CALIFORNIA DEBT LIMIT ALLOCATION COMMITTEE
901 P Street, Suite 213A
Sacramento, CA 95814
p (916) 653-3255
f (916) 653-6827
[email protected]
www.treasurer.ca.gov/cdlac
August 6, 2024
Catherine W. Bando
Executive Director
California Statewide Communities Development Authority
1700 North Broadway, Suite 405
Walnut Creek, CA 94596
RE: RESOLUTION ATTESTING TO THE TRANSFER OF
PRIVATE ACTIVITY BOND ALLOCATION
Dear Catherine W. Bando:
Enclosed is a copy of Resolution No. 24-171, adopted by the California Debt Limit Allocation Committee (the ''Committee'') on August 6, 2024, transferring $23,185,979.00 of the 2024 State Ceiling on Qualified Private Activity Bonds to the California Statewide Communities Development Authority (the ''Applicant'') for the Costa Mesa M6 (the ''Project''). The Resolution No. 24-171 establishes the terms and conditions under which the allocation has been granted. Please read it carefully and keep a copy in your permanent files.
The following is additional information pertaining to the use of the allocation for this Project:
1. Performance Deposit: Pursuant to Section 5050 of the Committee’s Regulations, a performance deposit to one-half of one percent (0.5%) of the Allocation requested, not to exceed $100,000, made payable to the Applicant, shall be evidenced within 20 calendar days following an award of an Allocation.
The performance deposit certified in support of this project ($100,000) is to remain on deposit until you receive authorization from the Committee that it may be released. This written release will be provided once the Committee receives: the “Report of Action Taken” template indicating that the allocation transferred was used for the Project's issuance of bonds, a copy of the conformed regulatory agreement, and the payment of the second installment of the CDLAC filing fee. A copy of the conformed regulatory agreement should be sent electronically to [email protected]. The full amount of the deposit will be released upon the Executive Director's approval if at least 80% of the allocation to this project is used for the issuance of bonds. If an amount less than 80% of the allocation is used to issue bonds, a proportionate amount of the deposit will be subject to forfeiture.
2. IRS
Certification: The IRS-required certification (Certificate pursuant to Section 149(e)(2)(F) Internal Revenue Code of 1986, As Amended) will be prepared by CDLAC staff and sent to the Applicant's bond counsel once the Committee receives the Report of Action Taken template from the Applicant.
MEMBERS
FIONA MA, CPA, CHAIR
STATE TREASURER
GAVIN NEWSOM
GOVERNOR
MALIA M. COHEN
STATE CONTROLLER
INTERIM EXECUTIVE DIRECTOR
MARINA WIANT
Attachment 1
Ju
stin Cooper, Esq., Orrick, Herrington & Sutcliffe LLP
Angela Heyward, Costa Mesa M6 LP
Catherine W. Bando
August 6, 2024
3. Second Installment of Filing Fee: Enclosed is an invoice for this Project. The invoice attached herein should be considered final,
due and payable upon the issuance of bonds.
4. Compliance: The Certification of Compliance II or equivalent form is to be submitted by the Project Sponsor to the Applicant by the Applicant's specified deadline, but no later than March 1st annually until the project's Certificate of Completion has been submitted to the Applicant. Following the submission of the Certificate of Completion or equivalent form to the Applicant, the Certification of Compliance II is to be submitted March 1st every three (3) years thereafter. In addition, an Annual Applicant Public Benefits and On-going Compliance Self-Certification (Self Certification) form must be submitted by the Applicant online every year until the Certificate of Completion has been submitted to the Applicant. After the completion of the project has been reported, the Self Certification will be required to be submitted March 1st every three years thereafter pursuant to Section 5144 of the CDLAC Regulations. Verification to CDLAC of income and rental information is not required in advance of the submission of the Certificate of Completion. A copy of the Certification of Compliance II and the Certificate of Completion forms may be found at this website location: https://www.treasurer.ca.gov/cdlac/compliance.asp. Failure to submit Compliance may result in disqualification from future program participation.
