FOR THE COUNCIL MEETING OF NOVEMBER 21, 2023
COUNCIL AGENDA REPORT
TO: City Council
FROM: Interim City Manager Alex Posada
Prepared by: Interim Director of Finance Xenia Bradford
SUBJECT: Public Hearing Per the Requirements of the Tax and Equity Fiscal Responsibility Act and Adopt a Resolution Approving Issuance of Revenue Bonds Regarding the Vizcaya Apartments
Description:
The City Council will conduct a public hearing under the requirements of the Tax and Equity Fiscal Responsibility Act and the Internal Revenue Code of 1986, as amended.
Environmental Notice: The activity is not a “Project” as defined under Section 15378 of the California Environmental Quality Act State Guidelines; therefore, pursuant to State Guidelines Section 15060(c)(3) no environmental review is required.
RECOMMENDATIONS:
Adopt a Resolution approving the issuance of revenue Bonds by the California Municipal Finance Authority for the sole purpose of financing the acquisition, rehabilitation, improvement, and equipping of a senior multifamily rental housing project located at 1720 South Depot Street, Santa Maria, California.
BACKGROUND:
VBC Vizcaya, LP (the "Borrower") a partnership of which Vintage Housing Development Inc. (the "Developer") or a related person to the Developer is the general partner , requested that the California Municipal Finance Authority (CMFA) serve as the municipal issuer of the Bonds in an aggregate principal amount not to exceed $ 65,000,000 of tax- exempt revenue bonds. The proceeds of the Bonds will be used to finance the acquisition, rehabilitation, improvement, and equipping of a senior multifamily rental housing project (Project) located at 1720 South Depot Street, Santa Maria, California.
DISCUSSION:
For all, or a portion, of the Bonds to qualify as tax-exempt Bonds, the City of Santa Maria must conduct a public hearing providing 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.
Before a Tax and Equity Fiscal Responsibility Act ( TEFRA) Hearing, reasonable notice must be provided to the members of the community. Following the close of the TEFRA Hearing, an “applicable elected representative” of the governm ental unit hosting the 2 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, under 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 350 municipalities, including the City, have become members of CMFA.
The CMFA was formed to assis t 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, 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 Bonds of the City or the State of California but are to be paid for solely from funds provided by the Borrower.
Participation by the City in the CMFA will not impact the City’s appropriations limits and will not constitute any type of indebtedness by the City. Outside of holding the TEFRA hearing, and adopting the required resolution, no other participation or activity of the City or the City Council concerning the issuance of the Bonds will be required.
Alternative(s)
The City Council may decide not to approve the issuance of the Bonds, and the affordable housing bond allocation awarded by the State (through CMFA) would be forfeited and the project would not move forward.
Fiscal Considerations
There is no direct or indirect financial impact to the City as a result of this proposed financing. The CMFA will issue tax -exempt bonds on behalf of the Project. The tax - exempt bonds are payable solely out of the revenues derived by the Borrower from the applicable project. No financial obligations are placed on the City for project financing costs or debt repayment.
The Board of Directors of the California Found ation 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 it s 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 Santa Maria, it is expected that a portion of the issuance fee attributable to the City (estimated to be app roximately $19,000) will be granted by the 3 CMFA to the General Fund of the City. Such grant may be used for any lawful purpose of the City.
Impact to the Community
Approving the issuance of tax -exempt bonds benefits the community by reducing financing costs of an affordable housing development and continuing to provide quality affordable housing for another 55 years.
ATTACHMENT A – Public Notice