HomeMy WebLinkAboutR35-Economic Development Agency
..
ECONOMIC DEVELOPMENT AGENCY
OF THE CITY OF SAN BERNARDINO
SUBJECT: TEFRA HEARING- HOUSING
AUTHORITY OF THE COUNTY OF SAN
BERNARDINO ISSUANCE OF
MULTIFAMILY REVENUE BONDS
(SANTIAGO HILLSIDE MOBILE HOME
PARK AND SANTIAGO
ORANGEWOOD MOBILE HOME
._____________________________________________________________________________________________________X~~L__________________________________________________________
Svnopsis of Previous Commission/Council/Committee Action(s):
FROM:
Maggie Pacheco, Deputy DirectorlDirector
Housing & Community Development
DATE:
April 29, 2002
0""-"'"
II I \.. II ~l"iL
See Background of this Report for previous Commission and Common Council actions and approvals.
_______________________________________________________________u.__________________________________._________-----------------------------------------------------.
Recommended Motion(s):
OPEN PUBLIC HEARING
CLOSE PUBLIC HEARING
.-------------------------.-----------------------------------.---------------.----------------------------------------------------------------------------------------.-----------
(Mayor & Common Council)
MOTION A: RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN
BERNARDINO APPROVING THE ISSUANCE OF MULTI-FAMILY REVENUE HOUSING
BONDS BY THE HOUSING AUTHORJTY OF THE COUNTY OF SAN BERNARDINO
("AUTHORJTY") FOR THE SANTIAGO HILLSIDE MOBILE HOME PARK IN THE PRJNCIPLE
AMOUNT OF $2.8 MILLION AND THE SANTIAGO ORANGEWOOD MOBILE HOME PARK IN
THE PRJNCIPLE AMOUNT OF $4 MILLION.
MOTION B: (Communitv Development Commission)
MOTION OF THE COMMUNITY DEVELOPMENT COMMISSION ACCEPTING CERTAIN
LOAN REPAYMENTS FROM THE SANTIAGO HILLSIDE MOBILE HOME PARK AND
SANTIAGO ORANGEWOOD MOBILE HOME PARK CORPORATIONS (THE
"CORPORATION") IN THE AGGREGATE APPROXIMATE AMOUNT OF $896,000 AND
AUTHORJZING THE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO
("AGENCY") TO RE-LOAN SAID FUNDS TO THE CORPORATION IN ACCORDANCE WITH
THE REFINANCING PLAN DISCUSSED BY THE COMMISSION ON JANUARY 8, 2001 AND
___________________________~.!'~.!_~'_~o.o..!:.______________________------------------------------------------------------------------------------------------------------------
Contact Person(s):
Project Area(s)
Maggie Pacheco
N/A
Phone:
Ward(s):
(909) 663-1044
3
Supporting Data Attached: [;'] Staff Report [;'] Resolution(s) 0 Agreement(s)/Contract(s) 0 Map(s) 0 Reports
SIGNATURE:
Source:
N/A
N/A
FUNDING REQUIREMENTS Amount: $
~
0, Deputy DirectorlDirector
ommunity Development
__________________________________________......_n_....___._.....____....._._____......___.._.....____._.._....----.-....--..--...-.-----...-.------.....------.-...
Commission/Council Notes:
~~~CR>d-- \?,S'
COMMISSION MEETING AGENDA
Meeting Date: 05/06/02
Agenda Item Number: -1{3t:i
,---
ECONOMIC DEVELOPMENT AGENCY
STAFF REPORT
~-------------------------------------------------------------------------------------------------------------_.-----
TEFRA Hearinl!-Housinl! Authority of the Countv of San Bernardino Issuance of Multi-Familv
Revenue Bonds
BACKGROUND:
The Redevelopment Agency of the City of San Bernardino (the "Agency") advanced funds on behalf of
the mobile home park conversion program that began in 1993 for (i) the initial analysis of the 44 mobile
home parks located in the city, (ii) due diligence investigations, engineering and financial analysis for the
converted mobile home parks, (iii) administrative and consultant expenses to implement the program and
(iv) payment of the mobile home park conversion consultant fees and expenses. As a result of the
analysis of the 44 parks, in 1995 and 1996, eight (8) mobile home parks were acquired by the Agency
including the Santiago Hillside Mobile home Park, formally the Friendly Village Mobile home Park
located at 2151 W. Rialto Avenue and the Santiago Orangewood Mobile Home Park located at 2160 W.
Rialto Avenue (the "Projects"). The Agency expended $4,187,296 in the implementation of the mobile
home park conversion program. All such funds were recorded on the Agency accounting records as loans
by the Agency to each separate single-purpose non-profit subsidiary corporation that was established for
each park.
