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HomeMy WebLinkAboutR7- Economic Development ECONOMIC DEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO 7 REQUEST FOR COMMISSION/COUNCIL ACTION FROM: RONALD E.WINKLER SUBJECT: COOPERATION AGREEMENT Development Director BETWEEN THE COUNTY OF PID SAN ARDINO AND THE DATE: November 26, 1997 t� J V CITY OF OF SAN BERNARDINO ------------------------------------------------------------------------------------------------------------------------------------------- Synopsis of Previous Commission/Council/Committee Action(s): On November 24, 1997,the Redevelopment Committee forwarded this item to the Community Development Commission with no recommendation. ------------------------------------------------------------------------------------------------------------------------------------------- i Recommended Motion(s): (Mayor and Common Council) MOTION: That the Mayor and Common Council authorize the execution of a Cooperation Agreement with the County of San Bernardino for the issuance of Multifamily Housing Revenue Bonds (Village Green Project). ------------------------------------------------------------------------------------------------------------------------------------------- Contact Person(s): Ronald E.Winkler/ Phone: 5081 Project Area(s): N/A Ward(s): Three(3) Supporting Data Attached:© Staff Report❑ Resolution(s) ❑x Agreement(s)/Contract(s) ❑ Map(s) ❑Ltr/Memo FUNDING REQUIREMENTS: Amount: $N/A Source: N/A Budget Authority: N/A SIGNATURE: Administrator Ronald E.Win er,Director Development ------------------------------------------------------------------------------------------------------------------------------------------- Commission/Council Notes: REW:lag:12-01-02.cdc COMMISSION MEETING AGENDA MEETING DATE: 12/01/1997 Agenda Item Number: ,9 ECONOMIC DEVELOPMENT AGENCY STAFF REPORT 1 ------------------------------------------------------------------------------------------------------------------ Cooperation Agreement Between County of San Bernardino And the City of San Bernardino Staff recently received correspondence requesting execution of the attached Cooperation Agreement. If approved, the agreement would allow the County to issue Multifamily Housing Revenue Bonds for an existing rental development in the City. The development is Village Green (184 Units) apartments located at 2122 West Chestnut. Originally, the development was privately financed. However, the decline in demand for apartments resulting in high vacancies in the early 1990's led to default by the prior owners. Since that time, the development has been bought by a new investment group Steadfast VGA, LLC, that is seeking to restructure project financing through a new bond issue with the County. As can be seen from the agreement, $5,900,000 in bond proceeds would be raised for the Village Green Apartments for acquisition and renovation costs. It would be part of a larger bond issue by the County involving financing for other developments outside the City. The new owner, Steadfast VGA, LLC, has obtained the necessary credit enhancements through letters of credit from G.E. Capital Corporation for the bonds. There is no financial obligation to either the City or Agency. Inquiries of the City's Police and Code Enforcement Departments were made regarding issues or reported incidents. Code Enforcement reported no current activity. Also, the Police Department reports that although there have been incidents in the surrounding neighborhood, there has not been a high level of calls for services at Village Green apartments. It should be noted that representatives of the same investment group recently purchased and renovated the Park Heights Apartments on Arden Avenue next to the new soccer complex. They have improved property appearance, strengthen management, reduced vacancies and installed a number of supportive service such as shuttle transportation for the tenants. Both County and owner representatives will be available to answer any questions. The above was presented to the Redevelopment Committee on November 24, 1997. At that meeting, concern was expressed if the City was loosing the ability to fund other projects through the bond allocation process. Particular concern was expressed should the application for Village Green compete with the ability to issue Industrial Development Bonds (IDB) for other eligible projects. Further, it was pointed out that the County was gaining fees for issuing the bonds. ----------------------------------------------------------------------------------------------------------- REW:lag:12-01-02.cdc COMMISSION MEETING AGENDA MEETING DATE: 12/01/19977 Agenda Item Number: 7 Economic Development Agency Staff Report Cooperation Agreement Between County November 25, 1997 Page Number-2- ------------------------------------------------------------------------------------------------------------------ In response, the following was noted. First application for the January meeting of the California Debt Limit Allocation Committee (CDCAC), which allocates the ability to issue bonds, must be filed by December 12, 1997. Thus, the request from the County for the Cooperation Agreement. Secondly, the County's fee for issuing the bonds is '/4 of 1% or approximately$15,000. The new owner of Village Green apartments has offered to compensate the City for any administrative expense. The Redevelopment Committee forwarded the Cooperation Agreement to the Commission without recommendation. Staff contacted Mr. Joe Yew, Executive Director for CDLAC. He stated that at one time the Committee did consider apportioning the ability to issue tax-exempt debt by community. However, because of population Los Angeles City and County dominated the allocation process to the detriment of other communities. Thus, a first come, first serve approach is used. For calendar year 1998 approximately$1.5 billion in tax exempt debt allocation will be granted by CDLAC. This includes single and multi-family bonds, tax credits, industrial development bonds, etc. Initially the Committee will reserve approximately 60% of the allocation end then apportion the remainder amongst the categories of use (i.e., multi-family, single-family, IDB's etc.). Applications are then received by the Committee and evaluated against others in their respective 8 category. That is, residential projects compete against each other, and industrial developments against other industrial projects. Thus, an application for multi-family bond authority from a community would not prevent that same community from receiving an allocation for industrial development bonds. Since CDLAC meets every two month, the process will continue over the year until the entire $1.5 billion in tax-exempt debt allocations is committed. Further, CDLAC reserves the right to shift debt allocations amongst categories of use depending upon the volume of applications received. In summary, staff does not believe execution of the subject Cooperation Agreement would prohibit or compete with a future application for IDB's. For that reason, it is recommended that the Common Council authorize execution of the Cooperation Agreement by the Mayor. 