The REPORT TO THE CITY COUNCIL
FROM: SANTINO DANISI, Finance Director/City Controller
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 California Municipal Finance Authority for the purpose of financing and refinancing the acquisition, construction, development and equipping of a 114-unit qualified residential rental project.
1. ***RESOLUTION - Approving a plan of finance of the California Municipal Finance Authority to issue and reissue revenue bonds for a qualified residential rental project for the benefit of Dakota Fresno LP, and certain other matters relating thereto. (Subject to Mayor’s Veto)
Body
RECOMMENDATION
Adopt the resolution approving the issuance of the Bonds by the California Municipal Finance Authority (the “Authority”) for the benefit of Dakota Fresno LP, a California limited partnership, or another ownership entity created by one or more of its general partners, UP Dakota, LLC, a California limited liability company, RHCB Dakota LLC, a California limited liability company, and/or Housing on Merit XXVI LLC, a California limited liability company (collectively, the “General Partner”), or by another affiliate of a General Partner (Such Limited partnership or other ownership entity, the “Borrower”) 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)
EXECUTIVE SUMMARY
The Borrower is seeking to obtain financing and refinancing of the acquisition, construction, development and equipping of a 114-unit qualified residential rental project (the “Project”). The new bonds will be issued by the Authority. As a jurisdiction in which the facilities are located, the Council must consider authorizing the Authority to issue obligations for such purposes.
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
The Borrower, has requested that the Authority undertake a proposed plan of finance to issue and reissue from time to time one or more series of revenue bonds in an outstanding principal amount not to exceed $50,000,000 (the “Bonds) to finance and refinance the acquisition, construction, development and equipping of the Project to be owned and operated by the Borrower and located at 3787 N. Blackstone Ave, in Council District 7, of The City of Fresno, California (the “City”).
An ”applicable elected representative” of the jurisdiction in which the Project is to be located is required to approve the proposed plan of finance for the project under section 147(f) of the Internal Revenue Code of 1986, as amended (the “Code”), and the City Council of Fresno (the “City Council) is the elected legislative body of the City and is an “applicable elected representative” for the purposes of Section 147(f) of the Code
The Authority has advised that the bonds may be issued pursuant to a “plan of finance” to issue an original issue of bonds and to issue or reissue one or more additional series of Bonds from time to time after the original issue of Bonds, if necessary or desirable to comply with applicable legal requirements, all in an aggregate principal amount not to exceed $50,000,000 to finance the Project, and all within the three-year period commencing on the date of issuance of the first series of Bonds pursuant to this resolution
The Authority has requested that the City Council approve the proposed plan of finance 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 Authority, dated as of January 1, 2004 (the “Agreement”), among certain local agencies, including the City
The Authority 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 350 municipalities, including the City of Fresno, have become members of the Authority.
The Authority 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 Authority’s representatives and its Board of Directors have considerable experience in bond financings.
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 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, 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.
ENVIRONMENTAL FINDINGS
This item is not a project for purposes of the California Environmental Quality Act (CEQA).
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 Authority payable only from loan repayments to be made to the Authority from certain funds and accounts established by or pursuant to the bond indenture(s) under which the Obligations will be issued. The Authority 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