurred, including legal counsel, the Project Sponsor may be charged for such time according to the then current hourly full cost recovery rate charged by the Housing Authority or legal counsel. Table 1: Summary of Housing Authority Fees TEFRA Hearing $3,500 Issuance Fee 20 basis points (0.20%) of the total original principal amount of bonds issued Issuance Deposit $3,500 Annual Administrative Fee $13,000 for 50 units or less $17,000 for 51-199 units $21,000 for 200 units or more Other Fees Full cost recovery Page 55 of 87 City of Chula Vista Housing and Homelessness Advisory Commission May 8, 2024, Agenda Chula Vista Housing Authority Refunding/Restructuring/Remarketing 24 Refunding/Restructuring/Remarketing On occasion, a Project Sponsor may ask the Housing Authority to refund its bonds to lower the interest rate, to remarket the bonds with a new credit enhancement, and/or to remarket the bonds as fixed rate bonds. The Project Sponsor will be responsible for all costs and fees related to the refunding. Optional Refunding Reasons to Refund Outstanding Bonds A Project Sponsor may ask the Housing Authority to refund its outstanding bonds for one of several reasons: Lower the interest rate on fixed rate bonds at the call date (through the issuance of fixed rate or variable rate refunding bonds); Substitute a new credit structure that was not expressly provided for in the existing documents; or Restructure the existing debt. Bond Counsel & Financing Team The Housing Authority shall reserve the right to select and approve the municipal advisor, underwriter (if applicable), and bond counsel to implement the refunding. Where possible and if desired by the Housing Authority, the financing team shall consist of the bond counsel, municipal advisor and, if applicable, underwriter that were retained for the original financing. The Project Sponsor will reimburse these costs at bond closing. Legal/Documentation New documents shall be prepared to meet the Housing Authority’s then-current legal, credit, financial, and procedural requirements and applicable then-current state or federal requirements. The Housing Authority shall follow the documentation process applicable to new bonds. Because the Housing Authority’s primary purpose in issuing multifamily housing bonds is to preserve and increase the supply of affordable housing in the Housing Authority, additional public benefit in the form of deeper income targeting, additional rent restrictions, including additional rent restricted units, the extension of the existing term of restrictions, or any combination therefore may be negotiated. The level of additional restrictions for public benefit will be determined in the context of the overall financial feasibility of each financing. Additionally, if federal or state affordability, income, and/or rent restrictions have changed between the time of the original financing and the refunding bonds, the more restrictive provisions shall apply. If new requirements are more restrictive than existing requirements, the new requirements shall be Page 56 of 87 City of Chula Vista Housing and Homelessness Advisory Commission May 8, 2024, Agenda Chula Vista Housing Authority Refunding/Restructuring/Remarketing 25 applied in phases to new tenants over a period of time, not to exceed five (5) years, as determined by the Housing Department staff and it’s Attorney. The provisions of Section 52080(g) the California Health and Safety Code shall apply to projects financed under this Program, which requires that low-income units remain affordable, except in certain circumstances, until thirty (30) years after the commencement of the Qualified Project Period. Except in limited circumstances, the provisions of Sections 65863.10 and 65863.11 of the California Government Code shall apply to projects financed under this Program and Project Sponsors are advised to review the requirements of these Sections. Bond Maturity Subject to the approval of bond counsel, the final maturity of the refunding bonds may be later than the final maturity of the prior bonds so as to allow the Project Sponsor the longest possible period for repayment under federal law. A minimum of ten percent (10%) of the units in the Project will be required to be set aside for occupancy by very low-income households at fifty percent (50%) or below the Housing Authority Median Income, with rents set at the corresponding affordability level for the term of the restructured bonds. Compliance The Housing Authority shall not proceed with a refunding if the Project is not in compliance with the current regulatory agreement, continuing disclosure reporting, or arbitrage rebate reporting and payment. Fees The Project Sponsor shall pay the following Housing Authority fees in connection with the refunding: Issuance Fee The Housing Authority shall charge an Issuance Fee in accordance with the Housing Authority’s current policy on Issuance Fees for new projects. Annual Monitoring Fee The Housing Authority shall continue to charge the same annual fee for monitoring the Project as for the original bonds. Such fee shall not be reduced even if the refunding bond size is lower. The Project Sponsor is also responsible for all other costs of the Housing Authority to cover the issuance of bonds to refund outstanding bonds (e.g. costs of municipal advisor, bond counsel and trustee, if applicable). Page 57 of 87 City of Chula Vista Housing and Homelessness Advisory Commission May 8, 2024, Agenda Chula Vista Housing Authority Refunding/Restructuring/Remarketing 26 Cash Flow Savings Cash flow savings from refunding fixed rate bonds at a lower fixed interest rate or a variable rate shall be applied as follows: Projects with a Housing Authority or City Loan A portion of the projected cash flow savings, to be determined by the Housing Division, shall be used to accelerate the repayment of the Housing Authority loan, subject to restrictions in existing documents. Projects with No Housing Authority or City Loan The Housing Authority Housing Department shall require the Project Sponsor to provide affordability or other financial concessions to the Housing Authority as a condition for refunding. Such concessions may include increasing the percentage of affordable units and extending the term of affordability restrictions. Housing Authority Approval All refunding bonds and related legal documentation must be approved by the Housing Authority in accordance with the procedures set for the issuance of new bonds. Page 58 of 87 City of Chula Vista Housing and Homelessness Advisory Commission May 8, 2024, Agenda Chula Vista Housing Authority Refunding/Restructuring/Remarketing 