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Home My WebLink About2008/09/16 Item 4 CITY COUNCIL AGENDA STATEMENT ITEM TITLE: SUBMITTED BY: REVIEWED BY: SEPTEMBER 16, 2008, Item~ RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA PURSUANT TO SECTION 147(F) OF THE INTERNAL REVENUE CODE APPROVING THE CONVERSION OF TAXABLE BOt-..'DS ISSUED BY THE CITY OF CHULA VISTA FOR TERESINA APARTMENTS TO TAX EXEMPT STATUS A.ND APPROVING THE MATURITY DATE THEREOF ASSISTANT DIRECTOR REDEVELOPMENT & HOUSINajtiJI CITY ~'\NAGE~IL . 4/5THS VOTE: YES D NO ~ SUM.MARY In 2006, multi-family revenue bonds were refunded utilizing a variable rate mode. Due to tax law restrictions, the bonds could not be tax-exempt, but could be converted to tax-exempt status at a particular date. The City is now proceeding with the conversion of the City of Chula Vista Variable Rate Demand Multifamily Housing Revenue Refunding Bonds to tax-exempt. The City Council is asked to adopt a resolution approving the conversion of the bonds to tax-exempt status and authorizing the remarketing 0 f the bonds as tax -exempt. ENVIRONMENTAL REVIEW The Environmental Review Coordinator has reviewed the proposed activity for compliance with the California Environmental Quality Act (CEQA) and has determined that the activity is not a "Project" as defmed under Section 15378(b)(4) of the State CEQA Guidelines; therefore, pursuant to Section 15060(c)(3) of the State CEQA Guidelines the activity is not subject to CEQA. Thus, no further environmental review is necessary. RECOMMENDATION Adopt the resolution. BOARDS/COM.l\1ISSION RECOMMENDATION Not Applicable 4-1 SEPTEMBER 16, 2008, Item---=L Page 2 of2 DISCUSSION In November, 1998, the City of Chula Vista issued two series of Multifamily Housing Revenue Bonds-(the Prior Bonds) in total aggregate principal amount of $43,000,000, to finance a 440- unit multifamily housing project known as Teresina Apartments, which is currently owned by EQR - Teresina Limited Partnership, a Delaware limited partnership (the Borrower). In connection with the issuance of the Prior Bonds, the City Council approved the issuance of the Prior Bonds pursuant to Section 147(1) of the Internal Revenue Code of 1986, after a public hearing following reasonable public notice. In April 2006, the City issued its Variable Rate Demand Multifamily Housing Refunding Revenue Bonds, Series 2006A, in the aggregate principal of $37,940,000 (the Refunding Bonds), in order to refund all outstanding Prior Bonds and pay a portion of the costs of issuing the Refunding Bonds. Due to tax law restrictions, the Refunding Bonds could not be tax-exempt until October 3,2008. The Borrower now wishes to convert the Refunding Bonds to tax-exempt bonds pursuant to the terms and conditions set forth in the Trust Indenture, by and between the City and U.S. Bank National Association, as trustee, dated as of April I, 2006. The maturity of the Refunded Bonds was extended beyond the maturity of the Prior Bonds, necessitating approval by the City Council pursuant to Section 147(1) of the Internal Revenue Code of 1986 (Tax and Equity Fiscal Responsibility Act or TEFRA hearing). Adoption of the resolution approves the conversion of the Refunding Bonds to tax-exempt bonds, authorizes the remarketing of the Refunding Bonds as tax-exempt bonds and authorizes certain officers of the City to execute all related documents necessary in the conversion. DECISION MAKER COl'<""FLICT 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. FISCAL IMP ACT 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. The bonds are secured by the project and will not constitute a liability to or obligation of the City. Prepared by: Amanda Mills, Redevelopment & Housing Manager, Redevelopment & Housing 4-2 RESOLUTION NO. 2008 - RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA PURSUANT TO SECTION I47(F) OF THE INTERNAL REVENUE CODE APPROVING THE CONVERSION OF TAXABLE BONDS ISSUED BY THE CITY OF CHULA VISTA FOR TERESINA i\.PARTMENTS TO TAX EXEMPT STATUS A1~D APPROVING THE MATURITY DATE THEREOF WHEREAS, Chapter 7 of Part 5 of Division 31 of the Health and Safety Code of the State of California (the "Act") authorizes cities to finance the acquisition, construction and development of multifamily rental housing for persons and families meeting the income limitations contained in the Act; WHEREAS, in November, 1998, pursuant to the Act, the City of Chula Vista, California (the "City") issued Multifamily Housing Revenue Bonds, Series 1998A (Gateway TO'<VTI Center) (the "Series 1998A Bonds") and Subordinate