CITY OF GLENDALE CALIFORNIA JOINT REPORT TO THE CITY COUNCIL AND HOUSING AUTHORITY

Transcription

1 June 7, 2016 CITY OF GLENDALE CALIFORNIA JOINT REPORT TO THE CITY COUNCIL AND HOUSING AUTHORITY AGENDA ITEM Agenda Item: Public Hearing Tax Equity and Fiscal Responsibility Act Public Hearing for California Municipal Finance Authority Proposed Issuance of Approximately $25 Million in Tax Exempt Revenue Bonds in Support of Park Paseo, a Glendale Affordable Senior Housing Residential Facility Owned and Operated by Park Paseo LP, a Partnership Created by Southern California Presbyterian Homes dba be.group. ( 1) Resolution of the City Council of the City of Glendale Approving the Issuance of Approximately $25 Million Tax Exempt Revenue Bond Obligations in Support of Park Paseo by the California Municipal Finance Authority. AUTHORITY ACTION Public Hearing [ X ] Ordinance [ Only [ ] Consent Calendar [ Action Item [ Report ADMINISTRATIVE ACTION Submitted Philip Lanzafame, Director, Community Development ~c:+---'--+-'lf---t--+-_,.._~rt---- Prepared Peter Zovak, Deputy Director of Housing, Community Development... -""'""'""""--+-: App~~~t~~choa, City Manager ~ im1~ Rev~::a~I J. Garcia, City Attorney... ~ 1 I

2 City CounciVHousing Authority Staff Report TEFRA Hearing June7, Page 2 RECOMMENDATION The Community Development Department recommends that the City Council of the City of Glendale (City Council) conduct a Tax Equity and Fiscal Responsibility Act (TEFRA) hearing and approve the issuance of up to approximately $25 million in Tax Exempt Revenue Bonds in support of Park Paseo, a Glendale affordable senior housing residential facility. SUMMARY Southern California Presbyterian Homes (SCPH), a Glendale based nonprofit senior housing developer dba as "be.group", has applied for the issuance of up to approximately $25 million in private activity revenue bonds to be issued by California Municipal Finance Authority (CMFA) in support of the acquisition, rehabilitation and redevelopment of Park Paseo, an affordable senior rental housing project for very low income seniors in Glendale. In order to issue revenue bonds that will be utilized within Glendale city limits, the City Council has been requested to conduct a TEFRA hearing on behalf of SCPH and CMFA. Section 147 (f) of the Internal Revenue Code of 1986 requires that the local elected public body conduct a public hearing related to the proposed issuance of revenue bonds and that the public be provided an opportunity to present arguments both for and against the issuance of these bonds by CMFA. The City Council has previously conducted TEFRA hearings for city sponsored affordable housing projects as well as privately sponsored projects such as Tobin World, Glendale Adventist Medical Center and most recently, Maple Park and Casa de la Paloma, the first affordable housing project in Glendale developed by SCPH and the City of Glendale. CMFA was created on January 1, 2004 to promote economic, cultural and community development, through the financing of economic development and charitable activities throughout California. To date, over 230 municipalities have become members of CMFA. CMFA is a public entity, separate and apart from each member. The debts, liabilities and obligations of the CMFA do not constitute debts, liabilities or ob ligations of the members. The bonds to be issued by CMFA for the proposed project wi ll be the sole responsibility of the borrower, and the City will have no financial, legal, moral obligation, liability or responsibility for the proposed project or the repayment of the bonds for the financing of the proposed project. All financing documents with respect to the issuance of the bonds will contain clear disclaimers that the bonds are not obligations of the City or the State of California, but are to be paid for solely from funds provided by the borrower. The City became a member of the CMFA in August 2012 and the City will in no way become exposed to any financial liability by reason of its membership in CMFA. In addition, participation by the City in CMFA will not impact the City's appropriations limits and will not constitute any type of indebtedness by the City. Outside of holding the TEFRA hearing and adopting the required resolution, no other participation or activity of the City or the City Council with respect to the issuance of the bonds will be required. To reflect the restrictions and conditions originally imposed upon the project and the developer by the Glendale Housing Authority (Housing Authority), a Disposition and Development Agreement (DOA) between SCPH and the Housing Authority was executed and remains in effect. The DOA allows for the sale of the project to facilitate the financial and affordability

