HomeMy WebLinkAbout2024-11-12; City Council; ; Public Hearing for the Issuance of Tax-Exempt Bonds by the California Municipal Finance Authority for the benefit of Mission Neighborhood Centers, Inc. for the La Costa FCA Review _ AF _
Meeting Date: Nov. 12, 2024
To: Mayor and City Council
From: Scott Chadwick, City Manager
Staff Contact: Erin Peak, Program Manager
erin.peak@carlsbadca.gov, 442-339-2043
Subject: Public Hearing for the Issuance of Tax-Exempt Bonds by the California
Municipal Finance Authority for the benefit of Mission Neighborhood
Centers, Inc. for the La Costa Family Apartments
District: 4
Recommended Action
1. Hold a public hearing under the requirements of the Tax and Equity Fiscal Responsibility
Act and the Internal Revenue Code of 1986; and
2. Adopt a resolution approving the issuance of the California Municipal Finance Authority
Multifamily Housing Revenue Bonds for the benefit of Mission Neighborhood Centers
Inc. on behalf of Mirka La Costa LP or by another affiliate in an aggregate principal
amount not to exceed $10 million for the purpose of financing or refinancing the
acquisition, rehabilitation, improvement and equipping of the La Costa Family
Affordable Apartments, a multifamily 100% affordable rental housing project located in
Carlsbad, California.
Executive Summary
The Mission Neighborhood Centers, Inc. is the developer of La Costa Family Affordable
Apartments, a 19-unit 100% affordable apartment community at La Costa Avenue and Camino
de las Coches. The project was granted authority from the state to issue tax-exempt revenue
bonds to finance the project, and Mission Neighborhood Centers Inc. is working with the
California Municipal Finance Authority to issue the bonds.
Although the City of Carlsbad is not issuing the bonds or in any way obligated to repay them,
the bonds will not qualify as tax-exempt under the federal Tax and Equity Fiscal Responsibility
Act unless the city conducts a public hearing, known as a TEFRA hearing, to provide an
opportunity for community members to speak in favor of or against the use of tax-exempt
bonds to finance the project.
In addition, the federal Internal Revenue Code requires that the financing be approved by the
City Council because the proposed project is located within Carlsbad's jurisdictional boundaries.
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Explanation & Analysis
Project background
La Costa Family Affordable Apartments is a
100% affordable housing development that
satisfied the affordable housing
requirement for the 76-unit residential
portion of the La Costa Town Square
development. The project, developed by
MirKa Investments LLC, in partnership with
Mission Neighborhood Centers Inc., offers
19 affordable housing units.
The development consists of five one-
bedroom, eight two-bedroom, and six three-bedroom units, all for very low-income to low-
income households, those earning between 30%-80% of the area median income. Its amenities
include community spaces for social gatherings and events, an on-site management office and
landscaped outdoor areas for recreation.
The financing of this project will result in providing Carlsbad with this affordable rental housing
for the next 55 years.
Project bond financing
The developer has secured financing for the project and is ready to proceed with construction.
A large portion of the project financing incudes $5,116,651 million in tax-exempt bond
financing.
The project can only issue and use the bond amount that has been allocated by the state. The
recommended action will approve a bond amount not to exceed $10 million, which is more
than what the project has been allocated. Approving this excess amount eliminates the need
for the city to reschedule and hold another TEFRA hearing in the event the developer has to ask
the state for a supplemental bond allocation due to unforeseen increases in construction costs.
The borrower has asked the California Municipal Finance Authority to issue tax-exempt facility
bonds for its qualified residential rental project in accordance with Section 142(a)(7) of the
Internal Revenue Code. (The California Municipal Finance Authority was formed as a joint
powers authority to help local governments, non-profit organizations and businesses through
the issuance of taxable and tax-exempt bonds aimed at improving the standard of living in
California. The City of Carlsbad is a member of the authority, whose representatives and board
of directors have considerable experience in bond financing.)
Public hearing and resolution
Although the finance authority will issue the bonds, the Internal Revenue Code requires an
“applicable elected representative” of the governmental unit hosting the project – the City
Council – to approve the issuance of the bonds,
Once the City Council holds the required TEFRA hearing and adopts the required resolution, no
other participation of the City of Carlsbad in the bond financing will be required.
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All parties should clearly understand:
• The debt issued that is financed by the bonds is not debt of the City of Carlsbad in any
way. All repayment of debt is the strict obligation of the borrower.
• All monitoring and administrative actions related to this issuance are the responsibility
of the California Municipal Finance Authority.
• The City of Carlsbad’s participation in the issuance of these state bonds will not impact
the city's appropriation limits and will not constitute any type of indebtedness by the
city.
Public notification
The required seven-day notice for the Tax and Equity Fiscal Responsibility Act public hearing
was posted in a newspaper of general circulation on November 1, 2024, and on the city
website. Copies of the notice are available in the Office of the City Clerk.
Fiscal Analysis
As noted above, the City of Carlsbad 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.
There is no fiscal impact to the City of Carlsbad for the California Municipal Finance Authority to
issue the bonds for this development.
The Municipal Finance Authority shares a portion of the issuance fees it receives with its
member communities when it issues bonds. The fee is deposited into the Housing Trust Fund
and reimburses the city for minor administrative and staff costs to prepare the reports and
related documents required by the borrower and the finance authority. Any remaining fee
revenue after reimbursement is maintained in the Housing Trust Fund.
Next Steps
City staff will forward the approved resolution to the California Municipal Finance Authority so
its staff and the borrower can proceed with getting the bonds issued.
Environmental Evaluation
This action does not constitute a project as defined under the California Environmental Quality
Act in accordance with Public Resources Code Section 21065, in that these actions may not
cause a direct physical change in the environment or a reasonably foreseeable indirect physical
change in the environment.
Exhibits
1. City Council resolution
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Exhibit 1
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