Title
Public Hearing Under the Federal Tax Equity and Fiscal Responsibility Act of 1982 to Consider Adoption of a Resolution Approving the Issuance of the California Municipal Finance Authority Multifamily Housing Revenue Bonds by an Outside Agency in an Aggregate Principal Amount Not-to-Exceed $35,000,000 for the Purpose of Financing or Refinancing the Acquisition, Construction, Improvement and Equipping of North Housing Senior Apartments and Certain Other Matters Relating Thereto. (City Manager 20821840)
Body
To: Honorable Mayor and Members of the City Council
From: Jennifer Ott, City Manager
EXECUTIVE SUMMARY
A public hearing and adoption of a resolution approving the issuance of bonds by the California Municipal Finance Authority (CMFA) for the benefit of the North Housing Senior Apartments Affordable Housing Project (Linnet Corner) is a requirement under the Federal Tax and Equity Fiscal Responsibility Act of 1982 (TEFRA) for all or a portion of the bonds to qualify as tax-exempt bonds. The bonds will not be a debt of the City of Alameda (City), nor do they obligate the City in any way.
Staff recommends that City Council conduct a public hearing and, upon conclusion, adopt a resolution approving the issuance of revenue bonds by the CMFA in an aggregate principal amount not-to-exceed $35,000,000 to finance Linnet Corner for the benefit of Mabuhay and Lakehurst LP, a California Limited Partnership (Borrower), a partnership of which the Housing Authority of the City of Alameda (AHA) and Island City Development (Developer) or a related person to the Developer is the general partner.
BACKGROUND
AHA is leading the development of the 12-acre North Housing parcel redevelopment at the former Alameda Naval Air Station (NAS), formerly known as Coast Guard Housing, under a homeless accommodation conveyance. The North Housing parcel was successfully transferred to AHA on May 30, 2019.
On August 17, 2020, the Planning Board approved the Development Plan; on September 15, 2020, City Council approved the Tentative Map. On May 16, 2023, City Council approved the first phase Final Map and the Backbone Improvements Plan for North Housing Block A, the first phase of the North Housing project, with a total of 155 apartments, to be built in three separate projects. Of these, Linnet Corner will contain 64 units.
The Borrower requested that CMFA serve as the municipal issuer of tax-exempt revenue bonds in an aggregate principal amount not-to-exceed $35,000,000. The proceeds of the bonds will be used to finance or refinance the acquisition, construction, improvement and equipping of Linnet Corner, located at 2000 Lakehurst Circle, Alameda, California.
In order for all or a portion of the Bonds to qualify as tax-exempt bonds, the City must conduct a public hearing (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 where the Project is located must provide its approval of the issuance of the Bonds for the financing of the Project. If fully funded, the project is anticipated to start construction in January 2024.
DISCUSSION
A key funding source for the Linnet Corner project is the 4% Low-Income Housing Tax Credit program. AHA submitted a 4% tax credit application for the Linnet Corner project on May 2023. Issuance of tax credit bonds are necessary to use the 4% tax credits.
The issuance of the bonds must be approved by the City Council, as the elected legislative body, because the Linnet Corner project is located within the territorial limits of the City. In order for all, or a portion, of the bonds to qualify as tax-exempt bonds, the City must:
1) Conduct a public hearing under the requirements of TEFRA and the Internal Revenue Code of 1986, as amended (Code). A TEFRA hearing is required by the Code before tax-exempt debt can be issued for the benefit of a private nonprofit corporation. The hearing gives the public an opportunity to comment on the use of tax-exempt funds by the Developer; and
2) Adopt a resolution approving the issuance of the bonds by CMFA for the benefit of the Developer, to provide for the financing of the Linnet Corner project. Such adoption is solely for the purposes of satisfying the requirements of TEFRA, the Code and California Government Code Section 6500, et seq.
Besides holding the TEFRA hearing, adopting the required resolution and executing the Joint Exercise of Powers Agreement of the CMFA, which the City did when it became a member on January 1, 2004, no other participation or activity of the City or the City Council with respect to the issuance of the bonds will be required.
A notice of today’s public hearing was published in the Alameda Sun newspaper by the City on November 24, 2023, which is at least seven (7) days in advance of the hearing.
ALTERNATIVES
• Hold the required public hearing and adopt a resolution approving the issuance of the bonds required to complete the financing needed for the senior multifamily rental housing project.
• Decline to approve issuance of the bonds or approve issuance in a different amount. Lack of approval, or approval of a lower dollar amount, would severely constrain the AHA’s ability to fully fund the Linnet Corner project.
FINANCIAL IMPACT
The bonds to be issued by CMFA for the Linnet Corner project will be the sole responsibility of the Developer and the AHA, 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 obligations of the City or the State of California, but are to be paid solely from funds provided by the Developer and the AHA. The adoption of the resolution approving the financing for the construction, improvement and equipping of the project and the issuance of the obligations complies with the requirements of Section 147(f) of the Internal Revenue Code of 1986.
Through its conduit issuance activities, CMFA shares a portion of the issuance fees it receives with its member communities and donates a portion of these issuance fees to the California Foundation for Stronger Communities, a California non-profit public benefit corporation for the support of local charities. With respect to the City, it is expected that a portion of the issuance fees attributable to the City will be granted by CMFA to the City’s General Fund. Such grant may be used for any lawful purpose of the City.
MUNICIPAL CODE/POLICY DOCUMENT CROSS REFERENCE
The affordable housing project is anticipated to be built pursuant to and consistent with a number of City documents including the five-year Affordable Housing Pipeline and the Housing Element of the General Plan.
ENVIRONMENTAL REVIEW
The Linnet Corner project is a component of the previously approved Development Plan, Density Bonus and Tentative Map for the development of up to 586 units on the approximately 12.07-acre site located at 501 Mosley Avenue (Application No. PLN20-0099). That approval was granted pursuant to the provisions of Government Code Section 65913.4 (SB 35), which establishes ministerial approval of qualified infill affordable housing projects. The development plan was found to conform to adopted objective standards, and so it is statutorily exempt from review under the California Environmental Quality Act.
CLIMATE IMPACT
There are no identifiable climate impacts or climate action opportunities associated with the subject of this report.
RECOMMENDATION
Conduct a public hearing under TEFRA to consider adoption of a resolution approving the issuance of revenue bonds by CMFA in an aggregate principal amount not-to-exceed $35,000,000 to finance the North Housing Senior Apartments Affordable Housing project, a 64-unit senior multifamily rental housing project, located at 2000 Lakehurst Circle, Alameda, California for the benefit of the Mabuhay and Lakehurst LP, a California Limited Partnership, a partnership of which AHA and Developer or a related person to the Developer is the general partner.
Respectfully submitted,
Amy Wooldridge, Assistant City Manager
By,
Lisa Fitts, Housing and Human Services Manager
Financial Impact section reviewed,
Margaret O’Brien, Finance Director
Exhibit:
1. Linnet Corner Funding Sources