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HomeMy WebLinkAbout2007/07/17 Item 11 CHULA VISTA HOUSING AUTHORITY AGENDA STATEMENT July 17,2007, ItemJL ITEM TITLE: HOUSING AUTHORITY RESOLUTION REGARDING ITS INTENTION TO ISSUE TAX EXEMPT OBLIGATIONS FOR A PROPOSED DEVELOPMENT OF THE LANDINGS AFFORDABLE APARTMENTS. ACTING DIRECTO~O COMMUNITY DEVELOPMEN~ CITY MANAGER ACTING ASSISTA T CITY MANAGER ~ SUBMITTED BY: REVIEWED BY: 4/5THS VOTE: YES D NO 0 BACKGROUND On March 20, 2007, the City of Chula Vista City Council conditionally approved $920,000 in financial assistance from HOME Investment Partnership funds, to assist fmancing the development of "The Landings" as an affordable rental community. The Landings apartments will be located on the comer of Discovery Falls Road and Crossroads Street in Otay Ranch Village 11 in Chula Vista. The development will provide 92 affordable rental units for lower income households. The total financing proposal included Tax Exempt Multi-Family Revenue Bonds, Low Income Housing Tax Credit financing, and the State Multifamily Housing Program (MHP) to support the majority of the project costs. The City of Chula Vista has received a request from Chelsea Investment Corporation ("Developer") to consider the issuance of tax exempt obligations toward development costs. The Developer is in the process of preparing an application for an allocation of tax credits and private activity bonds for multi-family projects from the California Debt Limit Allocation Committee (CD LAC) and is requesting that the Chula Vista Housing Authority be the vehicle for applying for an aggregate amount not to exceed $17.5 million. The application must be submitted by July 27, 2007. The bond allocation and tax credit contributions will be used to substantially finance the project. At this time, it is requested that the Housing Authority adopt a resolution expressing its preliminary intention to issue bonds. The requested action is preliminary and does not 11-1 July 17,2007, Item-.lL Page 2 of5 commit the Authority to issue the bonds. TIris preliminary action is necessary in order to allow the Authority to submit an application to the State bonding authority on behalf of the Developer and to allow the Developer to receive reimbursement out of bond proceeds for costs it incurs leading up to the actual sale of bonds. At a later date, the City Council will be asked to hold a public hearing on the question of whether the Housing Authority should issue tax exempt bonds for the financing of the project and to approve the issuance, sale, and delivery of multi-family housing revenue bonds by the Housing Authority at the time a bond allocation is received. If successful in obtaining a bond commitment from CDLAC, the Developer plans to come back to the Authority to request fmal approval for the issuance of the bonds. ENVIRONMENTAL REVIEW The Environmental Review Coordinator has reviewed the proposed project for compliance with the California Environmental Quality Act and has determined that the proposed project was adequately covered in previously adopted Final Second Tier Environmental Impact Report, EIR 01-02. Thus, no further CEQA review is necessary. RECOMMENDATION It is recommended that the Housing Authority adopt the resolution regarding its intention to issue tax-exempt obligations for the proposed development of The Landings affordable units, and authorizing the City Manager to execute all necessary documents for processing. BOARDS/COMMISSION RECOMMENDATION On February 28, 2007, the Housing Advisory Commission voted to recommend the development of The Landings at Winding Walk as an affordable rental community and the conditional approval of HOME funds to assist in its financing. DISCUSSION The ADDlicant The Chelsea Investment Corporation has developed several projects in Chula Vista, primarily in eastern Chula Vista to satisfy developer inclusionary housing requirements (Teresina Apartments, Rancho Buena Vista Apartments and Villa Serena). Chelsea Investment Corporation will form a limited partnership, CIC Landings, L.P. to own and operate the development. Chelsea Investment Corporation has developed and financed over 5,100 housing units and has successfully managed low income housing units for over 20 years. The company has a strong and