Multifamily Housing Revenue Bonds (Gateway Town Center), Series 1998B (the "Series 1998B Bonds" and, together with the Series 1998A Bonds, the "Prior Bonds") in total aggregate principal amount of $43,000,000, to finance a 440-unit multifamily housing project known as "Teresina Apartments" located at the southwest corner of East Palomar Street and La Media Road (the "Project"), which is currently o'<Vued by EQR - Teresina Limited Partnership, a Delaware limited partnership (the "Borrower"); and WHEREAS, in connection with the issuance of the Prior Bonds, the City Council of the City (the "City Council") approved the issuance of the Prior Bonds pursuant to Section 147(1) of the Internal Revenue Code of 1986 (the "Code"), after a public hearing following reasonable public notice; and WHEREAS, pursuant to the provisions of Article 11 of Chapter 3 of Part 1 of Division 2 of Title 5 of the Government Code of the State of California (the "Refunding Law"), on April 27, 2006, the City issued its Variable Rate Demand Multifamily Housing Refunding Revenue Bonds (Teresina Apartments), Series 2006A, in the aggregate principal of S37,940,000 an a final maturity date of May 15, 2036 (the "Refunding Bonds"), pursuant to the Trust Indenture, by and between the City and U.S. Bank National Association, as trustee (the "Trustee"), dated as of April 1, 2006 (the "Indenture"); and WHEREAS, the proceeds of the Refunding Bonds were used to refund all outstanding Prior Bonds and pay a portion of the costs of issuing the Refunding Bonds; and WHEREAS, the Refunding Bonds were initially issued as taxable bonds, which, pursuant to the terms and conditions set forth in Section 2.19 of the Indenture, may be converted to tax exempt bonds on a date 88 days prior to December 30, 2008 (the "Effective Date"); and 1 4-3 WHEREAS, in order for interest on the Refunding Bonds to be tax-exempt, Section 147(f) of the Code requires approval by the City Council of the issuance of the Refunded Bonds, the maturity date of the Refunding Bonds of May 15, 2036 (the "Maturity Date"), and the conversion of the Refunding Bonds to ta'{-exempt bonds after a public hearing following reasonable public notice; and WHEREAS, notice of a public hearing with respect to the proposed issuance of the Bonds was published in a newspaper of general circulation in the City on August 29, 2008; and WHEREAS, the hearing was held on September 16,2008, and an opportunity was provided for interested persons to express their views on the issuance of the Refunding Bonds, the maturity date of the Refunding Bonds of May 15, 2036 (the "Maturity Date"), and the conversion of the Refunding Bonds to tax-exempt bonds; and NOW THEREFORE BE, IT RESOLVED by the City Council of the City of Chula Vista as follows: 1. The above recitals, and each of them, are true and correct. 2. The City Council of the City ofChula Vista, pursuant to Section 147(f) of the Code, hereby approves the Maturity Date of the Refunding Bonds and the conversion ofthe Refunding Bonds to tax-exempt bonds. 3. The remarketing of the Refunding Bo,nds as tax-exempt bonds on the Effective Date is hereby authorized pursuant to the tenus and conditions set forth in the Indenture. 4. All actions heretofore taken by the officers and agents of the City with respect to the sale and issuance of the Refunding Bonds and the conversion of the Refunding Bonds to tax-exempt bonds are hereby approved, confirmed and ratified. The Mayor, the City Manager, the Deputy City Manager, the Finance Director, the City Attorney, and their designees, are hereby authorized and directed, for and in the name and on behalf of the City, to do any and all things and take any and all actions and execute and deliver any and all certificates, agreements and other documents, which they, or any of them, may deem necessary or advisable in order to consummate the lawful remarketing of the Refunding Bonds as tax-exempt bonds in accordance with this Resolution in accordance with the terms of the Indenture and other documents relating to the Refunding Bonds. 5. If any section, paragraph or provision of this Resolution shall be held to be invalid or unenforceable for any reason, the invalidity or unenforceability of such section, paragraph or provision shall not affect any remaining provisions of this Resolution. 2 4-4 6. This Resolution shall take effect immediately upon its adoption. Presented by Approved as to form by Eric Crockett Assistant Director of Redevelopment and Housing 4-5 db d d i1 /-. .p j JA N..,-,.,/ D tk~ Bart Miesfeld V Interim City Attorney , ~