HomeMy WebLinkAbout2024-03-26; City Council; ; Public Hearing for the Issuance of Tax-Exempt Bonds by the California Municipal Finance Authority for the benefit of Metropolitan Area Advisory Committee for the Laurel TCA Review _ AF _
Meeting Date: March 26, 2024
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: Public Hearing for the Issuance of Tax-Exempt Bonds by the California
Municipal Finance Authority for the benefit of Metropolitan Area
Advisory Committee for the Laurel Tree Apartments
District: 2
Recommended Action
Hold a public hearing, under the requirements of the Tax and Equity Fiscal Responsibility Act
and the Internal Revenue Code of 1986 and adopt a resolution approving the issuance of the
California Municipal Finance Authority Multifamily Housing Revenue Bonds for the benefit of
Metropolitan Area Advisory Committee on Anti-Poverty of San Diego County, Inc., or a
subsidiary or affiliate thereof, in an aggregate principal amount not to exceed $45 million for
the purpose of financing or refinancing the acquisition, rehabilitation, improvement and
equipping of Laurel Tree Apartments, a multifamily rental housing project located in Carlsbad,
California.
Executive Summary
The Metropolitan Area Advisory Committee is the owner and operator of Laurel Tree
Apartments, a 138-unit affordable apartment community at 1307 Laurel Tree Lane. The project
was granted authority from the state of California to issue tax-exempt revenue bonds to
refinance the project, and Metropolitan Area Advisory Committee is working with the California
Municipal Finance Authority to issue the bonds.
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 a
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.
March 26, 2024 Item #11 Page 1 of 7
Explanation & Analysis
Project background
In 1994 and 1996 the City Council approved loans totaling $700,000 from the Redevelopment
Low and Moderate Income Housing Fund and the city’s Housing Trust Fund to assist the
Metropolitan Area Advisory Committee with the construction of 138 affordable housing units.
The project, the Laurel Tree Apartments,
located at 1307 Laurel Tree Lane, is south
of Palomar Airport Road and east of
Aviara Parkway. The project, developed
by Metropolitan, satisfied the affordable
housing requirement for other housing
developments. The City of Carlsbad loan
was paid off in 2014. The project is now
eligible for refinancing, which can provide
financing for renovations throughout the
project.
The refinancing would cover acquisition and rehabilitation of the 24-year-old affordable
housing development. All units will remain at affordable rents for lower income households.
The project includes 138 units for very low-income households earning between 40%-50% of
the area median income. The development consists of two-, three- and four-bedroom units.
One unit is reserved for the onsite manager. Project amenities include leasing and management
offices, a business center, community room with kitchen, exercise room, centrally located
laundry facilities, outdoor courtyard and picnic area and vegetable garden. The residents
benefit from onsite supportive services.
The renovations will include replacing flooring, drywall repairs, painting, ceiling repairs,
remodeling kitchens, bathroom repairs and adding dishwashers. Exterior renovations will
include replacing roofs, exterior stucco, exterior paint, deck repairs and waterproofing, and
making 10% of the units accessible to the disabled, asphalt repairs and accessibility repairs to
parking and paths of travel.
Project bond financing
The developer has secured financing for the project and is ready to proceed with the acquisition
and rehabilitation of the affordable housing project. A large portion of the project financing
incudes $37,530,050 million in tax-exempt bond financing. Although the project can only issue
and use the bond amount that has been allocated by the state, this TEFRA action will approve a
bond amount not to exceed $45 million. 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.
The borrower has asked the California Municipal Finance Authority to issue tax-exempt facility
bonds for its qualified residential rental project in accordance with Section 142(a)(7) of the
Internal Revenue Code. (The California Municipal Finance Authority was formed as a joint
powers authority to help local governments, non-profit organizations and businesses through
March 26, 2024 Item #11 Page 2 of 7
the issuance of taxable and tax-exempt bonds aimed at improving the standard of living in
California. The City of Carlsbad is a member of the authority, whose representatives and board
of directors have considerable experience in bond financing.)
Public hearing and resolution
Although the finance authority will issue the bonds, the Internal Revenue Code requires an
“applicable elected representative” of the governmental unit hosting the project to approve the
issuance of the bonds.
Once the City Council holds the required TEFRA hearing and adopts the required resolution, no
other participation of the City of Carlsbad in the bond financing will be required.
