For City Council Meeting March 12, 2024
TO: Honorable Mayor and City Council
FROM: David N. Carmany, City Manager
AUTHOR: Colby Cataldi, Director of Community Development
Title
Public Hearing regarding issuance of Tax-Exempt bonds for Citrus Grove Apartments and consideration of Resolution No. 8191 approving the issuance of bonds.
RECOMMENDATION:
Staff requests that City Council:
1. Conduct a Tax Equity and Fiscal Responsibility Act Hearing in consideration of the issuance of tax-exempt bond financing by the California Statewide Communities Development Authority for the benefit of National Community Renaissance of California (or an affiliate thereof), to provide financing for the acquisition, rehabilitation, improvement, and equipping of a 152-unit multi-family rental housing project generally known as Citrus Grove Apartments; and
2. Adopt a resolution approving the issuance of Bonds by the California Statewide Communities Development Authority not to exceed $70,000,000, for the benefit of National Community Renaissance of California (or an affiliate thereof), to provide financing for the acquisition, rehabilitation, improvement, and equipping of a 152-unit multi-family rental housing project generally known as Citrus Grove Apartments.
(ACTION)
Body
BACKGROUND
National Community Renaissance of California (or an affiliate thereof) (the “Borrower”) has requested that the California Statewide Communities Development Authority (“CSCDA”) serve as the municipal issuer of tax-exempt multi-family housing revenue bonds in an aggregate principal amount not to exceed $70,000,000 (the “Bonds”). The proceeds of the Bonds will be used for the purpose of making a loan to the Borrower, to enable the Borrower to finance the acquisition, rehabilitation, improvement and equipping of a 152-unit affordable multifamily housing rental project located at 1432 North Willow Avenue, Rialto, California (the “Project”), which will be owned and operated by the Borrower.
ANALYSIS/DISCUSSION
On December 6, 2023, the project received an award of private activity bond allocation from the California Debt Limit Allocation Committee. In order for all or a portion of the Bonds to qualify as tax-exempt bonds, the City of Rialto (“City”) must conduct a public hearing (the “TEFRA Hearing”) providing the members of the community an opportunity to speak in favor of or against the use of tax-exempt bonds for the financing of the Project. Adoption of the resolution is solely for the purposes of satisfying the requirements of the Tax Equity and Fiscal Responsibility Act (TEFRA), the Internal Revenue Code and the California Government Code Section 6500 (and following). Prior to such TEFRA Hearing, reasonable notice must be provided to the members of the community. Following the close of the TEFRA Hearing, an “applicable elected representative” of the governmental unit hosting the Project must provide its approval of the issuance of the Bonds for the financing of the Project. A public notice was published on February 29, 2024 (Attachment 1). The approval of the Project is for TEFRA purposes only and does not replace normal City approval process for the Project. Additionally, the Borrower has requested the Housing Authority recast its current note relating to the Citrus Grove Apartments as a tax-exempt obligation. Such a request will be before the City at a later time if pursued by the Borrower.
CSCDA is a joint powers authority sponsored by the League of California Cities ("League") and the California State Association of Counties ("CSAC"). CSCDA was created by the League and CSAC in 1988 to enable local government and eligible private entities access to low-cost, tax-exempt financing for projects that provide a tangible public benefit, contribute to social and economic growth and improve the overall quality of life in local communities throughout California. CSCDA is comprised of more than 530 members, including the City of Rialto. CSCDA has issued more than $75 billion through 1,800 plus financings since 1988 and consistently ranks in the top 10 of more than 3,000 nationwide public issuers of tax-exempt debt, as measured by annual issuance amount.
ENVIRONMENTAL IMPACT
The proposed actions do not constitute a “project” as defined by the California Environmental Quality Act (CEQA). Pursuant to Section 15378(b), a project does not include organizational or administrative activities of governments that will not result in direct or indirect physical changes in the environment.
GENERAL PLAN CONSISTENCY:
This action is consistent with Guiding Principle 3A in the General Plan:
Our City government will lead by example, and will operate in an open, transparent, and responsive manner that meets the needs of the citizens and is a good place to do business.
LEGAL REVIEW
The City Attorney's Office has reviewed the resolution and approved it as to form.
FINANCIAL IMPACT
There is no fiscal impact to the City. The Bonds will be issued as limited obligations of CSCDA, payable solely from revenues and receipts derived from a loan to be made by CSCDA to the Borrower with the Bond proceeds. The City bears no liability with respect to the issuance of the Bonds. Further, the City is not named in any of the disclosure documents describing the Bonds or the proposed financing.