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HomeMy WebLinkAbout2009/05/12 Item 8 CHULA VISTA HOUSING AUTHORITY AGENDA STATEMENT MAY 12, 2009, Item~ ITEM TITLE: RESOLUTION OF THE HOUSING AUTHORITY OF THE CITY OF CHULA VISTA REGARDING ITS INTENTION TO ISSUE TAX-EXEMPT OBLIGATIONS FOR THE LANDINGS II AFFORDAB/~fAPARTMENTS DEPUTY CITY MANAG~DEVELOPMENT SERVICES DIRECTOR CITY MANAG~ 4/5THS VOTE: YES D NO I X I SUBMITTED BY: REVIEWED BY: SUMMARY Chelsea Investment Corporation (CIe) has proposed the development and construction of a 143-unit affordable housing development, known as The Landings II, located at the northwest corner of Discovery Falls Drive and Crossroads Street within the Winding Walk master planned community (the Project). To finance the majority of the costs of the Project, CIC is requesting that the Housing Authority consider the issuance of a maximum of $42 million in tax exempt obligations. ENVIRONMENT AL REVIEW The Environmental Review Coordinator has reviewed the proposed project for compliance with the California Environmental Quality Act (CEQA) 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 or documentation is necessary. Additionally, the Environmental Review Coordinator has reviewed the proposed project for compliance with the National Environmental Policy Act (NEP A) due to the use of federal funds, and has determined that the proposed project was adequately covered in a previously adopted Environmental Assessment (Project ill M-06- MC-07-0505) and a Finding of No Significant Impact (FONSI) has been prepared pursuant to Title 24, Part 58, Subpart E of the U.S. Department of Housing and Urban Development (Hl.JD) Environmental Guidelines. Thus, no further NEP A environmental review or documentation is necessary. RECOMMENDATION It is recommended that the Housing Authority adopt the resolution regarding its intention to issue tax-exempt obligations for a proposed development of The Landings II affordable apartments. 8-1 MAY 12, 2009, Item~ Page 2 of 5 BOARDS/COMMISSION RECOMMENDA nON On January 28, 2009, the Housing Advisory Commission voted to recommend the development of The Landings II at Winding Walk as an affordable rental community and the conditional approval of HOME funds to assist in its financing. On August 1, 2005, the Design Review Committee (DRC) reviewed and approved the proposed site plans and architectural elevations for the Project. DISCUSSION Background Brookfield Shea Otay, LLC, master developer for Otay Ranch Village 11 (aka Winding Walk), is to provide 207 total affordable units (92 low-income and 115 moderate-income) within its Neighborhood R-19 in satisfaction of its obligations under the City's Balanced Communities Policy of the Housing Element. The Landings apartment development, located on the northeast corner of Eastlake Parkway and Discovery Falls Road, was completed by Chelsea Investment Corporation and provides 92 affordable rental units for lower income households. The remaining balance ofthe affordable housing obligation (115 units) was contemplated as affordable housing for moderate income households. With financing so difficult right now, the project is infeasible for moderate income households. In order to satisfy this obligation and to obtain necessary financing for a project, Brookfield Shea has selected Chelsea Investment Corporation to construct and operate a 1 43-unit rental development affordable for lower income households. The project will be developed on the adjoining lot to the Landings development and is known as The Landings II. CIC is currently in the process of securing financing for the Project and has requested direct financial assistance from the City and that the Housing Authority issue tax exempt bonds. On February 3, 2009, the City Council adopted Resolution No. 2009-019 conditionally approving financial assistance in the amount of $2,400,000 from the HOME Investment Partnership Program to Chelsea Investment Corporation for the development of the Project. To substantially finance the Project, crc will submit an application to California Debt Limit Allocation Committee (CDLAC) on May 22,2009 for an allocation ofthe 2009 state ceiling on private activity bonds for multi-family projects. crc is requesting that the ChuIa Vista Housing Authority be the vehicle for applying for an aggregate amount not to exceed $42 million. At this time, it is requested that the Housing Authority adopt a resolution expressing