HomeMy WebLinkAbout2022-10-11; City Council; ; Tax and Equity Fiscal Responsibility Act Public Hearing for the Issuance of Tax-Exempt Bonds by the California Municipal Finance Authority for the Benefit of USA PropertiCA Review _RK _
Meeting Date: Oct. 11, 2022
To: Mayor and City Council
From: Scott Chadwick, City Manager
Staff Contact: Mandy Mills, Housing & Homeless Services Director
mandy.mills@carlsbadca.gov, 442-339-2907
Subject: Tax and Equity Fiscal Responsibility Act Public Hearing for the Issuance of
Tax-Exempt Bonds by the California Municipal Finance Authority for the
Benefit of USA Properties Fund Inc., and Request for a $65,000 Increase
in the Loan Amount from the Housing Trust Fund for the Marja Acres
Senior Apartments
District: 1
Recommended Action
That the City Council:
1.Hold a public hearing as required by the Tax and Equity Fiscal Responsibility Act and the
Internal Revenue Code of 1986, and adopt a resolution approving the issuance of up to
$15 million in California Municipal Finance Authority multifamily housing revenue bonds
for USA Properties Fund Inc. on behalf of Carlsbad 685 LP, a California limited partnership,
or another ownership entity to be created by the fund, for the purpose of financing the
acquisition, construction, improvement and equipping of a 47-unit affordable rental
housing project, the Marja Acres Senior Apartments, in the City of Carlsbad.
2.Adopt a resolution approving a $65,000 increase in the loan amount from the city’s
Housing Trust Fund to USA Properties Fund for the Marja Acres Senior Apartments
affordable housing project and appropriating the expenditure of funds.
Executive Summary
State bonds
The Marja Acres Apartments project is a 47-unit multifamily senior affordable housing project
located on the west side of El Camino Real, just south of Kelly Drive. The company building the
affordable units, USA Properties Fund Inc., has been granted authority to issue up to $15 million
in bonds from the California Municipal Finance Authority to complete the project.
Although the bonds are being issued by the state agency and not the City of Carlsbad, under the
federal Tax and Equity Fiscal Responsibility Act and the Internal Revenue Code of 1986, the
bonds cannot qualify as being tax-exempt unless the City Council holds a public hearing so that
community members can speak for or against the use of tax-exempt bonds for the financing of
the project.
Oct. 11, 2022 Item #7 Page 1 of 16
Housing Trust Fund loan
The City Council approved a $650,000 loan from the city’s Housing Trust Fund on Oct. 12, 2021,
to support the project. Since the original financing package on the affordable project was
proposed in 2021, economic conditions have changed dramatically, which have impacted
project financing. USA Properties is now as asking the City Council to grant it a $65,000, or 10%,
increase in its loan from the Housing Trust Fund to support the development of the project.
City Council Policy No. 90, which covers the administration of the Housing Trust Fund, requires
that the City Council make final decisions on Housing Trust Fund financial assistance requests
after the Housing Commission reviews them and makes its recommendation.
Discussion
Project background
New Urban West received a permit to develop a residential and commercial development at
the southwest corner of El Camino Real and Kelly Road. The overall development, known as,
Marja Acres, was approved by the City Council Nov. 3, 2020.
The project was approved as a density bonus project, which allows for certain development
concessions and incentives, as well as allowing the developer to build more units on the
property than would otherwise be allowed in exchange for providing affordable housing units
than normally required. As an approved density bonus project, Marja Acres is required to
provide 46 senior apartments affordable to lower-income seniors.
The Marja Acres development is to include 248 market rate townhomes, 47 affordable senior
apartments (46 lower-income plus 1 manager’s unit) and 10,000 square feet for specialty
commercial uses (Location Map-Exhibit 3).
The senior apartments, all one-bedroom and approximately 535 square feet, are located within
the commercial portion of the site as a mixed-use development. The proposed community will
be restricted to households earning between 30% and 60% of the area’s medium income (five
units at 30%, 36 units at 50%, and five at 60%) for the next 55 years. The proposed amenities
will include a clubroom, outdoor dining patio with barbecue, a community garden and laundry
room. Services will include adult educational classes, such as health and wellness, and skill-
building classes, as well as individualized services and programs.
USA Properties Fund Inc. has partnered with NUWI Carlsbad LLC to construct the affordable
housing portion of the project. To provide additional public benefit to the community and to
secure tax-exempt bond and tax credit equity financing, as well as local funding, the applicant
proposed to deepen the project’s affordability by restricting five of the 46 affordable housing
units to extremely low-income seniors. The developer has secured financing for the project and
is ready to proceed with construction.
Bond financing
A large portion of the project financing includes $9.5 million in tax-exempt bond financing. USA
Properties Fund has asked the California Municipal Finance Authority1 to issue tax-exempt
1 The California Municipal Finance Authority was formed as a joint powers authority to help local governments,
nonprofit 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.
Oct. 11, 2022 Item #7 Page 2 of 16
facility bonds for the qualified residential rental project, in accordance with Section 142(a)(7) of
the Internal Revenue Code.
