CA Review _ AF _
Meeting Date: March 26, 2024
To: Mayor and City Council
From: Scott Chadwick, City Manager
Staff Contact: Mandy Mills, Housing & Homeless Services Director [email protected], 442-339-2907
Subject: Public Hearing for the Issuance of Tax-Exempt Bonds by the California Municipal Finance Authority for the benefit of Metropolitan Area Advisory Committee for the Laurel Tree Apartments
District: 2
Recommended Action
Hold a public hearing, under the requirements of the Tax and Equity Fiscal Responsibility Act and the Internal Revenue Code of 1986 and adopt a resolution approving the is suance o f the California Municipal Finance Authority Multifamily Housing Revenue Bonds for the benefit of Metropolitan Area Advisory Committee on Anti-Poverty of San Diego County, Inc., or a subsidiary or affiliate thereof, in an aggregate principal amount not to exceed $45 million for the purpose of financing or refinancing the acquisition, rehabilitation, improvement and equipping of Laurel Tree Apartments, a multifamily rental housing project located in Carlsbad, C
alifornia.
E
xecutive Summary
The Metropolitan Area Advisory Committee is the owner and operator of Laurel Tree Apartments, a 138-unit affordable apartment community at 1307 Laurel Tree Lane. The project was gran ted authority from the state of California to issue tax-exempt revenue bonds to refinance the project, and Metropolitan Area Advisory Committee is working with the California Municipal Fi nance A uthority to issue the bonds.
For all or a portion of the bonds to qualify as tax-exempt, the City of Carlsbad is required under the federal Tax and Equity Fiscal Responsibility Act to conduct a public hearing, known as a TEFRA hearing, to provide an opportunity for community members to speak in favor of or against the use of tax-exempt bonds for the financing of the project.
In addition, although the City of Carlsbad is not issuing the bonds or in any way obligated to repay them, the federal Internal Revenue Code requires that the financing be approved by the City Council because the proposed project is located within Carlsbad's jurisdictional boundaries.
March 26, 2024
Item #11 Page 1 of 7
Explanation & Analysis
Project background
In 1994 and 1996 the City Council approved loans totaling $700,000 from the Redevelopment Low and Moderate Income Housing Fund and the city’s Housing Trust Fund to assist the Metropolitan Area Advisory Committee with the construction of 138 affordable housing units.
The project, the Laurel Tree Apartments,
located at 1307 Laurel Tree Lane, is south
of Palomar Airport Road and east of
Aviara Parkway. The project, developed
by Metropolitan, satisfied the affordable
housing requirement for other housing
developments. The City of Carlsbad loan
was paid off in 2014. The project is now
eligible for refinancing, which can provide
financing for renovations throughout the
project.
The refinancing would cover acquisition and rehabilitation of the 24-year-old affordable housing development. All units will remain at affordable rents for lower income households.
The project includes 138 units for very low-income households earning between 40%-50% of the area median income. The development consists of two-, three- and four-bedroom units.
One unit is reserved for the onsite manager. Project amenities include leasing and management offices, a business center, community room with kitchen, exercise room, centrally located laundry facilities, outdoor courtyard and picnic area and vegetable garden. The residents benefit from onsite supportive services.
The renovations will include replacing flooring, drywall repairs, painting, ceiling repairs, remodeling kitchens, bathroom repairs and adding dishwashers. Exterior renovations will include replacing roofs, exterior stucco, exterior paint, deck repairs and waterproofing, and making 10% of the units accessible to the disabled, asphalt repairs and accessibility repairs to parking and paths of travel.
Project bond financing
The developer has secured financing for the project and is ready to proceed with the acquisition and rehabilitation of the affordable housing project. A large portion of the project financing incudes $37,530,050 million in tax-exempt bond financing. Although the project can only issue and use the bond amount that has been allocated by the state, this TEFRA action will approve a bond amount not to exceed $45 million. By approving an amount in excess of what the project has been allocated, we can eliminate the need to reschedule and hold another TEFRA hearing in case the developer has to go back to the state for a supplemental bond allocation due to unforeseen increases in construction costs.
