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HomeMy WebLinkAbout13-Community Development - 4. - Cl"~ OF SAN BERNARDICb - REQUO FOR COUNCIL AC From: KENNETH J. HENDERSON, DIRECTOR RESOLUTION APPROVING DOCUMENTS ND REC'D~JlliJMHfJ""JZING ACTIONS IN CONNECTION WITH AUli"HORIZATION SALE AND ISSUANCE OF 1387 APR -9 PWf1WIID'lATELY $9,350,000 PRINCIPAL AMOUNT OF MULTIFAMILY MORTGAGE REVENUE REFUNDING BONDS (PUMALO PALMS PROJECT) Dept: Community Development Date: Apri 1 8, 1987 Synopsis of Previous Council action: In June, 1985, the Mayor and Common Council issued multifamily mortgage revenue bonds in the amount of $9,350,000 (series 1985) for Federicks Development (Pumalo Palms). On July 21, 1986, the Mayor and Common Council heard the first reading of the amendment to Ordinance No. 3815 and requested an analysis of the advantages and disadvantages of out-of-state trustees for municipal financings. On August 4, 1986, the Mayor and Common Council continued this matter to August 18, 1986. On August 18, 1986, the Mayor and Common Council adopted Ordinance MC-536 amending Ordinance #3815 and directed the preparation of an amendment to the Bond Policy Guidelines to specify the terms under which an out-of-state trustee would be permitted. (Continued to next page) Recommended motion: ADOPT RESOLUTION Contact parlOn: Kenneth J. Henderson Phonal 5065 7th Supporting dati Ittached: YES/STAFF REPORT Ward: FUNDING REQUIREMENTS: Amount: N/A Source: (ACCT. NO.) ALL (ACCT. DESCRIPTION) Finance: Council Not'l': Am~nda ltl!!!m Nn jj. , Q - l - - o o SYNOPSIS OF PREVIOUS COUNCIL ACTION Continued... On September 8, 1986, the Mayor and Common CounciJ and the Community Development Commission adopted resolution #86-351 and resolution #4924, respectively, amending policy guide- lines on bond sale procedures. On October 20, 1986, the Mayor and Common Council adopted resolution #86-419 approving substitution of out-of-state trustee and authorizing certain documents in connection with Pumalo Palms Project, Fannie Mae Program Bond Issue. 4/8/87 0175 o - 'CO OF SAN BERNAR~O - REQUOT FOR COUNCIL A~ON STAFF REPORT In June, 1985, the Mayor and Common Council authorized the issuance of multifamily housing revenue bonds in the amount of $9,350,000 (Series 1985). The bonds were issued to Fredericks Development Corporation for the development of Pumalo Palms project which included the construction of 328 new rental units, three (3) swimming pools and other amenities. The.bonds issued were to be backed by Fannie Mae Securities. The Pumalo Palms project marketed as Shadow Ridge, is located on 15.49 acres generally on the south side of Pumalo Street, west of Arden and bordered by Highway 30 on the south. The project itself is fully complete and is presently experiencing a healthy occupancy level of approximately ninty-three percent (93%). Under Section 4.1 of the existing bond financing agreement, the assignment of the mortgage loan to Fannie Mae must be transferred by the seller, California Federal. Unfortunately, California Federal advises staff that the deadline is April 1, 19B7, by which Fannie Mae Securities pass through certificates were to be issued to the trustee, does not appear to be obtainable due to "administrative problems and a misunderstanding of bond documents". Therefore, Federicks Development Corporation and California Federal are respectfully asking the City of San Bernardino to take whatever steps necessary to reissue the bonds. written correspondence from the trustee, Seafirst, indicates that if the above referenced deadline (April 1, 1987) is not met, they will redeem the 1985 series bond issue on May 1, 1987. In view of the fact that circumstances leading to the above referenced predicament were beyond the developers control, and their need for similar permanent financing is significant to the financial welfare of the project, staff recommends that the Mayor and Common Council consider adoption of the attached resolution approving certain documents and authorizing certain actions in connection with the authorization, sale and issuance of approximately $9,350,000 principal amount of multifamily mortgage revenue refunding bonds (Pumalo Palms Project) . Please be advised if said resolution is adopted, it is anticipated that the bonds will be remarketed in the future when the AAA letter of credit and rating is obtained. At that time a Supplemental Indenture setting forth the exact terms of the bonds will be brought back to the Mayor and Common Council for authorization. . Representatives of the developer and bond underwriter and bond counsel will be present to answer any questions. L.II<. G. "~ Kenneth J. Henderson Director of Community Development 4/9/87/0173 711-0264 J. ~ - - - I o o o o SBE00090-4/2346S/sf 04/06/87 RESOLUTION NO. RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO, CALIFORNIA, APPROVING CERTAIN DOCUMENTS AND