The bonds, at no time to exceed $15,000,000 in aggregate principal amount, are to finance or
refinance the acquisition, construction, rehabilitation, improvement and equipping the
affordable housing project. By approving an amount in excess of what the project has been
allocated, we can eliminate the need to reschedule and hold another TEFRA hearing in case the
developer has to go back to the state for a supplemental bond allocation due to unforeseen
increases in construction costs.
For all or a portion of the bonds to qualify as tax-exempt, the City of Carlsbad is required under
the federal Tax and Equity Fiscal Responsibility Act to conduct a public hearing, known as the
TEFRA hearing, to provide an opportunity for community members to speak in favor of or
against the use of tax-exempt bonds for the financing of the project.
In addition, although the City of Carlsbad is not issuing the bonds or in any way obligated to
repay them, 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.
Public hearing and resolution on the bonds
Although the California Municipal Finance Authority will issue the bonds, the Internal Revenue
Code requires an “applicable elected representative” of the local government hosting the
project to approve the issuance of the bonds.
Once the City Council holds the required hearing and adopts the required resolution, no other
participation of the City of Carlsbad in the bond financing will be required.
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. There is no obligation of any kind on the part of the City of Carlsbad, the City
Council or any entity controlled by the City of Carlsbad to repay the debt issued by the
California Municipal Finance Authority. 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
Project financing and loan request
The bond allocation and tax credits will finance the majority of the project’s cost. Additional
funding for the development costs will come from the master developer, a deferral of USA
Properties Fund’s developer fee and a loan from the City’s Housing Trust Fund.
Both the Housing Commission and City Council reviewed and approved a request from USA
Properties for a $650,000 loan from the city’s Housing Trust Fund in 2021. In exchange for the
loan, the developer agreed to increase the affordability of five apartments to serve extremely
low-income seniors, whose who earn no more than 30% of the area’s median income. The
financial assistance is structured as a residual receipts loan, meaning the borrower is required
Oct. 11, 2022 Item #7 Page 3 of 16
to repay the loan currently only if rents are sufficient to pay all operating expenses, including
management fees and debt service on a first mortgage. The loan will result in the principal plus
interest will be returned to the Housing Trust Fund to further the creation of other affordable
housing units.
The project’s financing details have significantly changed over the last year because of
increased construction costs and rising interest rates. Construction costs have increased by
about 20%, which, along with other cost increases, increased the total development cost by
$2.7 million, or approximately 17%. Additionally, interest rates increased, which decreases the
amount of financing to the project. While some other financing sources have increased, the net
increase in financing sources to the project is approximately $781,000. This creates a new
financing gap of approximately $1.9 million, about a 12.5% increase.
According to City Council Policy Statement No. 90, money from Housing Trust Fund is not to be
used to satisfy a development's requirement to provide affordable housing in accordance with
the city’s Inclusionary Housing Ordinance,2 but may be used to assist in exceeding the
requirement. The city’s Housing Policy Team, composed of representatives from Finance,
Community Development, Housing Services and the City Attorney’s office, reviewed the project
financing in July 2021 and again in July 2022 with updated information provided by the
developer. Based on considerable increases in construction costs and other market conditions,
city staff recommend an increase in $65,000, a 10% increase, to the original loan amount to
support the development.
Below is a summary of the change in the proposed sources and uses of funds:
SOURCES OF FUNDS
2021 TOTAL 2022 TOTAL CHANGE
Senior loan $4,625,000 $4,140,000 -$485,000
Net operating income during construction 197,187 288,057 90,870
Tax credit equity 7,393,959 7,935,990 542,031
Deferred developer fee 609,645 758,341 148,696
Housing Trust Fund loan 650,000 715,000 0
New Urban West (master developer) 2,350,000 2,835,000 485,000
TOTAL SOURCES $15,825,791 $16,672,388 $781,597
PERMANENT USES OF FUNDS
2021 TOTAL 2022 TOTAL CHANGE
Construction (including bonds) $7,997,749 $9,583,550 $1,585,801
Construction general conditions 840,000 780,000 (60,000)
Contractor overhead and profit 279,685 607,413 327,728
Construction contingency 799,775 1,097,096 297,321
Financing costs 886,349 984,049 97,700
Other transaction costs 2,938,124 3,274,627 336,503
Developer fee 2,084,109 2,262,082 177,973
TOTAL USES $15,825,791 $18,588,817 $2,763,026
2 The City of Carlsbad’s mandatory inclusionary housing program requires housing developers to provide 15% of
their total units as affordable to low-income households.
Oct. 11, 2022 Item #7 Page 4 of 16
Housing Commission review
The additional $65,000 financial assistance request was reviewed by the Housing Commission
on Sept. 8, 2022. The commission recommended the City Council approve USA Properties’
request for $65,000 in additional financial assistance based on the findings contained in the
Housing Commission resolution (Exhibit 4).
Options
Staff recommend the City Council conduct the required Tax and Equity Fiscal Responsibility Act
hearing in connection with the proposed issuance of tax-exempt revenue bonds by the
California Municipal Finance Authority in an amount not to exceed $15 million for the
acquisition, construction, rehabilitation, improvement and equipping of the project and adopt
the attached City Council resolution in favor of the issuance of the bonds. This action would
support the creation of more affordable housing within the city of Carlsbad.