Sincerely,
Marina Wiant
Interim Executive Director
Enclosures
cc: Jon Penkower, California Statewide Communities Development Authority
WHEREAS, C
osta Mesa M6 LP (''Project Sponsor'') has represented and the Applicant
THE CALIFORNIA DEBT LIMIT ALLOCATION COMMITTEE
RESOLUTION NO. 24-171
A RESOLUTION TRANSFERRING A PORTION OF THE 2024 STATE CEILING
ON QUALIFIED PRIVATE ACTIVITY BONDS FOR A
QUALIFIED RESIDENTIAL RENTAL PROJECT
WHEREAS, the California Debt Limit Allocation Committee (''CDLAC") is authorized to implement the volume limit for the state on private activity bonds established pursuant to federal law, annually determine a state ceiling on the aggregate amount of private activity bonds that may be issued, and allocate that aggregate amount among state and local agencies (Gov. Code, § 8869.81 et seq.); and
WHEREAS, CDLAC has received an application ("Application") from the California Statewide Communities Development Authority (''Applicant'') for the transfer to the Applicant of a portion of the 2024 state ceiling for use by the Applicant to issue bonds or other obligations (''Bonds'') for Costa Mesa M6 (''Project'') as described in Exhibit A; and
has confirmed in the Application certain facts and information concerning the Project; and WHEREAS, in evaluating the Project and allocating a portion of the state ceiling to the Applicant for the benefit of the Project, CDLAC staff has relied upon the written facts and information represented in the Application by the Project Sponsor and the Applicant; and
WHEREAS, it is consistent with CDLAC's statutes and regulations for CDLAC to transfer a portion of the 2024 state ceiling (''Allocation'') to benefit the Project; NOW, THEREFORE, BE IT RESOLVED by the California Debt Limit Allocation Committee the following:
Section 1. An amount of the 2024 state ceiling on the aggregate amount of private activity bonds equal to $23,185,979.00 shall be transferred to the Applicant. This Allocation shall be used only by the Applicant and only for the issuance of the Bonds for the Project, as described in Exhibit A. The terms and conditions of Exhibit A are incorporated herein as though set forth in full (this resolution, tog ether with Exhibit A are hereafter referred to collectively as this ''Resolution'').
Section 2. The terms and conditions of this Resolution shall be incorporated in appropriate documents relating to the Bonds. The Project Sponsor and the Applicant, and all of their respective successors and assignees, shall be bound by those terms and conditions. The Applicant shall monitor the Project for compliance with the terms and conditions of this Resolution. The Project shall be subject to the monitoring provisions of California Code of Regulations, title 4, sections 10337(c) and 5220.
Section 3. A modification to the Project made prior to the issuance of the Bonds that impacts the Resolution shall be reported to the Executive Director and, if the Executive Director determines that modification to be material pursuant to CDLAC’s statutes and regulations, the material modification shall be brought back to CDLAC for consideration before the Allocation may be used for the Project. After the Bonds are issued, the terms and conditions set forth in this Resolution shall be enforceable by CDLAC through an action for specific performance or other available remedy.
In addition, after the Bonds are issued, a change to any of the Items of Exhibit A shall require CDLAC or Executive Director approval for the term of the commitment.
Section 4. A material change in the structure of the Bonds sale prior to the issuance of the Bonds and not previously approved by CDLAC shall require approval of the CDLAC Chair or the Executive Director.
RESOLUTION NO. 24-171
Section 5. The transfer of the proceeds from the sale of the Bonds to a project other than the Project may be allowed only with the prior approval of the Executive Director in consultation with the CDLAC Chair.
Section 6. The Applicant is authorized to use the Allocation to make a carryforward election with respect to the Project. The Applicant is not authorized to transfer the Allocation to any governmental unit in the State except to CDLAC.