AUTHORIZING CERTAIN ACTIONS IN CONNECTION WITH THE AUTHORIZATION, SALE AND ISSUANCE OF APPROXIMATELY $9,350,000 PRINCIPAL AMOUNT OF MULTIFAMILY MORTGAGE REVENUE REFUNDING BONDS (PUMALO PALMS PROJECT) WHEREAS, the City' of San Bernardino, California (the "City"), is a "home rule city" duly organized and existing under and pursuant to a Charter adopted under the provisions of the Constitution of the State of California; and WHEREAS, pursuant to .its home rule powers, the City duly and regularly enacted Ordinance No. 3815 (the .Ordinance") to finance various types of projects, as defined in the Ordinance, and to issue its special revenue bonds for the purpose of enabling various developers to finance the cost of such projects, and has amended the same from time to time; and WHEREAS, said Ordinance No. 3815, as amended, is intended to finance the development of industry and conunerce and to thereby broaden the employment opportunities and to increase the availability of moderately priced rental units for residents of the City and to broaden the tax and revenue base of the City without any liability whatsoever to the City; and - 1 - 4/9/87 - ....- - - y - - , c o o o WHEREAS, the City is authorized and empowered by Health and Safety Code Section 52075, et seq. (the "Act"), to finance various types of projects, as defined in the Act, and to issue its special revenue bonds for the purpose of enabling various developers to finance the cost of such projects; and WHEREAS, Pumalo Palms Investors I, a California limited partnership, and Pumalo Palms Investors II, a California limited partnership, or its predecessors, successors or assigns (collectively herein, the "Developer"), has previously submitted a certain application (the "Application"), to the Mayor and Common Council of the City of San Bernardino, California (the "Mayor and Common Council"), for tax-exempt financing for a certain multifamily rental housing development pursuant to Ordinance No. 3815, as amended, and the Act, as more fully described in said Application (the "Project"); and WHEREAS, the Project consists of the construction and permanent financing of two mul tifami ly rental housing developments in the City as more fully described in the Application; and WHEREAS, pursuant to Resolution No. 85-194 of the Mayor and Common Council, said Mayor and Common Council have on May 23, 1985, previously authorized the execution and delivery of the $9,350,000 City of San Bernardino, California Multifamily Mortgage Revenue Bonds (Pumalo Palms Project - Fannie Mae Program) Series 1985 (the 4/9/87 - 2 - - - -- - o o 0 o "1985 Bonds"), for the purpose of acquiring, constructing and installing the Project; and WHEREAS, in order to reduce the costs of the financing of the Project, the City has been requested to provide for the refunding of the 1985 Bonds; and WHEREAS, the staff of the City has initiated certain actions in connection with the preparation as necessary for the refunding of the 1985 Bonds and the financing of the Project by the execution and delivery of certain multifamily mortgage refunding revenue bonds (the "Bonds"); and WHEREAS, it is desirable at this time that the City approve the execution and delivery of the Bonds and approve and authorize the formal financing documents necessary in connection with the execution and delivery of the Bonds and the execution and delivery of the Bonds and the related financing documents as authorized or permitted by the laws and the Constitution of the State of California; and WHEREAS, a portion of the proceeds of the sale of the Bonds will be set apart and irrevocably segregated in a special trust fund (the "Escrow Fund") in such principal amounts, together with the interest earnings thereon, will be sufficient to defease the liens and covenants created by the Indenture by and between the City and 4/8/87 - 3 - -- - ~ - - - 0 0 0 0 . meeting and on file with the City Clerk is hereby approved; and the Mayor and the City Clerk, or any other dUly authorized officials, are hereby authorized and directed, for and in the name of the City, to execute such Indenture. Said Indenture shall be executed in substantially the form hereby approved, with such changes therein as the officers executing the same may approve prior to the issuance and delivery of the Bonds with the approval by the City Attorney and Bond Counsel of. any Changes, amendments or mOdifications, and such approval to be conclusively evidenced by the execution and delivery thereof. Section 4. The form of the Loan Origination and Servicing Agreement dated as of April 1, 1987, by and between the City, the Trustee, California Federal Savings and Loan Association (the "Association") and the Developer (the "Loan Agreement"), as presented to the Ci ty at this meeting and on file with the City Clerk is hereby approved; and the Mayor and the City Clerk, or any other duly