In May 1996, the Agency caused the formation of The California Mobile Home Park Corporation, a
California nonprofit corporation (the "Corporation") (formally The San Bernardino Mobile Home Park
Corporation) and eight (8) subsidiaries thereof representing each park. All of the parks acquired by the
Agency were transferred to the Corporation or its subsidiaries. In 1999, the Corporation refinanced all of
the parks, except, Ninth Street Mobile Home Park, on a short-term basis, with the issuance by the
Housing Authority of the County of San Bernardino (the "Authority") of its $27,195,000 Multifamily
Revenue Notes (Mobile Home Park Projects) Series I 999A, 1999B, 1999C and 1999D Taxable Notes
(the "1999 Notes"). The intent of the financing program since its inception was to (I) stabilize the cash
flows and rents for each mobile home park, filling vacancies and funding improvements to each mobile
home park, and finally (2) to seek long- term FHA Insured mortgage financing to lower the interest rate
on the bonds.
The Internal Revenue Service (IRS) imposed certain limitations on the powers of the eight (8) subsidiary
mobile home park corporations and required that the Parent Non-Profit Corporation have full veto power
over virtually all of the actions that could be taken by any of the eight (8) subsidiary non-profit
corporations. The final determination letter written by the IRS to grant tax-exempt 501 (c)(3) status to
each of the eight (8) subsidiary non-profit corporations and the Parent Non-Profit corporation is based
upon the existing structure of the non-profit corporations and the limitations on powers that may be
exercised by each of the subsidiary non-profit corporations. There is also a requirement under the IRS
determination letter that the "Agency Administrator" be continuously on the Board of Directors of the
Parent Non-Profit Corporation. This requirement assures the IRS that there is some form of government
oversight of the operations of the mobile home park program to support the premise that the
parent/subsidiary non-profit corporations were formed to "lessen the burden upon government". In this
case, to lessen the burden upon the City of San Bernardino through the non-profit corporation, Mr. Gary
V an asdel, as the Executive Director of the Agency, sits in this particular board capacity of the Parent
Non-Profit Corporation. There is an application pending before the IRS that would remove Gary Van
Osdel as a required board member.
In March 1999, Santiago Management Company was selected by the prior board of directors ofthe Parent
Non-Profit Corporation to act as the Management Company for the eight (8) mobile home parks. An
COMMISSION MEETING AGENDA
Meeting Date: 05/06/02
Agenda Item Number: 105
r
Community Development Commission Agenda
April 29, 2002
TEFRA Hearing
Page3 of 4
independent board of directors assumed the board positions, except for the required appointment of the
"Agency Administrator" noted above.
The short term notes issued by the Authority in 1999 were structured to be refinanced by the long term
FHA insured bonds and one of the criteria for said structure was that no subordinate debt could be
recorded against each of the parks. Hence, the Original Loan Agreement between the Corporation was
modified to provide that the Agency return the deeds of trust recorded in 1995 and 1996, and that the
Parent Non-Profit Corporation execute new deeds of trust which would not be recorded until the 1999
Notes and any refund bonds have been repaid. The Agency also agreed to forebear payment or defer
repayment on any of the approved promissory notes until the 1999 Notes and any bonds were fully repaid
by the Corporation at which point the Agency would recapture a portion of its initial investment in the
mobile home park conversion program.
On January 8, 2001, the Commission authorized the restructing of the existing loan agreements to
eliminate the deeds of trust, to have loan agreements be secured only by a regulatory agreement upon
each mobile home park, and to have the repayment of the Agency obligation be that of the Parent Non-
Profit Corporation rather than each subsidiary non-profit. The financing documents of the 1999 Notes
require that certain tests be met before a mobile home park may be refinanced and removed from the
cross collateralized security of the 1999 Notes. For this reason, when the Council and Commission
authorized, the refinancing of Sequoia and Rancho Meridian, approximately $2 million was set aside with
the Trustee to assure that the weaker mobile parks (i.e., Tropicana) can in fact be refinance either with the
207 program or with another financing program.
In 200 I, the Pacific Palms, Glen Aire, Rancho Meridian and Sequoia parks were refinanced with long
term financing and a loan guarantee on the financing from the United States Department of Housing and
Urban Development ("HUD") pursuant to its 207 Program. Out of this refinancing, the Agency realized
approximately $1.2 million that was used by the Agency to buy down the loan on the CinemaStar note
pursuant to Commission approval of April 16, 2001. In addition, on this date, the Commission approved
the refinancing anticipated by the Corporation over the following 12 months, and authorized reloaning
funds to the Corporation that will be collected by the Agency from any future bond financing.
The plan of refinancing all seven (7) parks called for refunding the 1999 Notes to occur on or prior to
September 15, 2002, concurrently with the due date of the short-term notes. The last refinancing
remaining is for Tropicana Mobile Home Park and that is expected to occur around September 2002. At
that time, it is expected that the Agency will receive about $2 million, which is currently held in trust with
the Bond Trustee from prior bond issues.
