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HomeMy WebLinkAbout2006-01-24; City Council; 18417; Hunters Pointe Apartment BondsAB# MTG. DEPT. CITY OF CARLSBAD - AGENDA BILL , ^ 18,417 1/24/06 HIRED TITLE: DECLARATION OF INTENT BY CMFA TO ISSUE UP TO $30 MILLION IN TAX EXEMPT PRIVATE ACTIVITY BONDS FOR THE CONSTRUCTION OF ONE HUNDRED SIXTY EIGHT (168) AFFORDABLE APARTMENT UNITS (HUNTERS POINTE) WITHIN THE VILLAGES OF LA COSTA MASTER PLAN DEP™*rd®^^-~~j" CITYATTY. (&£" CITY MGR. I X/ ^\r RECOMMENDED ACTION: That the City Council take the following actions: 1) ACCEPT public comment on the intent by the California Municipal Finance Authority (CMFA), a public entity of the State of California, to issue tax- exempt multi-family revenue bonds within the jurisdiction of the City of Carlsbad in an amount not to exceed $30 million to finance the construction of one hundred sixty-eight (168) affordable apartment units (Hunters Pointe) within the Villages of La Costa Master Plan; 2) if acceptable, ADOPT Council Resolution No. 2006-015 l APPROVING the tax-exempt financing and the issuance of the revenue bonds by CMFA for CIC La Costa L.P., a California limited partnership to be owned and operated by Chelsea Investment Corporation, and APPROVING the City to join CMFA as a member by authorizing the City Manager to execute a Joint Powers Authority Agreement with CMFA. ITEM EXPLANATION: Background The Hunters Pointe Apartments represents a 168-unit development located on the east side of realigned Rancho Santa Fe Road. It lies south of San Elijo Road (old Questhaven Road) and west of the City limit for the City of San Marcos. It is located on a 15.84 acre parcel that is currently referred to as La Costa Oaks Village 3.6 of the Villages of La Costa Master Plan. The project is being developed by Chelsea Investment Corporation of Solana Beach and will satisfy the affordable housing requirement for Phase II of the Villages of La Costa Master Plan. The project includes one, two and three bedroom units. Of the 168 units, 59 units will be affordable to households earning 35% of the Area Median Income (AMI), 31 units at 50% of AMI and 76 units at 55% of the AMI. There will be two (2) manager units. On April 5, 2005, the City Council approved the Site Development Plan for the development of the affordable apartments. On August 16, 2005, the City Council took action to approve a loan in the amount of $1,932,000 to provide financial assistance for the project. The developer subsequently requested that the City agree to issue tax-exempt multi-family revenue bonds in an amount not to exceed $30 million to assist in financing the subject project and authorize staff to apply to the California Debt Limit Allocation Committee (CDLAC) to receive an allocation for the issuance of the tax-exempt bonds. The Council held the required Tax Equity and Fiscal Responsibility Act (TEFRA) hearing on December 20, 2005 and declared its intent to issue said bonds. Subsequent to discussions with the City on issuance of the subject bonds, the developer discovered a new program offered by a joint powers agency known as the California Municipal Finance Authority (CMFA), a public entity of the State of California. The CMFA was formed in January, 2004 to assist local governments, non-profit organizations and businesses with the issuance of taxable and tax- exempt financing aimed at improving the standard of living in California. The developer (Chelsea Investment Corporation) has decided that they would like to pursue bond financing from CMFA rather than the City of Carlsbad. However, in order for the developer to obtain the noted financing from CMFA, the City must become a member of CMFA and authorize the tax-exempt financing and the issuance of the revenue bonds by CMFA. The City must hold another TEFRA hearing to authorize the tax-exempt financing by CMFA. Page2ofAB#_ California Municipal Finance Authority and the Joint Powers Agreement 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, the Cities of Santa Clarita, Oakland, El Segundo, Redding, Milpitas and Vallejo and the County of San Diego have become members of CMFA. The Board of Directors of the California Foundation for Stronger Communities, a California non-profit public benefit corporation, acts as the Board of Directors for CMFA. The CMFA representatives and Board of Directors have considerable experience in tax-exempt bond financing. In 2005, transaction bond volume for CMFA was approximately $172 million. In order for the CMFA to have jurisdiction to issue the bonds for the Hunters Pointe project, it is necessary for the City to become a member of CMFA. To become a member of CMFA, the City must execute the joint exercise of powers agreement provided in Exhibit 3. The joint exercise of powers agreement explicitly provides that the CMFA is a public entity, separate and apart from the members executing the agreement, and the debts, liabilities and obligations of the CMFA do not constitute debts, liabilities or obligations of the members executing the agreement. The bonds to be issued for the subject project will be the sole responsibility of the Borrower (Chelsea), and the City will have no contractual, financial, legal or moral obligation or liability for the repayment of these bonds. All bond documents will contain clear disclaimers that the bonds are not obligations of the City or CMFA but are paid only from funds provided by the Borrower. There are no costs associated with membership in CMFA and the City will in no way become exposed to any financial liability by reason of its membership in CMFA. In addition, participation by the City in the CMFA will not impact the City's appropriation limits and will not constitute any type of indebtedness by the City. Once the City holds the public hearing, adopts the required resolution following the public hearing, and signs the joint exercise of powers agreement of CMFA, no other participation of the City in the actions of CMFA or in the bond financing will be required. The joint exercise of powers agreement expressly provides that any