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HomeMy WebLinkAbout21 COOP AG W/O.C. 10-07-96NO. 21 10-7-96 DATE' OCTOBER 7, 1996 TO: FROM: SUBJECT: WILLIAM A. HUSTON, CITY MANAGER REDEVELOPMENT AGENCY STAFF COOPERATION AGREEMENT WITH COUNTY OF ORANGE RECOMMENDATION It is recommended the City Council adopt Resolution No. 96-104 approving the Cooperative Agreement between the County of Orange and the City of Tustin allowing the County to issue bonds for the financing of the acquisition and rehabilitation of Hampton Square Apartments. FISCAL IMPACT This action will have no fiscal impact on the City or the Redevelopment Agency. Neither the City's nor the Agency's bonding authority is affected, nor is the City or Agency a party to the bond sale or issuance of the tax credits. BACKGROUND Hampton Square is a 350 unit apartment complex at the northwest comer of Brflliams Street and McFadden Avenue. Originally built in 1969, it is currently owned by Shea Business Properties. Shea has been marketing the property for almost two years. During that time, staff has received numerous inquiries about the possibility of tax exempt bond financing to assist in the acquisition of the project and the availability of the attendant 4% tax credits which are authorized by the federal government. With each inquiry, potential purchasers have been informed of the City's and Redevdopment Agency's policy to encourage home ownership. Consequently, Staffhas not been prepared to recommend that the City or Agency be the direct issuing authority for any bonds or provide any direr; subsidy, loan guarantees or other similar financial involvement if a project does not meet City and Agency objectives. Staffhas recommended, as an alternative, that the prospective buyers search out other bond issuing William A. Huston October 7, 1996 Page 2 agencies, such as the County of Orange, the California Housing Finance Agency, or other similar agencies. Fairfield Residential Corporation, operating under its parent company, Fairfield Holding Company, is the first potential buyer who has been successful in pursuing the County and other bonding authorities for financial assistance. They have entered into escrow with Shea Business Properties, and are working with the Countyof Orange to sell $13,500,000 in private activity bonds for multi-family housing. The County is acting through the Southern California Home Financing Authority (SCHFA), who has held the necessary hearings and authorized issuance of the bonds. An application, on behalf of Fairfield Holding, has been submitted to the California Debt Limit Allocation Committee as well as the California Tax Credit Allocation Committee by SCHFA. In using tax exempt bonds, Fairfield Residential also will receive 4% tax credits provided by the federal government. Receipt of these tax credits will place a covenant restriction on the property requiring that 60% of the units shall not exceed affordability standards for households at 60% of the Orange County median income for the thirty-year term of the bonds. While Fairfield Residential originally requested that 100% of the units be subject to covenant restrictions, staffindicated that both the City and the Agency have policies to disperse low income housing throughout the community, as well as throughout specific projects. Staff, therefore indicated that it would not recommend approval of a project with more than 60% of the units being subject to affordability restrictions. The following table indicates how this affects the rent structure for the units at Hampton Square compared to current market rents at Hampton Square: Unit Size Restricted Rent Current Rents at Rent Savings Hampton Square 1 bed/1 bath; 735 SF $659 $640-685 $0-26 2 bed/1 bath; 990 SF $791 $775-820 $0-29 2. bed/1 bath; 1036 SF $791 $780-840 $0-49 2 bed/1.5 bath; 1185 $791 $915 $124 SF Because the property is within the City of Tustin, a Cooperative Agreement is necessary between the County of Orange and the City. The agreement gives the County the authority to issue the bonds specifically for Hampton Square and specifically on behalf of Fairfield Holding Company. The agreement places no obligations on the City or the Redevelopmem Agency. In the'event Fairfield Holding defaults on the bonds, SCHAFA is the responsible agency. There are no provisions in the agreemem which would allow any bondholder or other aggrieved party to take action against the City under any circumstances. William A. Huston October 7, 1996 Page 3 The attached resolution No. 96-104 approves the Cooperative Agreemem subject to the provision that not more than 60% of the units be subject to covenant restrictions on affordability. Christine Shingleton Assistant City Manager ~ard Zirn~er/~~ Redevelopment/Pr, xSgram Manager i , ,.,// 10 11 12 13 14 15 16 17 18 19 2O 21 22 23 24 