authorized officials are hereby authorized and directed, for and in the name of the City, to execute the Loan Agreement with the Developer. The Loan Agreement shall be executed in substantially the form hereby approved, with such Changes therein as the officers executing the same may approve with the approval thereof by the City Attorney and Bond Counsel, and such approval to be conclusively evidenced by the execution and delivery thereof. Section 5. The Preliminary Official Statement relating to the Bonds is hereby authorized and directed to be prepared by the purchaser of the Bonds with such changes thereto as may be approved - 6 - I. In In.. - - o o o o by the Division Manager of the Community Development Department of the City of San Bernardino, the City Attorney and Bond Counsel; and the distribution of such Preliminary Official Statement is hereby authorized, and such Preliminary Official Statement may be converted to a Final Official Statement together with such changes or modifications as deemed desirable by Bond Counsel, the City Attorney and the Division Manager of the Community Development Department of the City of San Bernardino. The Mayor or the Division .Manager of the Community Development Department of the City of San Bernardino, or any other duly authorized officials, are hereby authorized to execute and deliver said Final Official Statement, and the execution thereof shall be deemed to be final approval of same by the City. Section 6. The form of the First Amended Regulatory Agreement and Declaration of Restrictive Covenants, dated as of April 1, 1987, by and among the City, the Trustee, the Association and the Developer (the "Regulatory Agreement"), presented at this meeting and on file with the City Clerk is hereby approved, and the Mayor and the City Clerk. or any other duly authorized official, are hereby authorized and directed for and in the name and on behalf of the City to execute such Regulatory Agreement in said form with such changes therein as the officers executing the same may approve with the approval thereof by the City Attorney and Bond Counsel, and such approval to be conclusively evidenced by the execution thereof. Section 7. Pursuant to the Act, the Bonds shall be sold ~nd issued as hereinafter provided in the aggregate principal amount - 7 - 4/9/87 - 4L - - o o o o not to exceed $9,350,000 as specified in the Bond Purchase Agreement hereinafter mentioned. The purposes for which the proceeds of the Bonds shall be expended are for the deposit of a portion or all of the Bond proceeds wi th the Trustee for the funding of the Proj ect and for such other purposes as are set forth in the proposed form of the Indenture presented at this meeting and on file with the City Clerk. Section 8. The Mayor and Common Council hereby waive the appointment of such California commercial banking institution duly qualified to act as Trustee in accordance with the "Policy Guidelines on Public and Negotiated Bond Sale Procedures for the City of San Bernardino and the Redevelopment Agency of the City of San Bernardino" (the "Policy Guidelines") as said Policy Guidelines are on file with the City Clerk due to the impending need to issue the Bonds prior to May 1, 1987. Seattle-First National Bank is appointed as the Trustee by the Mayor and Common Council. The City shall enter into such agreement with the Trustee in the manner as set forth above for the payment of fees which shall only be payable from amounts so available pursuant to the Indenture and not any other assets or funds of the City. Section 9. The form of the Bonds as set forth in the Indenture (as the Indenture may be modified as hereinbefore provided) is hereby approved. The Mayor and the City Clerk, or any other duly authorized official, are hereby authorized and directed t:> execute, in the name and on behalf of the City and under its - 8 - 4/9/87 - - - o o o o seal, such Bonds in the aggregate not to exceed the principal amount set forth hereinabove in accoroance with the Indenture. Section 10. The form of the Bond Purchase Agreement and the Remarketing Agreement, which agreements shall be provided prior to time of purchase of the Bonds by Miller & Schroeder Financial, Inc., as purchaser and remarketing agent, respectively, and the sale of the Bonds pursuant thereto are hereby approved, provided that the purchase price of the Bonds and the rate or rates of interest shall have been approved by the Mayor or the Division Manager of the Community Development Department of the City of San Bernardino and, subject to such approval, the Mayor or the Division Manager of the Communi ty Development Department of the City of San Bernardino are hereby authorized and directed to evidence the City's acceptance of the offer made by said Bond Purchase Agreement and Remarketing Agreement by executing and delivering said Bond Purchase Agreement in said form with such changes therein as the officers executing the same and the City Attorney may approve, such approval to be conclusively evidenced by the execution and delivery thereof. Section 11. The Division Manager of the Community Development Department of the City of San Bernardino or other Ci ty official are hereby authorized and directed to execute one or more requisitions authorizing the Trustee under the aforesaid Indenture to pay the Costs of Issuance for the Bonds from the Funds and Accounts established under and pursuant to the Indenture. 