Title
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 four series of tax-exempt bonds, in a cumulative amount not to exceed $50,369,000.00, by the Housing Authority of the County of Monterey to finance various housing facilities.
Report
RECOMMENDATION:
It is recommended 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 four series of tax-exempt bonds, in a cumulative amount not to exceed $50,369,000.00, by the Housing Authority of the County of Monterey to finance various housing facilities.
SUMMARY:
The Housing Authority of the County of Monterey (the “Authority”) owns various multifamily rental housing facilities located in Gonzales, Greenfield and Salinas. In connection with a Rental Assistance Demonstration program (“RAD”) of the Department of Housing and Urban Development (“HUD”), the Authority, working with the Monterey Housing Development Corporation (the “Corporation”), has established four California limited partnerships, and plans to issue four series of tax-exempt multifamily housing bonds to finance the acquisition from the Authority, and the rehabilitation by the respective partnerships, of the housing facilities. The establishment of the partnerships and the groupings of the housing facilities to be owned and rehabilitated by them were required by HUD policies and procedures and are identified under the attached “Description of Projects”.
In order for the interest on the four series of bonds to be tax-exempt, the Authority has requested that the Board of Supervisors conduct a public hearing regarding the proposed bond issues and, following the public hearing, adopt a resolution approving the issuance of the bonds by the Authority. The County will have no obligation whatsoever with respect to the payment or administration of the bonds, or the operation of the housing facilities.
DISCUSSION:
The Rental Assistance Demonstration program is HUD’s key public housing preservation strategy. The program gives public housing agencies the ability to convert their public housing stock to HUD’s project based Section 8 program through public/private partnerships utilizing low-income housing tax credits, tax-exempt bond proceeds, local agency resources, public housing reserve funds, capital funds, and replacement housing factor funds.
In doing so, the public housing agencies are required to finance and strategically address immediate capital needs of the projects to be financed. The Authority is working with the Corporation to oversee implementation of the RAD conversion of its public housing portfolio. HUD approved the Authority’s RAD application in March, 2015. The Authority is currently planning the implementation of the RAD for all of its 473 units of public housing throughout Monterey County and has determined the level of required modernization on all sites, and the Authority anticipates closing the four bond issues to finance the program in or around December, 2015.
The Corporation has contracted the services of a professional relocation consultant to ensure that eligible individuals and households being temporarily displaced due to the required rehabilitation of the housing units will be adequately informed of the relocation assistance benefits, policies, practices and procedures, including grievance procedures, provided for in the RAD and Uniform Relocation Act relocation guidelines. It is anticipated that affected tenants will only vacate their units for 60 days or less to facilitate the modernization process.
In order for the Authority to request allocations of tax-exempt bond authority from the California Debt Limit Allocation Committee and for the four series of bonds to ultimately qualify for tax-exempt status under the Internal Revenue Code, the local government agency with an elected governing body having jurisdiction over the area in which the projects are located must hold a properly noticed public hearing pursuant to TEFRA (26 U.S.C. 147 (f)) and adopt a resolution approving the issuance of the bonds following the conduct of the public hearing.
These bonds to be issued by the Authority for the housing facilities will be the sole responsibility of the respective project owners, and the County will have no financial, legal, moral obligation, liability or responsibility for the housing facilities or the repayment of the bonds. All relevant financing documents with respect to the issuance of each series 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 solely from funds provided by the respective project owners.
OTHER AGENCY INVOLVEMENT:
County Counsel and the County Administrative Office have reviewed the proposal as to form. RMA - Housing and Redevelopment Office has reviewed the request and concurs with the recommendation.
FINANCING:
Adoption of the resolution will have no fiscal impact to the County’s general or other funds.
Prepared by: Ron Holly, Chief Deputy Auditor-Controller, x5493
Approved by: Michael J. Miller, CPA, CISA, Auditor-controller, x5084
Attachments:
Description of Project
Resolution
Notice of Public Hearing