member may withdraw from the agreement upon written notice to the Board of Directors of CMFA. In the case of the proposed bond transaction, the City, if it executes the agreement, could, at any time following the issuance of the bonds, withdraw from the CMFA merely by providing notice to the Board of Directors of CMFA of its withdrawal from the agreement. Tax Exempt Bond Allocation The proposed bond issue by CMFA is classified as a private activity bond for the purposes of Section 147(f) of the Internal Revenue Code of 1986. In order for the interest on a private activity bond to be excluded from the gross income of the owner of the bond (i.e., tax-exempt), an "applicable elected representative" of the governmental unit issuing the bond must approve the issuance of the bond after a public hearing following reasonable public notice. Because the CMFA Board of Directors is not an elected body, Section 147(f)(2)(E)(ii) of the Code provides that a governmental unit with elected representatives and jurisdiction over the area in which a project to be financed is located, in this case the Carlsbad City Council, is an "applicable elected representative" with respect to the bond issue. Prior to any action to authorize issuance of the tax-exempt bonds, the Internal Revenue Code requires the City to hold a TEFRA public hearing to accept comments on the CMFA's intent to issue the bonds. At this time, staff and the Developer are requesting that the Council hold the required public hearing to Page3ofAB#_ accept comments on the CMFA's intent to issue the tax exempt bonds for the subject project. Adoption of the attached resolutions approve the tax-exempt financing and issuance of the revenue bonds by the CMFA, and authorize the City Manager to execute the appropriate Joint Powers Authority Agreement to allow the City to become a member of the CMFA. STAFF RECOMMENDATION Staff recommends that the City Council adopt the attached resolution approving the tax-exempt financing and the issuance of the revenue bonds by the CMFA for CIC La Costa L.P., a California limited partnership to be owned and operated by Chelsea Investment Corporation, and approving City membership in CMFA for the purposes of allowing CMFA to issue bonds within the City's jurisdiction. Approval of the attached resolution will authorize the City Manager to execute the appropriate Joint Powers Authority Agreement with CMFA, in substantially the form presented and subject to final approval by the City Attorney. ENVIRONMENTAL REVIEW The Hunters Pointe affordable apartment project was reviewed pursuant to the California Environmental Quality Act (CEQA). Staff prepared an initial study for the project and concluded that no potentially significant impacts would result with the implementation of the project that were not previously examined and evaluated in the Final Program Environmental Impact Report for the Villages of La Costa Master Plan (EIR 98-07), dated October 23, 2001. The City Council certified the EIR on October 23, 2001. At that time CEQA Findings of Fact, a Statement of Overriding Considerations, and a Mitigation Monitoring and Reporting Program were approved. All mitigation measures contained in the adopted Mitigation Monitoring and Reporting Program that were applicable to the subject project were completed, incorporated into the project design or were required as conditions of approval for the project. The proposed project will have no effects beyond those analyzed in the program EIR, as they are a part of the program analyzed earlier. This project is within the scope of Final Program EIR 98-07 and no further CEQA compliance is required. FISCAL IMPACT The Council is being asked to hold a public hearing and obtain public comments on CMFA's intent to issue tax-exempt bonds in an amount not to exceed $30 million to finance the construction of one hundred sixty-eight (168) affordable apartment units (Hunters Pointe) within the Villages of La Costa Master Plan, and to approve the tax-exempt financing and the issuance of the revenue bonds by CMFA. The entire legal obligation to repay the bonds rests with the Developer. Therefore, there will be no fiscal impact to the City resulting from the issuance of the bonds. CMFA shares a portion of its issuance fees with its member communities. With respect to the City of Carlsbad, it is expected that 25% of the issuance fee (or approximately $18,750) will be contributed by CMFA to the general fund of the City to be used for any lawful purpose. A similar amount will be donated by CMFA to the borrower to reduce its cost of financing. Page 4 of AB# EXHIBITS 1. City Council Resolution No. 2006-015 approving the tax-exempt financing and the issuance of the revenue bonds by CMFA for CIC La Costa L.P., a California limited partnership to be owned and operated by Chelsea Investment Corporation in an amount not to exceed $30 million. 2. Joint Powers Authority Agreement with CMFA. Contact: Debbie Fountain, Housing and Redevelopment Director, (760) 434-2815, dfoun@ci. carlsbad. ca. us 1 CITY COUNCIL RESOLUTION NO. 2006-015 2 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF 3 CARLSBAD, CALIFORNIA, APPROVING THE ISSUANCE OF TAX- EXEMPT OBLIGATIONS IN AN AMOUNT NOT TO EXCEED $30 4 MILLION BY THE CALIFORNIA MUNICIPAL FINANCE AUTHORITY TO FINANCE THE CONSTRUCTION OF ONE 5 HUNDRED SIXTY-EIGHT (168) AFFORDABLE APARTMENT UNITS WITHIN VILLAGES OF LA COSTA AND DIRECTING CERTAIN ACTIONS 7 APPLICANT: CHELSEA INVESTMENT CORPORATION CASE NO: SDP 04-13 8 WHEREAS, the California Municipal Finance Authority, a public entity of the State of California and a joint powers authority, ("CMFA") intends to issue tax-exempt obligations (the 11 "Obligations") for the purpose, among other things, of making a loan to Chelsea Investment 12 Corporation ("Chelsea") or a limited partnership or limited liability company to be established by 13 Chelsea (the "Developer"), the proceeds of which shall be used by the Developer to finance the j 5 acquisition, construction and development of a multifamily housing rental facility to be located 16 on