Fremont City Council Meeting: 10/18/22 07:00 PM
3300 Capitol Avenue Div/Dept: Finance Department
Fremont, CA 94538 Category: Affordable Housing
SCHEDULED
Sponsors:
STAFF REPORT (ID # 4723) DOC ID: 4723
Updated: 10/13/2022 11:52 AM by Alberto Quintanilla Page 1 BOND ISSUANCE FOR PACIFIC WEST COMMUNITIES, INC - Public Hearing (Published Notice) in Accordance with the Tax Equity and Fiscal Responsibility Act (TEFRA) to Consider the Issuance of Tax-Exempt Bonds by California Municipal Finance Authority (CMFA) for Fremont Pacific Associates II, LP. (Osgood Apartments South)
Contact Persons:
Name: Mario Rosas David Persselin
Title: Budget and Treasury Analyst Finance Director
Div/Dept: Finance Department Finance Department
Phone: 510-494-4637 510-494-4631
E-Mail: [email protected] [email protected]
Executive Summary: The California Municipal Finance Authority (CMFA), a joint exercise of powers authority of which the City is a member, has been asked by Pacific West Communities, Inc. to serve as the conduit issuer of tax-exempt bonds for the Osgood Apartments South affordable housing project (the “Project”) in the City of Fremont. CMFA may not approve the bond financing unless and until the City Council approves the bond issuance after conducting a public hearing (referred to as a “TEFRA hearing”).
The Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA) mandates a public accountability procedure involving the legislative body of a local agency in which a proposed project (to be funded with tax-exempt bonds) is located. The TEFRA hearing is intended to provide members of the community an opportunity to speak on behalf of or against the proposed project. Once the TEFRA hearing has been conducted, the City Council is then asked to adopt a resolution approving the issuance of tax-exempt bonds for the project.
The bonds will be issued as limited obligations of CMFA, and the City will have no liability with respect to the bonds or any role to play in the bond issuance other than the TEFRA hearing.
Staff recommends that the City Council conduct a public hearing in accordance with the Tax Equity and Fiscal Responsibility Act and adopt a resolution approving the issuance of tax - exempt bonds for the Project.
BACKGROUND: CMFA has been asked by Pacific West Communities, Inc. to serve as the conduit issuer for the project in the City of Fremont. CMFA may not approve the bond financing unless and until the City Council approves the bond issuance after conducting a TEFRA hearing.
DISCUSSION/ANALYSIS: Pacific West Communities, Inc. (“PWC”) was formed as a real estate development and financing firm, specializing in the construction and rehabilitation of affordable workforce housing throughout the western United States. With a particular emphasis on the use of the affordable housing tax credit, PWC and its related companies develop multi-family and senior housing in the states of California, Arizona, New Mexico, Utah, Oregon, Montana, Idaho, Nevada, Colorado, Washington, and Wyoming. Currently Staff Report (ID # 4723) Meeting of October 18, 2022
Updated: 10/13/2022 11:52 AM by Alberto Quintanilla Page 2 PWC owns and operates approximately 110 developments with over 6,000 units of affordable housing.
The proposed project, Osgood Apartments South, is a 100-unit family new construction rental project located at 41911 Osgood Road, in Fremont. With a mix of 50 studio units, 25 two-bedroom units, and 25 three-bedroom units, the proposed project will provide affordable housing for families residing in Alameda County.
The units will be newly constructed apartments in one six-story residential building. The type of construction will be wood frame supported by perimeter foundations with concrete slab flooring. There will be five residential stories built over one level of concrete podium parking. Residents will enjoy amenities such as a community center, exercise room, and an outdoor children’s playground. An on-site resident manager will provide assistance and management while residing in a three-bedroom manager’s unit. Within the units, residents will enjoy standard features including refrigerators, exhaust fans, dishwashers, disposals, and ranges with ovens. The design of these apartments will adhere to all necessary requirements and mandates that the local jurisdiction deems appropriate.