Section 7. If the Applicant has not issued the Bonds pursuant to the Allocation by the close of business on March 17, 2025, the Applicant shall notify CDLAC and carry forward the Allocation to the next approved project to be awarded a bond allocation pursuant to California Code of Regulations, title 4, section 5133. The Executive Director may extend this date by up to ninety (90) days if the extension is needed due to circumstances outside the control of the owner.
Section 8. Within twenty-four (24) hours of using the Allocation to issue the Bonds, the Applicant shall notify CDLAC at [email protected] that the Allocation has been used. This notice shall identify the Applicant, the Project or qualified residential rental project, the date the Allocation was used, and the amount of the Allocation used.
Section 9. Within fifteen (15) calendar days of the Bonds closing, the Applicant or its counsel shall submit a completed “Report of Action Taken Regarding the Issuance of Private Activity Bonds”, as made available by CDLAC.
Section 10. Differences between the amount of the Bonds issued and the amount of the Allocation granted in Section 1 shall be retained by the Applicant as required by 26 U.S.C. §146(f)(3)(A) regarding carryforward elections.
The use of a Carryforward Allocation shall be consistent with California Code of Regulations, title 4, section 5133.
Section 11. CDLAC staff is directed to transmit a copy of this Resolution to the Applicant together with a request that the Applicant retain a copy in the Applicant’s official records for the term of the Bonds or the term of the income and rental restrictions, whichever is longer. CDLAC staff shall retain a copy of this Resolution in the files of CDLAC, or any successor agency, for the same term.
Section 12. In consideration of the Allocation, the Applicant and Project Sponsor shall comply with all the terms and conditions contained in this Resolution and ensure that these terms and conditions are included in the documents related to the Bonds. The Applicant and Project Sponsor shall expressly agree that the terms and conditions of this Resolution may be enforced by CDLAC through an action for specific performance or any other available remedy, provided CDLAC agrees not to take any action or enforce any remedy that would be materially adverse to the interests of Bondholders. The Applicant and Project Sponsor shall ensure the Bond documents, as appropriate, expressly state CDLAC is a third-party beneficiary of the terms and conditions set forth in this Resolution.
Section 13. Either the “Certification of Compliance II for Qualified Residential Rental Projects” or “Certification of Compliance II for Non-Qualified Residential Rental Projects” shall be submitted by the Project Sponsor to the Applicant no later than March 1st annually until the Project's applicable “Certificate of Completion” has been submitted by the Project Sponsor to the Applicant. An “Annual Applicant Public Benefits and Ongoing Compliance Self-Certification” shall be annually submitted online by the Applicant to CDLAC until the applicable “Certificate of Completion” has been submitted by the Project Sponsor to the Applicant. Following the submission of the applicable “Certificate of Completion” to the Applicant, the applicable “Certification of Compliance II” shall be submitted by the Project Sponsor to the Applicant no later than March 1st, and no later than March 1st every three years thereafter, pursuant to California Code of Regulations, title 4 section 5144. V erification to CDLAC of income and rental information shall not be required prior to the submission of the applicable “Certificate of Completion.” A copy of the applicable “Certification of Compliance II” may be found at: http://www.treasurer.ca.gov/cdlac/forms.asp. Failure to submit compliance documents may result in disqualification from future participation for qualified residential rental projects.
AYES: St
ate Treasurer Fiona Ma, CPA
Michele Perrault for Governor Gavin Newsom
Evan Johnson for State Controller Malia M. Cohen
NOES: None
ABSTENTIONS: None
ABSENCES: None
Marina Wiant, Interim Executive Director
Date: August 6, 2024
RESOLUTION NO. 24-171
Section 14. All relevant bond documents for the Bonds shall permit principal payments or prepayments on the underlying loan(s) as transferred proceeds in a bond preservation and recycling program as permitted by 26 U.S.C. 146(i)(6) and shall require no less than thirty (30) days’ notice to CDLAC and the Applicant prior to the redemption of the Bonds at conversion to permanent financing.
