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SR 09-27-2022 12A City Council Report City Council Meeting: September 27, 2022 Agenda Item: 12.A 1 of 3 To: Mayor and City Council From: Gigi Decavalles-Hughes, Director, Finance Department, Revenue Subject: Public Hearing and Adoption of Resolution Approving the California Municipal Finance Authority (“CMFA”) to Issue Revenue Bonds for the Benefit of 710 Broadway Affordable, LP Recommended Action Staff recommends that the City Council: 1. Hold a public hearing under the requirements of the Tax and Equity Fiscal Responsibility Act (“TEFRA”) and the Internal Revenue Code of 1986, as amended; and, 2. Adopt a resolution approving the issuance of California Municipal Finance Authority bonds in an amount not-to-exceed $25,000,000 for the benefit of 710 Broadway Affordable LP or a related or successor entity for the purpose of financing or refinancing the acquisition, construction, improvement, and equipping of a multifamily rental housing project located at 710 Broadway, Santa Monica. Executive Summary 710 Broadway Affordable LP (“Borrower”), a developer of affordable housing at 710 Broadway in Santa Monica, has requested the City’s approval for the California Municipal Finance Authority (“CMFA”), a joint powers authority of which the City is a member, to issue revenue obligations (“Bonds”) in an aggregate principal amount not to exceed $25,000,000 to finance the project. To qualify as tax exempt facility bonds for a residential rental project pursuant to Section 147 (f) of the Internal Revenue Code and the Tax and Equity Fiscal Responsibility Act (“TEFRA”), the elected representatives of the City must approve the issuance of the Bonds at a public hearing. A proposed resolution approving the issuance of the Bonds by CMFA is attached as Attachment A. 12.A Packet Pg. 1071 2 of 3 Approval of the Bonds does not obligate the City financially in any way and it is not an approval of the Project for any other purpose. Discussion The CMFA was formed to assist local governments, non-profit organizations, and businesses with the issuance of taxable and tax-exempt bonds aimed at improving the standard of living of California. The CMFA is a public entity, separate and apart from each member, and the debts and obligations of the CMFA do not constitute debts, liabilities, or obligations of the members. The City is a member of the CMFA. However, there are no costs associated with membership in the CMFA and the City will in no way become exposed to any financial liability by reason of its membership in the CMFA. In addition, participation by the City in the CMFA will not impact the City’s appropriations limits and will not constitute any type of indebtedness by the City. Outside of holding the TEFRA hearing and adopting the required resolution no other participation or activity of the City or the City Council with respect to the issuance of the Bonds will be required. The CMFA proposes to issue up to $25 million of tax-exempt revenue bonds for the purposes of making a loan to Borrower, a partnership of which Related California ("Developer") or a related person to the Developer is general partner, for: (1) the acquisition, construction, improvement and equipping of a multifamily rental housing project located at 710 Broadway, Santa Monica, California, and (2) paying certain costs of issuance in connection with such financing or refinancing. The Bonds to be issued by the CMFA on behalf of the Borrower will be the sole responsibility of the Borrower. The City will have no financial, legal, moral obligation, liability, or responsibility for the repayment of the Bonds. 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 Board of Directors of the California Foundation for Stronger Communities, a California non-profit public benefit corporation (the “Foundation”), acts as the Board of 12.A Packet Pg. 1072 3 of 3 Directors for the CMFA. Through its conduit issuance activities, the CMFA shares a portion of the issuance fees it receives with its member communities and donates a portion of these issuance fees to the Foundation for the support of local charities. With respect to the City of Santa Monica, it is expected that that a portion of the issuance fee attributable to the City will be granted by the CMFA to the general fund of the City. Such grant may be used for any lawful purpose of the City. As required by law, a public hearing notice was published in The Santa Monica Daily Press at least 7 days prior to the hearing date. Financial Impacts & Budget Actions The issuance of the Bonds will have no financial impact to the City other than it is expected that CMFA will provide a small portion of the issuance fees to the City. The CMFA will act as issuer and perform all necessary legal and administrative responsibilities associated with the financing. The Bonds are special, limited obligations of CMFA payable solely through the repayment of the loans from the CMFA, which repayment is used to pay the principal of and interest on the Bonds. The Bonds issued by CMFA are not an obligation of the City or any CMFA member. Neither the faith or credit, nor the taxing power of the City, any CMFA member, the State or any other political subdivision is pledged to the repayment of the Bonds. Prepared By: David Carr, Assistant City Treasurer Approved Forwarded to Council Attachments: A. 2022-9-27 - TEFRA Resolution B. Written Comment 12.A Packet Pg. 1073 1 City Council Meeting: September 27, 2022 Santa Monica, California RESOLUTION NUMBER (CCS) (City Council Series) RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SANTA MONICA APPROVING THE ISSUANCE OF REVENUE BONDS BY THE CALIFORNIA MUNICIPAL FINANCE AUTHORITY FOR THE PURPOSE OF FINANCING OR REFINANCING THE ACQUISITION, CONSTRUCTION, IMPROVEMENT, AND EQUIPPING OF A MULTIFAMILY RENTAL HOUSING PROJECT LOCATED AT 710 