CURRENT ISSUE:
The Santiago Hillside Mobile Home Park Corporation and the Santiago Orangewood Mobile Home Park
Corporation (the "Subsidiary Corporations") have requested that the Authority issue long term bonds (the
"2002 Bonds") to refinance the portion of the 1999 Notes attributable to those parks. The 2002 Bonds
will be credit enhanced by a loan guarantee from HUD and will be triple A rated. It is anticipated that the
aggregate principle amounts of not too exceed $2.8 million will be issued for Santiago and $4 million will
be issued for Orangewood ("Bond Proceeds").
COMMISSION MEETING AGENDA
Meeting Date:jf/06/02
Agenda Item Number: 35"
.'
Community Development Commission Agenda
April 29. 2002
TEFRA Hearing
Page 3 of 4
The Bond Proceeds of the respective 2002 Bonds will be loaned to the respective Subsidiary Corporations
pursuant to Financing Agreements by and between the Authority, the respective Subsidiary Corporation,
Red Mortgage Capital, Inc. (the "Lender") and the 2002 Bond Trustee (the "Financing Agreement"). The
loan proceeds will be used as follows: underwriter and bond issuance costs, repayment of a portion of the
1999 Notes attributable to the Santiago Hillside Mobile Home Park and Santiago Orangewood Mobile
Home Park, repayment of the Agency notes for each Park in the total approximate amount of $896,000
and for a limited number of Park improvements, and to fund a reserve for the remaining 1999 Notes.
Although the Agency will be repaid the $896,000, (this $896,000 is part of the 2001 $4,187,296 Loan
Agreement), it will need to reloan the proceeds to the Parent Non-Profit Corporation as previously
described and discussed with the Commission in April 2001.
The Corporation will then sometime in September 2002, re-finance Tropicana Mobile Home Park, at
which time, the Agency is expected to be repaid about $2 million. In conclusion, upon the completion
of the refinancing plan for the seven (7) parks, the Agency expects to recapture approximately $2 million
of its original investment of $4, 187,296 million ("200 I Loan Agreement").
Accordingly, in order to permit the issuance of the $2.8 and $4 million in multi-family revenue bonds by
the Authority, the IRS Code requires that the Mayor and Common Council hold a TEFRA hearing
pursuant to IRS Code Section 147(f) which authorizes and approves the financing contemplated herein by
the Authority.
ENVIRONMENTAL IMPACT:
No environmental impact is expected as a result of the holding of the TEFRA hearing.
FISCAL IMPACT:
There is no direct or indirect fiscal liability to the City or the Agency as a result of the bond issuance.
The Bonds will be an obligation of the Authority and secured by the revenues from the respective Parks.
RECOMMENDA nONS:
That the Mayor and Common Council adopt the attached Resolution and Community Development
Commission approve Motion B.
puty Director/Director
unity Development
COMMISSION MEETING AGENDA
Meeting Date: 05/06/02
Agenda Item Number: A35"
e
2
3
4
5
6
7
8
9
10
11
12
e 13
14
15
16
17
e
. ~(Q)[pJW
RESOLUTION NO.
RESOLUTION OF THE MAYOR AND COMMON COUNCIL
OF THE CITY OF SAN BERNARDINO APPROVING THE
ISSUANCE OF MULTI-FAMILY REVENUE HOUSING BONDS
BY THE HOUSING AUTHORITY OF THE COUNTY OF SAN
BERNARDINO ("AUTHORITY") FOR THE SANTIAGO
HILLSIDE MOBILE HOME PARK IN THE PRINCIPAL
AMOUNT OF $2.8 MILLION AND THE SANTIAGO
ORANGEWOOD MOBILE HOME PARK IN THE PRINCIPAL
AMOUNT OF $4 MILLION
WHEREAS, the Santiago Hillside Mobile Home Park Corporation, a California non-
profit 501(c)(3)corporation and the Santiago Orangewood Mobile Home Park Corporation, a
California non-profit 50 I (c)(3)corporation (the "Corporations") have requested that the Housing
Authority of the County of San Bernardino (the "Authority") issue multifamily revenue bonds
in an aggregate principal amounts of not to exceed $2,800,000 and $4,000,000, respectively (the
"Bonds"), for the purpose of refinancing certain bonds issued to acquire the Santiago Hillside
Mobile Home Park, formerly the Friendly Village Mobile Home Park and the Santiago
Orangewood Estates Mobile Home Park (the "Projects") and to repay certain other obligations
of the Corporations including the Agency 200 I notes in the aggregate principal sum of
$896,000; and
18
WHEREAS, the Mayor and Common Council is the elected legislative body of the City
of San Bernardino (the "City"); and
WHEREAS, the Corporations have requested that the Mayor and Common Council
approve the financing of the Projects and the issuance of the Bonds in order to satisfy the public
approval requirements of Section 147(f) of the Internal Revenue Code; and
WHEREAS, the City Clerk has caused the publication of a notice of public hearing
which has been held in accordance with the requirements of the aforementioned law; and
WHEREAS, the Mayor and Common Council now desire to approve the financing of
the Projects and the issuance of the Bonds.