the east side of the realigned Rancho Santa Fe Road, south of San Elijo Road, and west of the 17 City limit for the City of San Marcos in the City of Carlsbad, California (the "Project"); and 18 WHEREAS, the CMFA is authorized by Chapter 7 of Part 5 of Division 31 of the Health 19 and Safety Code of the State of California (the "Law") to issue and sell revenue bonds for the 20 purpose of financing the acquisition, construction and development of multifamily rental housing 21 facilities to be occupied in part by low and very low income tenants; and 22 WHEREAS, the Obligations will be considered to be "qualified exempt facility bonds" £J 24 under Section 142(a) of the Internal Revenue Code of 1986, as amended (the "Code"), and 25 Section 147(f) of the Code requires that the "applicable elected representative", which is the City 26 of Carlsbad, shall hold a public hearing on and approve the issuance of the Obligations; and 27 28 1 CC Resolution 2 Page 2 3 WHEREAS, this City Council is the elected legislative body of the City; and 4 WHEREAS, a notice of public hearing in a newspaper of general circulation in the City 5 has been published, to the effect that a public hearing would be held by this City Council on the 6 date hereof regarding the issuance of the Obligations by the CMFA and the nature and location of 7 the Project; ando 9 WHEREAS, this City Council held said public hearing, at which time an opportunity was 10 provided to present arguments both for and against the issuance of such Bonds and the nature and 11 location of the Project; and 1 *?WHEREAS, it is in the public interest and for the public benefit that the City approve the issuance and delivery of the Obligations by CMFA for the purpose of financing the acquisition, 14 construction and development of the Project; 15 WHEREAS, the City shall not have any liability for the repayment of the Obligations or 16 any responsibility for the Project; and jg WHEREAS, the City reasonably expects to receive a portion of the issuance fee to 19 reimburse the City for certain expenditures related to the required public hearing and/or to be 20 used for any other lawful purpose. 21 NOW, THEREFORE, BE IT HEREBY RESOLVED by the City Council of the City 22 of Carlsbad, California, as follows: 23 1. The City hereby finds and determines that the foregoing recitals are true and correct. 24 2. The City hereby approves the issuance and delivery of the said Obligations by CMFA 25 for the purpose of paying the costs of financing the acquisition, construction and development of said Project. It is intended that this Resolution shall constitute a declaration of "official intent" within the meaning of Section 1.150-2 of the Treasury 27 Regulations promulgated under the Code for purposes of providing for and authorizing the reimbursement of Reimbursement Expenditures from the proceeds of 28 the Obligations. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 3. The adoption of this Resolution shall not bind the City or CMFA to issue the Obligations. Additionally, the adoption of this Resolution does not and shall not limit in any manner whatever the full discretion of the City to deny any further permit or approval that may be necessary for ultimate completion of the proposed Project. 4. The City Council approves the City becoming a member of CMFA and hereby authorizes the City Manager to execute the Joint Powers Authority Agreement to allow the City to become a member of the CMFA, in substantially the form presented and subject to final approval of said agreement by the City Attorney. 5. This resolution shall take effect upon its adoption. PASSED, APPROVED, AND ADOPTED at a regular meeting of the City Council of the City of Carlsbad, California, held on the 24th day of _JanuaryA 2006, by the following vote, to wit: AYES: Council Members Lewis, Hall, Kulchin, Packard, Sigafoose NOES: None ABSENT: None ABSTAIN: WIS , Mayor ATTEST: (SEAL) "*;.&„>* EXHIBIT 2 JOINT EXERCISE OF POWERS AGREEMENT RELATING TO THE CALIFORNIA MUNICIPAL FINANCE AUTHORITY THIS AGREEMENT, dated as of January 1, 2004, among the parties executing this Agreement (all such parties, except those which have withdrawn as provided herein, are referred to as the "Members" and those parties initially executing this Agreement are referred to as the "Initial Members"): WITNESSETH WHEREAS, pursuant to Title 1, Division 7, Chapter 5 of the California Government Code (in effect as of the date hereof and as the same may from time to time be amended or supplemented, the "Joint Exercise of Powers Act"), two or more public agencies may by agreement jointly exercise any power common to the contracting parties; and WHEREAS, each of the Members is a "public agency" as that term is defined in Section 6500 of the Joint Exercise of Powers Act; and WHEREAS, each of the Members is empowered by law to promote economic, cultural and community development, including, without limitation, the promotion of opportunities for the creation or retention of employment, the stimulation of economic activity, the increase of the tax base, and the promotion of opportunities for education, cultural improvement and public health, safety and general welfare; and WHEREAS, each of the Members may accomplish the purposes and objectives described in the preceding preamble by various means, including through making grants, loans or providing other financial assistance to governmental and nonprofit organizations; and WHEREAS, each Member is also empowered by law to acquire and dispose of real property for a public purpose; and WHEREAS, the Joint Exercise of Powers Act authorizes the Members to create a joint exercise of powers entity with the authority to exercise any powers common to the Members, as specified in this Agreement and to exercise the additional powers granted to it in the Joint Exercise of Powers Act and any other applicable provisions of the laws of the State of California; and WHEREAS, a public entity established pursuant to the Joint Exercise of Powers Act is empowered to issue or execute bonds, notes, commercial paper or any other evidences of indebtedness, including leases or installment sale agreements or certificates of participation therein (herein "Bonds"), and to otherwise undertake financing programs under the Joint Exercise of Powers Act or other applicable provisions of the laws of the State of California to accomplish its public purposes; and LosAngeles/l 77272. 