Section 15. This Resolution shall take effect immediately upon its adoption. * * *
CERTIFICATION
I, Marina Wiant, Interim Executive Director of the California Debt Limit Allocation Committee, hereby certify that the above is a full, true, and correct copy of the Resolution adopted at a meeting of the Committee held in the Paul Bonderson Building, 901 P Street, 1st Fl oor, Sacramento, California 95814, on Aug ust 6, 2024 with the following votes recorded:
1. Applican t: California Statewide Communities Development Authority
2. Application No.:
3. Project Sponsor :
4. Property Management Co.:
5. Project Name :
Costa Mesa M6
6. Loca tion:
Costa Mesa , CA
7. Private Placement Purchaser: Citibank, N.A.
Cash Flow Bond: Not Applicable
8. Public Sale:
Credit Enhancement Provider:
9. Total Number of Un its:
plus 1 unrestricted manager unit(s)
10. Total Number of Restricted Tenant Rental Un its:
11. 12.
13. The Project will utilize Gross Rents as defined in Section 5170 of the Committee’s Regulations.
14. Income and Rental Restrictions
a. Federally Bond-Restricted Set-aside:
At least 40% of the total units will be restricted at 60% of the Area Median Income. b. Other Restricted Units
For the entire term of the income and rental restrictions, the Project will have:
86 Qualified Residential units rented or held vacant for rental for persons or families whose income is at or below 50% of the Area Median Income.
RESOLUTION NO. 24-171
QUALIFIED RESIDENTIAL RENTAL PROJECT
EXHIBIT A
24-511
Costa Mesa M6 LP (CM Mercy House CHDO, LLC; CDP Costa
Mesa M6 LLC)
FPI Management
The term of the income and rental restrictions for the Project will be at least 55 years from the date 50% occupancy is achieved or when the project is otherwise placed in service.
The Regulatory Agreement shall not terminate prior to the end of the CDLAC Resolution affordability term in the event of foreclosure, exercise of power of sale, and/or transfer of title by deed in lieu of foreclosure in connection with a deed of trust directly or indirectly securing the repayment of Cash Flow Permanent Bonds.
All units identified in the CDLAC resolution, including both the Federally Bond-Restricted Units and the Other Restricted Units, will be incorporated into the Bond Regulatory Agreement. Assumptions to be included in the Bond Regulatory Agreement regarding the Other Restricted Units will include the AMI as outlined in the CDLAC resolution, a limitation that tenants pay no more than 30% of their income and 1.5 persons per bedroom occupancy standard to determine the applicable rent.
Applicable
Not Applicable
86 86
Not Applicable
RESOLUTION NO. 24-171
Exhibit A
15. Applicable:
16. New Construction Pool Set-aside Requirements.
Applicable
Not Applicable
Not Applicable
Not Applicable
17. Applicable
18. Not Applicable
19. Not Applicable
20. Not Applicable
21. Applicable
In accordance with Section 5191(a), a minimum of ten percent (10%) of the units must be restricted to households with incomes no greater than 50% of the Area Median Income and will be distributed as follows:
Studios: 9
Homeless Set-aside: at least 25% of the Tax Credit Units are designated for homeless households as defined by CTCAC Regulation Section 10315(b)(1) with affordable rents consistent with Section 10325(g)(3).
Homeless Set-aside Priority: 45% of the Tax Credit Units are designated for homeless households as defined by CTCAC Regulation Section 10315(b)(1) with affordable rents consistent with Section 10325(g)(3).
The Project will comply with the New Construction Density and Local Incentives of Section 5230(c). At a
mi
nimum, the Project must continue to meet the criteria sufficient to retain 10 points.
Extremely Low Income/Very Low Income (ELI/VLI) Set-aside. The rent and income targeting restrictions must h
ave an average of 50% area median income (AMI) or below.
