The Developer has requested that the CalPFA serve as the municipal issuer of certain tax-exempt revenue bonds (“Housing Bonds”) in an aggregate principal amount not to exceed $15,000,000.  The proceeds of the Housing Bonds will be used for the acquisition, substantial rehabilitation and equipping of the Project to be owned and operated by the Developer as the “Borrower”.

In order for all, or a portion of, the Housing Bonds to qualify as tax-exempt bonds, the City must conduct a Public Hearing (TEFRA Hearing) providing members of the community an opportunity to speak in favor of or against the use of tax-exempt bonds for the financing of the proposed Project.  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” (in this case, City Council) of the governmental unit hosting the proposed Project must provide its approval of the issuance of the Housing Bonds for the financing of the proposed Project. A TEFRA Hearing was previously held on May 24, 2016, before the City Council after which hearing the City Council approved Resolution No. 9362-16 approving the issuance of the Housing Bonds by the CalPFA.  The Housing Bonds have not yet been issued and the prior approvals will expire on May 24, 2017; therefore, another TEFRA Hearing is requested to extend the timeline for the issuance of the Housing Bonds for the Project.

The proposed Project will be an affordable housing community and provide 78 apartments for Low and Very Low Income households.  The proposed Project will be acquired, developed and owned by 10632 Bolsa Avenue, LP.

The Housing Bonds to be issued by the CalPFA for the proposed Project will be the sole responsibility of 10632 Bolsa Avenue, LP, and the City will have no financial, legal, moral obligation, liability nor responsibility for the Project or the repayment of the Housing Bonds for the financing of the Project.  All financing documents with respect to the issuance of the Housing Bonds will contain clear disclaimers that the Housing Bonds are not and shall never become obligations of the City nor the Housing Authority nor the State of California, but are to be paid solely from funds provided by 10632 Bolsa Avenue, LP as the Borrower.

There is no financial impact to the City; as noted, the City itself is not a party to the underlying financing, is not issuing the Housing Bonds, is not obligated to repay the Housing Bonds, and is not pledging or otherwise committing any of the City’s (or Housing Authority’s) revenue or other assets to secure repayment of the Housing Bonds.  The Housing Bonds are payable solely from revenue received pursuant to the terms and provisions of certain financing agreements to be executed by 10632 Bolsa Avenue, LP as the Borrower.  As a part of such financing documents, 10632 Bolsa Avenue, LP as the Borrower will agree to provide comprehensive indemnification of the CalPFA and its members, including the City.

Staff recommends that the City Council:

• Conduct a Public Hearing, accept and consider comments and any oral and written testimony, regarding the adoption of the resolution approving the issuance of the Housing Bonds by the CalPFA for the benefit of 10632 Bolsa Avenue, LP to provide for the financing of the proposed Project, a 78-unit affordable housing development located at 10632 Bolsa Avenue, Garden Grove; and

• Adopt the attached City Council Resolution in favor of the issuance of the Housing Bonds by the CalPFA.