The borrower has asked the California Municipal Finance Authority to issue tax-exempt facility bonds for its qualified residential rental project in accordance with Section 142(a)(7) of the Internal Revenue Code. (The California Municipal Finance Authority was formed as a joint powers authority to help local governments, non-profit organizations and businesses through March 26, 2024
Item #11 Page 2 of 7
the issuance of taxable and tax-exempt bonds aimed at improving the standard of living in California. The City of Carlsbad is a member of the authority, whose representatives and board of directors have considerable experience in bond financing.) Public hearing and resolution
Although the finance authority will issue the bonds, the Internal Revenue Code requires an “applicable elected representative” of the governmental unit hosting the project to approve the issuance of the bonds.
Once the City Council holds the required TEFRA hearing and adopts the required resolution, no other participation of the City of Carlsbad in the bond financing will be required.
All parties should clearly understand:
• The debt issued that is financed by the bonds is not debt of the City of Carlsbad in any way. All repayment of debt is the strict obligation of the borrower. • All monitoring and administrative actions related to this issuance are the responsibility of the California Municipal Finance Authority.
• The City of Carlsbad’s participation in the issuance of these state bonds will not impact the city's appropriation limits and will not constitute any type of indebtedness by the city.
Public notification
The required seven-day notice for the Tax and Equity Fiscal Responsibility Act public hearing was posted in a newspaper of general circulation on March 15, 2024, and on the city website.
Copies of the notice are available in the Office of the City Clerk.
Options
Staff recommend the City Council conduct the required Tax and Equity Fiscal Responsibility Act hearing and adopt the attached City Council resolution (Exhibit 1) in favor of the issuance of the bonds. This action would support the creation of more affordable housing within the City of Carlsbad. The City Council could choose to not approve the recommended resolution, but there would be no benefit to the city for doing so and this could result in this planned affordable housing development not being able to obtain the required financing, which would not advance the city’s efforts to help create more affordable housing.
Fiscal Analysis
As noted above, the City of Carlsbad will have no financial, legal, moral obligation, liability or responsibility for the project or the repayment of the bonds for the financing of the project.
There is no fiscal impact to the City of Carlsbad for the California Municipal Finance Authority to issue the bonds for this development.
The Municipal Finance Authority shares a portion of the issuance fees it receives with its member communities when it issues bonds. The city’s minor administrative and staff costs to prepare the reports and related documents required by the borrower and the finance authority will be reimbursed to the City of Carlsbad through a small portion of the bond issuance fee and be deposited into the Housing Trust Fund.
March 26, 2024
Item #11 Page 3 of 7
Next Steps
City staff will forward the approved resolution to the California Municipal Finance Authority so its staff and the borrower can proceed with getting the bonds issued.
Environmental Evalu ation
This action does not constitute a project as defined under the California Environmental Quality Act in accordance with Public Resources Code Section 21065, in that these actions may not cause a direct physical change in the environment or a reasonably foreseeable indirect physical change in the environment.