All parties should clearly understand:
•The debt issued that is financed by the bonds is not debt of the City of Carlsbad in any
way. All repayment of debt is the strict obligation of the borrower.
•All monitoring and administrative actions related to this issuance are the responsibility
of the California Municipal Finance Authority.
•The City of Carlsbad’s participation in the issuance of these state bonds will not impact
the city's appropriation limits and will not constitute any type of indebtedness by the
city.
Public notification
The required seven-day notice for the Tax and Equity Fiscal Responsibility Act public hearing
was posted in a newspaper of general circulation on March 15, 2024, and on the city website.
Copies of the notice are available in the Office of the City Clerk.
Options
Staff recommend the City Council conduct the required Tax and Equity Fiscal Responsibility Act
hearing and adopt the attached City Council resolution (Exhibit 1) 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.
Fiscal Analysis
As noted above, the City of Carlsbad will have no financial, legal, moral obligation, liability or
responsibility for the project or the repayment of the bonds for the financing of the project.
There is no fiscal impact to the City of Carlsbad for the California Municipal Finance Authority to
issue the bonds for this development.
The Municipal Finance Authority shares a portion of the issuance fees it receives with its
member communities when it issues bonds. The city’s minor administrative and staff costs to
prepare the reports and related documents required by the borrower and the finance authority
will be reimbursed to the City of Carlsbad through a small portion of the bond issuance fee and
be deposited into the Housing Trust Fund.
March 26, 2024 Item #11 Page 3 of 7
Next Steps
City staff will forward the approved resolution to the California Municipal Finance Authority so
its staff and the borrower can proceed with getting the bonds issued.
Environmental Evaluation
This action does not constitute a project as defined under the California Environmental Quality
Act in accordance with Public Resources Code Section 21065, in that these actions may not
cause a direct physical change in the environment or a reasonably foreseeable indirect physical
change in the environment.
Exhibits
1.City Council resolution
March 26, 2024 Item #11 Page 4 of 7
RESOLUTION NO. 2024-065
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 METROPOLITAN AREA ADVISORY COMMITTEE ON ANTI
POVERTY OF SAN DIEGO COUNTY, INC., OR A SUBSIDIARY OR AFFILIATE
THEREOF, IN AN AGGREGATE PRINCIPAL AMOUNT NOT TO EXCEED
$45,000,000 FOR THE PURPOSE OF FINANCING OR REFINANCING THE
ACQUISITION, REHABILITATION, IMPROVEMENT AND EQUIPPING OF
LAUREL TREE APARTMENTS, A MULTIFAMILY RENTAL HOUSING PROJECT
LOCATED IN CARLSBAD, CALIFORNIA
WHEREAS, Metropolitan Area Advisory Committee on Anti-Poverty of San Diego County, Inc.,
a California nonprofit public benefit corporation (the "Sponsor"), on behalf of a limited partnership or
other ownership entity to be created by an 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")
undertake a plan of finance, including the issuance from time to time of one or more series of
revenue bonds in an aggregate principal amount not to exceed $45,000,000 (the "Bonds"), to finance
and refinance the acquisition, construction, improvement and equipping of a 138-unit qualified
residential rental project (the "Project") to be owned and operated by the Borrower and located at
1307 Laurel Tree Lane in the City of Carlsbad, California (the "City"); and
WHEREAS, pursuant to Section 147(f) of the Internal Revenue Code (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 of Carlsbad; 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
March 26, 2024 Item #11 Page 5 of 7
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 desi res 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.
2.
That the above recitations are true and correct.
The City Council hereby approves the plan of finance for the Project, including the
issuance of the Bonds by the Authority. It is the purpose and intent of the City Council
that this resolution constitutes 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.
March 26, 2024 Item #11 Page 6 of 7
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, March 26, 2024, as required by Section
147(f) of the Internal Revenue Code of 1986, and will be held with respect to a plan of finance
that includes 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 $45,000,000
(together with a like amount of refunding bonds) (the "Bonds"), including but not limited to
revenue bonds issued to finance or refinance the acquisition, construction, improvement and
equipping of a 138-unit qualified residential rental project to be located at 1307 Laurel Tree Lane
in the City of Carlsbad, California (the "City"). The facilities are to be owned and operated by a
limited partnership or other ownership entity to be created by an affiliate of Metropolitan Area
Advisory Committee on Anti-Poverty of San Diego County, Inc., a California nonprofit public
benefit corporation (such limited partnership or other ownership entity being referred to herein
as 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, March 22, 2024. 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 S 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, or via email to clerk@carlsbadca.gov.