4/9/87 - 9 - ii!':;-' J.. - - - - c 0 0 0 Section 12. The officers of the City are hereby authorized and directed, jointly and severally, to do any and all things to execute and deliver any and all documents, including the Bonds, which they may deem necessary or advisable in order to consummate the issuance, sale and delivery of the Bonds, and otherwise to effectuate the purposes of this Resolution; and any such actions as previously taken by such officers in furtherance of the issuance and delivery of the Bonds are hereby ratified and confi rmed. Section 13. The Developer has previously provided appropriate covenants in the tax-exempt financing documents to assure that not less than twenty percent (20%) of the multifamily rental housing units included in the Project are to be occupied or reserved for occupancy by the individuals of low and moderate income as provided in the Code. Section 14. The Developer has previously provided to the City, for recording, a covenant running with the land in form approved by the City Attorney or the City whereunder the Developer waives any entitlement under State law to a density bonus for the property on which the proposed project is to be constructed. Section 15. Adoption of this Resolution shall not be construed as approval of the plans or concept of the proposed development, nor as an indication that the Mayor and Common Council will hereafter take any particular action toward granting any planning, zoning, or other approval relating to a plan of development. The Mayor and Common Counci 1 reserves its right to _ , n _ 4/9/87 ~=._,-<,.- - -- - - 4. J,. - o o o o evaluate any future administrative procedures and appeals based solely on the information available at the time of consideration, including any actions or recommendations by or appeals from the Development Review Committee and the Planning Commission. Nothing herein shall be construed as advance commitment or approval as to any such matter, and the Developer is hereby notified that normal planning processing shall be required, in accordance with the standard procedures of the City and that the Developer will be required to comply with all applicable laws and ordinances of the City, State and federal government. Section 16. The approval as herein granted and the final approval of the Project are specifically conditioned upon the conformance of all documents required to be executed and delivered by the City to the POlicy Guidelines. Section 17. The above-mentioned documents necessary for the issuance, sale and delivery of the Bonds shall contain language especially intended for the full and complete protection of the City against liability from any covenants or agreements within the said Bond documents to assure that, in any event, the bondholders sha 11 look only to the revenues pledged for the Bonds, and not to the revenues or general funds of the City unless specifically pledged in other than a conduit financing. For this purpose, Bond Counsel shall also include in all subsequent appropriate documents for the type of bond issue being considered, language substantially as fo llows: 4/9/87 - 11 - .... 4- -~ - ..l.. .t. - - o o o o "Non-recourse paragraph: The Issuer's obligations hereunder and under the Loan Agreement and the Regulatory Agreement are on a 'non-recourse' basis, and payment of any amounts which are owed or may become due hereunder or under the Loan Agreement or Regulatory Agreement shall not be enforced against the Issuer or any of its public officials, officers, employees, agents, or other personnel, but only against the property which is subj ect to the Deed of Trust, and any further security which may, from time to time, be hypothecated for this Indenture, the Regulatory Agreement or the Loan Agreement." "Exculpation of Issuer: The Issuer will not be liable to the company, to any bondholder, or to any other person for, and the company and the trustee, on behalf of the bondholders, hereby release the Issuer from all liability to the company, any bondholder, or any other person, for losses, costs. damages, expenses and liabilities even if such losses, costs, damages, expenses and liabilities directly or indirectly result from, arise out of or relate to, in who Ie or in part, one or more negligent acts or omissions of the Issuer or any of the