3 City Council/ Housing Authority Staff Report TEFRA Hearing June 7, 2016 Page 3 restructuring; however, a specific condition of the initial DOA was triggered by the proposed action. That condition states that the Housing Authority shall be entitled to increase the Purchase Price paid by the developer for the Site. In the Park Paseo project, the Housing Authority assembled the site on behalf of the developer at a cost of approximately $1.2M. Because of the financing at the time, the developer was only able to reimburse the Housing Authority $500,000, leaving the remaining balance of $700,000 as a "land write down". Because of the land write down, this provision was included in the DOA so that at a future time, the Housing Authority would be paid, over time, fair market value for the properties that were conveyed. The DOA calls for the funding to be utilized by the Housing Authority to provide for low and moderate income housing within Glendale. In order to facilitate the TEFRA refinancing and subsequent rehabilitation of Park Paseo, the Housing Authority, at its meeting of December 8, 2015, approved a payoff of the land write down in the amount of $900,000. At the time of refinancing of the project under the revenue bonds, the developer will deposit the $900,000 in the Housing Authority's Affordable Housing Trust Fund for future affordable housing activities. FISCAL IMPACT There is no fiscal impact to the City of Glendale associated with this TEFRA hearing or with the issuance of tax exempt revenue bonds by CMFA. The bonds proposed to be issued will be the indebtedness of CMFA, and the City will not be asked to approve or execute any of the documents relating to the financing. Through its conduit issuance activities, CMFA shares a portion of the bond issuance fees it receives with its member communities. With respect to the City of Glendale, it is expected that 25% of the issuance fee, up to approximately $12,850 will be granted by CMFA to the City. Such grant may be used for any lawful purpose of the City. This revenue will be received by the City after bond issuance and wi ll also be deposited into the Housing Authority's Affordable Housing Trust Fund. BACKGROUND Southern California Presbyterian Homes SCPH is a California not-for-profit public benefit corporation dba as "be.group", which was incorporated in Since that time, SCPH has grown to include over 35 communities, 1400 employees, and serving over 3,000 residents. SCPH, together with its controlled affiliates, owns and operates retirement communities, freestanding assisted living communities, and adult daycare centers, primarily in Southern California. Residents of the retirement communities receive residence, service and care in exchange for an entrance fee and a monthly fee. The communities include approximately 948 independent living units, 404 personal care beds, and 215 skilled nursing beds. SCPH also provides a range of long-term care services that are affordable to low- and moderate- income seniors. These services include adult day social care, adult day health care, and on-site outpatient therapy. SCPH provides management services to approximately 1,770 units of subsidized housing. SCPH has borrowed tax-exempt debt through CMFA and other issuers in the past. In addition to Park Paseo, SCPH also has developed 4 additional affordable senior housing projects totaling over 400 units in Glendale. The complete listing of those projects are in Table 1 below.

4 City Council/Housing Authority Staff Report TEFRA Hearing June 7, 2016 Page 4 Table 1 SCPH Affordable Senior Projects in Glendale Casa de la Paloma 167 Park Paseo 97 Palmer House 22 The Gardens 75 Otto Gruber 40 Total 401 units Park Paseo The Park Paseo Apartments is a 98 unit (one unit is a manager's unit) affordable senior housing development located in Glendale at 123 S. Isabel Street. The project is currently financed as a Department of Housing and Urban Development (HUD) 202 Loan. The project is an 8-story reinforced concrete structure constructed in The project provides housing and support services to individuals 62 years of age and older with income at or below 50% of area median income. Monthly rental assistance is provided to the residents and project owner via HUD's Project Based Section 8 program. Project rental assistance funds are provided to cover the difference between the HUD-approved operating cost for the project and the tenants' affordable contribution towards rent. When developed in 1984, the project was conditioned with affordability covenants by both HUD and the Housing Authority with 40 year covenants that extend until The proposed refinancing and rehabilitation of the project by SCPH will cause the affordability covenants to be extended out until 2071 (the final 12 years of the HUD and Housing Authority affordability covenants will run concurrently with the first 12 years of the State's 55 year covenants). This will occur at no additional cost to HUD or the Housing Authority. The proposed financing offered by the State of California Tax Credit program is designed to ensure the long term viability and affordability of the project for lower income senior households. Project Development Team Lender: Bond Counsel: Issuer Counsel: Lender Counsel: Borrower Counsel: Financial Advisor: To Be Determined Orrick, Herrington & Sutcliffe LLP Jones Hall, APLC To Be Determined Bocarsly Emden Ismail Cowen & Arndt California Housing Partnership Corporation Proposed Project Rehabilitation The proposed scope of the building rehabilitation consists of the following: Exterior painting, waterproofing, and balcony deck coating New irrigation system and landscaping upgrades New corridor finishes including paint, carpeting, handrails, and lighting