19
20
21
22
23
24
25
-1-
Y(b. 0s
s/~/a
i.
.
2
3
4
5
6
7
8
9
10
11
12
13
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. Recitals: The Recitals contained herein are true and correct and are
incorporated herein by this reference.
Section 2. Determination: The Mayor and Common Council hereby approve the
financing described above and find and determine that said financing will result in significant
public benefits to the City, the Redevelopment Agency of the City of San Bernardino (the
"Agency") and its residents.
Section 3. Official Action. The officers of the City and the Agency 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 financing
transaction approved hereby.
14
Section 4. Effective Date.
15 of its passage and adoption.
16 III
17 III
18 III
19 III
III
20
III
21
III
22 III
23 III
24 III
. 25 III
III
This Resolution shall take effect from and after the date
-2-
1-- .--
e
e
e
2
RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF
THE CITY OF SAN BERNARDINO APPROVING THE
ISSUANCE OF MULTI-FAMILY REVENUE HOUSING BONDS
BY THE HOUSING AUTHORITY OF THE COUNTY OF SAN
BERNARDINO ("AUTHORITY") FOR THE SANTIAGO
HILLSIDE MOBILE HOME PARK IN THE PRINCIPAL
AMOUNT OF $2.8 MILLION AND THE SANTIAGO
ORANGEWOOD MOBILE HOME PARK IN THE PRINCIPAL
AMOUNT OF $4 MILLION
7 I HEREBY CERTIFY that the foregoing Resolution was duly adopted by the Mayor and
3
4
5
6
8
Common Council of the City of San Bernardino at a
meeting
9
held on the
day of
, 2002, by the following vote to wit:
10 Council Members:
Ayes
Navs
Abstain
11
ESTRADA
LIEN
MCGINNIS
DERRY
SUAREZ
12
13
14
15 ANDERSON
16 MC CAMMACK
17
18
Rachel G. Clark, City Clerk
19
20
The foregoing resolution is hereby approved this
day of
21
22
Judith Valles, Mayor
City of San Bernardino
23
By:
24 LoMe;) City Attorney
25
-3-
Absent
thereof,
,2002.
.
.
** FOR OFFICE USE ONLY - NOT A PUBLIC DOCUMENT **
RESOLUTION AGENDA ITEM TRACKING FORM
Meeting Date (Date Adopted): S -<'=, -0 d Item # 12--35"" Resolution #
Vote: Ayes 1-;) I A - 'I Nays -e- Abstain -0
Change to motion to amend original documents: -
Absent ,~
;) Cl)d-\ 3-"-
Reso. # On Attachments:
Contract term: --
NullNoid After:-
Note on Resolution of Attachment stored separately: -=
Direct City Clerk to (circle I): PUBLISH, POST, RECORD W/COUNTY
By:
Date Sel!!. to Mayor: (; - '") - 0 d-
Date of Mayor's Signature: .., ;;; G:;
Date ofClerklCDC Signature: -5 -q-Ocr
Reso. Log Updated: /'
Seal Impressed: ..-/
Date MemolLett<<cSent for Signature:
60 Day Reminder Letter Sent on 30th day:
90 Day Reminder Letter Sent on 45th day: .
See Attached:
See Attached:
See Attached:
Date Returned: --
Request for Council Action & Staff Report Attached: Yes ..-/
Updated Prior Resolutions (Other Than Below): Yes
Updated CITY Personnel Folders (6413, 6429, 6433,10584,10585,12634): Yes
Updated CDC Personnel Folders (5557): Yes
Updated Traffic Folders (3985,8234,655,92-389): Yes
No By
No v' By
No --L By
No ~ By
No j/ By
Copies Distributed to:
City Attorney /
Parks & Rec.
EDA .,......
Finance
Code Compliance
Dev. Services
Police
Public Services
Water
Others:
Notes:
MIS
BEFORE FILING. REVIEW FORM TO ENSURE ANY NOTATIONS MADE HERE ARE TRANSFERRED TO THE
YEARLY RESOLUTION CHRONOLOGICAL LOG FOR FUTURE REFERENCE (Contract Term. etc.)
Ready to File: rY\,-
Date: ",,-- \0-0';>-
Revised 0 1/12/0 I