experienced team of professionals. The ProDertv The Landings development will be built within the Winding Walk subdivision of eastern Chula Vista. The low-income units will satisfy the requirements of the City's Program for the Provision of Affordable Housing within the Village II community. The 11-2 July 17,2007, Item-.lL Page 3 of 5 development envisions 92 townhome style units with all units affordable to low income households. The proposed development will consist of 92 3-bedroom units, approximately 1,200 SF each. Each unit will include an enclosed 2-car garage, in-unit washer and dryer, balcony, and full sized appliances. Project amenities include a pool, spa, clubhouse, and a tot lot. The ProDosal All 92 units will be rented on a rent restricted basis to households whose income is at or below 30-60 percent of the Area Median Income as determined by HUD. This project will provide a balance of housing opportunities and fulfill a need in Chula Vista for large family rental housing, particularly in the neighborhoods east of Interstate 805 as outlined in the City of Chula Vista Housing Element. Income and Rent Restrictions For the bond funding, Section 142 (d) of the Internal Revenue Services Code requires either a minimum of twenty percent of the rental units in the Project to be available for occupancy by persons or families whose income does not exceed 50 percent of the area median income (AMI) for the San Diego Primary Metropolitan Statistical Area, or alternatively, at least 40 percent of the rental units are required to be available for occupancy by persons or families whose income does not exceed 60 percent of the AMI. In each case, the units are to be made available at affordable rents established by the applicable State law. Per the Affordable Housing Agreement for the inclusionary obligation, all 92 units must be affordable for low income households. Because of the financing the Developer is pursuing, the entire project will provide rents even lower. The number of units actually restricted by the Affordable Housing Agreement will be 92 low income. Unit No. of Target Inclusionary Proposed Description Units Income Housing Rents Group Obligation 3 Bd/2 Ba 32 30% AMI $1,035 $479 3 Bd/2 Ba 12 50% AMI $1,035 $838 3 Bd/2 Ba 22 55% AMI $1,035 $928 3 Bd/2 Ba 25 60% AMI $1,035 1,018 MGR 1 N/A N/A N/A Total 92 Restricted The Developer proposes to maintain the income and rent restrictions for The Landings for a period not less than fifty-five years, exceeding the 30-year term of the bonds. The income and rent restrictions outlined above are to be incorporated into the Regulatory Agreement for the bonds, which will be recorded against the property. 11-3 July 17, 2007, Item-LL Page 4 of5 Compliance with the income and rent restrictions will be subject annually to a regulatory audit and annual tax credit certification. Compliance with strict property management policies and procedures will ensure that income and rent restrictions will be maintained for the full 55-year compliance period, and will bind all subsequent owners of The Landings, so that the commitment remains in force regardless of ownership. Proposed Financinl! ofProiect Financing and development of The Landings, is proposed as a joint private-public partnership. The Developer will be using Tax Exempt Multi-Family Revenue Bonds, Low Income Housing Tax Credit financing, and the State Multifamily Housing Program (MHP) to support the majority of the estimated $37.3 million ($405,420 per unit) cost of constructing the project. The Developer has requested the Housing Authority of the City of Chula Vista consider the issuance of up to $17.5 million in bonds to be purchased directly on a private placement basis. The permanent bond loan is estimated at approximately $6 million. The initial issuance of $17.5 million is necessary to comply with a requirement to bond for at least fifty percent of the project costs (fifty percent test), which is critical to receipt of the tax credits for the project. The Developer will apply for approximately $11.8 million in Low Income Housing Tax Credits. The permanent Bonds and Tax Credits would cover almost 50 percent of the estimated cost. The balance is expected to be provided by land donation, a small City subsidy and State financing. The required documents