1 15 WHEREAS, the Members have determined to specifically authorize a public entity authorized pursuant to the Joint Exercise of Powers Act to issue Bonds pursuant to the Joint Exercise of Powers Act or other applicable provisions of the laws of the State of California; and WHEREAS, it is the desire of the Members to use a public entity established pursuant to the Joint Exercise of Powers Act to undertake the financing and/or refinancing of projects of any nature, including, but not limited to, capital or working capital projects, insurance, liability or retirement programs or facilitating Members use of existing or new financial instruments and mechanisms; and WHEREAS, it is further the intention of the Members that the projects undertaken will result in significant public benefits to the inhabitants of the jurisdictions of the Members; and WHEREAS, by this Agreement, each Member desires to create and establish the "California Municipal Finance Authority" for the purposes set forth herein and to exercise the powers provided herein; NOW, THEREFORE, the Members, for and in consideration of the mutual promises and agreements herein contained, do agree as follows: Section 1. Purpose. This Agreement is made pursuant to the provisions of the Joint Exercise of Powers Act. The purpose of this Agreement is to establish a public entity for the joint exercise of powers common to the Members and for the exercise of additional powers given to a joint powers entity under the Joint Powers Act or any other applicable law, including, but not limited to, the issuance of Bonds for any purpose or activity permitted under the Joint Exercise of Powers Act or any other applicable law. Such purpose will be accomplished and said power exercised in the manner hereinafter set forth. Section 2. Term. This Agreement shall become effective in accordance with Section 17 as of the date hereof and shall continue in full force and effect until such time as it is terminated in writing by all the Members; provided, however, that this Agreement shall not terminate or be terminated until all Bonds issued or caused to be issued by the Authority (defined below) shall no longer be outstanding under the terms of the indenture, trust agreement or other instrument pursuant to which such Bonds are issued, or unless a successor to the Authority assumes all of the Authority's debts, liabilities and obligastions. Section 3. Authority. A. CREATION AND POWERS OF AUTHORITY. Pursuant to the Joint Exercise of Powers Act, there is hereby created a public entity to be known as the "California Municipal Finance Authority" (the "Authority"), and said Authority shall be a public entity separate and apart from the Members. Its LosAngeles/177272.1 °\ debts, liabilities and obligations do not constitute debts, liabilities or obligations of any Members. B. BOARD. The Authority shall be administered by the Board of Directors (the "Board," or the "Directors" and each a "Director") of the California Foundation for Stronger Communities, a nonprofit public benefit corporation organized under the laws of the State of California (the "Foundation"), with each such Director serving in his or her individual capacity as a Director of the Board of the Authority. The Board shall be the administering agency of this Agreement and, as such, shall be vested with the powers set forth herein, and shall administer this Agreement in accordance with the purposes and functions provided herein. The number of Directors, the appointment of Directors, alternates and successors, their respective terms of office, and all other provisions relating to the qualification and office of the Directors shall be as provided in the Articles and Bylaws of the Foundation, or by resolution of the Board adopted in accordance with the Bylaws of the Foundation. All references in this Agreement to any Director shall be deemed to refer to and include the applicable alternate Director, if any, when so acting in place of a regularly appointed Director. Directors may receive reasonable compensation for serving as such, and shall be entitled to reimbursement for any expenses actually incurred in connection with serving as a Director, if the Board shall determine that such expenses shall be reimbursed and there are unencumbered funds available for such purpose. The Foundation may be removed as administering agent hereunder and replaced at any time by amendment of this Agreement approved as provided in Section 16; provided that a successor administering agent of this Agreement has been appointed and accepted its duties and responsibilities under this Agreement. C. OFFICERS; DUTIES; OFFICIAL BONDS. The officers of the Authority shall be the Chair, Vice-Chair, Secretary and Treasurer (defined below). The Board, in its capacity as administering agent of this Agreement, shall elect a Chair, a Vice-Chair, and a Secretary of the Authority from among Directors to serve until such officer is re-elected or a successor to such office is elected by the Board. The Board shall appoint one or more of its officers or employees to serve as treasurer, auditor, and controller of the Authority (the "Treasurer") pursuant to Section 6505.6 of the Joint Exercise of Powers Act to serve until such officer is re-elected or a successor to such office is elected by the Board. Subject to the applicable provisions of any resolution, indenture, trust agreement or other instrument or proceeding authorizing or securing Bonds (each such resolution, indenture, trust agreement, instrument and proceeding being herein referred to as an "Indenture") providing for a trustee or other fiscal agent, and except as may otherwise be LosAngeles/177272.1 specified by resolution of the Board, the Treasurer is