RECOMMENDATION(S): (CONT'D)
3. AUTHORIZES the proper officers of the County to take actions and execute certificates, agreements and other documents needed in connection with modifications to the documents for the Notes, so long as the modifications do not in any way increase the obligations or liability of the County under such documents.
FISCAL IMPACT:
No impact to the General Fund. The County will be reimbursed for any costs incurred in the process of conducting the TEFRA hearing and Board of Supervisors’ approval. The re-issuance authorization is for the sole purpose of meeting the provisions of the Code. No County funds are pledged to secure the repayment of the Notes.
BACKGROUND:
Contra Costa County, through the Conservation and Development Department, operates a multifamily mortgage revenue bond financing program. The purpose of the program is to increase or preserve the supply of affordable rental housing available to low and very low-income households. The County program may be undertaken within the unincorporated County and within the cities located in the County that have agreed to let the County operate the program in their jurisdiction. The County is authorized to issue multifamily housing revenue notes and bonds pursuant to Section 52075 and following of the California Health and Safety Code.
On October 23, 2018, the Board of Supervisors adopted Resolution No. 2018/512 authorizing the issuance of two series (2018 B-1 and B-2) of multifamily housing revenue notes (the “Notes”) in the aggregate principal amount of $66,000,000, and loaned the proceeds of the Notes to Bay Point Family Apartments, L.P., a California limited partnership (the “Borrower”), to provide financing for costs of the acquisition and construction by the Borrower of a 193-unit affordable rental housing development known as Bay Point Family Apartments (the “Development”) located at 3600-3628 Willow Pass Road in the unincorporated Bay Point area of the County. 100% of the units are at or below 60% of the area median income (AMI).
Due to unforeseen circumstances, the completion of the construction and lease-up of the Development has been delayed, and the Borrower and the owner of one of the Notes, the Series 2018B-1, have agreed to modify some of the documents executed in connection with the issuance of the Notes, to increase the principal amount of the Series 2018B-1 Note to remain outstanding after the completion and rent-up of the Development, and to change the interest rate following the conversion of the Series 2018B-1 Note to the permanent phase of the financing (the “Modifications”). The Modifications will result in a “reissuance” of the Notes for purposes of the Code. In order for the interest on the Notes to continue to be tax-exempt, Section 147(f) of the Code requires that the Board of Supervisors approve the reissuance of the Notes following the conduct of a public hearing on the financing of the Development.
Following the conduct of a public hearing, on August 3, 2021, the Board of Supervisors adopted Resolution No. 2021/229 approving the reissuance of the Notes for purposes of the Code (the “Approving Resolution”); however, under applicable federal regulations, the approval of the Board of Supervisors must occur within one year of the effective date of the Modifications, and it is now expected that the Modifications will not become effective until more than one year after the adoption of the Approving Resolution. The Borrower has requested that the Board of Supervisors once-again approve the reissuance of the Notes in order to satisfy the requirements of section 147(f) of the Code so that the interest paid on the Notes can continue to be tax-exempt.
A public hearing was held by the Department of Conservation and Development on June 29, 2022, where members of the community were given an opportunity to speak in favor of or against the use of tax-exempt financing for the Development. A notice of the hearing was published in the East County Times (proof of publication attached) on June 21, 2022. No public comments were received prior to or at the meeting.
CONSEQUENCE OF NEGATIVE ACTION:
Without the approval of the re-issuance, the interest on the Notes will become subject to federal income taxes.
CHILDREN'S IMPACT STATEMENT:
Bay Point Family Apartments will support outcome number three: Families are Economically Self Sufficient.