27 Default Refunding In the event of a default on the bonds or the underlying mortgage, a fixed rate bond issue may be refundable in advance of the call date without premium. The issue does not arise with variable rate bonds, as such bonds are callable at any time. Default refunding bonds are an area of potential sensitivity for the Housing Authority as it will not want a Project Sponsor to manufacture a default to take advantage of more favorable interest rates. Bond Counsel & Financing Team The Housing Authority shall reserve the right to select and approve the municipal advisor, underwriter (if applicable), and bond counsel to implement the refunding. Such selection shall be made in compliance with the City’s Charter and attendant Municipal Code requirements. Where possible and if desired by the Housing Authority, the financing team shall consist of the bond counsel, municipal advisor and, if applicable, underwriter that were retained for the original financing. The Project Sponsor will reimburse these costs at bond closing. Confirming the Default To confirm a default, the Housing Authority must receive a notice from an independent party, such as the bond trustee. If applicable, notice of cash flow insufficiency is then filed as part of the Continu ing Disclosure Certificate. In addition, the Housing Authority shall retain, at the expense of the Project Sponsor, an independent feasibility consultant to review the default. The Housing Authority will proceed with the transaction only if a review by staff and the independent consultant indicates that: Net cash flow from the Project is currently insufficient to pay debt service on the outstanding bonds and is unlikely to do so within a reasonable period; The Project is being operated in accordance with reasonable real estate management practices and the net operating income has not been artificially reduced by failing to rent units actively, inflating operating expenses, or other reasons within the control of the Project Sponsor; and The Project Sponsor has provided audited operating statements, Continuing Disclosure filings (if applicable), and arbitrage rebate reports for all years, has cooperated in providing requested information, and has used operating income and other resources to pay debt service. Additional Requirements Indemnification The Housing Authority shall be indemnified as to any costs incurred as a result of the refunding, under terms approved by the Housing Authority’s Legal Counsel. Such indemnification shall come from a party or parties with adequate net worth or other financial capacity and whose assets are not limited to ownership of the Project. Page 59 of 87 City of Chula Vista Housing and Homelessness Advisory Commission May 8, 2024, Agenda Chula Vista Housing Authority Refunding/Restructuring/Remarketing 28 Future Debt Coverage The analysis of the feasibility consultant shall show that, upon the refunding, the Project’s current net operating income will be at least sufficient to pay the revised debt service plus a reasonable coverage ratio (or adequate non-bond proceeds will be available to cover such deficiencies). In other words, the Housing Authority shall not proceed with the refunding if it will not cure the cash flow problem. Bond Counsel Review Bond counsel shall have determined that the original bond and disclosure documents provided adequate disclosure of such a potential redemption and that the provisions of the prior documents have been satisfied. Compliance Fees The Housing Authority shall not proceed with a refunding if the Project is not in compliance with the current regulatory agreement, continuing disclosure reporting, or arbitrage rebate reporting and payment. The fees and expenses of the feasibility consultant, municipal advisor and bond counsel shall not be contingent on their findings or completion of a refunding. The Housing Authority shall require that the Project Sponsor deposit the estimated fees and expenses with the Housing Authority prior to the commencement of any analysis. Affordability Restrictions The affordability requirements for a default refunding shall be the same as those listed under “Legal/Documentation” for an optional refunding. Housing Authority Approval The Development Services Department’s Housing Division, in conjunction with the Finance Department and Housing Authority’s Legal Counsel, shall obtain final Housing Authority approval authorizing the bond issue and execution of the relevant documentation. A recommendation of default refunding by Housing Authority staff shall only be given after an initial analysis of feasibility is performed, a default is confirmed, and it is determined that a refunding will cure the cash flow problem. Housing Authority Fees The Housing Authority shall charge the same Issuance Fee and annual monitoring fee that it otherwise would in conjunction with a new bond issue. Page 60 of 87 City of Chula Vista Housing and Homelessness Advisory Commission May 8, 2024, Agenda Chula Vista Housing Authority Refunding/Restructuring/Remarketing 29 REMARKETING A Project Sponsor may ask the Housing Authority to remarket outstanding bonds under one of three basic scenarios: (1) converting variable rate bonds to fixed rate bonds; (2) a mandatory tender of bonds; or (3) substituting a new credit enhancement for the bonds in accordance with existing documentation. Bond Counsel & Financing Team The Housing Authority shall reserve the right to select and approve the municipal advisor, underwriter (if applicable), and bond counsel to implement the refunding. Where possible and if desired by the Housing Authority, the financing team shall consist of the bond counsel, municipal advisor and, if applicable, underwriter that were retained for the original financing. The Project Sponsor will reimburse these costs at bond closing. Legal/Documentation A remarketing of fixed rate bonds will not require new legal documentation. However, the Housing Authority’s Legal Counsel, in conjunction with bond counsel, may require a new disclosure document. A remarketing of bonds with a new credit enhancement may require amended documentation, as well as a new disclosure document, as determined by the Housing Authority’s Legal Counsel and bond counsel. Fees A remarketing will not result in the payment of additional or revised Housing Authority issuance or annual fees. However, the Housing Authority shall recover its actual remarketing administrative costs incurred (estimated to range from $10,000 to $25,000) from the Project Sponsor. Housing Authority Approval All remarketed bonds and any related documentation shall be approved by