Empower individuals & families ● Build community resilience ● Promote housing opportunities ● Enhance quality of life
HOUSING &
HOMELESS SERVICES
Item 7.1
Otay Ranch Apartments/Encelia
Presented by:
Bradley R. Neal, Stradling Yocca Carlson & Rauth
Michelle Ito, Meta Housing
HOUSING &
HOMELESS
SERVICES
Housing Authority Multi-Family Bonds
• Law authorizes local governments to issue
mortgage revenue bonds (“Bonds”) to finance
development, acquisition, construction and
rehabilitation of multifamily housing rental
projects.
• Must set aside a percent of units to affordable
either 50% or 60% AMI
• Usually restricted for 55 years
• Bond Interest is exempt from federal and state
taxation, providing below market financing for
qualified projects.
• Administered by the Housing Authority with no
direct liability of the City.
• Security for repayment of the bonds is limited
to project revenue.
• Program is self-supporting with the owner
responsible for the payment of all costs.
HOUSING &
HOMELESS
SERVICES
City must hold a public hearing to
provide the public an opportunity to
comment on the use of the tax-exempt
funds to finance the Project prior to the
issuance of the tax-exempt obligations.
Tax Equity and Fiscal Responsibility Act
of 1982 (“TEFRA”)
HOUSING &
HOMELESS
SERVICES
• Errata 3/27/23 - The most recent update to the Borrower’s pro forma indicated an increase in the supplemental taxable borrowing from a previously estimated $870,000 to $1,436,683. As a result, Staff is recommending an increase in the not to exceed par of taxable Notes to $1,500,000.
• Attachment 3 - While the taxable bond amount has increased, it will be paid down in full at conversion. There is no effect on the permanent loan. The public benefits remain the same, therefore Attachment 3 has not been updated.
Otay Ranch Apartments / Encelia
HA TEFRA
Inducement
• October 2019
• Approved $70M
Inducement
CDLAC
Allocation
• February 2020
HA TEFRA
Hearing
• December 2020
• $35M in Bonds
Issued
Pandemic &
Market
Changes
CDLAC
Allocation
• November 2022
• $4M
Supplemental
Request
HA TEFRA
Hearing
• Tonight’s Action
• Issuance
Request:
- $4M Exempt
• - $1.5M Taxable
Project Costs Estimated at $73.5 M Project Costs Estimated at $80.2 M Meta Housing Corporation
City Council
March 28, 2023
Project
Location
6 Located within Otay Ranch,
Village 8 West
Off La Media Road @ 1910
Encelia Circle
Project Summary
Three buildings
175 units
Approx. 10,000 sq. of commercial
Low income rents range between 50-60% AMI
$1,220 - $2,030 (March 2023)
Amenities: community rooms, teen lounge, dog park, tot
lot, half basketball court, and more.
7 8
Master Development Sitework
Project Milestone Planned Timeline Actual Timeline
Apply for bonds + tax credits Sept. 2019 Sept. 2019
Close Financing Dec. 2020 Dec. 2020
Start Construction of Building 2 March 2021 June 2021
Completion of Master Development Sitework April 2021 Jan. 2022 Start Construction of Buildings 1 & 3 April 2021 Feb. 2022 9 Project Timeline
10 Major Development Impacts
Applied for tax-exempt bonds & tax credits in Fall 2019 • Our application did not anticipate the historic market volatility caused by the COVID-19 pandemic.
Delayed completion of master development sitework
• Subcontractors could not hold their original pricing from 2020 with their suppliers. The Project absorbed significant material cost increases.
Rising interest rates
• Rapid increases in interest rates have far exceeded the Project’s interest reserve that was budgeted in 2020.
3/29/2023 11
Supplemental Tax-Exempt Bonds
Under Internal Revenue Code (IRC) Section 42(h)(4)(B), qualified residential rental projects applying for tax-exempt bonds can receive the 4% LIHTC under IRC Section 42 on 100% of the qualified low-income units if the project is financed at least 50% with tax-exempt bonds from a state’s bond volume cap.
Recent Construction Photos
Aerial photo taken in January 2023
13 Recent Construction Photos
3/29/2023 14
Anticipated Timeline
Building (Number of Units) Construction
Completion Lease-Up
Building 2 (82 units) June 2023 July 2023
Building 1 (49 units) Sept. 2023 Oct. 2023
Building 3 (44 units) Oct. 2023 Nov. 2023
Contact Info:
Michelle Ito
(310) 575-3543 x 151
[email protected]
HOUSING &
HOMELESS SERVICES
Item 7.1 Recommended Action
Hold a Tax Equity and Fiscal Responsibility Act of 1982 (“TEFRA”) public hearing.
Adopt:
Resolution A (of the City Council) approving the sale, execution, and delivery of additional multifamily housing revenue notes of the Housing Authority of the City of Chula Vista for Otay Ranch Apartments; and
Resolution B (of the Housing Authority) authorizing the sale, execution, and delivery of a tax-exempt multifamily housing revenue note in an aggregate principal amount not to exceed $4,000,000 and a taxable note in the amount up to $1,500,000 for the purpose of financing a portion of construction costs of the Otay Ranch Apartments multifamily rental housing project; approving and authorizing the execution and delivery of any and all documents necessary to execute and deliver the notes, complete the transaction and implement the resolution, and ratifying and approving any action heretofore taken in connection with the notes.