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HomeMy WebLinkAboutItem 22 - Approve the Tax Equity Fiscal Responsibility Act (TEFRA) Resolution Hearing for 1108 N. HarborCommunity Development Agency www.santa-ana.org/cd Item # 22 City of Santa Ana 20 Civic Center Plaza, Santa Ana, CA 92701 Staff Report May 6, 2025 TOPIC: Tax Equity Fiscal Responsibility Act (TEFRA) Resolution Hearing for Estrella Springs Apartments at 1108 North Harbor Boulevard, Santa Ana AGENDA TITLE Approve the Tax Equity Fiscal Responsibility Act (TEFRA) Resolution Hearing for North Harbor Housing Partners LP (the "Borrower") a Partnership of which Jamboree Housing Corporation (the "Developer"), Consisting at Least the Developer or a Related Person to the Developer and One or More Limited Partners Legal Notice published in the OC Reporter on April 25, 2025 RECOMMENDED ACTION 1. Conduct a Tax Equity and Financial Responsibility Act (TEFRA) Hearing in consideration of the issuance of tax exempt bond financing by the California Municipal Finance Authority (the "CMFA") on behalf of North Harbor Housing Partners LP (or the "Borrower"), for the benefit of Estrella Springs Apartment, FKA North Harbor Village Apartments (the "Project") to finance or refinance the acquisition, construction, improvement and equipping of Estrella Springs, a multifamily rental housing project located at 1108 North Harbor Boulevard, Santa Ana (the "Project"). 2. Adopt a resolution approving the issuance of revenue bonds by the CMFA in an amount not to exceed $30,000,000 to finance or refinance the acquisition, construction, improvement and equipping of a multifamily rental housing project located at 1108 North Harbor Boulevard, Santa Ana, California (the "Project"). RESOLUTION NO. 2025-XXX entitled A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SANTA ANA APPROVING THE ISSUANCE BY THE CALIFORNIA MUNICIPAL FINANCE AUTHORITY OF EXEMPT FACILITY BONDS FOR ESTRELLA SPRINGS 3. Preauthorize the City Manager to execute a future Subordination Agreement with JP Morgan Chase Bank, N.A. for the City's Community Development Block Grant loan agreement with North Harbor Housing Partners LP. GOVERNMENT CODE §84308 APPLIES: Yes Tax Equity Fiscal Responsibility Act (TEFRA) Resolution Hearing for Estrella Springs May 6, 2025 Page 2 DISCUSSION The Borrower has requested the City of Santa Ana (City) to conduct a Tax Equity and Fiscal Responsibility Act (TEFRA) hearing. The tax-exempt bonds to be issued are the sole responsibility of the Borrower. The City bears no financial or legal liability for the project or bond repayment and incurs no indebtedness. Additionally, the City was provided a draft resolution, a draft notice, a draft staff report, and a TEFRA Hearing Fee of $1,011 was required per the City's Miscellaneous Fee Schedule for the City to conduct the TEFRA hearing. A TEFRA hearing is a public hearing required by the Internal Revenue Service (IRS) for certain types of tax-exempt bond issuances, particularly those involving private activity bonds (PABs) or bonds issued by nonprofit organizations. The hearing is mandated under the Tax Equity and Fiscal Responsibility Act of 1982 and is a prerequisite for the interest on these bonds to be excluded from gross income for federal tax purposes. The primary purpose of a TEFRA hearing is to provide the public with an opportunity to comment on the proposed use of tax-exempt bond proceeds. This process ensures transparency and accountability in the allocation of public financial benefits, such as tax exemption, to private projects or nonprofit borrowers. Project Description A TEFRA hearing for this Project was already held and a TEFRA Resolution was approved on March 2, 2021. The Project is the adaptive reuse and rehabilitation of a Budget Inn Motel to create Permanent Supportive Housing studios for 89 formerly homeless veterans and those living with a mental health diagnosis. The Project has completed construction and is ready to convert from construction financing to permanent financing. The Developer now has a need to increase the permanent bond amount. This simply means that less of the bonds than originally anticipated will be paid off and will be left outstanding upon conversion to permanent financing. Since this is happening outside of the three-year plan of finance window, this triggers a technical reissuance of the Bonds, which requires an additional TEFRA hearing. The proceeds of the Bonds were used to finance or refinance the acquisition, construction, improvement, and equipping of the Project. The Borrower