Exhibits
1. City Council resolution
March 26, 2024
Item #11 Page 4 of 7
RESOLUTION NO. 2024-065
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARLSBAD,
CALIFORNIA, APPROVING THE ISSUANCE OF THE CALIFORNIA MUNICIPAL
FINANCE AUTHORITY MULTIFAMILY HOUSING REVENUE BONDS FOR THE BENEFIT OF METROPOLITAN AREA ADVISORY COMMITTEE ON ANTI POVERTY OF SAN DIEGO COUNTY, INC., OR A SUBSIDIARY OR AFFILIATE
THEREOF, IN AN AGGREGATE PRINCIPAL AMOUNT NOT TO EXCEED $45,000,000 FOR THE PURPOSE OF FINANCING OR REFINANCING THE
ACQUISITION, REHABILITATION, IMPROVEMENT AND EQUIPPING OF
LAUREL TREE APARTMENTS, A MULTIFAMILY RENTAL HOUSING PROJECT
LOCATED IN CARLSBAD, CALIFORNIA
WHEREAS, Metropolitan Area Advisory Committee on Anti-Poverty of San Diego County, Inc., a California nonprofit public benefit corporation (the "Sponsor"), on behalf of a limited partnership or other ownership entity to be created by an affiliate of the Sponsor for the purpose of owning the project described herein (such limited partnership or other ownership entity being referred to herein as the "Borrower"), has requested that the California Municipal Finance Authority (the "Authority") undertake a plan of finance, including the issuance from time to time of one or more series of revenue bonds in an aggregate principal amount not to exceed $45,000,000 (the "Bonds"), to finance and refinance the acquisition, construction, improvement and equipping of a 138-unit qualified residential rental project (the "Project") to be owned and operated by the Borrower and located at 1307 Laurel Tree Lane in the City of Carlsbad, California (the "City"); and WHEREAS, pursuant to Section 147(f) of the Internal Revenue Code (the "Code"), the issuance of the Bonds by the Authority must be approved by the City Council of the City of Carlsbad because the Project is located within the territorial limits of the City of Carlsbad; and WHEREAS, the City Council of the City of Carlsbad 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 Exhibit 1
March 26, 2024
Item #11 Page 5 of 7
Municipal Finance Authority, dated as of January 1, 2004 (the "Agreement " ), among certain local agencies, including the City of Carlsbad; 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 Carlsbad, California, as follow s:
1. 2.
That the above recitations are true and correct.
The City Council hereby approve s the plan of finance for the Project, including the issuance of the Bonds by the Authority. It is the purpo se and intent of the City Council that thi s resolution constitutes approval of the issuance of the Bonds by the Authority , for the purpo ses of (a) Section 147(f) of the Code by the applicable elected repre sentative of the governmental unit having juri sdiction over the area in which the Project is located, in accordance with said Section 147(f) and (b) Section 4 of the Agreement.
3. The issuance of the Bonds shall be subject to the approval of the Authority of all financing document s relating thereto to which the Authority is a party . The City of Carlsbad shall have no responsibility or liability what soever with respect to the Bonds.
4. The adoption of this Resolution shall not obligate the City of Carlsbad or any department thereof to (i) provide any financin g 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 plannin g approval, permit or other action necessary for the acquisition, construction, rehabil itation , installation or oper ation of the Proj ect ; (iii) make any contribution or advance any funds what soever to the Authority; or (iv) take any further action with respect to the Authority or its member ship therein.
5. The offic ers of the City of Carlsbad are hereby authorized and directed , jointly and severally, to do any and all thing s 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 th e term s and intent of this resolution and the financing tran saction approved hereby.
March 26, 2024
Item #11 Page 6 of 7
6. The Clerk shall forward a certified copy of this Resolution to the Authority in care of its counsel :
Ronald E. Lee, Esq.
Jones Hall, A Professional Law Corporation
475 Sansome Street, Suite 1700
San Francisco, California 94111
7. This resolution shall take effect immediately upon its adoption.
PASSED, APPROVED AND ADOPTED at a Regular Meeting of the City Counci l of the City of Carlsbad on the 26th day of March, 2024, by the following vote, to wit:
AYES:
NAYS:
ABSTAIN:
ABSENT:
BLACKBURN, BHAT-PATEL, ACOSTA, BURKHOLDER, LUNA.
NONE.
NONE.
NONE.
KEITH BLACKBURN, Mayor
0A fr
SHERRY FREISINGER, City Clerk
(SEAL)
March 26, 2024
Item #11 Page 7 of 7
TO: CITY CLERK
AFFIDAVIT OF MAILING
NOTICE OF PUBLIC HEARING
DATE oF PUBLIC HEARING: 3l;i. Lplaca 'i
SUBJECT: ~-..hr:x'.=f?&:.-.0& ~
~s.