The City Council could choose to not approve the recommended resolution, but there would be
no benefit to the city for doing so and this could result in this planned affordable housing
development not being able to obtain the required financing, which would not advance the
city’s efforts to help create more affordable housing.
Staff provide the following options for the City Council’s consideration related to the request
for additional Housing Trust Fund assistance:
1. Approve the increase in the loan amount by $65,000
Pros
• This option allows for the timely construction of 46 units for extremely low-, very
low- and low-income households by reducing the financing gap.
• The financial assistance is structured as a residual receipts loan and will result in
principle plus interest being returned to the Housing Trust Fund to further the
creation of other affordable housing units
• The Housing Trust Fund has a sufficient balance to cover this project as well as
pending requests for assistance
Cons
• Reduces the Housing Trust Fund by $65,000
2. Do not approve additional funding for this project. If the City Council does not approve
the funding as presented, the current developers will have to restructure the project for
an alternate funding plan
Pros
• Maintains the current balance of the Housing Trust Fund
Cons
• Significantly increases the funding gap for the affordable project, jeopardizing
the timely construction of the affordable units.
Staff recommend Option 1, that the City Council authorize the appropriation of $65,000 from
the city’s Housing Trust Fund for the loan as requested.
Oct. 11, 2022 Item #7 Page 5 of 16
Fiscal Analysis
As noted above, the City of Carlsbad will have no financial, legal or 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 city’s minor administrative and staff costs to
prepare the reports and related documents required by the borrower and the Municipal
Finance Authority will be reimbursed to the City of Carlsbad through a small portion of the
bond issuance fee to be paid to the Housing Trust Fund.
If the request to increase the Housing Trust Fund loan by $65,000 is approved, the City Council
will have assigned the total recommended loan amount of $715,000 from the city’s Housing
Trust Fund (Fund 133), which is restricted to affordable housing and homelessness-related
projects, programs and services. The Housing Trust Fund had an available balance of $11.5
million as of August 2022.
The recommended form of assistance is a 55-year residual receipts loan at 3% simple interest
per year. The loan would be secured by a promissory note and deed of trust and repaid in
annual installments from surplus cash generated by operations.
Next Steps
City staff will forward the approved resolution to the California Municipal Finance Authority so
its staff and Carlsbad 685, LP can proceed with getting the bonds issued.
Staff will draft implementing agreements with USA Properties for the Housing Trust Fund loan,
and appropriate funds. The resolution authorizes the City Manager, or designee, to execute all
appropriate documents necessary to provide the financial assistance.
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.
Public Notification
This item was noticed in keeping with the state's Ralph M. Brown Act and it was available for
public viewing and review at least 72 hours before the scheduled meeting date.
A seven calendar-day public Tax and Equity Fiscal Responsibility Act hearing notice was posted
in a newspaper of general circulation on Sept. 30, 2022, and on the city website. Copies of the
notice are available in the Office of the City Clerk.
Exhibits
1. City Council resolution – TEFRA hearing and revenue bond issuance
2. City Council resolution – Housing Trust Fund loan
3. Location map
4. Housing Commission Resolution 2022-005
Oct. 11, 2022 Item #7 Page 6 of 16
RESOLUTION NO. 2022-243
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARLSBAD,
CALIFORNIA, APPROVING THE ISSUANCE OF THE CALIFORNIA MUNICIPAL
FINANCE AUTHORITY MULTIFAMILY HOUSING REVENUE BONDS FOR THE
BENEFIT OF CARLSBAD 685, LP., OR A SUBSIDIARY OR AFFILIATE CREATED
BY USA PROPERTIES FUND, INC., IN AN AGGREGATE PRINCIPAL AMOUNT
NOT TO EXCEED $15,000,000 FOR THE PURPOSE OF FINANCING AND
REFINANCING THE ACQUISITION, CONSTRUCTION, REHABILITATION,
IMPROVEMENT AND EQUIPPING OF MARJA ACRES APARTMENTS, A 47-
UNIT MULTIFAMILY RENTAL SENIOR HOUSING PROJECT LOCATED IN
CARLSBAD, CALIFORNIA
WHEREAS, USA Properties Fund, Inc. (the "Sponsor"), on behalf of Carlsbad 685, LP., a
California limited partnership, or another ownership entity to be created by the Sponsor, or another
affiliate of the Sponsor for the purpose of owning the project described herein (such limited
partnership or other ownership entity being referred to herein as the "Borrower"), has requested
that the California Municipal Finance Authority (the "Authority") issue from time to time one or more
series of revenue bonds in an aggregate principal amount not to exceed $15,000,000 (the "Bonds"),
including but not limited to revenue bonds issued as part of a plan to (1) finance and refinance the
acquisition, construction, improvement and equipping of a 47-unit affordable rental senior housing
facility for low-, very low-and extremely low-income seniors (the "Project") to be owned and
operated by the Borrower and located on a parcel situated south of El Camino Real, east of Kelly
Drive and north-northwest of Park Drive in the City of Carlsbad, California (the "City"), and (2) pay
certain expenses in connection with the issuance of the Bonds; and
WHEREAS, pursuant to Section 147(f) of the Internal Revenue Code of 1986, as amended (the
"Code"), the issuance of the Bonds by the Authority must be approved by the City Council of the City
of Carlsbad because the Project is located within the territorial limits of the City; and
WHEREAS, the City Council of the City of Carlsbad is the elected legislative body of the City and
is one of the "applicable elected representatives" required to approve the issuance of the Bonds under
Section 147(f) of the Code; and
WHEREAS, the Authority has requested that the City Council approve the issuance of the Bonds
by the Authority 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 California
Exhibit 1
Oct. 11, 2022 Item #7 Page 7 of 16
Municipal Finance Authority, dated as of January 1, 2004 (the "Agreement"), among certain local
agencies, including the City of Carlsbad; and
WHEREAS, pursuant to Section 147(f) of the Code, the City Council has, following notice duly
given, held a public hearing regarding the issuance of the Bonds, and now desires to approve the
issuance of the Bonds by the Authority;
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Carlsbad, California, as
follows:
1.That the above recitations are true and correct.
