G\T Y OF
PISMO BEACH CITY COUNCIL STAFF REPORT
A�syo sEPc�' Agenda Item 11.A
Meeting Date: November 19, 2024
TITLE:
Conduit Financing for the Pismo Terrace Affordable Housing Apartments Project RECOMMENDATION:
1. Conduct a public hearing under the requirements of Tax and Equity Fiscal Responsibility Act (TEFRA) and the Internal Revenue Code of 1986, as amended, in connection with the proposed issuance of revenue bonds by the California Municipal Finance Authority (CMFA).
2. Adopt a Resolution approving the issuance of revenue bonds by the California Municipal Finance Authority in an aggregate principal amount not to exceed $13,414,789 to finance and refinance a 50-unit affordable rental housing facility for the benefit of Pismo Terrace, L.P. or its affiliate, and certain other matters relating thereto.
BACKGROUND:
On August 17, 2021, the City Council held a Tax and Equity Fiscal Responsibility Act (TEFRA) hearing for the Pismo Terrace Affordable Housing Apartment project located at 855 4t" Street. At that meeting, the Council adopted Resolution R-2021-073 approving the issuance of revenue bonds by CMFA for the Pismo Terrace development project. The August 17, 2021 staff report and resolution are available online in the Access Pismo public records portal at www.pismobeach.org/accesspismo' . Now that the project is complete, People's Self Help Housing as the developer is seeking a new bond issuance because the loan amounts have changed from $15,000,000 to $13,414,789. This requires recasting the loans as part of the loan conversion to permanent financing.
Pismo Terrace, L.P. as the Borrower has requested that the CMFA serve as the municipal issuer of the Bonds in an aggregate principal amount not to exceed $13,414,789 (the "Bonds") of tax-exempt revenue bonds. The proceeds of the Bonds will be used to (1) finance and refinance the acquisition, construction, development and equipping of a 50- unit affordable multifamily rental housing facility including units for low-income tenants (the "Project"), to be located at 855 North Fourth Street in the City of Pismo Beach, California (the "City"), and (2) pay certain expenses in connection with the issuance of the Bonds.
In order for the Bonds to qualify as tax-exempt bonds, the City of Pismo Beach must conduct a public hearing (the "TEFRA Hearing") providing for the members of the community an opportunity to speak in favor of or against the use of tax-exempt bonds for the financing of the Project. Prior to such TEFRA Hearing, reasonable notice must be provided to the members of the community. Following the close of the TEFRA Hearing, Full URL:
https://accesspismo.pismobeach.org/WebLink/DocView.aspx?id=344446&dbid=0&repo=Laserfiche Council Agenda 11-19-2024 11.A-1
an "applicable elected representative" of the governmental unit hosting the Project must provide its approval of the issuance of the Bonds for the financing of the Project.
California Municipal Finance Authority
The CMFA was created on January 1, 2004, pursuant to a joint exercise of powers agreement to promote economic, cultural, and community development through the financing of economic development and charitable activities throughout California. To date, over 330 municipalities, including Pismo Beach, have become members of CMFA.
The CMFA was formed to assist local governments, non-profit organizations, and businesses with the issuance of taxable and tax-exempt bonds aimed at improving the standard of living in California. The CMFA's representatives and its Board of Directors have considerable experience in bond financings.
The Bonds to be issued by the CMFA for the Project will be the sole responsibility of the Borrower, and the City will have no financial, legal, or moral obligation, liability or responsibility for the Project or the repayment of the Bonds for the financing of the 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.
Conclusion and Recommendation
The public hearing is a requirement of the type of financing being sought for the affordable housing project and is necessary because the loan amounts of the permanent financing have changed. Therefore, staff recommends that the Council conduct the TEFRA Hearing and adopt a Resolution (Attachment 1) in favor of issuance of the Bonds by the CMFA.
FISCAL IMPACT:
There is minimal fiscal impact to the City associated with the proposed action. 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, it is expected that that a portion of the issuance fee attributable to the City will be granted by the CMFA to the general fund of the City. Such grant may be used for any lawful purpose of the City.
ATTACHMENTS:
1. Resolution
Prepared by: Cindy Jacinth, Planning Manager
Submitted by: Scot Graham, Community Development Director City Manager Approval: _
Council Agenda 11-19-2024 11.A-2
Attachment 1
RESOLUTION NO. R-2024-XXX
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PISMO BEACH,
CALIFORNIA APPROVING THE ISSUANCE OF REVENUE BONDS BY THE
CALIFORNIA MUNICIPAL FINANCE AUTHORITY IN AN AGGREGATE PRINCIPAL AMOUNT NOT TO EXCEED $13,414,789 TO FINANCE AND REFINANCE A 50-UNIT
AFFORDABLE RENTAL HOUSING FACILITY FOR THE BENEFIT OF PISMO TERRACE, L.P. OR ITS AFFILIATE, AND CERTAIN OTHER MATTERS RELATING
THERETO
WHEREAS, People's Self-Help Housing Corporation (the "Sponsor"), on behalf of Pismo Terrace, L.P., a California limited partnership (the "Borrower"), has requested that the California Municipal Finance Authority (the "Authority") issue one or more series of revenue bonds in an aggregate principal amount not to exceed $13,414,789 (the "Bonds"), including but not limited to revenue bonds issued as part of a plan to (1) finance and refinance the acquisition, construction, development and equipping of a 50-unit affordable multifamily rental housing facility including units for low-income tenants (the "Project"), to be located at 855 North Fourth Street in the City of Pismo Beach, California (the "City"), and (2) pay certain expenses in connection with the issuance of the Bonds; and
WHEREAS, an "applicable elected representative" of a jurisdiction in which the Project is to be located is required to approve the issuance of the Bonds under Section 147(f) of the Code; and
WHEREAS, the City Council of the City (the "City Council") is the elected legislative body of the City and is an "applicable elected representative" for purposes of 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 Pismo Beach as follows:
Section 1. The foregoing recitals are true and correct.
Council Agenda 11-19-2024 11.A-3
Attachment 1
Section 2. The City Council hereby approves the issuance of the Bonds by the Authority, including but not limited to Bonds issued as part of a plan to finance and refinance the Project. 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 Project, for the purposes of (a) Section 147(f) of the Code by the applicable elected representative of a governmental unit having jurisdiction over the area in which the Project is to be located, in accordance with said Section 147(f) and (b) Section 4 of the Agreement.
Section 3. 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 4. The Clerk shall forward a certified copy of this Resolution to the Authority in care of its counsel:
Ronald E. Lee, Esq.
Jones Hall, APLC
475 Sansome Street, Suite 1700
San Francisco, CA 94111
Section 5. This resolution shall take effect immediately upon its adoption.
UPON MOTION OF Council Member , seconded by Council Member the foregoing resolution was adopted by the City Council of the City of Pismo Beach this 19t" day of November 2024, by the following vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
RECUSED:
Approved: Attest:
Ed Waage, Mayor Erica Inderlied, City Clerk
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the City of Pismo Beach, California, on
Erica Inderlied, City Clerk
Council Agenda 11-19-2024 11.A-4