REPORT TO THE CITY COUNCIL
FROM: SANTINO DANISI, MBA, City Controller/Finance Director
Finance Department
BY: PHILLIP HARDCASTLE, Principal Accountant - Debt Administration
Finance Department
SUBJECT
Title
Tax Equity and Financial Responsibility Act (TEFRA) public hearing.
TEFRA HEARING - To hear and consider information concerning the proposed issuance of tax-exempt bonds by the California Municipal Finance Authority (“CMFA”) for the purpose of financing the acquisition, construction, installation and equipping of Hotel Fresno Apartments (the Project), a multifamily rental housing project located at 1241-1263 Broadway Plaza, Fresno, California 93721. Proceeds of the Bonds will be loaned to Broadway Plaza Family Apartments, LP (the “Borrower”) in partnership with APEC International, LLC (the “Developer”).
1. ***RESOLUTION - Approving the issuance by the California Municipal Finance Authority of multifamily housing revenue bonds in an aggregate principal amount not to exceed $20,000,000 for the purpose of financing or refinancing the acquisition, construction, improvement and equipping of Hotel Fresno Apartments and certain other matters relating thereto. (Subject to Mayor’s Veto)
Body
RECOMMENDATION
Conduct the public hearing under the requirements of TEFRA and the Internal Revenue Code of 1986 as amended (the “Code”), and adopt the resolution approving the issuance of the Bonds by the California Municipal Finance Authority (“CMFA”) for the benefit of Hotel Fresno Apartments (Project) and Broadway Plaza Family Apartments, LP (the “Borrower”) in partnership with APEC International, LLC (the “Developer”), to provide for the financing of the Project, such adoption is solely for the purposes of satisfying the requirements of TEFRA, the Code and the California Government Code Section 6500 (and following).Section 4 of the Joint Exercise of Powers Agreement Relating to the California Municipal Finance Authority.
EXECUTIVE SUMMARY
The Borrower requested that the CMFA serve as the municipal issuer of the Bonds in an aggregate principal amount not to exceed $20,000,000 of tax-exempt revenue bonds. The proceeds of the Bonds will be used to finance or refinance the acquisition, rehabilitation, improvement and equipping of the Project, to be operated by FPI Management, Inc.
Should the City authorize the issuance of Bonds, the City would have no obligation or liability associated with these facilities or with these obligations.
BACKGROUND
A TEFRA hearing was held and a resolution approved at a City Council meeting held on November 8, 2018 approving the financing. Another TEFRA hearing was held on April 25, 2019 to correct a noticing error. Another TEFRA hearing is required because the project has applied for and received supplemental bond allocation from the State and the previous TEFRA has now expired. All other aspects of the Project remain as they were in the original TEFRA resolution approved on November 8, 2018 and April 25, 2019.
The Borrower requested that the CMFA serve as the municipal issuer of the Bonds in an aggregate principal amount not to exceed $20,000,000 of tax-exempt revenue bonds. The proceeds of the Bonds will be used to finance or refinance the acquisition, rehabilitation, improvement and equipping of a 79-unit multifamily rental housing project located at 1241-1263 Broadway Plaza, Fresno, California, generally known as Hotel Fresno Apartments (the “Project”) and operated by FPI Management, Inc.
As a public benefit to the community of Fresno, the Borrower will team up with Deep Green Housing and Community Development (“DGHCD”), which is a non-profit organization providing affordable housing and services to the low-income population of Fresno, CA.
In order for all or a portion of the Bonds to qualify as tax-exempt bonds, the City of Fresno must conduct a public hearing (the “TEFRA Hearing”) providing 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 the 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 governmental unit hosting the Project must provide its approval of the issuance of the Bonds for the financing of the Project.
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 320 municipalities 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.
ENVIRONMENTAL FINDINGS
This item is not a project of the City of Fresno and as such, for purposes of this hearing, the California Environmental Quality Act requirements are not applicable.
LOCAL PREFERENCE
Local preference was not considered because this resolution does not include a bid or award of a construction or service contract.
FISCAL IMPACT
The City has no obligation or liability associated with the requested financing. The Obligations will not constitute indebtedness or obligation of, and will not involve a pledge of the good faith and credit of the City. The Obligations will be limited obligations of the Issuer payable only from loan repayments to be made to the Issuer from certain funds and accounts established by or pursuant to the bond indenture(s) under which the Obligations will be issued. The Issuer has no taxing power and the issuance of the Obligations will not obligate the State of California or any political subdivision of the State to levy or pledge any form of taxation for the Obligations or to make any appropriation for the payment of the Obligations.
Attachment: Resolution
TEFRA Notice