2.The City Council hereby approves the issuance of the Bonds by the Authority, including
but not limited to Bonds issued as part of a plan of financing and refinancing of the
facilities described herein. It is the purpose and intent of the City Council that this
resolution constitute approval of the issuance of the Bonds by the Authority, for the
purposes of (a) Section 147(f) of the Code by the applicable elected representative of
the governmental unit having jurisdiction over the area in which the Project is located,
in accordance with said Section 147(f), and (b) Section 4 of the Agreement.
3.The issuance of the Bonds shall be subject to the approval of the Authority of all
financing documents relating thereto to which the Authority is a party. The City of
Carlsbad shall have no responsibility or liability whatsoever with respect to the Bonds.
4.The adoption of this Resolution shall not obligate the City of Carlsbad or any department
thereof to (i) provide any financing to acquire or construct the Project or any refinancing
of the Project; (ii) approve any application or request for or take any other action in
connection with any planning approval, permit or other action necessary for the
acquisition, construction, rehabilitation, installation or operation of the Project; (iii)
make any contribution or advance any funds whatsoever to the Authority; or (iv) take
any further action with respect to the Authority or its membership therein.
5.The officers of the City of Carlsbad are hereby authorized and directed, jointly and
severally, to do any and all things and to execute and deliver any and all documents
which they deem necessary or advisable in order to carry out, give effect to and comply
with the terms and intent of this resolution and the financing transaction approved
hereby.
Oct. 11, 2022 Item #7 Page 8 of 16
6.This resolution shall take effect immediately upon its adoption.
PASSED, APPROVED AND ADOPTED at a Regular Meeting of the City Council of the City of
Carlsbad on the 11th day of October, 2022, by the following vote, to wit:
AYES:
NAYS:
ABSENT:
Blackburn, Bhat-Patel, Acosta, Norby.
None.
Hall.
� MATT HALL, Mayor
+,-vFAVIOLA MEDINA, City Clerk Services Manager
{SEAL)
Oct. 11, 2022 Item #7 Page 9 of 16
..............-l<Pk
RESOLUTION NO. 2022-244
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARLSBAD,
CALIFORNIA, APPROVING AN INCREASE OF $65,000 IN THE LOAN AMOUNT
FROM THE HOUSING TRUST FUND TO USA PROPERTIES FUND FOR THE
MARJA ACRES SENIOR APARTMENTS AFFORDABLE HOUSING PROJECT (DEV
16-038)
WHEREAS, NUWI Carlsbad, LLC (New Urban West or NUW) sought the city's approval to build a
mixed-use project consisting of 248 town homes, 46 affordable senior apartments (plus an unrestricted
manager's unit) and 10,000 square feet for specialty commercial uses located on property commonly
known as Marja Acres, on the south side of El Camino Real just east of Kelly Road; and
WHEREAS, the City Council approved said development, including the affordable senior
apartments on Nov. 3. 2020; and
WHEREAS, USA Properties Fund, Inc. has partnered with NUW to build the Marja Acres
affordable senior apartments; and
WHEREAS, USA Properties Fund requested financial assistance from the City of Carlsbad for the
construction of 46 apartment homes to be affordable to extremely low, very low, and lower-income
senior households; and
WHEREAS, the request for financial assistance was submitted to the City of Carlsbad's Housing
Commission for review and consideration at their public meeting on Aug. 12, 2021, on which date said
Commission recommended that the City Council approve the requested financial assistance in the
amount of $650,000; and
WHEREAS, the City Council approved $650,000 in Housing Trust Fund assistance on Oct. 12,
2021, in order to create additional public benefit by exceeding the units required by the density bonus,
serving five extremely low-income seniors and improve project competitiveness for tax exempt bond
and tax credit equity financing; and
WHEREAS, the city's Affordable Housing Policy Team evaluated the subsequent financial
assistance request on Aug. 2, 2022, and recommended that it be forwarded to the Housing Commission
for their consideration and recommendation to the City Council; and
WHEREAS, the Housing Commission considered the subsequent financial assistance request,
staff evaluation and recommendation, and the testimony of all persons desiring to be heard on the
Oct. 11, 2022 Item #7 Page 10 of 16
Exhibit 2
matter at their regular meeting on Sept. 8, 2022, on which date the Housing Commission recommended
that the City Council approve an increase in the loan amount of $65,000 from the Housing Trust Fund;
. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Carlsbad, California, as
follows:
1.That the above recitations are true and correct.
