SR 09-27-2022 12A
City Council
Report
City Council Meeting: September 27, 2022
Agenda Item: 12.A
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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.
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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
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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
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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
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Packet Pg. 1074 Attachment: 2022-9-27 - TEFRA Resolution [Revision 2] (5343 : TEFRA Public Hearing)
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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
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Packet Pg. 1075 Attachment: 2022-9-27 - TEFRA Resolution [Revision 2] (5343 : TEFRA Public Hearing)
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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)
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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
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Packet Pg. 1077 Attachment: Written Comment (5343 : TEFRA Public Hearing)