will be presented to the City/Housing Authority for approval at such time as fmal approval of the issuance of the bonds and the related bond documents is requested. The proposed total project cost is estimated at $37,298,627 ($405,420 per unit). Below is a summary of development costs and associated sources. COST AMOUNT SOURCE AMOUNT Land Purchase $9,670,000 Master Developer Contribution $1,300,000 Construction $17,135,188 Tax Credit Eauity $11,863,000 Permits & Fees $4,664,216 State MHP Loan $6,931,052 Interest/Fees, Financinl! Costs $1,836,365 Bond $6,004,000 Desil!ll!Enl!ineerinl! $830,000 City Loan $920,000 Develooer Fees $2,457,000 Land Donation $9,660,000 Reserves, Lel!-al, Other $705,858 Deferred Develooer Fee $620,575 TOTAL ESTIMATED COST $37,298,627 TOTAL SOURCES $37,298,627 The City Council conditionally approved $920,000 in fmancial assistance from HOME Investment Partnership funds, to assist 11 units at the extremely low income range. DECISION MAKER CONFLICT Staff has reviewed the property holdings of the City Council and has found no property holdings within 500 feet of the boundaries of the property which is the subject of this action. 11-4 July 17,2007, Item-1L Page 5 of5 FISCAL IMPACT Bond fmancing is a self-supporting program with the owner responsible for the payment of all costs of issuance and other costs and repayment of the bonds. All costs related to the issuance of the bonds will be paid for from bond proceeds or profits. The bonds will be secured by the project and will not constitute a liability to or obligation of the City or Housing Authority. The City of Chula Vista Housing Authority will receive compensation for its services in preparing the bond issuance by charging an origination fee of 1/8 of I % of the bond loan, approximately $21,875. Additionally, staff costs associated with monitoring compliance of the regulatory restrictions and administration of the outstanding bonds will be reimbursed from an armual administrative fee of approximately $7,505 paid to the City by the owner. ATTACHMENTS 1. Locator Map 2. Disclosure Statement Prepared by: Amanda Mills, Housing Manager, Community Development Department 11-5 " ./>' , ~, " " "- " "", / ". /', '..> ", .' / '. ../ ,:', '\..' />" ,." '. / '" / /' './ J ,//':, '<." ')':///'" '\//;v 1,/ / ''-, '< //)~//"~" "-</ ,- " ( // ;" '<"( / ".~/ \ //,/." "'-. /'/ / ,'-, ,/, ('J '\ ' , ,_(./ ^ .' / , ",f.:J \,', ' .( ", ,< /' ~...,~ ./ ' "./ /,,' /', ,_<:~~<(fl )- 'y/ '^'. " ,/ /' ,'~ .../K ./ ... ,h,/ ,', '. v ,-{ / ) ~J/ v''.'?:' ' "" "'/ / '/ ""~,O \, /x/ ,^, ~ ,/" " " '/ M...~r -( / ,,/ /,V"J. / ' ' I/', ,,/,~O~~./ /", ,( /'v/ >,"X /'. '., , ' _' f' ' /' ' ,"C' " ,- ' >./ / ~'V / v/./' ", ,/ ,/- ',//' , " >' /)~ /'/'<) \. S./';<./~,>, <. >',;. ", rcy ? ' , ./ '\ / ,'7.\'1' ./' / /--, x,'" '\. ,/ .{ " ,/ / /,Y"A' " ,/ /" 1'/ /' ,r..., '( /A., /~ /' VA. //'...,// //,,", " "- , )" 'A ,,,/ ;;. /' ,>'YL' I'" ), <, ,./ " (/ " / ' ,,/ -: / ,~ >, //,> <, ,/', , /' " /, V N' /1. "7'<'1 ;>. / / '/ :1' '/ /,/ >>-, ',/ X/'^) ,.(}~// 1 \ }, V /'. / ' \/ v ' '\ ,/ ' / ,''<. /\ \ /./ ./', ,( ;<;>;'~/~/j\0?\"~/~) / 'jl ",< \. \ /'< ./" \ ~ ,// <" ,\XA'l \1/ '1;A~: ( ~ ~V/ " '. \ ~//\ ;., '" , , , " '.... ....." , , " " " , , " " , "'" "" / // /\ "? \ // \~ \ // \~ \ \ / / '\"0 \ \~/,/ ~ //\ . "\ ~ \ \ \ \\ \ \\ "" '" z \ \ \ \ \ " " , .. .. ", '" , , , " , ...... - _0. C a Cb:E E ... .cO v- a a = u <(,g City of Chula Vista Request for Information Affordable Housing Review ATTACHMENT 2 DISCLOSURE STATEMENT (Please Print) The following information must be disclosed: 1. Apolicant - List the names and addresses of all persons having a financial interest in the application. James J. Schmid .. 5993 Avenida Encinas, Suite 101 Carlsbad, CA 92008 2. Owner - List the names and addresses of all persons having any ownership interest in the property involved. James J. Schmid 5993 Avenida Encinas, Suite 101 Carlsbad, CA 92008 Prometheus-Landings, LLC, a to-be-formed limited 5993 Avenida Encinas, Suite 101 Iiabili com an Carlsbad, CA 92008 3. If any person identified pursuant to (1) or (2) above is a corporation or partnership, list the names and addresses of all individuals owning more than 10% of the shares in the shares of the corporation or owning any partnership interest in the partnership. 