the Housing Authority prior to any remarketing. Page 61 of 87 City of Chula Vista Housing and Homelessness Advisory Commission May 8, 2024, Agenda Chula Vista Housing Authority Post-Issuance Compliance Procedures 30 Post-Issuance Compliance Procedures As an issuer of Bonds awarded allocations from CDLAC, the Housing Authority must attest to the adherence with CDLAC requirements for each development that is still in its monitoring period to ensure that Bond funds are spent appropriately and to ensure that rents assessed to tenants meet the terms of the Bond Regulatory Agreement. The Housing Authority performs Bond compliance monitoring duties for CDLAC as defined under Section 5220 of the CDLAC regulations. The Housing Authority shall maintain documents related to its issuance of the Bonds, loan, and ongoing monitoring of the Project in compliance with the City’s Document Retention Policy. Use of Bond Proceeds and Bond-Financed or Refinanced Assets The Project Sponsor shall be responsible for: Monitoring the use of bonds proceeds and the use of bond-financed or refinanced assets (e.g. facilities, furnishings or equipment) throughout the term of the bonds to ensure compliance with covenants and restrictions set forth in the documents relating to the bonds; Maintaining records identifying the assets or portion of assets that are financed or refinanced with proceeds of each issue of bonds, including a final allocation of bond proceeds; Consulting with bond counsel and other legal counsel and advisors in the review of any contracts or arrangements involving use of bond-financed or refinanced assets to ensure compliance with all covenants and restrictions set forth in the documents related to the bonds; Maintaining records for any contracts or arrangements involving the use of bond-financed or refinanced assets; Conferring at least annually with personnel responsible for bond-financed or refinanced assets; and, The extent that the Project Sponsor discovers than any applicable tax restrictions regarding use of bond proceeds and bond-financed or refinanced assets will or may be violated, consult promptly with Bond Counsel and other legal counsel and advisors to determine a course of action to remediate all nonqualified bonds, if such counsel advises that a remedial action is necessary. Record Keeping The Project Sponsor shall be responsible for maintaining the following documents for the term of each issue of bonds (including refunding bonds, if any), and at least three additional years: A copy of the bond closing transcript(s) and other relevant documentation delivered to the Project Sponsor or in connection with the closing of the bond issue; Page 62 of 87 City of Chula Vista Housing and Homelessness Advisory Commission May 8, 2024, Agenda Chula Vista Housing Authority Post-Issuance Compliance Procedures 31 A copy of all material documents relating to capital expenditures financed or refinanced by bond proceeds, including (without limitation) construction contracts, purchase orders, invoices, trustee requisitions and payment records, draw request for bond proceeds and evidence as to the amount and date of each expenditure of bond proceeds, as well as documents relating to costs paid or reimbursed with bond proceeds and records identifying the assets or portion of assets that are financed or refinanced with bond proceeds, including a final allocation of bond proceeds; A copy of all contracts and arrangement involving the use of bond-financed or refinanced assets; and With respect to any investment of bond proceeds or collateral securing the repayment of the bonds, a copy of all records of investments, investment agreements, arbitrage reports and underlying document, including trustee or fiscal agent statements, in connection with any investment agreements, and copies of all bidding document, if any. For housing bond financings subject to the requirement of Section 142 (d) of the Code, as amended, the Project Sponsor shall be responsible for maintaining, until the end of the qualified project period within the meaning of Section 142 (d)(2)(A) of the Code, and at least three (3) additional years a copy of all records evidencing compliance with the requirements of Section 142 (d) of the Code, including tenant income verifications, leases and tenant records. Such records shall be made available to the Housing Authority at its reasonable request. Records for the current year and preceding two (2) years shall be available at the Project site at such time the Housing Authority provides notification of a monitoring of the Project at the site. The Project Sponsor, in the document relating to the bonds and/or other documents finalized at or before the issuance of the bonds, shall agree to the forgoing records retention requirements and procedures. Annual Certification of Public Benefits and On-going Compliance As required by CDLAC regulations, all projects that receive a CDLAC bond allocation and are within an existing regulatory period and/or compliance period, shall be monitored by the Housing Authority for compliance with the terms and conditions of the CLDAC resolution. The Housing Authority may choose to hire an outside compliance monitoring firm to assist with such requirements. The Housing Authority utilizes FOCUS® a housing compliance monitoring and reporting software for submittal of Project rent rolls. It is acknowledged that the Housing Authority is required to collect, review, and submit to CDLAC the Certification of Compliance I, Certification of Compliance II and CDLAC Completion Certificate for each issuance bonds, when applicable. Each year, by March 1st, the Housing Authority submits such Page 63 of 87 City of Chula Vista Housing and Homelessness Advisory Commission May 8, 2024, Agenda Chula Vista Housing Authority Post-Issuance Compliance Procedures 32 certifications to CDLAC in such format as required by CDLAC, and must certify as the issuer that all of its Bond-funded developments are complying with the features originally identified in application to CDLAC and contained in Attachment A to the CDLAC resolution. Annually, on or before February 1st of each year until the expiration of the later of the qualified project period or compliance period under the applicable CDLAC Resolution and Regulatory Agreement, Project Sponsor and/or their representatives, are required to submit to the Housing Authority the following information and forms as follows: Certification of Delivery of Public Benefits and Continuing Program Compliance (attach validating back-up information on services contracts, services types, and services frequency) Annual QRRP Certification