Previous Council Item

 Next Council Item Corresponding Agenda
List of Council Meetings List of Reports to Council Sunnyvale Home Page

 

RTC#02-460

November 26, 2002

SUBJECT:

Resolution Authorizing the Issuance and Sale of City of Sunnyvale Housing Revenue Bonds, 2002, 501C(3) Bonds, and Approving and Authorizing Related Documents and Actions

REPORT IN BRIEF

City Council is being asked to adopt a resolution which authorizes the issuance of City of Sunnyvale Housing Revenue Bonds, 2002, 501C(3) Bonds (the "501C(3) Bonds") in the an amount not to exceed $3 million. The 501C(3) Bonds to will be exchanged for a note from Emergency Housing Consortium (EHC). EHC will then deliver the 501C(3)Bonds) Bonds to the seller of the property at 183 Acalanes Drive, thereby financing the acquisition of the property.

BACKGROUND

On September 17, 2002 Council approveding a request by Emergency Housing Consortium (EHC), a non-profit agency, for $1,500,000 of CDBG, HOME and Sunnyvale Housing Funds to finance the purchase of 183 Acalanes Drive, Sunnyvale, a 24-unit rental housing complex. The project will provide permanent affordable rental housing for the next forty years. The apartments will be affordable to very low-income families whose annual gross incomes are at or below 30 percent of median income for Santa Clara County.

EHC requested that the City be the issuer of up to $3,000,000 of a 501C(3) tax-exempt bond to finance the balance of the purchase. The City held a Tax Equity And Financial Responsibility Act (TEFRA) hearing for this development and passed a resolution approving in concept the issuance of bondthe financing indicating the City of Sunnyvale’s willingness to issue bondsby the City for the for the purchase of 183 Acalanes Drive. The City will have no financial liability for the issuance of the bonds. Neither the General Fund nor the full faith and credit of the City is pledged for the payments of the interest on, or principal of, the bond. The bond does not constitute an indebtedness of the City within the meaning of any constitutional or statutory debt limitation or restriction.

The proposed financing of the acquisition of the property includes the issuance of 501C(3) Bonds by the City to lend money for the purchase of 183 Acalanes Drive. The 501C(3) Bonds will be exchanged for a note from EHC. EHC will then deliver the 501C(3) Bonds to the existing owner seller of the property. The purpose of the 501C(3) Bonds is to create tax-exempt financing on the seller’s purchase money (carryback) loan. The total bond amount will not exceed $3,000,000.

EXISTING POLICY

The Consolidated Plan places a priority on maintaining and increasing the stock inventory of affordable rental housing for families. The City’s Housing and Community Revitalization Sub-Element contains a number of goals and policies related to affordable housing in the community.

Goal E: Maintain and increase housing units affordable to households of all income levels and ages.

E.2.d Participate with the County to encourage the use of Mortgage Revenue Bonds to develop new low-income rental units and to preserve low-income units through refinancing.

E.2.g Acquire land and assist in development/redevelopment of housing through partnerships with regional agencies, nonprofit housing developers and private sector developers.

Goal F: Improve Housing conditions for people with special needs.

F.1.c Assist the development of new housing for families graduating from transitional housing programs.The Consolidated Plan places a priority on maintaining and increasing the stock of affordable rental housing for families. The City’s Housing and Community Revitalization Sub-Element contains a number of goals and policies related to affordable housing in the community (that was already stated in the first paragraph.)

DISCUSSION

Legal Structure of the 2002 Housing Revenue Bonds, 501C(3) Bonds

The 2002 Housing Revenue Bonds, 501C(3) Bonds, will be issued by the CityCity will issue the City of Sunnyvale, Housing Revenue Bonds, 2002, 501C(3) Bonds.. This approach will simplify the bond structure and the documentation. The City will act as the administrator of the regulatory agreement and will issue annual certifications of compliance concerning the incomes of the residents and the rents charged to residentsce. For these services the City will be compensated with an administration fee paid by the bond holderbondholder.

Bond Counsel

The City’s bond counsel, the law firm of Jones Hall and the City’s Investment Banker, E.J. De La Rosa & Company have reviewed the bond documents and have reported to the Director of Finance that the City has no financial liability for the payment of debt service on the bonds, and that the City’s only responsibility is to administer and oversee the bonds while they are outstanding. Administrative efforts to be undertaken by the City have been kept to a minimum.

FISCAL IMPACT

There are no financial impacts on the City’s General Fund. The City will have no financial liability for the bond. All costs incurred by the City associated with the issuance of the bond will be reimbursed to the City by the seller of the property. The seller of the property will reimburse all costs incurred by the City associated with the issuance of the bond to the City. The City’s financial involvement will be through the direct CDBG, HOME, and City Housing Fund loans for the purchase of the property.

PUBLIC CONTACT

The application and proposal requesting funds to finance the purchase was reviewed and approved by the Housing and Human Services Commission at its meeting on June 26, 2002.

The required public notice was published in the Sunnyvale Sun on August 28, 2002.

Public contact was made through posting of the Council agenda on the City’s official notice bulletin board, posting of the agenda and report on the City’s web page, and the availability of the report in the Library and the City Clerk’s Office.

ALTERNATIVES

  1. Authorize Approve a Resolution Authorizing the Issuance and Sale of City of Sunnyvale Housing Revenue Bonds, 2002, 501C(3) Bonds, and Approving and Authorizing Related Documents and Actions.
  2. Do not authorize the Issuance and Sale of City of Sunnyvale Housing Revenue Bonds, 2002, 501C(3) Bonds, and do not Approve and Authorize Related Documents and Actions.

RECOMMENDATION

Staff recommends that the City CouncilAlternative #1, to adopt the resolution set forth in Attachment A:

A. A Resolution Authorizing the Issuance and Sale of City of Sunnyvale Housing Revenue Bonds, 2002, 501C(3) Bonds, and Approving and Authorizing Related Documents and Actions. (See Attachment A).

Prepared by:
Annabel Yurutucu
Housing Officer

Reviewed by:
Robert Paternoster
Director, Community Development

Mary J. Bradley
Director of Finance

Approved by:
Robert S. LaSala
City Manager

Attachments

  1. A Resolution Authorizing the Issuance and Sale of City of Sunnyvale Housing Revenue Bonds, 2002, 501C(3) Bonds, and Approving and Authorizing Related Documents and Actions.
  2. Regulatory Agreement between the Emergency Housing Consortium, a California nonprofit public benefit corporation and the City of Sunnyvale
  3. Administrative Agreement between Emergency Housing Consortium, a California nonprofit public benefit corporation, the City of Sunnyvale and the Bondholder.

Previous Council Item

 Next Council Item Corresponding Agenda
List of Council Meetings List of Reports to Council Sunnyvale Home Page