Mixed Income Set-aside. A Mixed Income Project is a New Construction Qualified Residential Rental Project which either (1) is not utilizing the Average Income test of Internal Revenue Code Section 42 (g)(1)(C) and w
hich has 50% or fewer of its total units designated as Restricted Rental Units or; (2) is part of the California Housing Finance Agency Mixed-Income Program. In a Competitive Application Process, a Mixed Income Project may only apply for an allocation of tax-exempt bonds if the ratio of tax-exempt bonds, not including recy cled
bonds,
to aggregate depreciable basis plus land basis is less than or equal to the ratio of units that will be restricted pursuant to a CTCAC regulatory agreement.
Minimum construction standards pursuant to CDLAC Regulation Section 5205 and Sections 10325(f)(7)(A) thr
ough (J) of the CTCAC Regulations will be incorporated into the project design for all new construction and r
ehabilitation projects.
For all Acquisition & Rehabilitation projects, a minimum of $15,000 in hard construction costs will be expende d fo
r each unit.
Other Rehabilitation Pool Requirements. The Project will comply with the requirement to complete rehabilita tion w
ork at a minimum of $60,000 in hard construction cost per unit as defined in CTCAC Regulation Section 10302(u),
subject to the provisions of Internal Revenue Code Section 42(e)(3)(A)(ii)(I), expended only on immediate health and safety
improvements, seismic and accessibility improvements and/or the replacement of m
ajor systems with a remaining useful life of less than ten years pursuant to CDLAC Regulation Section 5170.
The Project will comply with the Preservation and Other Rehabilitation Project Priorities of Section 5230(b). At a minimum, the Project must continue to meet the criteria sufficient to retain 0 points.
RESOLUTION NO. 24-171
Exhibit A
22. Applicable
23. Applicable
24. Applicable
25. Applicable
26. Applicable
27. Applicable
28. Applicable
29. Not Applicable
30. Applicable
31. Not Applicable
32. Applicable
Hours per Year:
The Project will comply with the Exceeding Minimum Income Restrictions of Section 5230(d). At a minimum, the Project must continue to meet the criteria sufficient to retain 20 points.
The Project will comply with the New Construction Housing Type requirement of Section 5230(g). At a minimum, the Project must continue to meet the criteria sufficient to retain 10 points as a Non-Targeted housing type.
The Project will comply with the Leveraged Soft Resources requirements of Section 5230(h). At a minimum, the Project must continue to meet the criteria sufficient to retain 8 points.
The Project will comply with the Readiness to Proceed requirements of Sections 5152 and 5230(i). At a minimum, the Project must continue to meet the criteria sufficient to retain 10 points.
The Project will comply with the Affirmatively Furthering Fair Housing requirements of Section 5230(j)(1)(A).
At a minimum, the Project must continue to meet the criteria sufficient to retain 10 points.
The Project will comply with the Affirmatively Furthering Fair Housing requirements of Section 5230(j)(1)(B).
At a minimum, the Project must continue to meet the criteria sufficient to retain 9 points.
The Project will comply with the Exceeding Minimum Rent Restrictions of Section 5230(e). At a minimum, the Project must continue to meet the criteria sufficient to retain 10 points.
The Project will comply with the General Partner Experience requirements of Section 5230(f)(1). At a minimum, the Project must continue to meet the criteria sufficient to retain 7 points.
The Project will comply with the Management Company Experience requirements of Section 5230(f)(2). At a minimum, the Project must continue to meet the criteria sufficient to retain 3 points.
For a period of fifteen (15) years after the Project is placed in use, the Project will provide residents high speed internet service in each Project unit free of charge (minimum average download speed 25 megabits/second).
For a period of fifteen (15) years after the Project is placed in use, the Project will provide residents a Service Coordinator. Service Coordinator responsibilities must include, but are not limited to: (a) providing tenants with information about available services in the community, (b) assisting tenants to access services through referral and advocacy, and (c) organizing community-building and/or other enrichment activities for tenants (such as holiday events, tenant council, etc.).