of Compliance I or II form, as applicable (Must be submitted and signed on project sponsor letterhead) IRS Form 8703 Annual Certification of a Residential Rental Project If property did not already submit its rent roll for this previous year via FOCUS®, the City’s/Housing Authority’s housing compliance monitoring and reporting software, then submit rent roll as of December 30th. Else, resubmission of September 30th rent rolls is not required. If CDLAC adopted a new Exhibit A to its CDLAC resolution in the most recent year, the most recent Exhibit A If the project ownership has changed since the Bonds were first issued, provide: o Completed Legal Status Questionnaire (attached to Certification of Delivery of Public Benefits form) o W-1 Attachment o Partnership organizational chart with principals and officers of each entity of the new partnership identified (see sample forms attached). Project Sponsors and/or representatives are required to maintain the above records and any other records required by the Housing Authority or CDLAC for the term prescribed in the Bond, Regulatory Agreement, or any other legal requirement (including applicable period which may be subject to audit) whichever is the longest. All required forms for submittal to the Housing Authority for monitoring purposes can be found on the City of Chula Vista Rental Housing Compliance website at Page 64 of 87 City of Chula Vista Housing and Homelessness Advisory Commission May 8, 2024, Agenda Chula Vista Housing Authority Post-Issuance Compliance Procedures 33 http://www.chulavistaca.gov/departments/development-services/housing/building- affordable-housing/rental-housing-compliance. The Housing Authority shall review the Project Sponsor’s Certificate of Compliance, all other documents submitted and may request additional supporting documents that evidence compliance as necessary in the sole reasonable discretion of the Housing Authority. IRS Form 8703 The Project Sponsor is required to submit IRS Form 8703 annually to the IRS on or before each March 31st as long as the bonds are outstanding. Form 8703 provides annual information to the IRS to help them determine whether a project continues to be a qualified residential rental project under Section 142 (d) of the Code, as amended. Monitoring For projects receiving an allocation of bond authority from CDLAC after December 31, 2016, CDLAC requires that a review of twenty percent (20%) of all management files associated with federally bond- restricted units either on-site or electronically be performed upon project completion and a minimum of every three (3) years thereafter. Non-Compliance For projects which are not satisfying the terms and conditions stated in the CDLAC Resolution, the Housing Authority will provide written notification of such non-compliance to the Project Sponsor and provide two (2) weeks for Project Sponsors to provide any further information or documentation that may demonstrate continuing compliance. Should the Housing Authority determine such non- compliance continues to exist, the Housing Authority will work with its legal counsel and CDLAC staff to institute remedial action, as necessary, including an action for specific performance or other available remedy, as may be specified within the Regulatory Agreement, Loan Agreement or other loan related documents. The Housing Authority may disqualify a bond application from any Project Sponsor or member of the development partnership who is not in compliance with the Housing Authority’s or CDLAC’s post issuance compliance requirements, guidelines, policies as determined by the Housing Authority and/or by CDLAC. Transfer of Ownership The Housing Authority reserves the right to approve any voluntary change in ownership of a bond- financed project (i) to another owner; (ii) that results in a transfer of fifty percent (50%) or more of the total equity interests in a project owner or (iii) that results in a transfer of any general partner or managing member interest in the project owner. Such approval of transfer ownership shall be at the discretion of the Housing Authority subject to any additional requirements set for in the applicable tax certificate or Regulatory Agreement. The Housing Authority shall review management practices of the Page 65 of 87 City of Chula Vista Housing and Homelessness Advisory Commission May 8, 2024, Agenda Chula Vista Housing Authority Post-Issuance Compliance Procedures 34 proposed transferee’s current and previously owned multifamily housing rental properties. Any proposed transferee (including individuals with an ownership) whose currently owned multifamily housing rental properties have been found by the Housing Authority to have deficiencies that have not been resolved within the time frame prescribed by the City, Housing Authority, or other local government authorities, may not assume ownership of or an ownership interest in an any bond- financed project. The Housing Authority may initiate additional inspections to verify findings. Carryforward Election With respect to each allocation of tax-exempt private activity bond issue authority to the Housing Authority in a given calendar year for which less than all of the allocation volume cap was used, the Housing Authority staff shall contact CDLAC requesting confirmation of the amount, if any, of carryforward election the Housing Authority shall make under Section 146(f) of the Code and the Housing Authority will timely file a Form 8328 with the IRS. Arbitrage Rebate Compliance The Project Sponsor shall comply with all applicable federal tax laws set forth in the tax or arbitrage certificate and bond documents, including arbitrage rebate compliance. Upon request, the Project Sponsor shall provide the Housing Authority documentation that verifies the Project Sponsor’s compliance with federal tax laws set forth in the tax or arbitrage certificate and bond documents, including rebate compliance reports. Other Required Disclosures The Project Sponsor shall be solely responsible of any and all disclosures under any applicable Securities and Exchange Commission and any Municipal Securities Rulemaking Board (MSRB) rules, requirements and regulations, including but not limited to fixed rate bond issuance with Fannie Mae and/or Freddie Mac involvement. Page 66 of 87 City of Chula Vista Housing and Homelessness Advisory Commission May 8, 2024, Agenda Chula Vista Housing Authority Post-Issuance Compliance Procedures 35 SAMPLE FORMS TO FOLLOW Page 67 of 87 City of Chula Vista Housing and Homelessness Advisory Commission May 8, 2024, Agenda Chula Vista Housing Authority Post-Issuance Compliance Procedures 