Affordability: As detailed below, all rents will be reduced to an affordable level for very low and low-income households.
Percent of Restricted Rental Units in the Project: 100%
• 10% (10 Units) restricted to 30% or less of area median income households; • 25% (25 Units) restricted to 50% or less of area median income households; • 48% (47 Units) restricted to 60% or less of area median income households; and • 17% (17 Units) restricted to 80% or less of area median income households. • 1 manager’s unit
Unit Mix: Studio, 2- and 3-bedroom units
Term of Restriction: 55 years
TEFRA Hearing: TEFRA mandates a public accountability procedure involving the legislative body of a local agency in which a proposed project (to be funded with tax-exempt bonds) is located. The TEFRA hearing is intended to provide members of the community an opportunity to speak on behalf of or against the proposed project. Notice of the public hearing must be published in a newspaper of general circulation at least seven days prior to the date on which it is scheduled. To comply with federal tax laws, as well as with CMFA policy, once the TEFRA hearing has been conducted, the City Council is asked to adopt a resolution approving the issuance of tax-exempt bonds for the project.
Project Financing: The costs of the project are estimated to total approximately $66 million. A large part of the project costs, up to $41.4 million, are proposed to be financed through multi-family housing revenue bonds issued by CMFA, with Low Income Housing Tax Credits as the other principal funding source. On November 2, 2021 the City Council approved a loan of $6.0 million from the Affordable Housing Development Fund (Fund 196) for this project. Other funds will be coming from the General Partner and Equity. A summary of the estimated sources and uses of funds for the project is presented in the following table.
Staff Report (ID # 4723) Meeting of October 18, 2022
Updated: 10/13/2022 11:52 AM by Alberto Quintanilla Page 3
FISCAL IMPACT: None. The bonds will be issued as limited obligations of CMFA, payable solely from revenues and receipts derived from a loan to be made by CMFA to Fremont Pacific Associates II, LP with the bond proceeds. The City bears no liability with respect to the issuance of the bonds. Further, the City is not a party to any of the financing docum ents related to the bond issuance and is not named in any of the disclosure documents describing the bonds or the proposed financing.
The Board of Directors of the California Foundation for Stronger Communities, a California non-profit public benefit corporation (the “Foundation”), acts as the Board of Directors for the CMFA. Through its conduit issuance activities, the CMFA shares a portion of the issuance fees it receives with its member communities and donates a portion of these issuance fees to the Foundation for the support of local charities. With respect to the City of Fremont, it is expected that that a portion of the issuance fee will be granted by the CMFA to the general fund of the City. Such grant may be used for any lawful purpose of the Cit y.
ENVIRONMENTAL REVIEW: Not applicable.
ATTACHMENTS: None.
ATTACHMENTS:
• Draft Resolution- Osgood South TEFRA
RECOMMENDATION:
1. Hold a public hearing in accordance with the TEFRA;
2. Adopt a Resolution Approving the Issuance of Multifamily Housing Revenue Bonds by the California Municipal Finance Authority for the purpose of financing an affordable housing project in the City of Fremont to be developed by Fremont Pacific Associates II, LP Estimated Sources of Funds Estimated Uses of Funds
Tax-Exempt Bond
Proceeds
$34,409,000
New Construction $39,131,382
Deferred Developer Fee $7,921,790 Developer Fee $7,921,790 Recycled Tax-Exempt
Bond Proceeds
$7,000,000 Soft Cost, Interest, etc. $5,410,188
City of Fremont-
Affordable Housing Loan
$6,000,000 Hard & Soft Cost Contingency $4,500,000
Taxable Bond Proceeds $6,000,000 Land Acquisition $4,255,000 LIH Tax Credit Equity $3,721,742 Cost of Issuance/Financing Cost $2,834,172 Deferred Costs $665,763 Architectural & Engineering $1,000,000 Reserves $665,763
Total Sources $65,718,295
Total Uses $65,718,295