5 City Council/Housing Authority Staff Report TEFRA Hearing June 7, 2016 Page 5 Energy efficiency upgrades Replacement of all elevator equipment components, and cab interiors New heating, ventilating, air conditioning systems, fan coils, and domestic boilers Additional new secondary heating and air conditioning systems in key common areas New roof membrane system New parking lot surface ADA and UFAS upgrades New fire panels New furnishings, fixtures and equipment New balcony rai ls Security fencing upgrades New windows CONCLUSION SCPH, a Glendale based nonprofit senior housing developer, has applied for the issuance of approximately $25 million in revenue bonds by CMFA in support of the rehabilitation of Park Paseo, a 98-unit affordable senior housing project owned by SCPH and reserved for very low income seniors. In order to issue revenu e bonds which will be utilized within Glendale, the City of Glendale has been requested to conduct a TEFRA hearing on behalf of SCPH and CMFA. Section 147 (f) of the Internal Revenue Code of 1986 requires that the local elected public body conduct a public hearing related to the proposed issuance of revenue bonds and that the public be provided an opportunity to present arguments both for and against the issuance of these bonds by CMFA. The City Council has previously conducted TEFRA hearings for city and other privately sponsored projects. There is no fiscal impact to the City of Glendale associated with this TEFRA hearing or with the issuance of tax exempt revenue bonds by the CMFA. Th e bonds proposed to be issued will be the indebtedness of CMFA, and the City will not be asked to approve or execute any of the documents relating to the financing. The bond proceeds will benefit Park Paseo and will allow for a rehabilitation of the building. No tenants are expected to be displaced during the rehabilitation and the project will continue to be reserved as affordable housing for very low income seniors for 55 years from the date of completion of the rehabilitation. EXHIBITS None

6 RESOLUTION NO RESOLUTION OF THE CITY COUNCIL OF THE CITY OF GLENDALE, CALIFORNIAAPPROVING THE ISSUANCE OF THE CALIFORNIA MUNICIPAL FINANCE AUTHORITY MULTIFAMILY HOUSING REVENUE BONDS IN AN AGGREGATE PRINCIPAL AMOUNT NOT TO EXCEED $17,000,000 FOR THE PURPOSE OF FINANCING OR REFINANCING THE ACQUISITION, REHABILITATION, IMPROVEMENT AND EQUIPPING OF PARK PASEO APARTMENTS AND CERTAIN OTHER MATTERS RELATING THERETO WHEREAS, Park Paseo, LP (the "Borrower") or a partnership created by Southern California Presbyterian Homes (dba be.group) (the "Developer"), consisting at least of the Developer or a related person to the Developer and one or more limited partners, has requested that the California Municipal Finance Authority (the "Authority") participate in the issuance of one or more series of revenue bonds issued from time to time, including bonds issued to refund such revenue bonds in one or more series from time to time, in an aggregate principal amount not to exceed $17,000,000 (the "Bonds") for the acquisition, rehabilitation, improvement and equipping of a 98-unit senior multifamily rental housing project located at 123 S. Isabel Street, Glendale, California, generally known as Park Paseo Apartments (the "Project") and operated by the Developer; and WHEREAS, pursuant to Section 147(f) of the Internal Revenue Code of 1986 (the "Code"), the issuance of the Bonds by the Authority must be approved by the City of Glendale (the "City") because the Project is located within the tenitorial 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; NOW, THEREFORE, BE IT RESOLVED, by the City Council of the City of Glendale as follows: Section 1. The foregoing resolutions are true and conect. 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 constitute approval of the issuance of the Bonds by the Authority, for the purposes of (a) Section 14 7(f) of the Code by the applicable elected representatives of the governmental unit having jurisdiction over the area in OHSUSA:765 I A I

7 which the Project is located, in accordance with said Section 147( ) and (b) Section 4 of the Agreement. Section 3. The issuance of the Bonds shall be subject to the 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 the Bonds. Section 4. The adoption of this Resolution shall not obligate the City or any department thereof to (i) provide any financing to acquire or construct the Project or any refinancing of 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 for the acquisition, construction, rehabilitation, installation or operation of 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 officers 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 which 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 transaction approved hereby. Section 6. This resolution shall take effect immediately upon its adoption. ~~~- -~~~~~~~~ Adopted this day of, Mayor ATTEST: City Clerk OHSUSA:765 l

8 STATE OF CALIFORNIA ) COUNTY OF LOS ANGELES ) SS CITY OF GLENDALE ) I, Ardashes Kassakhian, City Clerk of the City of Glendale, certify that the foregoing Resolution No. was adopted by the Council of the City of Glendale, California, at a regular meeting held on the day of, 2016, by the following vote: Ayes: Noes: Absent: City Clerk APPROVED AS TO FORf'il ~~ ATIORNEY DATE b - / ~/{, OHSUSA:765 l