36 Page 68 of 87 City of Chula Vista Housing and Homelessness Advisory Commission May 8, 2024, Agenda Chula Vista Housing Authority Post-Issuance Compliance Procedures 37 Page 69 of 87 City of Chula Vista Housing and Homelessness Advisory Commission May 8, 2024, Agenda Chula Vista Housing Authority Post-Issuance Compliance Procedures 38 Page 70 of 87 City of Chula Vista Housing and Homelessness Advisory Commission May 8, 2024, Agenda Chula Vista Housing Authority Post-Issuance Compliance Procedures 39 Page 71 of 87 City of Chula Vista Housing and Homelessness Advisory Commission May 8, 2024, Agenda Chula Vista Housing Authority Post-Issuance Compliance Procedures 40 Page 72 of 87 City of Chula Vista Housing and Homelessness Advisory Commission May 8, 2024, Agenda Chula Vista Housing Authority Post-Issuance Compliance Procedures 41 Page 73 of 87 City of Chula Vista Housing and Homelessness Advisory Commission May 8, 2024, Agenda Chula Vista Housing Authority Post-Issuance Compliance Procedures 42 Page 74 of 87 City of Chula Vista Housing and Homelessness Advisory Commission May 8, 2024, Agenda Chula Vista Housing Authority Post-Issuance Compliance Procedures 43 Page 75 of 87 City of Chula Vista Housing and Homelessness Advisory Commission May 8, 2024, Agenda Chula Vista Housing Authority Post-Issuance Compliance Procedures 44 Page 76 of 87 City of Chula Vista Housing and Homelessness Advisory Commission May 8, 2024, Agenda Chula Vista Housing Authority Post-Issuance Compliance Procedures 45 Page 77 of 87 City of Chula Vista Housing and Homelessness Advisory Commission May 8, 2024, Agenda Chula Vista Housing Authority Post-Issuance Compliance Procedures 46 Page 78 of 87 City of Chula Vista Housing and Homelessness Advisory Commission May 8, 2024, Agenda Chula Vista Housing Authority Post-Issuance Compliance Procedures 47 Page 79 of 87 City of Chula Vista Housing and Homelessness Advisory Commission May 8, 2024, Agenda Chula Vista Housing Authority INDEX 48 INDEX Bond Issuance Application and supporting documents requirements ................................................................................ 9 Fee Structure for issuance and ongoing annual administration................................................................ 21 Requirements for inducement & TEFRA Resolutions and TEFRA public hearings .............................. 13 Parameters for issuer liability for bond issuance or repayment of bonds ................................................. 1 Indemnification requirements with respect to the financing and the project ......................................... 15 Procedures and requirements for private placement purchases and public sales of bonds ................. 17 Underwriter selection criteria and procedures............................................................................................ 13 Credit enhancement requirements ................................................................................................................ 17 Bond Counsel selection criteria and procedures ......................................................................................... 12 Loan to value restrictions/limits ...................................................................................................................... 8 Interest rate restrictions/limits ......................................................................................................................... 8 Requirements for offering materials or disclosure documents ................................................................. 14 Maximum loan amount .................................................................................................................................... 8 Minimum bond ratings ................................................................................................................................... 16 Minimum/maximum bond denominations ................................................................................................. 17 Limitations on uses of bond proceeds .......................................................................................................... 20 Rent and income limitations (if applicable) ................................................................................................... 4 Affordability requirements .............................................................................................................................. 5 Public benefit requirements ............................................................................................................................. 4 Debt to income requirements ........................................................................................................................... 8 Local review and approval requirements .................................................................................................... 11 Review procedures and requirements for financing structure, financing documents and tax-exempt status ............................................................................................................................................. 11 Developer and ownership partnership requirements and limitations ....................................................... 9 Property management requirements and limitations ............................................................................... n/a Management plan requirements ................................................................................................................. n/a Page 80 of 87 City of Chula Vista Housing and Homelessness Advisory Commission May 8, 2024, Agenda Chula Vista Housing Authority INDEX 49 Procedure for determining developer fee and developer fee limits ........................................................... 8 ID any third-party contractors and describe rights, obligations and limitations of third- party contractors .............................................................................................................................................. 12 Exceptions/waivers of policy requirements and procedures for requesting a waiver ..................... 11, 18 Post Issuance Compliance Identification of third-party contractors engaged in compliance verification, reporting and/or auditing and describe rights, obligations and limitations of third-party contractors ............................ 30 Identification of parties responsible for compliance verification and reporting..................................... 