2.That the request for $65,000 in additional financial assistance from USA Properties Fund,
Inc. is consistent with the goals, objectives and programs of the City of Carlsbad's
Housing Element, City Council Policy No. 90 guidelines, and the city's Housing Trust Fund
underwriting practices.
3.That the request for $65,000 in additional financial assistance will assist the affordable
housing developer in constructing a total of 46 apartment units affordable to extremely
low, very low, and low income senior households, plus one unrestricted manager's
apartment. Specifically, the assistance will result in deeper affordability levels by
providing five extremely low-income (30% AMI), 36 very low-income (50% AMI), and five
low-income (60% AMI) senior apartments.
4.That the City Council authorizes the Deputy City Manager, Administrative Services, to
assign and appropriate an additional amount of $65,000 from the Housing Trust Fund
to provide a total loan amount of $715,000 to USA Properties Fund for the Marja Acres
Senior Apartments, subject to the following conditions:
a.The financial assistance shall be in the form of a residual receipts loan for a term of
55 years at three percent simple interest per annum. Said loan shall be secured by a
promissory note and deed of trust.
b.The financial assistance is conditional and contingent upon USA Properties Fund, Inc.
receiving all other necessary funding commitments identified in the financial
assistance application including private loans, tax credit financing, master developer
contribution, and deferred developer fees.
c.The city's commitment of funds will be maintained for a period of twenty-four
months upon City Council's approval. The funding commitment will expire at the end
of this term unless developer has secured all other necessary funding, has executed
Oct. 11, 2022 Item #7 Page 11 of 16
a loan agreement with the city, and the project is ready to construct; or unless a time
extension is granted by the City Council.
5.That the City Council authorizes the City Manager, or designee, to prepare and execute
all documents related to the provision of the city loan, subject to review and approval
by the City Attorney.
PASSED, APPROVED AND ADOPTED at a Regular Meeting of the City Council of the City of
Carlsbad on the 11th day of October, 2022, by the following vote, to wit:
AYES:
NAYS:
ABSENT:
Blackburn, Bhat-Patel, Acosta, Norby.
None.
Hall.
tv' MATT HALL, Mayor
� �FAVIOLA MEDINA, City Clerk Services Manager
(SEAL)
Oct. 11, 2022 Item #7 Page 12 of 16
t
Exhibit 3
Marja Acres Senior Apartments Location Map
Senior Apartments
Oct. 11, 2022 Item #7 Page 13 of 16
AFF0ROA6l.E 5El'IOR
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CAJ=EIRE5TAURANT
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TOWNI-IOMES
RESOLUTION NO. 2022-005
A RESOLUTION OF THE HOUSING COMMISSION OF THE CITY OF CARLSBAD,
CALIFORNIA RECOMMENDING THAT THE CITY COUNCIL APPROVE AN
INCREASE OF $65,000 IN THE LOAN FROM THE HOUSING TRUST FUND TO
USA PROPERTIES FUND FOR MARJA ACRES SENIOR APARTMENTS (DEV 16-
038)
WHEREAS, NUWI Carlsbad, LLC (New Urban West or NUW) sought the city’s approval to build a
mixed-use project consisting of 248 townhomes, 46 affordable senior apartments (plus an unrestricted
manager’s unit) and 10,000 square feet for specialty commercial uses located on property commonly
known as Marja Acres, on the south side of El Camino Real just east of Kelly Road; and
WHEREAS, the City Council approved said development, including the affordable senior
apartments on Nov. 3. 2020; and
WHEREAS, USA Properties Fund, Inc. has partnered with NUW to build the Marja Acres
affordable senior apartments; and
WHEREAS, USA Properties Fund requested financial assistance for the construction of 46
apartment homes to be affordable to extremely low, very low, and lower-income households; and
WHEREAS, the request for financial assistance was submitted to the City of Carlsbad’s Housing
Commission for review and consideration at their public meeting on Aug. 12, 2021, on which date said
Commission recommended that the City Council approve the requested financial assistance in the
amount of $650,000; and
WHEREAS, the City Council approved $650,000 in Housing Trust Fund assistance on Oct. 12,
2021, in order to create additional public benefit by serving extremely low-income seniors and improve
project competitiveness for tax exempt bond and tax credit equity financing; and
WHEREAS, the city’s Affordable Housing Policy Team evaluated the subsequent financial
assistance request on Aug. 2, 2022, and recommended that it be forwarded to the Housing Commission
for their consideration and recommendation to the City Council; and
WHEREAS, the Housing Commission considered the financial assistance request, staff
evaluation and recommendation, and the testimony of all persons desiring to be heard on the matter
at their regular meeting on Sept. 8, 2022.