LOCATION: ~ 00 Carlsbad Village Drive, Carlsbad, CA 92008 .
D Other:
- - ----------- -----
DATE POSTED TO CITY WEBSITE _ 3-=-.....,,h:~~"""-L...J/:J. ..... :..:....1/...L..-_ DATE NOTICES MAILED TO PROPERTY OWNERS: ----------
NUMBER_ MAILED: -
I declare under penalty of perjury under the laws of the State of California that I am employed by the City of Carlsbad and the foregoing is true and correct.
DEPARTMENT: ~ TY CLERK'S OFFICE □ OTHER _______ _
Signature Date
--------------------------- --------------------------- ---------------------- -- SENT TO FOR PUBLICATION VIA E-MAIL TO: 0 Union Tribune on ___ _ w" CoastNewson •3kJ/fJ..3/ - m v11J i,.p_
PUBLICATION DATE: Union Tribune --------------
p.JJ.A- Cr/) 0~
Coast News _.....;;:3="'--'/;.__,s""-U.lho.-:;.....;::;...::;;~ t/'--------- 1 declare under penalty of perjury under the laws of the State of Californ ia that I am employed by the City of Carlsbad and th e foregoing is true and correct .
DEPARTMENT: Q,6'TY CLERK'S OFFICE □ OTHER _ ______ _
Signature Date
Attachments: 1) Mailing Labels
2) Notice w/ attachments
NOTICE OF PUBLIC HEARING
NOTICE IS HEREBY GIVEN to you, because your interest may be affected, that the City Council of the City of Carlsbad will hold a public hearing at the Council Chamber, 1200 Carlsbad Village Drive, Carlsbad, California, at 5 p.m. on Tuesday, March 26, 2024, as required by Section 147(f) of the Internal Revenue Code of 1986, and will be held with respect to a plan of finance that includes the proposed issuance by the California Municipal Finance Authority (the "Authority") of its revenue bonds in one or more series in an amount not to exceed $45,000,000 (together with a like amount of refunding bonds) (the "Bonds"), including but not limited to revenue bonds issued to finance or refinance the acquisition, construction, improvement and equipping of a 138-unit qualified residential rental project to be located at 1307 Laurel Tree Lane in the City of Carlsbad, California (the "City"). The facilities are to be owned and operated by a limited partnership or other ownership entity to be created by an affiliate of Metropolitan Area Advisory Committee on Anti-Poverty of San Diego County, Inc., a California nonprofit public benefit corporation (such limited partnership or other ownership entity being referred to herein as the "Borrower").
The Bonds and the obligation to pay principal thereof and interest thereon and any redemption premium with respect thereto do not constitute indebtedness or an obligation of the City, the Authority, 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 Authority, payable solely from certain revenues duly pledged therefor and generally representing amounts paid by the Borrower.
Copies of the staff report will be available by Friday, March 22, 2024. If you have any questions, please contact the Housing & Homeless Services Department at (442) 339-2811 or [email protected]. The hearing will commence at S p.m. or as soon thereafter as the matter can be heard and will be held at City Hall, 1200 Carlsbad Village Drive, Carlsbad, California.
Interested persons wishing to express their views on the issuance of the Bonds or on the nature and location of the facilities proposed to be financed and refinanced may attend the public hearing or, prior to the time of the hearing, submit written comments to the City Clerk Services Manager, 1200 Carlsbad Village Drive, Carlsbad, California 92008, or via email to [email protected].