29 Commencement of Qualified Project Period and reporting requirements and procedures ................................................................................................................................................ 30 Compliance forms for reporting .................................................................................................................... 34 Compliance verification, reporting and auditing procedures: .................................................................. 30 Affordability (i.e.: # of units at 50% AMI and 60% AMI) (QRRP only) ...................................................... Income limits (QRRP only) ............................................................................................................................ Utility allowances (QRRP only) ..................................................................................................................... Service amenities and other public benefits required by CDLAC resolution.................................................. Arbitrage rebate............................................................................................................................................... Frequency of compliance verification, reporting and audits ..................................................................... 30 Issuer document retention procedures and time limits ............................................................................. 29 Site-based document retention procedures and time limits ...................................................................... 30 Procedures for reporting compliance/non-compliance to regulatory agencies and other external entities (i.e.: CDLAC, TCAC, etc.) .................................................................................................. 30 Criteria and procedures for seeking revised resolutions and/or regulatory agreements......................... Non-compliance correction procedures and penalties ............................................................................... 32 Page 81 of 87 City of Chula Vista Housing and Homelessness Advisory Commission May 8, 2024, Agenda v . 0 03 P a g e | 1 City of Chula Vista Boards & Commissions Housing & Homeless Advisory Commission May 8, 2024 Item No. 5.2 ITEM TITLE Housing Authority Policy: Consideration of Revisions to the Chula Vista Housing Authority’s Multifamily Mortgage Revenue Bond Policies Location: No specific geographic location Recommended Action: Commission provide an advisory recommendation to the Chula Vista Housing Authority on the proposed revisions to its Multifamily Mortgage Revenue Bond Policies. SUMMARY As a qualified issuer of Multifamily Mortgage Revenue bonds, the Chula Vista Housing Authority (“Housing Authority”) is required to maintain a document of its Bond Policies. Revisions to the Bond Policies are now being proposed in order to exercise greater regulatory oversight over affordable projects in Chula Vista. ENVIRONMENTAL REVIEW The activity is not a “Project” as defined under Section 15378 of the CEQA State Guidelines; therefore, pursuant to State Guidelines Section 15060(c)(3) no environmental review is required. DISCUSSION Multifamily housing revenue bonds, also known as private activity bonds, are a common method of financing affordable housing developments. Bonds are awarded, but not issued, by the California Debt Limit Allocation Committee (“CDLAC”). The bonds are attractive to investors because their interest income is exempt from state and federal taxes. The federal government sets a “bond cap” limiting the amount of bonds that can be issued annually within each state. To ensure that California’s bond capacity does not exceed federal limits, CDLAC determines which projects are to receive an allocation of bonds, and then transfers the authority for that amount to the bond issuer for each project. CDLAC and the California Tax Credit Allocation Committee (“CTCAC”) are closely aligned agencies, and projects awarded bonds are nearly always awarded federal 4% low-income housing tax credits as well. Currently, bonds may be issued either by the Chula Vista Housing Authority (“Housing Authority”) or by other qualified entities such as the California Statewide Community Development Authority (“CSCDA”), the California Municipal Finance Authority (“CMFA”), or other joint powers authorities (“JPAs”). The proposed change would require the Chula Vista Housing Authority to be the bond issuer for all affordable projects located within Chula Vista, except in rare circumstances. The primary reason for the proposed change is that it would give the City greater oversight over affordable developments in Chula Vista. The City, through the Housing Authority, would have regulatory oversight over Page 82 of 87 City of Chula Vista Housing and Homelessness Advisory Commission May 8, 2024, Agenda P a g e | 2 the projects, and therefore would be able to take a more hands-on approach to addressing any maintenance or compliance issues. The City has a vested interest in ensuring the long-term success of affordable developments in Chula Vista, whereas the other conduit bond issuers have little connection to Chula Vista beyond the limited scope of their role as bond issuer. Ultimately, the City is already expected to ensure that its housing stock is free of blight, crime, and nuisance activity; having a regulatory agreement in place would allow the City to intervene more quickly to address problem activities. Additionally, bond origination fees and ongoing compliance fees will provide an ongoing source of revenue to cover the costs of program administration. Outside issuers would still be able to issue bonds to projects where warranted by special circumstances, such as a bond issuance spanning multiple jurisdictions. Additional changes to the Bond Policies would ensure that the City’s Bond Policies are consistent with CDLAC requirements for income and rent limits and make other minor updates. Legal counsel may provide additional guidance to ensure that the Bond Policies comply with applicable statutes. The proposed changes were drafted in consultation with staff from the San Diego Housing Commission, City of Los Angeles, and City of San Jose, all of whom have similar policies. DECISION-MAKER CONFLICT Staff has reviewed the decision contemplated by this action and has determined that it is not site-specific and consequently, the real property holdings of the Housing & Homeless Advisory Commission do not create a disqualifying real property-related financial conflict of interest under the Political Reform Act (Cal. Gov't Code § 87100, et seq.). Staff is not independently aware and has not been informed by any Housing & Homeless Advisory Commission Commissioner, of any other fact that may constitute a basis for a decision-maker conflict of interest in this matter. ATTACHMENTS 1. Bond Policies (Redline) Staff Contact: Brian Warwick, Housing Manager Stacey Kurz, Director of Housing & Homeless Services Page 83 of 87 City of Chula Vista Housing and Homelessness Advisory Commission May 8, 2024, Agenda v . 