4. If any person identified pursuant to (1) or (2) above is a non-profot organization or a trust, list the names and addresses of any person serving as officer or director of the non-profit organization or as a trustee or beneficiary of the trust. Community Development Housing Division 276 FOURTH AVE' CHULA VISTA' CALIFORNIA 91910 . (619) 585-5722' FAX (619) 585 -5698 11-7 DISCLOSURE STATEMENT PAGE 2 5. Have you had more than $250 worth of business transacted with any member of City staff, Boards, Commissions, Committees andlor City Council within the past twelve months? YesCl No [i1J If yes, please indicate person(s): Person identified as: 'Any individual, firm, co-partnership, joint venture, association, social club, fraternal organization, corporation, estate trust, receiver, syndicate, this and any other county, city municipality, district or other political subdivision, or any other group or combination acting as a unit.' NOTE: Attach additional pages as necessary. 2 -/7'-07 Date ~,rs --:/ ~/nr/.? Print or Type Name lfi~Aptr hHtF? ,'S;#ftf/L/ Print or Type Name '2- /7'-07 Date ./\ ( \ / "- '---- Community Development Housing Division 276 FOURTH AVE' CHULA VISTA' CALIFORNIA 91910. (619) 585-5722 . FAX (619) 585 -5698 11-8 HA RESOLUTION NO. 2007- RESOLUTION OF THE HOUSING AUTHORITY OF THE CITY OF CHULA VISTA REGARDING ITS INTENTION TO ISSUE TAX-EXEMPT OBLIGATIONS FOR A PROPOSED DEVELOPMENT OF THE LANDINGS AFFORDABLE APARTMENTS WHEREAS, pursuant to Chapter 1 of Part 2 of Division 24 of the Health and Safety Code of the State of California, as amended (the "Act"), the Housing Authority of the City of Chula Vista (the "Authority") is authorized to issue revenue bonds for the purpose of financing the acquisition, construction, rehabilitation, refmancing or development of multifamily rental housing and for the provision of capital improvements in connection with and determined necessary to the multifamily rental housing; and WHEREAS, Chelsea Investment Corporation (herein called the "Borrower"), has requested the Authority to issue and sell multifamily housing revenue bonds (the "Bonds") pursuant to the Act for the purpose of financing the development of a 92 affordable units to be located on the comer of Discovery Falls Road and Crossroads Street in Otay Ranch Village 11, in the City of Chula Vista, as identified in Exhibit A hereto (the "Project"); and WHEREAS, as a part of financing the development of the Project, the Authority desires to reimburse the Borrower, but only from Bond proceeds, for expenditures (the "Reimbursement Expenditures") made in connection with the Project within the period from the date 60 days prior to the adoption of this Resolution to the date of issuance of the Bonds; and WHEREAS, Section 1.103-8(a)(5) and Section 1.150-2 of the Treasury Regulations require the Authority to declare its reasonable official intent to reimburse prior expenditures for the Project with proceeds of a subsequent tax-exempt borrowing; and WHEREAS, the Authority wishes to declare its intention to authorize the issuance of Bonds for the purpose of financing costs of the Project (including reimbursement of the Reimbursement Expenditures, when so requested by the Borrower upon such terms and conditions as may then be agreed upon by the Authority, the Borrower and the purchaser of the Bonds) in an aggregate principal amount not to exceed $17,500,000, as set forth in Exhibit A; and WHEREAS, Section 146 of the Internal Revenue Code of 1986 limits the amount of multifamily housing mortgage revenue bonds that may be issued in any calendar year by entities within a state and authorizes the governor or the legislature of a state to provide the method of allocation within the state; and WHEREAS, Chapter 11.8 of Division 1 of Title 2 of the California Government Code governs the allocation of the state ceiling among governmental units in the State of California having the authority to issue private activity bonds; and 11-9 HA Resolution No. 2007- Page 2 WHEREAS, Section 8869.85 of the California Government Code requires a local agency desiring an allocation of the state ceiling to file an application with the California Debt Limit Allocation Committee ("CDLAC") for such allocation, and the Co=ittee has certain policies that are to be satisfied in connection