its preliminary intention to issue bonds. The requested actions are preliminary and do not 8-2 MAY 12, 2009, Item~ Page 3 of 5 commit the Authority to issue the bonds. Such preliminary actions are necessary in order to allow CIC to submit an application to the State bonding authority and to allow them to receive reimbursement out of bond proceeds for costs it incurs leading up to the actual sale of bonds. After submittal of the application, 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 such time a bond allocation is received. If successful in obtaining a bond commitment from CDLAC, CIC will come back to the Authorityto request final approval for the issuance of the bonds. The Applicant CIC has developed several projects in Chula Vista, primarily in eastern Chula Vista, to satisfy developer inclusionary housing requirements CTeresina Apartments, Rancho Buena Vista Apartments, Villa Serena and The Landings). CIC has developed and financed over 5,100 housing units. The company has a strong and experienced team of professionals. crc has successfully managed low income housing units for over 20 years. The Property The Landings II 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 11 community. The development will be located at the northwest comer of Discovery Falls Drive and Crossroads Street directly adjacent to the 92-unit Landings development. The Project is a continuation of design and development of the adjacent Landings development and will provide a total of 143-tovvnhome style units, with all units being 3-bedroom and affordable to very low and low income households. Project amenities will be shared with Landings and include a pool, spa, clubhouse, and a tot lot. The Proposal All 143 units will be rented on a rent restricted basis to households whose income is at or below 50-60 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 Cd) 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. 8-3 MA Y 12, 2009, Item~ Page 4 of 5 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, a minimum of 115 units must be affordable to moderate income households. Due to the financing CIC is pursuing, the Project will include more units and provide rents even lower than what the City requires. 3 Bd/2 Ba 3 Bd/2 Ba MGR Total crc proposes to maintain the income and rent restrictions for The Landings II 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. 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 II, so that the commitment remains in force regardless of ownership. Proposed Financing of Project Financing and development of The Landings is proposed as a joint private-public partnership. CIC will be using Tax Exempt Multi-Family Revenue Bonds and Low Income Housing Tax Credit financing to support the majority of the estimated $49 million ($345,734 per unit) cost of constructing the project. CIC has requested that the Housing Authority of the City of Chula Vista consider the issuance of up to $42 million in private placement bonds. Final approval of the issuance of the bonds and the related bond documents will be presented to the City and its Housing Authority for approval at such time crc is successful in receiving a commitment from CDLAC for a bond allocation. In conjunction with the bond financing, CIe will apply for approximately $15.3 million in Low Income Housing T3,X Credits. The permanent bond loan and Tax Credits would cover over 65 percent of the estimated cost. The remaining balance is expected to be provided by the City subsidy, other contributions and a deferred developer fee. The City Council on February 3, 2009, conditionally 8-4 MAY 12, 2009, Item~ Page 5 of5 approved $2,400,000 in financial assistance from HOME Investment Partnership funds, to assist 11 units at the very low and/or low income range. Below is a summary of development costs and associated sources. Acquisition & Construction Contingency Permits & Fees 34,074,000 1,150,000 7,200,000 1,400,000 1,300,000 2,500,000 1,816,000 S 49,440,000 Interest/Fees, Financing Costs DesignJEngineering Developer Fees Reserves, Legal, Other TOTAL ESTIMATED COST Permanent Loan (Bond) 17,000,000 Shea Loan (Bond) 12,000,000 Tax Credit Equity 15,300,000 City Loan 2,400,000 Other Contribution 2,000,000 Deferred Developer Fee 740,000 TOTAL SOURCES $ 49,440,000 DECISION MAKER CONFLICT Staff has reviewed the property holdings of the City Council and has found no property holdings within 500 feet ofthe boundaries ofthe property