Title
It is requested that the Board of Supervisors:
a. Conduct a public hearing under the requirements of Tax Equity and Financial Responsibility Act (TEFRA) and the Internal Revenue Code of 1986, as amended; and,
b. Adopt a resolution approving the issuance of up to $11,000,000 in tax-exempt bonds by the California Municipal Finance Authority (CMFA) for Camphora Associates, L.P., or another limited partnership, or a limited liability company, to be established by Eden Housing, Inc., or an affiliate thereof, or South County Housing Corporation or an affiliate thereof, with respect to a multifamily rental project.
Report
RECOMMENDATION:
It is requested that the Board of Supervisors:
a. Conduct a public hearing under the requirements of Tax Equity and Financial Responsibility Act (TEFRA) and the Internal Revenue Code of 1986, as amended; and,
b. Adopt a resolution approving the issuance of up to $11,000,000 in tax-exempt bonds by the California Municipal Finance Authority (CMFA) for Camphora Associates, L.P., or another limited partnership, or a limited liability company, to be established by Eden Housing, Inc., or an affiliate thereof, or South County Housing Corporation or an affiliate thereof, with respect to a multifamily rental project.
SUMMARY:
Eden Housing, Inc. ("EHI") will be taking over from South County Housing Corporation ("South County") as the sponsor of the Project and an affiliate of EHI will be the general partner of the limited partnership acquiring and constructing the Project. Alternatively, should the issuance occur before EHI takes over, the issuer will be South County Housing Corporation, or an affiliate thereof. Accordingly, the information contained in the TEFRA Notice and the TEFRA Resolution adopted by this Board on January 14, 2014 is no longer correct, and a new TEFRA Hearing will need to be held and a new TEFRA Resolution will need to be adopted prior to the issuance of the Bonds, which is scheduled to occur in mid-to-late September, 2014.
EHI and South County are working with the California Municipal Finance Authority ("CMFA") to issue up to $11,000,000 (Eleven Million Dollars) in tax-exempt bonds to help finance the acquisition and construction of 44-affordable apartments. California Debt Limit Allocation Committee (CDLAC) has awarded an allocation of $11,000,000 to CMFA for the financing. However, due to the change in ownership, the recommended actions are required before the CMFA can proceed.
DISCUSSION:
EHI intends to acquire and construct a multifamily rental housing development totaling 44 units located at 32101 McCoy Road (Assessor's Parcel Number 031-005-000) in the County of Monterey, California 93960 (the "Project"). The owner of the Project is expected to be a limited partnership or a limited liability company established by EHI, or an affiliate thereof.
In order for the CMFA to request an allocation of tax-exempt bonds from CDLAC and for the bonds to ultimately qualify for tax-exempt status under the Internal Revenue Code, the local government agency having jurisdiction over the area in which the project is located must hold a properly noticed public hearing pursuant to TEFRA (26 U.S.C 147 (f)) and adopt a resolution approving sale of the private activity bonds. The County held such a hearing on January 14 and adopted the necessary resolution. Based on these actions, CMFA applied to CDLAC and received an allocation of $11,000,000 on July 16, 2014. However, due to the change in ownership of the Project, which just recently was proposed, a new TEFRA hearing needs to be held, and a new TEFRA Resolution adopted, prior to the issuance of the Bonds.
The County of Monterey is a member of the CMFA. The Joint Exercise of Powers Agreement provides that the CMFA is a public entity, separate and apart from each member executing such agreement. The debts, liabilities and obligations of the CMFA do not constitute debts, liabilities or obligations of the members executing such agreement.
The Bonds to be issued by the CMFA for the Project will be the sole responsibility of the Borrower, and the County 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. All financing documents with respect to the issuance of the Bonds will contain clear disclaimers that the Bonds are not obligations of the County or the State of California but are to be paid for solely from funds provided by the Borrower.
OTHER AGENCY INVOLVEMENT:
RMA - Housing and Redevelopment Office, County Counsel, and the County Administrative Office have reviewed this request and concur with the recommendations.
FINANCING:
The staff cost of processing this request has been financed by Fund 001, Budget Unit 1110 (Auditor-Controller). If the bonds are issued, a portion of the issuance fees estimated to total $6,250 will be deposited in Fund 001.
Prepared by: Ron Holly, Chief Deputy Auditor Controller, x5493
Approved by: Michael J. Miller, CPA, CISA, Monterey County Auditor-Controller, x5084
Attachments:
Resolution