Exhibit 4
Oct. 11, 2022 Item #7 Page 14 of 16
NOW, THEREFORE, BE IT RESOLVED by the Housing Commission of the City of Carlsbad,
California, as follows:
1.That the above recitations are true and correct.
2.That the request for additional financial assistance from USA Properties Fund, Inc. is
consistent with the goals, objectives and programs of the City of Carlsbad's Housing
Element, City Council Policy No. 90 guidelines, and the city’s Housing Trust Fund
underwriting practices.
3.That the request for financial assistance will assist the affordable housing developer in
constructing a total of 46 apartment units affordable to extremely low, very low, and
low income senior households, plus one unrestricted manager’s apartment. Specifically,
the assistance will result in deeper affordability levels by providing five extremely low-
income (30% AMI), 36 very low-income (50% AMI), and five low-income (60% AMI)
senior apartments.
4.That, based on information provided in the Housing Commission staff report and
considering testimony of all persons desiring to be heard at the Sept. 8, 2022 public
meeting, the Housing Commission hereby recommends that the City Council approve an
additional amount of $65,000 in financial assistance from the Housing Trust Fund to USA
Properties Fund, Inc., subject to the following conditions:
a.The financial assistance shall be in the form of a residual receipts loan for a term of
55 years at three percent simple interest per annum. Said loan shall be secured by a
promissory note and deed of trust.
b.The financial assistance is conditional and contingent upon USA Properties Fund, Inc.
receiving all other necessary funding commitments identified in the financial
assistance application including private loans, tax credit financing, master developer
contribution, and deferred developer fees.
c.The city’s commitment of funds will be maintained for a period of twenty-four
months upon City Council’s approval. The funding commitment will expire at the end
of this term unless developer has secured all other necessary funding, has executed
a loan agreement with the city, and the project is ready to construct; or unless a time
extension is granted by the City Council.
Oct. 11, 2022 Item #7 Page 15 of 16
PASSED, APPROVED AND ADOPTED at a Meeting of the Housing Commission of the City of
Carlsbad on the 8th day of September 2022, by the following vote, to wit:
J
AYES: NGUYEN-CLEARLY, MANZANO, YDIGORAS
NAYS: NONE
ABSENT: CORTES-TORRES, COLE
CARLSBAD HOUSING COMMISSION
ATTEST:
()1L_, �
Mandy Mills
Housing & Homeless Services Director
Oct. 11, 2022 Item #7 Page 16 of 16
TO: CITY CLERK
DATE OF PUBLIC HEARING:
AFFIDAVIT OF MAILING
NOTICE OF PUBLIC HEARING
SUBJECT: ___._vr]----'---''----'~=-=.'l"-'.......,,a.,. __ -=-W...,..~=-=-----~' s.,c;;.E-__.t_..;../(i...>:..:.,f±.....__+-(1""'-"'o,:;_;;~:;..=~~,_
ffi200 Carlsbad Village Drive, Carlsbad, CA 92008 LOCATION:
D Qther: ------------------
DATE POSTED TO CITY W EBSITE 9 /;)__9/ d-;;).,,
DATE NOTICES MAILED TO PROPERTY OWNERS: ----------
NUMBER_ MAILED:
I declare under penalty of perjury under the laws.of the State of California that I am employed by
the City of Carlsbad and the foregoing is true and correct.
DEPARTMENT: G}c:(TY CLERK'S OFFICE □OTHER ______ _
s j ' 7th '771,.;,,,__
Signature Date
------------------------------------------------------------------------------
SENT TO FOR PUBLICATION VIA E-MAIL TO: □ Union Tribune on ___ _
jZJ Coast New s ~n-_ 9 /z.,r;,,/ :1. 'J.-
PUBLICATION DATE: Union Tribune --------------
Coast News __ 9'--/,___3o__._/~z._2.. ________ _
I declare under penalty of perjury under the laws of the State of California that I am employed by
the City of Carlsbad and the foregoing is true and correct .
. r .
DEPARTMENT: □ CITY CLERK'S OFFICE [K] OTHER {1t)VS.t'v:j "', ~~ ~v ~C.e.~
Signature Dat e
Attachments: 1) Mailing Labels
2) Notice w/ attachments
The Coast News
Decreed A Legal Newspaper by the Superior Court
of San Diego County.
Mail all correspondence regarding public
notice advertising to:
The Coast News
P.O. Box 232550
Encinitas, CA 92023
(760) 436-9737
· Proof of Publication
RECEIVED
OCT 9 6 2022
CITY OF CARLSBAD
CITY CLERK'S OFFICE
Space above for Court Clerk's Filing Stamp
u ~ -. . -·~ ..