officers. directors, employees, agents, servants or any other party acting for or on behalf of the Issuer in connection with the issuance of the bonds or performance by the Issuer of its obligations under the indenture, the loan agreement, the regulatory agreement. or any other agreement related to the indenture. The Issuer's obligations hereunder are on a 'non-recourse' basis, and payment of any amounts which are owed or may become due hereunder shall not be enforced against the Issuer or any of its public officials. officers. employees, agents, and other personnel, but only against the property which is. subject to the Deed of Trust and any other further security which may, from time to time, be hypothecated hereunder." As appropriate, the language shall be changed if the security is something other than a deed of trust, and if the documents being utilized are other than a loan agreement and r~gulatory agreement. Notice of non-recourse and exculpation of the - 12 - 4/9/87 ..L - - - - - - - o o o o the Seattle-First National Bank (the "1985 Trustee") and to discharge and satisfy all rights of the Owners of the 1985 Bonds thereunder, by insuring the payment of the principal of, payment if any, and interest on the 1985 Bonds prior to the maturity dates of such 1985 Bonds; and WHEREAS, pursuant to the Bond Purchase Agreement, dated the date of execution thereof (the "Purchase Agreement") by and among the City, Miller & Schroeder Financial, Inc. and the Developer, and the Remarketing Agreement, dated as of April 1, 1987, by and among the City, Miller & Schroeder Financial, Inc., the Trustee, and the Developer (the "Remarketing Agreement") the City desires to enter into arrangements for the sale and delivery of the Bonds and the remarketing of the Bonds; and WHEREAS, the City deems it desirable to authorize the execution and delivery of the Bonds, provided that the refunding of the 1985 Bonds and the financing of the Project is contemplated herein, and approve the form of the financing documents related to and with respect to the execution and delivery of the approximate $9,350,000 City of San Bernardino, California, Multifamily Mortgage Refunding Revenue Bonds (Pumalo Palms project) 1987 Series A; and WHEREAS, all acts, conditions and things required by the Act, and by all other laws of the State of California, to exist, to 4/9/87 - 4 - --" . _..l. a - .. - ~ - o o o o have happened and to have been performed precedent to and in connection with the issuance of the aforesaid multif amily . residential mortgage revenue bonds exist, have happened, and have been performed in regular and due time, form and manner as required by law, and the City is now duly authorized and empowered, pursuant to each and every requirement of law, to issue such multifamily residential mortgage revenue bonds for the purpose, in the manner and upon the terms herein provided; and NOW, THEREFORE, THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO, CALIFORNIA, DO HEREBY FIND, RESOLVE, DETERMINE AND ORDER AS FOLLOWS: Section 1. The above recitals, and each of them, are true and correct. Section 2. The Division Manager of the Community Development Department of the City of San Bernardino, or such other person as the Mayor and Common Council may from time to time designate, is hereby designated to administer the Program as shall be undertaken by the Developer. Section 3. The form of the Indenture of Trust, dated as of April 1, 1987, by and between the City and any commercial banking institution qualified to act as trustee (the "Trustee"), securing the Bonds (the "Indenture"), as presented to the City at this - 5 - 4/9/87 III - - - ~ 1 ILl - . o o o o issuer provisions shall be prominently included in any official statement or other equivalent disclosure documents. Section 18. The language shall be subject to revision, as may be appropriate, depending upon the documents involved, the type of security offered, and other similar considerations, but in any event language substantially as specified herein shall be included in all appropriate Bond documents. In the event that Bond Counsel recommends against any such language, Bond Counsel shall specifically advise the City that such language not be included with reasoning therefor. Unless such request is so made by Bond Counsel and approved by the City, such language shall be included in all appropriate Bond documents. Section 19. adoption. This Resolution shall take effect upon - 13 - ,. In 10,-. - - o o o I HEREBY CERTIFY that the foregoing adopted by the Mayor and Common Council San Bernardino at a held on the day of the following vote, to wit: resolution of the meeting AYES: Council Members o was duly Ci ty of thereof, 1987, by NAYS: ABSENT: City Clerk day of The foregoing resolution is hereby approved this , 1987. Mayor of the City of San Bernardino Approved as to form: , ~1tIZn -tf: ~~ ), ,~.City Attorney / 4/9/87