Dated and published: March 15, 2024
City of Carlsbad
City Council
(i CITI'OFCARl.SRAD
NOTICEOFPUBLlCMEETING
NOTICE IS IIEREBY GIVEN to you, because your interest may be afl'ec-t,,d, that the
City Council of the City of Cut.bad will hold a public hearing at the Council Chamber,
1200 Carlsbad Villag,, Prive, Carlsbad, California, at 5 p.m. on Tuesday, Man,h 26, 2024,
a.s required by Section 147(0 of the Internal Revenue Code of 1986, and will be held with
re.sped to a plan of finance that includes the proposed issuance by the California Municipal
Finance Authority (the "Authority") of its rev,:nue bond, in one or mo<e series in a.n a.mount
not to exceed $45,000,000 (together with a like amount of refunding bonds) (the "Bonds"),
including but not limited to revenue bonds issued to finance or refinance the acquisition,
construction, improvement and equipping ofa 138-unitgualified residential rent.al project
to be located al 1307 Laurel Tree Lane in the City of Carlsbad, California (the "City"). The
facilities are to be ownied &nd operated by a limited partnership or other ownership entity lo
be created by an affiliate of Metropolitan Area Advisory Committre on Anti-Poverty ofSan
Diego County, Inc., a California nonprofit public bendit OOIJ)Ora.tion (such limited partner-
ship or other awnershlp entity being referred ta herein .., the "Borrower").
The Bonds and the obligation ta pay principal thereof and intere,t the""-'n and any
redemption premium with respect thereto do not oonstitute indebtedness or an obligfttion
of the City, the Authority, the State of California or any political subdi\ision thereof, within
the meaning of any cons"titutiouaJ or statutory debt limita.lion, or a charg,, against the g,,n-
eral 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 r,,pre-
senting &mounts paid by the Borrower.
Copies of the s!Affreport will be available by l'riday, Marci> 22, 2024. If you have any
questions, please contact the Housing 8r Homeless Services Department at (442) 339-2811
or bousing@carlsbadc.a.gov. The hearing wiU commence at 5 p.m. or.., soon thereafter as
the matter can be helU"d and will be held at City Hall, 1200 Carlsbad Villag,, Drive, Carlsbad,
California. Interested persons wishing to express their ,iews on the issuance of the Bonds
or on the nature and location of the.facilities proposed ta be financed and refinanced may
attend the public bearing or, prior to the time of the hearing, submit written comments to
the.City Clerk S1m1ces Manager, 1200 Carlsbad Village Drive, Carlsbad, California 92008,
o, via email to clerk@carlsbadca.gov.
Dated and published: Man:h 15, 2024
City of Carlsbad
City Council
03/15/2024 CN 28669
3 col X 5,5"
16.5Hx $15
$247.50
LAUREL TREE APARTMENTS
AFFORDABLE HOUSING
TEFRA HEARING
Mandy Mills, Director
Housing & Homeless Services
March 26, 2024
1
{city of
Carlsbad
Background
LAUREL TREE APTS TAX EXEMPT BONDS
•138-unit affordable housing development completed in 1999
•Eligible for refinance with new bond issuance
•Improvements to the property and extends the affordability with a
new Regulatory Agreement
•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
2
{city of
Carlsbad
LAUREL TREE APTS TAX EXEMPT BONDS
3
FISCAL ANALYSIS
•Not debt of the City of Carlsbad
•No obligation of the City of Carlsbad to repay the debt
•Will not impact the city's appropriation limits and will
not constitute any type of indebtedness by the city.
LAUREL TREE APTS TAX EXEMPT BONDS
4
{city of
Carlsbad
RECOMMENDATION
•Conduct the public hearing
•Adopt a resolution approving the issuance of
multifamily housing revenue bonds for the Laurel
Tree Apartments affordable rental housing project
LAUREL TREE APTS TAX EXEMPT BONDS
5
{city of
Carlsbad