with any such allocation; NOW, THEREFORE, BE IT RESOLVED, by the Board of Commissioners of the Housing Authority of the City ofChula Vista, as follows: Section 1. Finding and Determinations. (a) The above recitals, and each of them, are true and correct. The Authority hereby determines that it is necessary and desirable to provide financing for the Project (including reimbursement of the Reimbursement Expenditures) by the issuance and sale of Bonds pursuant to the Act in aggregate principal amount not to exceed $17,500,000, as set forth in Exhibit A, subject to authorization of the issuance of the Bonds by resolution of the Authority at a meeting to be held for such purpose. The expected date of issue of the Bonds is within eighteen (18) months of the later of the date the first Reimbursement Expenditure was made and the first date the Project is placed in service and, in no event, later than three years after the date of the first Reimbursement Expenditure. (b) Proceeds of the Bonds to be used to reimburse Project costs are not expected to be used directly or indirectly to pay debt service with respect to any obligation or to be held as a reasonably required reserve or replacement fund with respect to an obligation of the Authority or any entity related in any manner to the Authority, or to reimburse any expenditure that was originally paid with the proceeds of any obligation, or to replace funds that are or will be used in such manner. (c) As of the date hereof, the Authority has a reasonable expectation that the Bonds will be issued to reimburse Project costs. This Resolution is consistent with the budgetary and fmancial circumstances of the Authority, as of the date hereof. The Bonds will be repaid solely from proceeds of the Bonds and amounts paid by the Borrower. No other moneys are, or are reasonably expected to be, reserved, allocated on a long-term basis, or otherwise set aside by the Authority (or any related party) pursuant to its budget or financial policies to repay the Bonds. Section 2. Declaration of Official Intent. This resolution is being adopted by the Authority solely for purposes of establishing compliance with the requirements of Section 1.103- 8(a)(5) and Section 1.150-2 of the Treasury Regulations. In such regard, the Authority hereby declares its official intent to use proceeds of indebtedness to reimburse the Reimbursement Expenditures. This action is taken expressly for the purpose of inducing the Borrower to undertake the Project, and nothing contained herein shall be construed to signify that the Project complies with the planning, zoning, subdivision and building laws and ordinances applicable thereto or to suggest that the Authority, the City or any officer or agent of the City will grant any such approval, consent or permit that may be required in connection with the development of the Project, or that either the Authority or the City will make any expenditure, incur any indebtedness, or proceed with the financing of the Project. 11-10 HA Resolution No. 2007- Page 3 Section 3. Application to CDLAC. The City Manager and/or the program managers of the Authority are hereby authorized and directed to apply to CDLAC for an allocation from the state ceiling of private activity bonds to be issued by the Authority for the Project in an amount not to exceed $17,500,000, and to take any and all other actions as may be necessary or appropriate in connection with such application, including but not limited to the payment of fees, the posting of deposits and the provision of certificates, and any such actions heretofore taken by such officers and program managers are hereby ratified, approved and confirmed. Because the amount of private activity bond allocation is limited, such officers and/or program managers of the Authority are also authorized to resubmit the application to CDLAC one or more times in the event the application is denied by CDLAC. Section 4. adoption. Effective Date. Ibis resolution shall take effect immediately upon its Presented by Moore City Attorney Ann Hix ~ Acting Director of Community Development . 11-11 Name: Location: Number of Units: Maximum Bond Amount: EXHIBIT A DESCRIPTION OF PROJECT The Landings Comer of Discovery Falls Road and Crossroads Street in Otay Ranch Village II 92 $17,500,000 11-12