which is the subject of this action. CURRENT YEAR FISCAL IMPACT Bond financing 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 1 % of the bond loan, approximately $66,000. ONGOING FISCAL IMPACT Staff costs associated with monitoring compliance of the regulatory restnctlOns and administration of the outstanding bonds will be reimbursed from an annual administrative fee of approximately $21,250 (based upon 1/8 of 1 % of the permanent bond loan) paid to the Housing Authority by the owner. A TT ACHMENTS 1. Locator Map 2. Disclosure Statement Prepared by: Leilani Hines, Principal Project Coordinator, Development Services Department 8-5 Locator Map The Landings II at Winding Walk Attachment 1 8-6 BIRCH R The Landings I & II 2122 Burdock WCZO{ City of Chula Vista Request for Information Affordable Housing Review ATTACHMENT 2 DISCLOSURE STATEMENT Applicant's statement of disclosure of certain ownership interests on all applications which will require discretionary action on the part of the City Councilor any appointed board, commission, or committee. (Please Print) The following information must be disciosed: 1. Applicant - List the names and addresses of all persons having a financial interest in the application. Names Address 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. Names Address James J. Schmid 5993 Avenida Encinas, Suite 101 Carlsbad, CA 92008 A to-be-formed limited liability company 5993 Avenida Encinas, Suite 101 Carlsbad, CA 92008 Pacific Southwest Community Development 215 South Highway 101, Suite 104 Corporation Solana Beach, CA 92075 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. Names Address 4. If any person identified pursuant to (1) or (2) above is a non-profit 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. Names Address Robert W. Laing 215 South Highway 101, #104, Solana Beach, CA Michael Walsh 5650 EI Camino Real, Carlsbad, CA Mario Antonio Reyes 963 B Street, San Luis, AZ Kimberly Collins 720 Heber Avenue, Calexico CA Community Development Housing Division 276 FOUI3TH AVE. CHULA VISTA. CALlFOFgAA]9191 0 . (619) 585-5722. FAX (619) 585 -5698 DISCLOSURE STATEMENT PAGE 2 5. Have you had more than $250 worth of business transacted with any member of City staff, Boards, Commissions, Committees and/or City Council within the past twelve months? YesO No [8] 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- {f-og Date James J. Schmid Print or Type Name /) ! /::2 - ';j- 02/ Date James J. Schmid Print or Type Name Community Development Housing Division 276 FOURTH AVE. CHULA VISTA. CALlFO&I\JI~ 91910. (619) 585-5722. FAX (619) 585 -5698 RESOLUTION NO. 2009- RESOLUTION OF THE HOUSING AUTHORITY OF THE CITY OF CHULA VISTA REGARDING ITS INTENTION TO ISSUE TAX-EXEMPT OBLIGATIONS FOR THE LANDINGS II 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, refinancing 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, or a limited partnership to be formed by it (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 143 affordable units to be located on the northwest corner of Discovery Falls Road and Crossroads Street in Otay Ranch Village 11, in the City ofChula Vista, as identified in Exhibit A hereto (the "Project"); and WHEREAS, as a part of financing the development of the Proj ect, 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 1.1 03-8(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 $42,000,000, 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 8-9 Resolution No. 2009- 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 ("CD LAC") for such allocation, and the Committee 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 $42,000,000, 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 financial 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 8-10 Resolution No. 2009- Page 3 Project, or that either the Authority or the City will make any expenditure, incur any indebtedness, or proceed with the financing of the Project. 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 $42,000,000, 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. This resolution shall take effect immediately upon its Presented by: Approved as to form by: Gary Halbert, P.E., AICP Deputy City Manager! Development Services Director 8-11 Name: Location: Number of Units: Maximum Bond Amount: EXHIBIT A DESCRIPTION OF PROJECT The Landings II Northwest Comer of Discovery Falls Road and Crossroads Street in Otay Ranch Village 11 143 $42,000,000 8-12