designated as the depositary of the Authority to have custody of all money of the Authority, from whatever source derived and shall have the powers, duties and responsibilities specified in Sections 6505, 6505.5 and 6509.5 of the Joint Exercise of Powers Act. The Treasurer of the Authority is designated as the public officer or person who has charge of, handles, or has access to any property of the Authority, and such officer shall file an official bond with the Secretary of the Authority in the amount specified by resolution of the Board but in no event less than $1,000. The Board shall have the power to appoint such other officers and employees as it may deem necessary and to retain independent counsel, consultants and accountants. The Board shall have the power, by resolution, to the extent permitted by the Joint Exercise of Power Act or any other applicable law, to delegate any of its functions to one or more of the Directors or officers, employees or agents of the Authority and to cause any of said Directors, officers, employees or agents to take any actions and execute any documents or instruments for and in the name and on behalf of the Board or the Authority. D. MEETINGS OF THE BOARD. (1) Ralph M. Brown Act. All meetings of the Board, including, without limitation, regular, adjourned regular, special, and adjourned special meetings shall be called, noticed, held and conducted in accordance with the provisions of the Ralph M. Brown Act (commencing with Section 54950 of the Government Code of the State of California), or any successor legislation hereinafter enacted (the "Brown Act"). (2) Regular Meetings. The Board shall provide for its regular meetings; provided, however, it shall hold at least one regular meeting each year. The date, hour and place of the holding of the regular meetings shall be fixed by resolution of the Board. To the extent permitted by the Brown Act, such meetings may be held by telephone conference. (3) Special Meetings. Special meetings of the Board may be called in accordance with the provisions of Section 54956 of the Government Code of the State of California. To the extent permitted by the Brown Act, such meetings may be held by telephone conference. LosAngeles/l 77272.1 IV (4) Minutes. The Secretary of the Authority shall cause to be kept minutes of the regular, adjourned regular, special, and adjourned special meetings of the Board and shall, as soon as possible after each meeting, cause a copy of the minutes to be forwarded to each Director. (5) Quorum. A majority of the Board shall constitute a quorum for the transaction of business. No action may be taken by the Board except upon the affirmative vote of a majority of the Directors constituting a quorum, except that less than a quorum may adjourn a meeting to another time and place. E. RULES AND REGULATIONS. The Authority may adopt, from time to time, by resolution of the Board such rules and regulations for the conduct of its meetings and affairs as may be required. Section 4. Powers. The Authority shall have the power, in its own name, to exercise the common powers of the Members and to exercise all additional powers given to a joint powers entity under any of the laws of the State of California, including, but not limited to, the Joint Exercise of Powers Act, for any purpose authorized under this Agreement. Such powers shall include the common powers specified in this Agreement and may be exercised in the manner and according to the method provided in this Agreement. The Authority is hereby authorized to do all acts necessary for the exercise of such power, including, but not limited to, any of all of the following: to make and enter into contracts; to employ agents and employees; to acquire, construct, provide for maintenance and operation of, or maintain and operate, any buildings, works or improvements; to acquire, hold or dispose of property wherever located; to incur debts, liabilities or obligations; to receive gifts, contributions and donations of property, funds, services, and other forms of assistance from person, firms, corporations and any governmental entity; to sue and be sued in its own name; to make grants, loans or provide other financial assistance to governmental and nonprofit organizations (e.g., the Members or the Foundation) to accomplish any of its purposes; and generally to do any and all things necessary or convenient to accomplish its purposes. Without limiting the generality of the foregoing, the Authority may issue or cause to be issued Bonds, and pledge any property or revenues as security to the extent permitted under the Joint Exercise of Powers Act, or any other applicable provision of law; provided, however, the Authority shall not issue Bonds with respect to any project located in the jurisdiction of one or more Members unless the governing body of any such Member, or its duly authorized representative, shall approve, conditionally or unconditionally, the project, including the issuance of Bonds therefor. Such approval may be evidenced by resolution, certificate, order, report or such other means of written approval of such project as may be selected by the Member (or its authorized representative) whose approval is required. No such approval shall be required in LosAngeles/177272.1 connection with Bonds that refund Bonds previously issued by the Authority and approved by the governing board of a Member. The manner in which the Authority shall exercise its powers and perform its duties is and shall be subject to the restrictions upon the manner in which a California general law city could exercise such powers and perform such duties. The manner in which the Authority shall exercise its powers and perform its duties shall not be subject to any restrictions applicable to the manner in which any other public agency could exercise such powers or perform such duties, whether such agency is a party to this Agreement or not. Section 5. Fiscal Year. For the purposes of this Agreement, the term "Fiscal Year" shall mean the fiscal year as established from time to time by resolution