"· · NOTICE OF PUBLIC
I • \ ••,• IIE.AlllNG ~•~ • •
N,OTICE .IS -HEREBY GIVEN
reaemption pre.l111UD1 • witl!-
. respect thereto do not constitute·
indebtedness or. iln obligation of
'STATE OF-CALIFORNIA, ss. -
COUNTY OF SAN DIEGO,
. ----,tO~)'Q)J,-because-your-int
may. be,affected,,that ~ City
Couni;i!:of.the.Gify,of:Gai-lsbad
will hold a .pu_blic' · hearing
· at , .the· ..... Co~ ;·,,eiuunber,
1,200 · . Carlsbad . Village_, Drive,
the City, the Authority, the S~t~: .. __ _
!"iirCaliforrua. or l!PY . political
subdivision thereof, :within. the
meaning of ·aIIY constitutional
or·statutory debt limitation, or
a _charge .. a~t. the · general
aedit or ·raxihg •. powers of
. 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 11,1atter.
· I am principal clerk of the printer of The Coast News, a
newspaper printed and published weekly _and w_hich newspa~r has
been adjudged a newspaper of general c1rculat10n for the c1t1es of
Carmel Valley, Del Mar, Solana Beach, Encinitas/Cardiff,
Carlsbad, Oceanside, Rancho Santa Fe. Vista. San Marcos,
Escondido, San. Diego, the County of San Diego and the ~ou~ty
Judicial District by the Superior Court of the State of Cahfom1a,
County of San Diego (8/4/94, #677114, B2393, P396); and th~t the
notice of which the annexed is a printed copy. has been published
in, ea~h regular and entire issue of said newsp~per and not in any
supplement thereof on the following dates, to-wit:
September 30, 2022
I certify under penalty of perjury that the
foregoing is true and correct. Executed at
Encinitas, County of San Diego, State of
California on this 30th of September 2022.
. ~J:
Carlsbad, -Calif~ at 5 p:m.
o,; Tuesday, October 11, 2022, as
required by Section 147(0 of the
Internal-Revenue &de of 1986
ilnd'will .be held with respect to
tl\e i'r'!>~ ~ by the
California· Municipal, Finance
'Authority' ·,(the . -~Authority,")
I of ·its revehue~bonds in one·,or·
I m~re seri~ in-an·amo,,int,not
I 10,,-~d · ·$15;000,000 ·(the
"Bonds,), 'including, '.bui• not
· limited to m-en"ue bonds issued
· as part' of a plan to:'(1) finance
and·:refinance :the· acquisition,
· chnstructiori;, , : · improvement
and·. equippµig. of . a ; ,47-unit
affoffl!lble rental. chousi!)g ·
facility:for low•,•ve,y.•low-and I
extreme)y.low•inco~ seniors.to
. lie.'Ioi:ated·on a.parcei situat~
90Utb of,~£1. ·Cainino· .. Real,
east ·of;:Kelly -Drive ·and'-nortii:
:-north~ of Parlc,Dtjve in. the
~ty -of. Carlsbad (the, "Ci_ty"~; 1
• and".(l)-.m ~-~ .... : incurred iii connection with·
the-:issuance o(.,$~.~ds. The
facilities.are. to·be owped:and.
operated by Carlsbad 685; LP., a
· ealifomia: limited, partnership;
or:another entity.to be created
liy. USA,Properties·F'!"d,,lnc.,
j)r Lan :affiliate; thereof •.(the
~--1:). ~ .·.; ,,. . . . ,
' The Bonds alid the obligation
'<? -~• _principal,.thef!"'f, a:nd
iet~, ,,.th~a .. ,an~:. nnr_
·any of them The Bo,:ids shall
· 'be a . Jimited Qbligation • of
the Authority, · payable ,solely
fro~-•certain revenues duly
pledg~ ,therefo~ and generally
representing amounts paid by
the·Borrower.' ·. ,, ., ,:
Copies ~f the staff report will.be
available by -Friday, -October. 7,
20~2:If you ·have any questions,
: please contact the Housing &
l!omeless Service,s' Department ·
• at-(442) 33~2811,sor ~
; carlsbadcu1ov, ··The· hearing
. will commence at. 5 p.m. · or as
soon thereafter:as the matter
can be-heard and, wilJ ·be, held
· at ,City, Hall, 1200 .C;irlsbad
Village:. .Drive;-· 'Garlsbad,
Galifomia Interested. -persons
·wishing .tQ _express.their .views
on• the -issuance ,of. the. -Bonds
or. on:the na~ and·location
of. the facilities proposed tci be · · · ~drefiiianc may
attend··thc-.'public hearing-or,
prior to the time of the hearing,
submit writteo comments to the
City Clerk Seroces Manager,
UOO Carlsbad Yillage Drive,
· .Carlsbad, California· 92008. ..
• Dated . and . published:
September 30,2022 .-, .
City of.Carlsbad .
City Gouncil .
9/30fl2 CNS-3626511#. ·
1 €Ni6969 .