has requested that the CMFA participate in the issuance of one or more series of tax-exempt revenue bonds, pursuant to a single plan of financing, in a maximum aggregate principal amount of $30,000,000 (the "Bonds"). These funds are intended to finance or refinance the acquisition, construction, improvement, and equipping of the Project. However, for any portion of the Bonds to qualify as tax-exempt, a public hearing (the "TEFRA Hearing") must be conducted that allows community members the opportunity to voice their opinions regarding the use of tax-exempt bonds for the Project's financing. Tax Equity Fiscal Responsibility Act (TEFRA) Resolution Hearing for Estrella Springs May 6, 2025 Page 3 After the TEFRA Hearing concludes, an "applicable elected representative" of the governmental unit hosting the Project, in this case, the City, must provide approval for the CMFA to issue the Bonds for the Project's financing. The bonds to be issued by the CMFA are the sole responsibility of North Harbor Housing Partners LP. The City bears no financial or legal liability for the project or bond repayment and incurs no indebtedness. The Board of Directors of the California Foundation for Stronger Communities, a California non-profit public benefit corporation (the "Foundation"), serves as the Board of Directors for the CMFA. Through its conduit issuance activities, the CMFA shares a portion of its issuance fees with its member communities and allocates a portion of these fees to the Foundation to support local charities. At the original closing, the CMFA donated $14,616 to the City as part of this sharing of issuance fees. Subordination Agreement with JP Morgan Chase Bank In the title of the original Staff Report published on April 20, 2021, for the approval of a $1,687,047 loan agreement with North Harbor Housing Partners LP, it stated, "approve a future Subordination Agreement with JP Morgan Chase Bank, N.A." However, there was an error in the Staff Report and the Recommended Action # 2 did not include this approval. The loan for JP Morgan Chase Bank is larger than the City's Community Development Block Grant (CDBG) Loan. At the time of permanent loan conversion, JP Morgan Chase Bank (as the senior lender) will require the City to subordinate our $1,687,047 CDBG loan agreement. In order for Jamboree Housing to convert from construction financing to permanent financing for the Project, staff is requesting pre -authorization for the City Manager to execute a future Subordination Agreement with JP Morgan Chase Bank, N.A. for the City's CDBG loan agreement on behalf of the City, approved as to form by the City Attorney. This will correct the Staff Report from four years ago, and allow Jamboree Housing to close on their permanent loan financing in the future. This is a standard subordination that is customary for the City's affordable housing projects. Furthermore, Jamboree Housing will not be able to close on their permanent loan financing for the Project without this approval. FISCAL IMPACT Funds in the amount of $1,011 will be deposited into the Inclusionary Housing Fund revenue account for the TEFRA Hearing Fee — Housing Project (No. 41718002-53902). EXHIBIT(S) 1. TEFRA Resolution 2. TEFRA Hearing Notice Proof of Publication Tax Equity Fiscal Responsibility Act (TEFRA) Resolution Hearing for Estrella Springs May 6, 2025 Page 4 Submitted By: Michael L. Garcia, Executive Director of Community Development Agency Approved By: Alvaro Nunez, City Manager EXHIBIT 1 RESOLUTION NO. 2025- XXX A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SANTA ANA APPROVING THE ISSUANCE BY THE CALIFORNIA MUNICIPAL FINANCE AUTHORITY OF EXEMPT FACILITY BONDS FOR ESTRELLA SPRINGS WHEREAS, North Harbor Housing Partners LP (the "Borrower") a partnership of which Jamboree Housing Corporation (the "Developer") or a related person to the Developer is the general partner, has requested that the California Municipal Finance Authority (the "Authority") adopt a plan of financing providing for the issuance of exempt facility bonds for a qualified residential rental project pursuant to Section 142(a)(7) of the Internal Revenue Code of 1986 (the "Code") in one or more series issued from time to time, including bonds issued to refund such exempt facility bonds in one or more series from time to time, and at no time to exceed $30,000,000 in aggregate principal amount (the "Bonds"), to finance or refinance the acquisition, construction, improvement and equipping of a multifamily rental housing project located at 1108 North Harbor Boulevard, Santa