of the Board, being, at the date of this Agreement, the period from July 1 to and including the following June 30, except for the first Fiscal Year which shall be the period from the date of this Agreement to June 30, 2004. Section 6. Disposition of Assets. At the end of the term hereof or upon the earlier termination of this Agreement as set forth in Section 2, after payment of all expenses and liabilities of the Authority, all property of the Authority both real and personal shall automatically vest in the Members in the manner and amount determined by the Board in its sole discretion and shall thereafter remain the sole property of the Members; provided, however, that any surplus money on hand shall be returned in proportion to the contributions made by the Members. Section 7. Bonds. From time to time the Authority shall issue Bonds, in one or more series, for the purpose of exercising its powers and raising the funds necessary to carry out its purposes under this Agreement. The services of bond counsel, financing consultants and other consultants and advisors working on the projects and/or their financing shall be used by the Authority. The expenses of the Board shall be paid from the proceeds of the Bonds or any other unencumbered funds of the Authority available for such purpose. Section 8. Bonds Only Limited and Special Obligations of Authority. The Bonds, together with the interest and premium, if any, thereon, shall not be deemed to constitute a debt of any Member or pledge of the faith and credit of the Members or the Authority. The Bonds shall be only special obligations of the Authority, and the Authority shall under no circumstances be obligated to pay the Bonds except from revenues and other funds pledged therefor. Neither the Members nor the Authority shall be obligated to pay the principal of, premium, if any, or interest on the Bonds, or other costs incidental thereto, except from the revenues and funds pledged therefor, and neither the faith and credit nor the taxing power of the Members nor the faith and credit of the Authority shall be pledged to the payment of the LosAngeles/177272.1 principal of, premium, if any, or interest on the Bonds nor shall the Members or the Authority in any manner be obligated to make any appropriation for such payment. No covenant or agreement contained in any Bond or related document shall be deemed to be a covenant or agreement of any Director, or any officer, employee or agent of the Authority in his or her individual capacity and neither the Board of the Authority nor any Director or officer thereof executing the Bonds shall be liable personally on any Bond or be subject to any personal liability or accountability by reason of the issuance of any Bonds. Section 9. Accounts and Reports. All funds of the Authority shall be strictly accounted for. The Authority shall establish and maintain such funds and accounts as may be required by good accounting practice and by any provision of any Indenture (to the extent such duties are not assigned to a trustee of Bonds). The books and records of the Authority shall be open to inspection at all reasonable times by each Member. The Treasurer of the Authority shall cause an independent audit to be made of the books of accounts and financial records of the Authority by a certified public accountant or public accountant in compliance with the provisions of Section 6505 of the Joint Exercise of Powers Act. In each case the minimum requirements of the audit shall be those prescribed by the State Controller for special districts under Section 26909 of the Government Code of the State of California and shall conform to generally accepted auditing standards. When such an audit of accounts and records is made by a certified public accountant or public accountant, a report thereof shall be filed as a public record with each Member and also with the county auditor of each county in which a Member is located; provided, however, that to the extent permitted by law, the Authority may, instead of filing such report with each Member and such county auditor, elect to post such report as a public record electronically on a website designated by the Authority. Such report if made shall be filed within 12 months of the end of the Fiscal Year or Years under examination. The Treasurer is hereby directed to report in writing on the first day of July, October, January, and April of each year to the Board and the Members which report shall describe the amount of money held by the Treasurer for the Authority, the amount of receipts since the last such report, and the amount paid out since the last such report (which may exclude amounts held by a trustee or other fiduciary in connection with any Bonds to the extent that such trustee or other fiduciary provided regular reports covering such amounts.) Any costs of the audit, including contracts with, or employment of, certified public accountants or public accountants in making an audit pursuant to this Section, shall be borne by the Authority and shall be a charge against any unencumbered funds of the Authority available for that purpose. In any Fiscal Year the Board may, by resolution adopted by unanimous vote, replace the annual special audit with an audit covering a two-year period. LosAngeles/l 77272.1 Section 10. Funds. Subject to the applicable provisions of any Indenture, which may provide for a trustee or other fiduciary to receive, have custody of and disburse Authority funds, the Treasurer of the Authority shall receive, have the custody of and disburse Authority funds pursuant to the accounting procedures developed under Sections 3.C and 9, and shall make the disbursements required by this Agreement or otherwise necessary to carry out any of the provisions of purposes of this Agreement. Section 11. Notices. Notices and other communications hereunder to the Members shall be sufficient if delivered to the clerk of the governing body of each Member; provided, however, that to the extent permitted by law, the Authority may, provide notices and other communications and postings