The Borrower has requested GSFA serve as the municipal issuer to adopt a plan of financing providing for the issuance of one or more series of revenue bonds issued in an aggregate principal amount not to exceed $12,000,000 (“Bonds”) for the acquisition, rehabilitation, and equipping of a senior affordable housing project of 82 apartment units located at 12811 Garden Grove Boulevard, Garden Grove, California, generally known as Sungrove Senior Apartments (“Project”) and operated by Western National Property Management.

In order for all or a portion of the Bonds to qualify as tax-exempt bonds, the City of Garden Grove (“City”) must conduct a public hearing (“TEFRA Hearing”) providing for the members of the community an opportunity to speak in favor of, against, or neutral to the use of tax-exempt bonds for the financing of the Project.  Prior to such TEFRA Hearing, reasonable public 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.

The Project as proposed to be financed with the Bonds, and to be undertaken and operated by Sungrove Garden Grove AR, L.P., will be a senior affordable housing community and will provide 82 apartments for extremely low, very low and low income senior households. GSFA is authorized, pursuant to the provisions of California Government Code Section 6500, et seq. and the terms of the Amended and Restated Joint Exercise of Powers Agreement, originally dated as of July 1, 1993, and as thereafter from time to time amended and restated, among certain local agencies throughout the State of California (“Agreement”), including the City, to issue its revenue bonds in accordance with Chapter 7 of Part 5 of Division 31 of California Health and Safety Code for the purpose of providing financing for the acquisition, rehabilitation and equipping of multifamily rental housing for persons and families, including seniors, of low or moderate income.

The Bonds to be issued by the GSFA for the Project will be the sole responsibility of the Borrower, and the City 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 City or the State of California, but are to be paid for solely from funds provided by the Borrower. The Bonds to be issued by the GSFA for the Project will be the sole responsibility the Borrower/Developer, and the City 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 and shall never become obligations of the City or the Housing Authority or the State of California, but are to be paid for solely from funds provided by Developer as the Borrower.

The City’s membership in GSFA bears with it no cost or other financing obligation, but serves as a public acknowledgement by the host jurisdiction of the project financing.

From time to time, GSFA, as issuer of bonds, donates a portion of their proceeds to the jurisdiction (Garden Grove) conducting the public hearing. These funds are unexpected and, as such, need to be appropriated to the Fiscal Year 2019-20 Budget to be expended on delivery costs related to the Project.

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 Bonds, is not obligated to repay the 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 Bonds are payable solely from revenue received pursuant to the terms and provisions of certain financing agreements to be executed by the Developer as the Borrower.  As a part of such financing documents, Developer, as the Borrower, will agree to provide comprehensive indemnification of the GSFA and its members, including the City.

It is recommended 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 bonds by GSFA;

• Adopt the attached Resolution in favor of the issuance of the Bonds by the GSFA; and

• Authorize to appropriate donated funds, if any, into the Fiscal Year 2019-20 Budget.