Ana, California (the "Project"); and WHEREAS, pursuant to Section 147(f) of the Code, the issuance of the Bonds by the Authority must be approved by the City of Santa Ana (the "City") because the Project is located within the territorial limits of the City; and WHEREAS, the City Council of the City (the "City Council") is the elected legislative body of the City and is one of the "applicable elected representatives" required to approve the issuance of the Bonds under Section 147(f) of the Code; and WHEREAS, the Authority has requested that the City Council approve the issuance of the Bonds by the Authority in order to satisfy the public approval requirement of Section 147(f) of the Code and the requirements of Section 4 of the Joint Exercise of Powers Agreement Relating to the California Municipal Finance Authority, dated as of January 1, 2004 (the "Agreement"), among certain local agencies, including the City; and WHEREAS, pursuant to Section 147(f) of the Code, the City Council has, following notice duly given, held a public hearing regarding the issuance of the Bonds, and now desires to approve the issuance of the Bonds by the Authority. BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SANTA ANA AS FOLLOWS: Section 1. The recitals set forth herein are true and correct. Resolution No. 2025-XXX Page 1 of 3 EXHIBIT 1 Section 2. The City Council hereby approves the issuance of the Bonds by the Authority. It is the purpose and intent of the City Council that this resolution constitutes approval of the issuance of the Bonds by the Authority, for the purposes of (a) Section 147(f) of the Code by the applicable elected representative of the governmental unit having jurisdiction over the area in which the Project is located, in accordance with said Section 147(f) and (b) Section 4 of the Agreement. Section 3. The issuance of the Bonds shall be subject to approval of the Authority of all financing documents relating thereto to which the Authority is a party. The City shall have no responsibility or liability whatsoever with respect to repayment or administration of the Bonds. Section 4. The adoption of this Resolution shall not obligate the City or any department thereof to: (i) provide any financing with respect to the Project; (ii) approve any application or request for or take any other action in connection with any planning approval, permit or other action necessary with respect to the Project; (iii) make any contribution or advance any funds whatsoever to the Authority; or (iv) take any further action with respect to the Authority or its membership therein. Section 5. The City Manager and applicable Executive Directors of the City are hereby authorized and directed, jointly and severally, to do any and all things and to execute and deliver any and all documents that they deem necessary or advisable in order to carry out, give effect to and comply with the terms and intent of this resolution and the financing approved hereby. Section 6. This resolution shall take effect immediately upon adoption. Resolution No. 2025-XXX Page 2 of 3 EXHIBIT 1 ADOPTED this day of 2025. Valerie Amezcua Mayor APPROVED AS TO FORM: Sonia R. Carvalho, City Attorney By-(j'w/" cl Andrea Garcia -Miller Assistant City Attorney AYES: Councilmembers NOES: Councilmembers ABSTAIN: Councilmembers NOT PRESENT: Councilmembers CERTIFICATE OF ATTESTATION AND ORIGINALITY I, JENNIFER HALL, City Clerk, do hereby attest to and certify the attached Resolution No. 2025-XXX to be the original resolution adopted by the City Council of the City of Santa Ana on Date: City Clerk City of Santa Ana Resolution No. 2025-XXX Page 3 of 3 EXHIBIT 2 ORANGE COUNTY REPORTER - SINCE 1921 - 600 W SANTA ANA BLVD STE 812, SANTA ANA, CA 92701 Telephone (714) 543-2027 / Fax (714) 542-6841 Lauren Sommerhauser ORRICK HERRINGTON/SANFRANCISCO 405 HOWARD ST SAN FRANCISCO, CA - 94105 PROOF OF PUBLICATION (2015.5 C.C.P.) State of California ) County of ORANGE )SS Notice Type: HRG - NOTICE OF HEARING Ad Description: NOTICE OF PUBLIC HEARING - Tuesday, May 6, 2025 I am a citizen of the United States and a resident of the State of California; I am over the age of eighteen years, and not a party to or interested in the above entitled matter. I am the principal clerk of the printer and publisher of the ORANGE COUNTY REPORTER, a newspaper published in the English language in the city of SANTA ANA, county of ORANGE, and adjudged a newspaper of general circulation as defined by the laws of the State of California by the Superior Court of the County of ORANGE, State of California, under date 06/20/1922, Case No. 13421. That the notice, of which the annexed is a printed copy, has been published in each regular and entire issue of said newspaper and not in any supplement thereof on the following dates, to -wit: 04/25/2025 Executed on:04/25/2025 At Los Angeles, California I certify (or declare) under penalty of perjury that the foregoing is true and correct. 