BROADWAY, SANTA MONICA WHEREAS, 710 Broadway Affordable, LP (the “Borrower”) a partnership of which Related California (the “Developer”) or a related person to the Developer is the general partner, has requested that the California Municipal Finance Authority (the “Authority”) adopt a plan of financing providing for the issuance of exempt facility bonds for a qualified residential rental project pursuant to Section 142(a)(7) of the Internal Revenue Code of 1986 (the “Code”) in one or more series issued from time to time, including bonds issued to refund such exempt facility bonds in one or more series from time to time, and at no time to exceed $25,000,000 in aggregate principal amount (the “Bonds”), to finance or refinance the acquisition, construction, improvement and equipping of a multifamily rental housing project located at 710 Broadway, Santa Monica, California (the “Project”); and WHEREAS, pursuant to Section 147(f) of the Code, the issuance of the Bonds by the Authority must be approved by the City of Santa Monica (the “City”) because the Project is located within the territorial limits of the City; and WHEREAS, the City Council of the City (the “City Council”) is the elected legislative body of the City and is one of the “applicable elected representatives” required to approve the issuance of the Bonds under Section 147(f) of the Code; and WHEREAS, the Authority and the Borrower have requested that the City Council approve the issuance of the Bonds by the Authority to satisfy the public approval requirement of Section 147(f) of the Code and the requirements of Section 4 of the Joint 12.A.a Packet Pg. 1074 Attachment: 2022-9-27 - TEFRA Resolution [Revision 2] (5343 : TEFRA Public Hearing) 2 Exercise of Powers Agreement Relating to the California Municipal Finance Authority, dated as of January 1, 2004 (the “Agreement”), among certain local agencies, including the City; and WHEREAS, it is intended that this Resolution shall comply with the public approval requirements of Section 147(f) of the Code; provided, however, that this Resolution is neither intended to, nor shall it constitute, an approval by the City Council of the Project for any other purpose; and WHEREAS, pursuant to Section 147(f) of the Code, the City Council has, following notice duly given, held a public hearing regarding the issuance of the Bonds, and now desires to approve the issuance of the Bonds by the Authority. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF SANTA MONICA DOES RESOLVE AND PROCLAIM AS FOLLOWS: SECTION 1. The foregoing resolutions are true and correct. SECTION 2. The City Council hereby approves the issuance of the Bonds by the Authority. It is the purpose and intent of the City Council that this resolution constitutes approval of the issuance of the Bonds by the Authority, both for the purposes of Section 147(f) of the Code by the applicable elected representative of the governmental unit having jurisdiction over the area in which the Project is located and as required by Section 4 of the Agreement. This resolution, however, shall not constitute an approval by the City Council of the Project for any other purposes, nor does it constitute an approval of the underlying credit or financial structure of the Bonds. SECTION 3. The issuance of the Bonds shall be subject to the approval of the Authority of all financing documents relating thereto to which the Authority is a party. The City is not a party to any of the financing documents relating to the Bonds and the City shall 12.A.a Packet Pg. 1075 Attachment: 2022-9-27 - TEFRA Resolution [Revision 2] (5343 : TEFRA Public Hearing) 3 have no responsibility or liability whatsoever with respect to the Bonds. SECTION 4. The adoption of this Resolution shall not obligate the City or any department thereof to (i) provide any financing or refinancing to acquire or construct the Project; (ii) approve any application or request for or take any other action in connection with any planning approval, permit or other action necessary for the acquisition, construction, rehabilitation, installation or operation of the Project; (iii) make any contribution or advance any funds whatsoever to the Authority; or (iv) take any further action with respect to the Authority or its membership therein. SECTION 5. The officers, employees, and agents of the City are hereby authorized and directed, jointly and severally, to do any and all things and to execute and deliver any and all documents which they deem necessary or advisable in order to carry out, give effect to and comply with the terms and intent of this resolution and the issuance of the Bonds and otherwise to effectuate the purposes of this Resolution. SECTION 6. The City Clerk shall certify to the adoption of this Resolution, and thenceforth and thereafter the same shall be in full force and effect. APPROVED AS TO FORM: _______________________ Douglas Sloan, City Attorney 12.A.a Packet Pg. 1076 Attachment: 2022-9-27 - TEFRA Resolution [Revision 2] (5343 : TEFRA Public Hearing) 1 Vernice Hankins From:Ellen Hannan <elhasm@gmail.com> Sent:Thursday, September 22, 2022 4:33 PM To:councilmtgitems; David Martin; David White Subject:Item 12 A on September 27, 2022 City Council Agenda EXTERNAL  The issue of bonds to a private developer will cost the city tax.  The issue fee will be paid by the City and the amount is  not quoted here. Since we are in a financial squeeze I suggest you postpone this vote.     There is no guarantee that this building will be 100% affordable.  There will be a large area of commerce space.  I would suggest you postpone this vote and require more concrete information from this large developher.   Ellen Hannan  1218 9th St #6  Santa Monica CA 90401  Speptem 22, 2022  Item 12.A 09/27/22 Item 12.A 09/27/22 12.A.b Packet Pg. 1077 Attachment: Written Comment (5343 : TEFRA Public Hearing)