Dated and published: March 15, 2024
City of Carlsbad
City Council
(i
CITI'OFCARl.SRAD
NOTICEOFPUBLlCMEETING
NOTICE IS IIEREBY GIVEN to you, because your interest may be afl'ec-t,,d, that the City Council of the City of Cut.bad will hold a public hearing at the Council Chamber, 1200 Carlsbad Villag,, Prive, Carlsbad, California, at 5 p.m. on Tuesday, Man,h 26, 2024, a.s required by Section 147(0 of the Internal Revenue Code of 1986, and will be held with re.sped to a plan of finance that includes the proposed issuance by the California Municipal Finance Authority (the "Authority") of its rev,:nue bond, in one or mo<e series in a.n a.mount not to exceed $45,000,000 (together with a like amount of refunding bonds) (the "Bonds"), including but not limited to revenue bonds issued to finance or refinance the acquisition, construction, improvement and equipping ofa 138-unitgualified residential rent.al project to be located al 1307 Laurel Tree Lane in the City of Carlsbad, California (the "City"). The facilities are to be ownied &nd operated by a limited partnership or other ownership entity lo be created by an affiliate of Metropolitan Area Advisory Committre on Anti-Poverty ofSan Diego County, Inc., a California nonprofit public bendit OOIJ)Ora.tion (such limited partner ship or other awnershlp entity being referred ta herein .., the "Borrower").
The Bonds and the obligation ta pay principal thereof and intere,t the""-'n and any redemption premium with respect thereto do not oonstitute indebtedness or an obligfttion of the City, the Authority, the State of California or any political subdi\ision thereof, within the meaning of any cons"titutiouaJ or statutory debt limita.lion, or a charg,, against the g,,n eral credit or taxing powers of any of them. The Bonds shall be a limited obligation of the Authority, payable solely from certain revenues duly pledged therefor and generally r,,pre senting &mounts paid by the Borrower.
Copies of the s!Affreport will be available by l'riday, Marci> 22, 2024. If you have any questions, please contact the Housing 8r Homeless Services Department at (442) 339-2811 or [email protected]. The hearing wiU commence at 5 p.m. or.., soon thereafter as the matter can be helU"d and will be held at City Hall, 1200 Carlsbad Villag,, Drive, Carlsbad, California. Interested persons wishing to express their ,iews on the issuance of the Bonds or on the nature and location of the.facilities proposed ta be financed and refinanced may attend the public bearing or, prior to the time of the hearing, submit written comments to the.City Clerk S1m1ces Manager, 1200 Carlsbad Village Drive, Carlsbad, California 92008, o, via email to [email protected].
Dated and published: Man:h 15, 2024
City of Carlsbad
City Council
03/15/2024 CN 28669
3 col X 5,5"
16.5Hx $15
$247.50
LAUREL TREE APARTMENTS
AFFORDABLE HOUSING
TEFRA HEARING
Mandy Mills, Director
Housing & Homeless Services
March 26, 2024
1 {city of
Carlsbad
Background
LAUREL TREE APTS TAX EXEMPT BONDS
• 138-unit affordable housing development completed in 1999 • E
ligible for refinance with new bond issuance
• Improvements to the property and extends the affordability with a ne
w Regulatory Agreement
• Federal Tax and Equity Fiscal Responsibility Act requires a public hear
ing on the use of tax-exempt bonds for the project.
• Adopt a resolution approving the issuance of multifamily housing rev
enue bonds
2 {city of
Carlsbad
LAUREL TREE APTS TAX EXEMPT BONDS
3 FISCAL ANALYSIS
• Not debt of the City of Carlsbad
• No obligation of the City of Carlsbad to repay the debt • Will not impact the city's appropriation limits and will not
constitute any type of indebtedness by the city.
LAUREL TREE APTS TAX EXEMPT BONDS
4 {city of
Carlsbad
RECOMMENDATION
• Conduct the publi c hearing
• Adopt a resolution approving the issuance of
mul
tifamily housing revenue bonds for the Laurel
Tree Apartments affordable rental housing project
LAUREL TREE APTS TAX EXEMPT BONDS
5 {city of
Carlsbad