HomeMy WebLinkAbout03 PH - MORT REV BOND INDUCEMENT EX 1 2012-08-06.doc~~
T 6, 2012
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I U T ISS F
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CITY COUNCIL A IN
1. Hold a TERA Tax Equity and Financial Responsibility Act} Hearing in consideration of the
issuance of multi-family housing revenue bonds by the Housing Authority of the City of
Santa Ana for the purpose of financing the acquisition and rehabilitation of 1401 N.
Flower Street by Washington Place Management, LLC.
2. Adopt a resolution approving the issuance of tax-exempt bonds for the project.
UI AT ITY ACTIGN
Adopt a resolution relating to the issuance of bonds forthe purpose of financing the acquisition and
rehabilitation of multifamily rental housing located at 1401 N. Flower Street.
M U ITY L TAN UI C I I CJ i
At its regular meeting on July 17, 2012, by a vote of 5°0 (Wooten and Reyes absent), the
Community Redevelopment and Housing Commission adopted a resolution recommending
approval of the issuance of multifamily housing revenue bonds by the Housing Authority of the City
of Santa Ana for the purpose of financing the acquisition and rehabilitation of multifamily rental
housing.
PH -Mortgage Revenue Bond Inducement
and TEFRA
August 6, 2012
Page 2
iSCUSI
The Vitus Group has developed and owns more than 70 projects in 13 states, with 15 of those
projects located in California. They have successfully acquired and rehabilitated over 6,000
subsidized senior units.
The developer is proposing to acquire and rehabilitate the project by utilizing tax-exempt bonds
and low income housing tax credits. The current affordability restrictions are due to expire in 2017.
By virtue of the proposed funding, the affordability will be extended for 55 years. Of the 200 units,
59 units will be designated for very low-income and 140 units for low income households. One unit
will be set aside for an onsite manager.
All cost to acquire, rehabilitate and provide forthe level of affordability for this project will be funded
solely through the issuance of bonds and tax credit allocation. The project will undergo an
extensive rehabilitation to address deferred maintenance, improve the physical condition of the
property, and address long-term capital needs. Existing tenants will not be displaced during the
rehabilitation, although may be temporarily relocated to a hotel or a renovated vacant unit should
the need arise. The acquisition of the property is planned for December 2012 and the
rehabilitation is anticipated to commence in February 2013 and be completed in June 2013.
In order for the Housing Authority to apply for a bond allocation from the California Debt Limitation
Allocation Committee on behalf of the developer, the Housing Authority must adopt an Inducement
resolution relating to the bonds. The Inducement resolution confirms the Housing Authority's intent
to issue the bonds and identifies the time at which costs expended on the project qualify for the
financing with the tax-exempt bonds. The bonds are considered "conduit" obligations. This means
that although the Housing Authority will issue the bonds, the owner is actually the borrower and
has sole responsibility for repayment. The bonds will be repaid strictly out of the project's cash
flow. There is no recourse to the Housing Authority or the City of Santa Ana.
Prior to bonds being sold, the City Council must hold a public hearing as required by the Tax
Equity and Fiscal Responsibility Act (TEFRA}. The public hearing is to solicit comments on the
project and the issuance of bonds. Holding the TEFRA is also a precondition to applying for the
PH --Mortgage Revenue Bond Inducement
and TEFRA
August 6, 2012
Page 3
bond allocation. On July 23 and July 30, 2012, public hearing notification was published in the
Orange County Register. In addition, Orrick, Herrington Sutcliffe, LLP will serve as bond counsel
and CSG Advisors, Inc. will serve as financial consultant for the Housing Authority. Their fees will
be paid by the developer.
The acquisition and rehabilitation of this property will assist the City to meet their affordable
housing goals as identified in the Consolidated Plan, and Housing Element. It will also ensure that
the project, which is at risk of being removed from the City's affordable housing stock, will be
maintained.
IC L I ACT
The issuer fees generated from the issuance will be deposited into the issuer fee account Account
#13318002.
APPROVED AS TO FUNDS AND ACCOUNTS:
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Shelly Landry-Bayle
Housin Division Mana er ~~
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Community Development Agency
NTE/SLB/kg
Francisco Gutierrez
Executive Director
Finance ~ Management Services Agency
Exhibits: 1. Map
2. Resolutions