25 26 27 28 RESOLUTION NO. 96-104 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF TUSTIN ADOPTING A MULTI-FAMILY HOUSING FINANCE PROGRAM IN COOPERATION WITH THE COUNTY OF ORANGE WHEREAS, there is a shortage in the County of Orange (the "County") and 'in the.City of Tustin (the "City") of decent, safe and sanitary housing, particularly of housing affordable by persons in the lower end of the income spectrum, and a consequent need to encourage the acquisition, construction and rehabilitation of rental units affordable to such persons; and WHEREAS, the Board of Supervisors of the County has resolved to engage, in collaboration with other Southern California counties, as a member of the Southern California Home Financing Authority, a joint powers authority (the "Authority"), in a multifamily rental housing finance program (the "Program") pursuant to Chapter 7 of Part 5 of Division 31 of the Health and Safety Code of the State of California (the "Act") for persons and families within the income limits established by the Act, and to issue, through the Authority, revenue bonds pursuant to the Act to provide funds for the Program; and WHEREAS, this City Council finds and determines that it is in the best interest of the City'to adopt the Program and to consent to the implementation of the Program by the County and the Authority within the geographic boundaries of the City pursuant to the Act; NOW, THEREFORE, BE IT RESOLVED by the city Council of the City of Tustin as follows: SECTION 1. The City hereby adopts the Program for the purpose of preserving or maintaining the housing supply in the County and in the City and consents to the implementation of the Program by the County and the Authority pursuant to the Act with respect to: (1) the sale of the Hampton Square 350-unit apartment complex from Shea Business Properties to Fairfield Holding Company, the rehabilitation of the same and imposition of covenant restrictions on no more than 60% of the' total units to limit rents to 60% of the Orange County median income, and (2) such other properties located within the geographic boundaries of the City as may be approved in writing by the~ City manager. The City hereby authorizes the City Manager to approve, from time to time, other properties located within the geographic boundaries of the City, to be subject to the program and the Cooperative Agreement described in 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 Section 2, below. SECTION 2. The agreement between the County and the City (the "Cooperative Agreement"), in substantially the form submitted to this meeting, is hereby approved; and the City Manager is hereby authorized and directed to execute and deliver the same, for and in the name and on behalf of the City, and to approve any additions to or changes in the form of the Cooperative Agreement which he deems necessary or advisable, his approval of such additions or changes to be conclusively evidenced by his execution of the Cooperative Agreement as so added to or changed. The City Manager is further authorized to enter into such additional agreements with the County or the Authority, execute such other documents and take such other actions as he may deem necessary or appropriate to carry out the purpose and the intent of the Cooperative Agreement or to cooperate in the implementation of the Program. SECTION 3. This resolution shall take effect immediately upon its adoption. PASSED AND ADOPTED by the City Council of the City of Tustin at a regular meeting held o'n the 7th day of October 1996. Tracy Wills Worley Mayor Pamela Stoker City Clerk STATE OF CALIFORNIA ) COUNTY OF ORANGE ) CITY OF TUSTIN ) I, Pamela Stoker, City Clerk and ex-officio Clerk of the City Council of the City of Tustin, California, do hereby certify that the whole number of the members of the City Council of the City of Tustin is five; that the above and foregoing Resolution No. 96-104 was duly passed and adopted 28 10 11 12 13 15 16 17 18 19 20 21 22 23 24 25 26 27 28 at a regular meeting of the Tustin City Council, held on the 7th day of October, 1996, by the following vote: COUNCILMEMBER AYES: COUNCILMEMBER NOES: COUNCILMEMBER ABSTAINED: COUNCILMEMBER ABSENT: PAMELA STOKER CITY CLERK COOPERATIVE AGREEMENT BETWEEN THE COUNTY OF ORANGE AND THE CITY OF TUSTIN THIS COOPERATIVE AGREEMENT (the "Cooperative Agreement")dated as of October 1, 1996 is by and between the COUNTY OF ORANGE, a legal subdivision and body corporate and politic of the State of California (the "County"), and the CITY OF TUSTIN, a municipal corporation of the State of California (the "City"). WITNESSETH: WHEREAS, the County has determined to engage, in collaboration with other Southern California counties, as a member of the Southern California Home Financing Authority, a joint powers authority (the "Authority"), in a multifamily rental housing finance program (the "Program") 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") for the purpose.of financing the acquisition, construction or rehabilitation of multifamily rental housing in the County, all as provided for in the Act; and WHEREAS, the County has determined to cooperate with the City pursuant to the Act in the exercise, through the Authority, of its powers under the Act for the purposes of the Program; NOW, THEREFORE, in consideration of the mutual covenants hereinafter provided, the parties hereto agree as follows: SECTION 1. The words and phrases of this Cooperative Agreement shall, for all purposes hereof unless otherwise defined herein, have the meanings assigned to such words and phrases in the Act. SECTION 2. The County agrees to use its best efforts to undertake the Program, including the issuance by the Authority of revenue bonds pursuant to the Act as soon as practicable. SECTION 3. The City represents and warrants to the County that: (i) the City has adopted a general plan for the City in conformance with the provisions of the Planning and Zoning Law of the State of California (Government Code Sections 65000 et seq.), (ii) the general plan includes a land use element and a housing element as required by Government Code Section 65302, and (iii) the Program complies with the land use element and housing element. SECTION 4. The City agrees to cooperate with the County, through the Authority, in the exercise jointly or otherwise of their powers for the purpose of financing multifamily rental housing projects pursuant to the Act, by agreeing that, subject to the provisions of Section 5 hereof, the County, through the Authority, may exercise any and all of the City's powers for the purpose of making or acquiring loans under the Program, all as more specifically provided in the Act, with respect to (1) the sale of the Hampton Square 350-unit apartment complex from Shea Homes to Fairfield Holding Company, and the rehabilitation of the same, and (2) such other properties located within the geographic boundaries of the City as are approved in writing by the City Manager of the City. Nothing in this Cooperative Agreement shall be construed as enabling either the Authority or the County to act in the name of, bind, or incur any liability or obligation on behalf of, the City. SECTION 5. The City reserves to itself the right to undertake its own program of financing multifamily rental housing projects under the Act, provided that under no circumstances will the City conduct or participate in a multifamily rental housing finance program from which bond proceeds would be used to provide financing for any project for which the Authority has provided financing under the Program. PUl~C:42583_21109122840.0010 2 SECTION. 6. 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 Cooperative Agreement. This language shall not be construed as: (1) requiring the City to (a) actively participate in the implementation of the Program or the financing agreements entered into pursuant thereto, or (b) supervise or ensure County or Authority compliance with the Act; or (2) subjecting the City to liability on account of the failure of either the County or the Authority to (a) comply with the Act or the financing agreements entered into pursuant to the Program, or (b) otherwise implement the Program. SECTION 7. Nothing in this Cooperative 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 8. This Cooperative Agreement may be amended by one or more supplemental agreements executed by the County and the City at any time, except that no amendment or supplement shall be made which shall adversely affect the rights of the owners of any bonds issued by the Authority in connection with the Program. SECTION 9. It is the intention of the parties that this Cooperative Agreement shall remain in full force and effect at least as long as any bonds issued in connection with this Cooperative Agreement remain outstanding. SECTION 10. This Cooperative Agreement may be executed in counterparts, each of which shall be deemed to be an original, and such counterparts shall constitute one and the same instrument. ~'UBL:42583_21109122840.0010 3 IN WITNESS WHEREOF, the County and the City have caused this Cooperative Agreement to be executed and attested by their duly authorized officers, and have caused their official seals to be affixed, all as of the date first above written. COUNTY OF ORANGE (SEAL) SIGNED AND CERTIFIED THAT A COPY OF THIS DOCUMENT HAS BEEN DELIVERED TO THE CHAIRMAN OF THE BOARD OF SUPERVISORS By Chairman of the Board of Supervisors Clerk of the Board of Supervisors APPROVED AS TO FORM: County Counsel CITY OF TUSTIN (SEAL) ATTEST: By Mayor City Clerk APPROVED AS TO FORM: City Attorney ~,um.:42583_2 t 109122840.0010 4