0 03 P a g e | 1 City of Chula Vista Boards & Commissions Housing & Homeless Advisory Commission May 8, 2024 Item No. 5.3 ITEM TITLE Affordable Housing Funding: Approving the Commitment of $4,000,000 in City Funds for a New Permanent Supportive Rental Housing Development to be Located at 610 Paseo Del Rey, to be Developed by Wakeland Housing and Development Corporation Location: 610 Paseo Del Rey (91910) Recommended Action: Commission provide an advisory recommendation to the City Council to provide financial assistance, in an amount not to exceed $4,000,000, for the construction of the Project. SUMMARY In response to a Request for Proposals, Wakeland Housing and Development Corporation (“Wakeland”) is being recommended for $4,000,000 in HOME Investment Partnership (“HOME”) and HOME American Rescue Plan Program (“HOME-ARP”) funds towards the construction costs, to support creation of a new affordable permanent supportive rental housing project to be located at 610 Paseo Del Rey (“Project”). Approval of the recommended action will cause the Project to be recommended for a funding commitment by City Council and help support the construction of the Project. ENVIRONMENTAL REVIEW CEQA: This action, approval of a loan for construction of the affordable housing project, is not a “project” and is therefore not subject to the California Environmental Quality Act (CEQA) pursuant to State CEQA Guidelines Section 15060(c)(3). This determination is predicated on Section 15004 of the Guidelines, which provides direction to lead agencies on the appropriate timing for environmental review. This action does not constitute approval of a project. The proposed action is approval of a loan for construction of the affordable housing project, but such loan is contingent upon subsequent completion of the environmental review in accordance with CEQA Section 15004, to the extent necessary. This action will not foreclose review of alternatives or mitigation measures by the public as part of the CEQA process. NEPA: Federal funds constitute a portion of the proposed loan for construction of the affordable housing project. A final reservation of federal funds shall occur only upon satisfactory completion of the environmental review and receipt by the City of Chula and a release of funds from the U.S. Department of Housing and Urban Development under 24 CFR Part 58 of the National Environmental Policy Act (NEPA). Page 84 of 87 City of Chula Vista Housing and Homelessness Advisory Commission May 8, 2024, Agenda P a g e | 2 DISCUSSION Competitive Selection Process for Permanent Supportive Housing Projects Permanent Supportive Housing (“PSH”) is a form of housing that pairs long-term housing with low barriers to entry at an affordable cost with intensive supportive services designed to address the individual needs of residents. PSH is widely considered a best practice for ensuring the long-term stability of chronically homeless individuals, especially those in need of treatment for substance dependency or mental health challenges. In 2023, the City announced its intention to provide funding for one or more PSH developments. The City used a two-step selection process to screen proposals for new construction of projects with a PSH component. It first issued a Request for Qualifications (“RFQ”), followed by a Request for Proposals (“RFP”). The RFQ for development teams to construct, rehabilitate, and/or operate PSH was issued on July 24, 2023 and concluded on August 24, 2023. The purpose of the RFQ was to evaluate general organizational experience and capacity rather than project-specific proposals. The evaluation criteria included developer experience, service provider experience, and experience financing affordable housing projects. Four organizations submitted responses to the RFQ: Wakeland, PATH Ventures (PATH), Milestone Housing Group, LLC (Milestone), and RPM JT2 Horizon. An ad hoc committee of City staff members evaluated the proposals and determined that three of the four organizations (Wakeland, Path, and Milestone) met the minimum criteria for qualifications. The RFP to select a partner for new construction of PSH was then issued on March 11, 2024. The RFP evaluation criteria included a set of minimum threshold criteria as well as competitive scoring criteria. The threshold criteria was set in order to ensure that project submittals are complete and responsive; that projects have a viable financing plan and a clear path to obtaining planning entitlements; that projects set aside a minimum number of units to PSH, and the PSH units provide appropriate services and rental assistance to the targeted population; and that projects are eligible to receive HOME funds, including HOME funds set aside for Community Housing Development Organizations (“CHDOs”). A CHDO is a private nonprofit, community-based organization that has staff with the capacity to develop affordable housing for the community it serves. In order to qualify for designation as a CHDO, the organization must meet certain requirements pertaining to their legal status, organizational structure, and capacity and experience. For all projects that met the threshold criteria, the competitive evaluation portion consisted of the following criteria, ranked on a scale of 0-100: PSH (25 points) – Up to 15 points were awarded to projects based on the number of PSH units provided. Up to 10 additional points were awarded based on the quality, detail, and readiness of the supportive services plan. Geographic Equity (25 points) – Up to 15 points were awarded to projects located in “highest resource,” “high resource,” or “moderate resource” areas, according to opportunity maps published by the California Tax Credit Allocation Committee (“CTCAC”). Up to 10 additional points were awarded based on projects’ proximity to amenities such as transit service, parks, libraries, public schools, grocery stores, and medical clinics. Project Readiness (25 points) – Up to 15 points were awarded to projects based on how close they were to obtaining land use approvals. Up to 10 additional points were awarded to projects that had received financing commitments from other public agencies or private lenders. Project Cost (10 points) – Up to 5 points were awarded based on