Title
Public Hearing Under the Federal Tax Equity and Fiscal Responsibility Act of 1982 to Consider Adoption of Resolution Approving the Issuance of Revenue Bonds by the California Municipal Finance Authority in an Aggregate Principal Amount Not to Exceed $45,000,000 to Finance the Rosefield Village, a 92-Unit Multifamily Rental Housing Project, Located at 718-746 Eagle Avenue and 715-727 Buena Vista Avenue, Alameda, California for the Benefit of the City of Alameda Housing Authority. (Community Development 858)
Body
To: Honorable Mayor and Members of the City Council
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 Rosefield Village Affordable Housing Project owned by the Housing Authority of the City of Alameda 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 represent a debt of the City of Alameda (City), nor do they obligate the City in any way.
Staff recommends that the 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 $45,000,000 to finance Rosefield Village, a multifamily rental housing project, owned by the Housing Authority of the City of Alameda (AHA) and its nonprofit affiliate Island City Development (ICD).
BACKGROUND
AHA currently owns a multifamily, wood frame and modular style property built in the 1970s, known as Rosefield Village, which has no current affordability restrictions encumbering the property. The original property is comprised of 40 modular units on approximately 1.5 acres, one block from the Webster Street commercial district. Moreover, AHA purchased and/or built additional houses and apartments on adjacent parcels it owns, so Rosefield Village is now comprised of 53 apartment homes on approximately 2.4 acres.
AHA and its nonprofit affiliate ICD plan to redevelop the Rosefield Village property in the following way: the 40 modular units will be demolished and replaced with 78 new units of deed-restricted affordable housing. Additionally, ten of the existing units, comprised of three triplexes and a single family home, will be renovated with new interior finishes and fixtures to extend their useful life for 55 more years as new deed-restricted affordable housing. A four-bedroom single-family dwelling unit will be converted into a duplex and deed restricted as new affordable housing. The duplex located on the property at 738 Eagle Avenue was substantially renovated in 2017, so no work is planned for two of the existing units. As a result, the proposed project will include 91 new deed-restricted units, plus one manager’s unit, totaling 92 units, on the property. Once complete, the property will provide affordable housing for families and individuals earning between 20-80% of the Area Median Income. Exhibit 1 provides a list of all of the funding sources for this important infill project.
AHA requested that CMFA serve as the municipal issuer of tax-exempt revenue bonds in an aggregate principal amount not to exceed $45,000. The proceeds of the bonds will be used to finance the rehabilitation, improvement and equipping of Rosefield Village, a multifamily rental housing project, located at 718-746 Eagle Avenue and 715-727 Buena Vista Avenue, 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) to provide an opportunity for community members to speak in favor of or against the use of tax-exempt bonds for financing 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. If fully funded, the project is anticipated to start construction in June 2020.
DISCUSSION
A key funding source for the Rosefield Family project is the 4% Low-Income Housing Tax Credit program. AHA submitted a 4% tax credit application for the Rosefield Village project on November 15, 2019. 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 Rosefield Village 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 ICD.
2) Adopt a resolution approving the issuance of the bonds by CMFA for the benefit of ICD, to provide for the financing of the Rosefield Village 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 December 5, 2019, which is at least seven (7) days in advance of the hearing
FINANCIAL IMPACT
The bonds to be issued by CMFA for the Rosefield Village project will be the sole responsibility of ICD 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 ICD 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.
ALTERNATIVES
• Hold the required public hearing and adopt a resolution approving the issuance of the bonds required to complete the financing needed for the Rosefield Village multifamily affordable 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 Rosefield Village project.
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
This Rosefield Village project is categorically exempt from the California Environmental Quality Act (CEQA) pursuant to California Public Resources Code sections 21159.21, 21159.23 (Exemption for affordable housing) and 21159.24 (Exemption for infill affordable housing), as well as CEQA Guideline section 15332 (Infill development projects). Furthermore, the project does not trigger any of the exceptions in CEQA Guidelines section 15300.2 in that the project will not have any significant effects due to unusual circumstances or any cumulatively significant impacts and will not adversely impact any designated historic resources.
CLIMATE IMPACTS
Issuance of the bonds for the Rosefield Village multifamily project has no climate impacts.
RECOMMENDATION
Conduct a public hearing and, upon conclusion, adopt a Resolution approving the issuance of revenue bonds by the California Municipal Finance Authority in an aggregate principal amount not to exceed $45,000,000 to finance the Rosefield Village multifamily rental housing project for the benefit of the Housing Authority of the City of Alameda and its nonprofit affiliate Island City Development.
CITY MANAGER RECOMMENDATION
The City Manager recommends adoption of a Resolution approving the issuance of revenue bonds by the California Municipal Finance Authority in an aggregate principal amount not to exceed $45,000,000 to finance Rosefield Village.
Respectfully submitted,
Debbie Potter, Community Development Director
By:
Kathleen Mertz, Housing Development Director, Housing Authority
Financial Impact section reviewed,
Elena Adair, Finance Director
Exhibit:
1. Rosefield Village Funding Sources
cc: Eric Levitt, City Manager