11iuuiu1[u1i� iu 111uu111 uiiiiiiiiiiiuiui This space for filing stamp only OR#: 3917795 NOTICE OF PUBLIC HEARING BEFORE THE CITY COUNCIL OF THE CITY OF SANTA ANA, CA The City of Santa Ana encourages the public to participate in the decision - making process. The following notice is being provided so that you can ask questions, make comments, and stay informed about projects that might be important to you. We encourage you to contact us prior to the Public Hearing if you have any questions. NOTICE IS HEREBY GIVEN - The City of Santa Ana will hold a Public Hearing to receive public testimony and will take action on the item described below. Decision on this matter will be final. Proposed Action: The City of Santa Ana (the "City") will conduct a public hearing as required by Section 147(f) of the Internal Revenue Code of 1986 (the "Code'), at which it will hear and consider information concerning a proposed plan of financing by the California Municipal Finance Authority (the "Authority") of exempt facility bonds for a qualified residential rental project pursuant to Section 142(a)(7) of the Code in one or more series issued from time to time, including bonds issued to refund such exempt facility bonds in one or more series from time to time, and at no time to exceed $30,000,000 in outstanding aggregate principal amount (the "Bonds"), to finance or refinance the acquisition, construction, and development of a multifamily rental housing project located at 1108 North Harbor Boulevard, Santa Ana, California. The facilities are to be owned by North Harbor Housing Partners LP (the "Borrower') or a partnership of which Jamboree Housing Corporation (the "Developer") or a related person to the Developer is the general partner (the "Project"). The Bonds and the obligation to pay principal (or redemption price) of and interest thereon with respect thereto do not constitute indebtedness or an obligation of the City, the State of California, or any political subdivision thereof, within the meaning of any constitutional or statutory debt limitation, or a charge against the general credit or taxing powers of any of them. The Bonds shall be a limited obligation of the City, payable solely from certain revenues duly pledged therefor and generally representing amounts paid by the Borrower. Meetino Time and Date — This matter will be heard on Tuesday, May 6, 2025 at 5:30 P.M. or as soon thereafter as the matter may be heard, in the City Council Chamber, 22 Civic Center Plaza, Santa Ana, CA 92701. Members of the public may attend this meeting in -person or join via Zoom. For the most up to date information on how to participate virtually in this meeting, please visit https://www.santa-ana.org/agendas-and- minutes/. Written Comments: If you are unable to participate in the meeting, you may send written comments by e-mail to eComment@santa-ana.org (reference the Agenda Item # in the subject line) or mail to Jennifer L. Hall, City Clerk, City of Santa Ana, 20 Civic Center Plaza — M30, Santa Ana, CA 92701. Deadline to submit written comments is two hours prior to the start of the meeting. Comments received after the deadline may not be distributed to the City Council but will be made part of the record. Where To Get More Information - All staff reports regarding any item on this agenda are available for public inspection in the City Clerk's Office during regular business hours and posted on the City's website the Tuesday prior to the Council meeting at: www.santa-ana.org/agendas- and-minutes. Who To Contact For Questions - Should you have any questions, please contact Judson Brown, Housing Division Manager, at (714) 667-2241 or you can send an email to jbrown@santa-ana.org. Si tiene preguntas en espafiol, favor de Ilamar al 714-667-2241. Neu can lien lac bang tieing Viet, xin dien thoai cho Kristie Ha s6 (714) 667- 2241. If you challenge the decision on the above matter, you may be limited to raising only those issues you or someone else raised at the public hearing described in this notice, or in written correspondence delivered to the City of Santa Ana at, or prior to, the public hearing. Jennifer L. Hall, CMC City Clerk 4/25/25 OR-3917795#