the amount of City funding being sought per unit, and an additional 5 points could be awarded to projects that could demonstrate a Page 85 of 87 City of Chula Vista Housing and Homelessness Advisory Commission May 8, 2024, Agenda P a g e | 3 viable plan to ensure development cost savings through innovative construction or entitlement techniques. Developer experience (5 points) – Up to 5 points were awarded based on an assessment of the developer’s experience and capacity to deliver a completed project. General Proposal Quality (10 points) – Up to 10 points were awarded based on a holistic assessment of the submittal’s thoroughness, attention to detail, and overall quality. The RFP concluded on April 9, 2024. Wakeland was the sole organization to submit a response, on behalf of its project located at 610 Paseo Del Rey. Staff’s initial review found that the submittal was substantially responsive but required clarification or additional information in a handful of areas. Staff submitted a set of follow-up questions for Wakeland, and Wakeland provided satisfactory written responses to these questions shortly thereafter. Project Details The Project as proposed consists of 96 units, including 95 affordable units and one manager’s unit. Of these, 48 units would be designated as PSH and the remainder would be restricted to households at 60% of Area Median Income (“AMI”). The Project would consist of a mix of studios and 1-, 2-, and 3-bedroom units, with the PSH units being studios and 1-bedroom units. (This is appropriate, since households qualifying for PSH units are typically composed of one or two people.) Wakeland owns the property that the Project will be located on and has demonstrated that the site may be developed at the desired intensity. The Project site is just over three acres in size and is located in an area zoned as R-3-P10 – Apartment Residential Zone, which would allow for up to 27 units per acre. The Project would take advantage of Density Bonus law (California Government Code Section 65915 et seq.) to achieve the desired 96 units. It would also use a state streamlining law, AB 2162, to bypass the discretionary entitlement process and secure permits ministerially. The Project is located in District 2. According to CTCAC’s opportunity map classification system, it is located in a “low resource” area, so it did not earn points for that portion of the evaluation criteria. However, it is situated within a half-mile or less of various amenities, including multiple bus stops, Paseo Del Rey Park, Rogers Elementary School, 99 Ranch Market grocery store, and a Rite Aid Pharmacy and is located in an area that does not currently have any other affordable units for families or individual adults. The nearest affordable complex is Villa Serena Senior Apartments, located 1.5 miles away at 1231 Medical Center Drive. The 48 PSH units would consist of 25 units for veterans experiencing homelessness (supported by HUD- VASH Vouchers) and 23 units for persons with a serious mental illness who are experiencing homelessness (supported by vouchers in connection with the California Department of Housing and Community Development’s No Place Like Home program). Supportive services would be provided by the County of San Diego Health and Human Services agency and the VA San Diego Health Care System. Additionally, Wakeland would employ an onsite Wellness Coordinator to oversee the service needs of all residents, identify unmet needs, and connect residents with outside resources. Supportive services will include mental health care, treatment for substance dependency, medication management, linkage for attendant care for eligible residents, and other resources. Wakeland, along with its selected property management company, ConAm Management Corporation, has experience managing over 1,000 units of PSH. The voucher commitments for the PSH units will provide a critical subsidy for the successful ongoing operation of the Project. The total development cost for the Project is projected to be approximately $53 Million, or approximately $550,000 per unit. (Given the various labor, financing, and accessibility requirements associated with Page 86 of 87 City of Chula Vista Housing and Homelessness Advisory Commission May 8, 2024, Agenda P a g e | 4 affordable housing development, this is a cost-efficient sum.) In addition to project-based voucher commitments for the 48 PSH units, the Project has been awarded $3,000,000 of funds from the County of San Diego through the Innovative Housing Trust Fund program, and $5,045,073 through the No Place Like Home program. Wakeland is preparing to submit an application for 9% low income housing tax credits (“Tax Credits”) in July 2024, which would be awarded (if successful) in December 2024. A City Council commitment of $4,000,000 prior to the July Tax Credits application deadline would greatly increase the likelihood that the Project is awarded Tax Credits. If awarded Tax Credits, the Project is scheduled to begin construction in March of 2025 and complete construction in the 4th quarter of 2026. The City has partnered with Wakeland on a previous project with a PSH component, Casa Anita Apartments (completed in 2023), and found that Wakeland completed the project efficiently and on budget, and that it has successfully operated the PSH component. The Project met all of the RFP’s threshold criteria and scored 80 points out of 100 on the competitive scoring criteria. City staff have full confidence that the Project can be completed and operated effectively, and that it would represent a significant asset to Chula Vista’s housing stock. Staff are pleased to present the Project for recommendation for a funding commitment. DECISION-MAKER CONFLICT Staff has reviewed the property holdings of the Housing & Homeless Advisory Commission members and has found no property holdings within 1,000 feet of the boundaries of the property which is the subject of this action. Consequently, this item does not present a disqualifying real property-related financial conflict of interest under California Code of Regulations Title 2, section 18702.2(a)(7) or (8), for purposes of the Political Reform Act (Cal. Gov’t Code §87100, et seq.). Staff is not independently aware and has not been informed by any Housing & Homeless Advisory Commission Commissioner, of any other fact that may constitute a basis for a decision-maker conflict of interest in this matter. ATTACHMENTS None Staff Contact: Brian Warwick, Housing Manager Stacey Kurz, Director of Housing & Homeless Services Page 87 of 87 City of Chula Vista Housing and Homelessness Advisory Commission May 8, 2024, Agenda