title
TEFRA PUBLIC HEARING FOR THE POLO RUN APARTMENTS LOCATED AT 8165 PALISADES DRIVE
recommended action
RECOMMENDATION
It is recommended that the City Council adopt a resolution:
1. Approving the issuance of multifamily housing revenue bonds by the California Statewide Communities Development Authority in an amount not to exceed $30 million on behalf of Polo Run Family Apartments, LP, a California limited partnership.
Note: The bonds will not represent a debt of the City, nor do they obligate the City in any way.
2. It is further recommended that the City Manager be authorized to take appropriate actions necessary to carry out the purpose and intent of the resolution.
body
Summary
The purpose of this hearing is to satisfy the public approval requirement of the Tax and Equity Fiscal Responsibility Act (TEFRA), Section 147(f) of the Internal Revenue Code of 1986 (Tax Code). The City Council is being asked to adopt a resolution that would approve the issuance of multifamily housing revenue bonds by California Statewide Communities Development Authority (CSCDA) in an amount not to exceed the aggregate principal amount of $30 million. The purpose of the bonds is to finance the acquisition and rehabilitation of Polo Run Apartments, a 318-unit multifamily rental housing project located at 8165 Palisades Drive (Attachment A - Vicinity Map). The acquisition and rehabilitation will be financed with the bonds, proceeds from Four Percent Tax Credits, and a private construction loan. There are no City funds being used. The rehabilitation project will address needed work on the exterior of the buildings including new roofing, repainting, and improvements to the parking lots and landscaping. Interior improvements will be extensive, and will include repairs to the kitchens and bathrooms, and replacing water heaters and HVAC units. The project will also include the installation of a surveillance system to improve security.
The proposed bonds are not a debt of the City, nor do they obligate the City in any way. The role of the City Council in this hearing is limited to certifying the public benefit of this project for the purpose of facilitating financing for the project by CSCDA.
DISCUSSION
Background
ROEM Development Corporation (ROEM) is in the process of acquiring the Polo Run Apartments. ROEM is an experienced housing developer with affordable and market rate projects throughout California. It is a vertically-integrated company that provides the full-range of property services from ownership, development, through to the daily management of the properties. As is typical for these types of projects, a limited partnership, known as Polo Run Family Apartments, L.P., was created to own and manage the complex. ROEM is the managing partner of the Limited Partnership.
The Polo Run Apartments were constructed in 1979, making them approximately thirty-seven years old. While there have been minor improvements to the property, there has not been a major rehabilitation to the units and they are now in need of significant upgrades and repairs. The proposed rehabilitation, with an estimated total cost of $11 million, will update the units and a number of major systems within the buildings. Work to be completed includes new roofs and insulation, repairing handrails and railings, replacing cabinets, countertops and appliances in kitchens as needed, replacing and/or repairing bathtubs, showers, and sinks in bathrooms, replacing doors and windows throughout the units, and replacing or repairing water heaters and HVAC units. The rehabilitation will also include the installation of a surveillance system and improvements to the parking lots and landscaping.
To finance the acquisition and rehabilitation, ROEM is proposing a combination of funding sources, including multifamily housing revenue bonds, proceeds from four percent tax credits, and a bank loan. There is no City funding being provided for the rehabilitation project.
Present Situation
To assist with the acquisition and rehabilitation, Polo Run Family Apartments, L.P. has requested approval from the Stockton City Council to allow CSCDA to issue multifamily housing revenue bonds in an amount not to exceed an aggregate of $30 million. CSCDA is a Joint Powers Authority whose members include the City of Stockton and over 520 other California cities, counties, and special districts.
The TEFRA Act, Section 147 (f) of the Tax Code, requires that before bonds can be issued, the local jurisdiction in which a project to be financed with bonds is located must; 1) conduct a public hearing and 2) approve the issuance of the bonds. The City Council is being asked to hold such a public hearing and adopt a resolution that would authorize the issuance of the bonds by CSCDA in an amount not to exceed the aggregate principal amount of $30,000,000.
As stated in the published notice explained below, there is no obligation on the part of the City Council to respond to any specific comments made or submitted. A TEFRA hearing is mandated by the IRS to provide a reasonable opportunity for interested individuals to express their views on the issuance of bonds and the nature of the improvements and projects for which the bond funds will be allocated. This hearing is simply an opportunity for all interested persons to speak to or submit written comments on the proposal to issue the debt and the public benefit of the rehabilitation project. The role of the City Council in this hearing is limited to certifying the public benefit of this project for the purpose of facilitating financing for the project by CSCDA. The bonds will not represent a debt of the City, nor do they obligate the City in any way.
Other than holding the required TEFRA hearing and adopting the required resolution, no other participation or activity of the City is required. The bonds will not represent a debt of the City, nor do they obligate the City in any way. The role of the City Council in this hearing is limited to certifying the public benefit of this project for the purpose of facilitating financing for the project by CSCDA.
Public Notice
The legal notice for the TEFRA public hearing is required to be advertised at least 14 days in advance. The notice for this hearing was published on July 22, 2016, in The Record.
FINANCIAL SUMMARY
The City has no financial liability as a result of approving the issuance of the bonds for the Polo Run Apartments. Authorizing the issuance of the bonds does not create any financial obligations, but only serves as a public acknowledgement by the local jurisdiction of the project financing.
Attachment A - Vicinity Map