1. RONAL E. WINKLER, Director Development Department ------------------------------------------------------------------------------------------------------------------ REW:lag:12-01-02.cdc COMMISSION MEETING AGENDA MEETING DATE: 12/01/1997 Agenda Item Number: _� FILE No. 476 11/19 '97 13:00 ID:K 0 N & D 619 793 8340 PAGE 2 COOPERATION AGREEMENT BETWEEN THE COUNTY OF SAN BERNARDINO AND THE CITY OF SAN BERNARDINO THIS COOPERATIVE AGREEMENT ("Agreement"), made mid entered into as of . 1997,by and between the County of San Bernardino,a political subdivision of the State of California(the"County"),and the City of San Bernardino, a political subdivision of the State of California. (tire"C41 1- W ITNESS ETH: WHEREAS, the County leas detomrined pursuant to Chapter 7 (commencing with Section 52075) of Part 5 of Division 31 of the Health and Safety Code of the State of California (the "Act") to provide financial assistance for the acquisition and rehabilitation of a 184-unit multifamily rental housing development, known as "Village Green Apartments", located within the City wid the County, and for the provision of capital improvements in connection therewith(the"Project");and WHEREAS, the County, pursuant to the Act, has adopted Resolution 97-___, on , 1997, has determined to cooperate with the City pursuant to the Act in the exercise of its powers under the Act in providing financial assistance for the Project; WHEREAS, the City, pursuant to the Act, has adopted Resolution 97-_and has determined to cooperate with the County pursuant to die Act in the exercise of its powers under the Act in providing financial assistance for the Project;and WHEREAS, the County has determined, for the purpose of providing financial assistance for the Project,to issue "County of San Bernardino Multifamily Housing Revenue Bonds" (the "Bonds"), in one or more series to be determined at a later date, in an aggregate principal amount not to exceed$5,900,000 as authorize by the Act and the Internal Revenue Code of 1986(the"Code"); NOW, THEREFORE, in consideration of the mutual covenants hereinafter provided, the parties hereto agree as follows: Section 1. The terms used in this Agreement shall, for all purposes of this Agreement, unless otherwise defined herein,have the meanings assigned to such terms in the Act. Section Z. The County agrees to provide financial assistance for the Project and issue Bonds therefor pursuant to the Act and the Code from time to time to the extent that the County receives allocations from the State. Section 3. The City hereby agrees to cooperate with the County in the exercise jointly or otherwise of their powers, pursuant to the Act and the Code, in connection with the providing of financial assistance for the Project. Section 4. The City, pursuant to Section 8869.85(d) of the Government Code of the State of California, hereby assigns to the County any portion of the State ceiling;for private activity bonds allocated TO the City with respect to the Project, if any, by the California Debt Limitation Allocation Committee FILE No. 476 11/19 '97 13:00 ID:K D N & D 619 793 8340 PAGE 3 Cooperative Agreement County of San Bernardino and the City of San Bernardino Paget ("CDLAC") pursuant to Section 146 of the Internal Revenue Code of 1986 and Section 8869.85 of the Government Code. Such assignment is solely for use by the County to provide financial assistance for the AroJeCt. Section 5. The City agrees to undertake such further proceedings or actions as may be necessary in order to carry out the terms and the intent of this Agreement. Nothing in this Agreement shall prevent the County from entering into one or more agreements with other political subdivisions within the County, if deemed necessary and advisable to do so by the County. Section 6. This Agreement may be amended by one or more supplemental agreements executed by the County and die City at any time, except that no such amendment or supplement shall be made which shall adversely affect the rights of the holders of the Bonds issued by the County, pursuant to the Act, to provide financial assistance for the Project. Section 7. The term of this Agreement shall extend until the Bonds issued from the allocation assigned in Section 4 hereof,are fully paid and retired,or shall terminate if Bonds are not issued to provide financial assistance for the Project. Section 8. This Agreement shall take effect from and after its adoption. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed and attested by their proper officers thereunder fully authorized, and their official seals to be hereunto affixed, all as of the day first above written. COUNTY OF SAN BERNARDINO By: Authorized Signatory ATTEST: APPROVED AS TO FORM Farlene Sproat,Cle:rk of the Board ALAN K. MARKS of Supervisors of San Bernardino County County Counsel By. By: MICHELLE D. BLAKEMORE, ESQ. Deputy County Counsel ]:1rm11umbcml4ictd5lcoo,?XWop".doc 2 FILE No. 476 11/19 '97 13:01 ID:K 0 N & D 619 793 8340 PAGE 4 Cooperative Agreement County of San Bernardino and the City of San Bernardino Page3 'T'itle: Date: f f i i i r 1pallaenbcntlsteed5leooplcoopew,doe 3 FILE No. 476 11--19 '97 13=01 ID:K 0 N & D 619 793 8340 PAGE 5 - Cooperative Agreement County of San Bernardino and the City of San Bernardino Page4 CITY OF SAN BERNARDINO By: Authorized Official ATTEST: By: City Clerk 4