electronically (including, without limitation, through email or by posting to a website). Section 12. Additional Members/Withdrawal of Members. Qualifying public agencies may be added as parties to this Agreement and become Members upon: (1) the filing by such public agency with the Authority of an executed counterpart of this Agreement, together with a copy of the resolution of the governing body of such public agency approving this Agreement and the execution and delivery hereof; and (2) adoption of a resolution of the Board approving the addition of such public agency as a Member. Upon satisfaction of such conditions, the Board shall file such executed counterpart of this Agreement as an amendment hereto, effective upon such filing. A Member may withdraw from this Agreement upon written notice to the Board; provided, however, that no such withdrawal shall result in the dissolution of the Authority so long as any Bonds remain outstanding. Any such withdrawal shall be effective only upon receipt of the notice of withdrawal by the Board which shall acknowledge receipt of such notice of withdrawal in writing and shall file such notice as an amendment to this Agreement effective upon such filing. Section 13. Indemnification. To the full extent permitted by law, the Board may authorize indemnification by the Authority of any person who is or was a Director or an officer, employee of other agent of the Authority, and who was or is a party or is threatened to be made a party to a proceeding by reason of the fact that such person is or was such a Director or an officer, employee or other agent of the Authority, against expenses, including attorneys fees, judgments, fines, settlements and other amounts actually and reasonably incurred in connection with such proceeding, if such person acted in good faith in a manner such person reasonably believed to be in the best interests of the Authority and, in the case of a criminal proceeding, had no reasonable cause to believe the conduct of such person was unlawful and, in the case of an action by or in the right of the Authority, acted with such care, including reasonable inquiry, as an ordinarily prudent person in a like position would use under similar circumstances. LosAngeles/177272.1 Section 14. Contributions and Advances. Contributions or advances of public funds and of the use of personnel, equipment or property may be made to the Authority by the Members for any of the purposes of this Agreement. Payment of public funds may be made to defray the cost of any such contribution or advance. Any such advance may be made subject to repayment, and in such case shall be repaid, in the manner agreed upon by the Authority and the Member making such advance at the time of such advance. It is mutually understood and agreed to that no Member has any obligation to make advances or contributions to the Authority to provide for the costs and expenses of administration of the Authority, even though any Member may do so. The Members understand and agree that a portion of the funds of the Authority that otherwise may be allocated or distributed to the Members may instead be used to make grants, loans or provide other financial assistance to governmental units and nonprofit organizations (e.g., the Foundation) to accomplish any of the governmental unit's or nonprofit organization's purposes. Section 15. Immunities. All of the privileges and immunities from liabilities, exemptions from laws, ordinances and rules, and other benefits which apply to the activity of officers, agents or employees of Members when performing their respective functions within the territorial limits of their respective public agencies, shall apply to the same degree and extent to the Directors, officers, employees, agents or other representatives of the Authority while engaged in the performance of any of their functions or duties under the provisions of this Agreement. Section 16. Amendments. Except as provided in Section 12 above, this Agreement shall not be amended, modified, or altered, unless the negative consent of each of the Members is obtained. To obtain the negative consent of each of the Members, the following negative consent procedure shall be followed: (a) the Authority shall provide each Member with a notice at least sixty (60) days prior to the date such proposed amendment is to become effective explaining the nature of such proposed amendment and this negative consent procedure; (b) the Authority shall provide each Member who did not respond a reminder notice with a notice at least thirty (30) days prior to the date such proposed amendment is to become effective; and (c) if no Member objects to the proposed amendment in writing within sixty (60) days after the initial notice, the proposed amendment shall become effective with respect to all Members. Section 17. Effectiveness. This Agreement shall become effective and be in full force and effect and a legal, valid and binding obligation of each of the Members on the date that the Board shall have received from two of the Initial Members an executed counterpart of this Agreement, together with a certified copy of a resolution of the governing body of each such Initial Member approving this Agreement and the execution and delivery hereof. Los Angeles/177272.1 Section 18. Partial Invalidity. If any one or more of the terms, provisions, promises, covenants or conditions of this Agreement shall to any extent be adjudged invalid, unenforceable, void or voidable for any reason whatsoever by a court of competent jurisdiction, each and all of the remaining terms, provisions, promises, covenants and conditions of this Agreement shall not be affected thereby, and shall be valid and enforceable to the fullest extent permitted by law. Section 19. Successors. This Agreement shall be binding upon and shall inure to the benefit of the successors of the parties hereto. Except to the extent expressly provided herein, no Member may assign any right or obligation hereunder without the consent of the other Members. Section 20. Miscellaneous. This Agreement