160
RESOLUTION NO. 24-171
Exhibit A
33. Applicable
Hours per Year:
34. Applicable
35. Applicable
36. Applicable
37. The following entity will conduct the site and file inspections:
Not Applicable
For a period of fifteen (15) years after the Project is placed in use, the Project will provide residents instructor-led adult educational, health and wellness, or skill building classes. This includes, but is not limited to: Financial literacy, computer training, home-buyer education, GED classes, and resume building classes, ESL, nutrition class, exercise class, health information/awareness, art class, parenting class, on-site food cultivation and preparation classes, and smoking cessation classes. Drop-in computer labs, monitoring or technical assistance shall not qualify.
84 As specified in Section 5144(c) of the Committee’s Regulations, sponsors will be required to utilize CTCAC’s Compliance Manual specifically Section VI: Qualify Tenants for Low Income Housing Tax Credit Units, to verify tenant income in conjunction with initial occupancy. No less than every three (3) years after the project is completed, the Sponsor must collect and retain the following income and verification documentation related to all the Federally Bond-Restricted units identified in the Committee Resolution: CTCAC Tax Income Calculation (TIC) or equivalent documentation, all associated source income documentation, evidence of the verifying income computation and unit lease.
As specified in Section 5144(e) of the Committee’s Regulations, applicants are required to ensure an onsite inspection as well as an on-site review of the 20% Federally Bond-Restricted units is performed every 3 years after the Qualified Project Period has commenced.
The Project will comply with the Cost Containment requirements of Section 5230(l). At a minimum, the Project must continue to meet the criteria sufficient to retain 12 points.
As specified in Section 5144(d) of the Committee’s Regulations, compliance with the income and rental requirements of the Federally Bond-Restricted Units identified in the Committee Resolution and the Bond Regulatory Agreement must be demonstrated by the Applicants initial review of 20% of all management files associated with the Federally Bond-Restricted units and subsequent review every three years of 20% of all management files associated with the Federally Bond-Restricted units.
Date: August 6, 2024
24-511
ED
To: Jon Penkower
Managing Director
California Statewide Communities Development Authority
1700 North Broadway, Suite 405
Walnut Creel, CA 94596
2nd Installment of fee levied pursuant to Section 8869.90 of the California Government Code:
NAME OF ISSUER: California Statewide Communities Development Authority NAME OF PROJECT: Costa Mesa M6
ALLOCATION AWARD DATE: August 6, 2024
ALLOCATION AWARD AMOUNT:
AMOUNT DUE: Allocation award x .00035 = $
Less initial application fee = -$
Amount Due = $
REVISED AMOUNT DUE: Amount issued x .00035 = $
Less initial application fee = -$
Revised Amount Due =$
STATE OF CALIFORNIA
PAYMENT IS DUE WITHIN 30 DAYS OF BOND CLOSING
Application No.:
Analyst Initials:
CALIFORNIA DEBT LIMIT ALLOCATION COMMITTEE
ACCOUNTING SERVICES
901 P Street, Suite 213A
Sacramento, CA 95814
(916)
653-
3255
FILING FEE INVOICE
1,200.00
How to Make a Payment
To determine the revised amount due, complete the following only if the amount of allocation used is less than the amount of allocation awarded, and remit the revised amount due. The application fee is based on the amount of allocation used to issue bonds.
$23,185,979
8,115.09
1,200.00
6,915.09
If the amount of allocation used is less than the amount of allocation awarded If paying by Check
Make sure the Check has:
Project Name and Application Number
CD
LAC as Payee
Amount Due or Revised Amount Due (see above)
Send Check to Address listed above with this Invoice.
If paying Online
Go to: https://www.treasurer.ca.gov/cdlac/payment.asp