I • , ·.:
.. ------
I IN~ 111 llj 11 II IW IM Ii ~111111111 I 1111/ Ii ill * A D D D D D 6 1 3 4 6 7 S *
NOTICE OF PUBLIC HEARING
NOTICE IS HEREBY GIVEN to you, because your interest may be affected, that the City
Council of the City of Carlsbad will hold a public hearing at the Council Chamber, 1200 Carlsbad
Village Drive, Carlsbad, California, at 5 p.m. on Tuesday, October 11, 2022, as required by Section
147(f) of the Internal Revenue Code of 1986 and will be held with respect to the proposed
issuance by the California Municipal Finance Authority (the "Authority") of its revenue bonds in
one or more series in an amount not to exceed $15,000,000 (the "Bonds"), including but not
limited to revenue bonds issued as part of a plan to: (1) finance and refinance the acquisition,
construction, improvement and equipping of a 47-unit affordable rental housing facility for low-
, very low-and extremely low-income seniors to be located at 4901 El Camino Real, on a parcel
situated south of El Camino Real, east of Kelly Drive and north-northwest of Park Drive, in the
City of Carlsbad (the "City"); and (2) pay certain expenses incurred in connection with the
issuance of the Bonds. The facilities are to be owned and operated by Carlsbad 685, L.P., a
California limited partnership, or another entity to be created by USA Properties Fund, Inc., or an
affiliate thereof (the "Borrower").
The Bonds and the obligation to pay principal thereof and interest thereon and any
redemption premium with respect thereto do not constitute indebtedness or an obligation of the
City, the Authority, the State of California or any political subdivision thereof, within the meaning of
any constitutional or statutory debt limitation, or a charge against the general credit or taxing
powers of any of them. The Bonds shall be a limited obligation of the Authority, payable solely from
certain revenues duly pledged therefor and generally representing amounts paid by the Borrower.
Copies of the staff report will be available by Friday, October 7, 2022. If you have any
questions, please contact the Housing & Homeless Services Department at (442) 339-2811 or
housing@carlsbadca.gov. The hearing will commence at 5 p.m. or as soon thereafter as the matter
can be heard and will be held at City Hall, 1200 Carlsbad Village Drive, Carlsbad, California.
Interested persons wishing to express their views on the issuance of the Bonds or on the nature and
location of the facilities proposed to be financed and refinanced may attend the public hearing or,
prior to the time of the hearing, submit written comments to the City Clerk Services Manager, 1200
Carlsbad Village Drive, Carlsbad, California 92008.
Dated and published: Sept. 30, 2022
City of Carlsbad
City Council
Marja Acres TEFRA Hearing &
Additional Request from
Housing Trust Fund
Mandy Mills,
Housing & Homeless Services Director
Oct. 11, 2022
•• II
{city of
Carlsbad
TODAY’S PRESENTATION
•Public hearing on the use of tax exempt
bond financing
•Request for additional Housing Trust Fund
support of the project
Marja Acres
{city of
Carlsbad
SITE
CHARACTERISTICS
248 market rate townhomes
Designated for high density
residential & commerical
Marja Acres
+20.5 acres
Mixed-use
{city of
Carlsbad
AFFORDABLE SITE
CHARACTERISTICS
46 units
Onsite community space
& services
3 stories
Affordability mix for seniors
Marja Acres
{city of
Carlsbad
Table 1 –Rent Ranges
Income
group
Extremely
Low
(30% AMI)
Very Low
(50%
AMI)
Low
(60%
AMI)
Market
rate
Required 0 units 37 units 9 units
Proposed 5 units 36 units 5 units
Rents -1 Br $607 $1,040 $1,257 $1,900-
$2,300
Marja Acres
{city of
Carlsbad
Bond Financing
MARJA ACRES
•Marja Acres project received authority to issue up to $15 million
of tax-exempt revenue bonds to finance the project.
•Project Developer, USA Properties Fund, is working with the
California Municipal Finance Authority to issue the bonds.
•Federal Tax and Equity Fiscal Responsibility Act requires a public
hearing on the use of tax-exempt bonds for the project.
•Adopt a resolution approving the issuance of multifamily housing
revenue bonds not to exceed $15,000,000 for the construction of
the Maraj Acres affordable housing project
{city of
Carlsbad
BOND FISCAL ANALYSIS
•Not debt of the City of Carlsbad
•No obligation of the City of Carlsbad to repay the debt
•All monitoring and administrative actions are the
responsibility of the California Municipal Finance
Authority.
•Will not impact the city's appropriation limits and will
not constitute any type of indebtedness by the city.
MARJA ACRES
{city of
Carlsbad
Marja Acres
•Increase in Construction Costs
•Rising Interest Rates
•Financing Gap
PROJECT FISCAL ANALYSIS
{city of
Carlsbad
SUBSIDY ANALYSIS
City Council Policy 90
Public benefit
Housing Element
Risk
Marja Acres
NEXT STEPS
LOAN & BOND
DOCUMENTS
CONSTRUCTIONCITY COUNCIL
CONSIDERS
FUNDING
REQUEST
Marja Acres
STAFF RECOMMENDATION
•Conduct Public Hearing and approve
issuance of tax exempt bonds for the
project
•Recommend City Council approve an
addition of $65,000 loan to USA
Properties for the development of
Marja Acres Apts.
Marja Acres
{city of
Carlsbad