may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. The section headings herein are for convenience only and are not to be construed as modifying or governing the language in the section referred to. Wherever in this Agreement any consent or approval is required, the same shall not be unreasonably withheld. This Agreement shall be governed under the laws of the State of California. This Agreement is the complete and exclusive statement of the agreement among the Members, which supercedes and merges all prior proposals, understandings, and other agreements, whether oral, written, or implied in conduct, between and among the Members relating to the subject matter of this Agreement. LosAngeles/177272.1 n IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed and attested by their duly authorized representatives as of the day and year first above written. Member: CITY OF CARLSBAD B RAYMOND R. PATCHETT City Manager ATTEST: Approved As To Form: LORRAINE M. WOOD City Clerk RONALD R. BALL City Attorney IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed and attested by their duly authorized representatives as of the day and year first above written. Member: COUNTY OF SAN DIEGO By Name: Title: ATTEST: By _ Name: Title: LosAngeles/177272.1 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed and attested by their duly authorized representatives as of the day and year first above written. Member: CITY OF SANTA CLARITA By Name: Title: ATTEST: By Name: Title: LosAngeles/177272. 1 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed and attested by their duly authorized representatives as of the day and year first above written. Member: CITY OF OAKLAND By Name: Title: ATTEST: By Name: Title: Los Angeles/177272. 1 20 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed and attested by their duly authorized representatives as of the day and year first above written. Member: CITY OF EL SEGUNDO By Name: Title: ATTEST: By _ Name: Title: LosAngeles/l 77272. 1 CITY OF CARLSBAD NOTICE OF PUBLIC HEARING NOTICE IS HEREBY GIVEN that the City Council of the City of Carlsbad, California (the "City") at its regular meeting at the City Council Chambers, 1200 Carlsbad Village Drive, Carlsbad, California, at 6:00 p.m., on January 24, 2006, will hold a public hearing and consider approval of tax-exempt financing and the issuance of revenue bonds by the California Municipal Finance Authority (CMFA) in a principal amount not to exceed Thirty Million Dollars ($30,000,000) for the purpose of financing the acquisition, construction and development of a multifamily affordable rental housing development to be located in the City. The City will also consider approving membership in CMFA. The project to be financed, currently known as Hunters Pointe Apartments, will consist of 168 rental housing units affordable to lower income households to be located on an approximately 15.84 acre site located on the east side of realigned Rancho Santa Fe Road, south of San Elijo Road (old Questhaven Road) and west of the City's eastern border with the City of San Marcos. The initial owner of the project will be Chelsea Investment Corporation ("Chelsea") or a limited liability partnership or limited liability company to be established by Chelsea (the "Developer")- This notice is intended to comply with the public notice requirements of Section 147(f) of the Internal Revenue Code of 1986, as amended. All those interested in matters related to either the issuance of the revenue bonds by CMFA or the location or operation of the project are invited to attend and be heard at the meeting. If you have any questions regarding the proposed bond issuance or development, please call Debbie Fountain, Housing and Redevelopment Director of the City of Carlsbad at (760) 434-2935, dfoun@ci.carlsbad.ca.us. If you challenge the approval of the tax-exempt financing and issuance of revenue bonds by the California Municipal Finance Authority (CMFA) in court, you may be limited to raising only those issues raised by you or someone else at the public hearing described in this notice, or in written correspondence delivered to the City of Carlsbad, Attn: City Clerk, 1200 Carlsbad Village Drive, Carlsbad, CA 92008 at, or prior to, the public hearing. PUBLISH: January 9, 2006 - North County Times CITY OF CARLSBAD CITY COUNCIL PROOF OF PUBLICATION (2010 & 2011 C.C.P.) This space is for the County Clerk's Filing Stamp STATE OF CALIFORNIA County of San Diego I am a citizen of the United States and a resident of the County aforesaid: I am over the age of eighteen years and not a party to or interested in the above- entitled matter. I am the principal clerk of the printer of North County Times Formerly known as the Blade-Citizen and The Times-Advocate and which newspapers have been adjudicated newspapers of general circulation by the Superior Court of the County of San Diego, State of California, for the City of Oceanside and the City of Escondido, Court Decree number 171349, for the County of San Diego, that the notice of which the annexed is a printed copy (set in type not smaller than nonpariel), has been published in each regular and entire issue of said newspaper and not in any supplement thereof on the following dates, to-wit: thJanuary 09tn, 2006 I certify (or declare) under penalty of perjury that the foregoing is true and correct. Dated at SAN MARCOS California This 09th, Day of January, 2006 Proof of Publication of NOTICE re HEREBY OMEN fl«lh»a(yCouncil of the Ciryot CartibKrCalfomS(the 'City1) at its reoular meetingat theincil Chambers, 12OT Carlsbad°VlMage• ' J -ila,at6LOOp.m.,on * The project to be financed, currently known as Hunt-ers Pointe Apartments, will consist of 168. rentalhousing unfholds to be in Marcos. The Initial owner This notice is......tlce requirementsRevenue Code _ public no-the Internal issuance ofWrevenue'EondYbv'CfifA or jti lo-cation or operation of the project are invited to'atthe meeting. All those Interested In matters i issu hearing. NCT 1891040 • 01/09/06 r \ Signature Jane Allshouse NORTH COUNTY TIMES Legal Advertising