HomeMy WebLinkAbout09 CONDUIT FINANCING FOR USA TUSTIN LEGACY 5 & 6 APARTMENTS PROJECTDocusign Envelope ID: A4C4519A-7DF8-43A1-B788-1E7EA41473BF
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Agenda Item
AGENDA REPORT Reviewed:
City Manager aS
Finance Director h
MEETING DATE: APRIL 21, 2026
TO: ALDO E. SCHINDLER, CITY MANAGER
FROM: JENNIFER KING, FINANCE DIRECTOR/CITY TREASURER
SUBJECT: CONDUIT FINANCING FOR USA TUSTIN LEGACY 5 & 6 APARTMENTS
PROJECT
SUMMARY:
Conduct a public hearing under the Tax and Equity Fiscal Responsibility Act ("TEFRA")
on April 21, 2026 in connection with the proposed issuance of revenue bonds by the
California Municipal Finance Authority (the "CMFA"), a joint exercise of powers authority
and public entity of the State of California, in an amount not to exceed $80,000,000, (the
"Bonds"), to finance and refinance the acquisition, construction, development and
equipping of a 334-unit (including four manager's units) multifamily rental housing project
located on an approximately 5.46-acre site generally bounded by Warner Avenue to the
north, Compass Avenue to the west, Legacy Road to the east and Airship Avenue to the
south (the "Project") in the City of Tustin.
RECOMMENDATIONS:
Recommend the City Council:
CONDUCT A PUBLIC HEARING UNDER THE REQUIREMENTS OF TEFRA
AND THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
"CODE"); and
2. ADOPT RESOLUTION 26-19, A RESOLUTION OF THE CITY COUNCIL OF
THE CITY OF TUSTIN APPROVING A PLAN OF FINANCE INCLUDING THE
ISSUANCE OF EXEMPT FACILITY BONDS BY THE CALIFORNIA
MUNICIPAL FINANCE AUTHORITY IN AN AGGREGATE OUTSTANDING
PRINCIPAL AMOUNT NOT TO EXCEED $80,000,000 TO FINANCE AND
REFINANCE A QUALIFIED RESIDENTIAL RENTAL PROJECT FOR THE
BENEFIT OF TUSTIN 738, L.P. (OR AN AFFILIATE), AND CERTAIN OTHER
MATTERS RELATING THERETO
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City Council Agenda Report
Conduit Financing for USA Tustin Legacy 5 & 6 Apartments Project
April 21, 2026
Page 2
FISCAL IMPACT:
The Bonds to be issued by the CMFA for the Project will be the sole responsibility of the
borrower, Tustin 738, L.P., and the City will have no financial and legal obligations, liability
or responsibility for the Project or the repayment of the Bonds for the financing of the
Project. All financing documents with respect to the issuance of the Bonds will contain
clear disclaimers that the Bonds are not obligations of the City of Tustin, the County of
Orange, or the State of California but are to be paid for solely from funds provided by the
Borrower.
The Board of Directors of the California Foundation for Stronger Communities, a
California nonprofit public benefit corporation (the "Foundation"), acts as the Board of
Directors for the CMFA. Through its conduit issuance activities, the CMFA shares a
portion of the issuance fees it receives with its member communities and donates a
portion of these issuance fees to the Foundation for the support of local charities. With
respect to the City of Tustin, it is expected that that a portion of the issuance fee
attributable to the City will be granted by the CMFA to the general fund of the City. Such
grant may be used for any lawful purpose of the City. The Borrower will be the beneficiary
of the CMFA's charitable donation through a 25% reduction in issuance fees.
CORRELATION TO THE STRATEGIC PLAN:
The recommendation correlates to the strategic plan by implementing Goal A. Economic
and Neighborhood Development, item 1d Develop critical phases of Tustin Legacy and
Coordinate development with other public agencies.
BACKGROUND AND DISCUSSION:
The CMFA was created on January 1, 2004 pursuant to a joint exercise of powers
agreement to promote economic, cultural and community development, through the
financing of economic development and charitable activities throughout California. To date,
over 350 municipalities have become members of CMFA, including the City of Tustin.
The CMFA was formed to assist local governments, nonprofit organizations and businesses
with the issuance of taxable and tax-exempt bonds aimed at improving the standard of living
in California. The CMFA's representatives and its Board of Directors have considerable
experience in bond financing.
USA Properties Fund, Inc., on behalf of Tustin 738, L.P., a California limited partnership has
requested that the CMFA serve as the municipal issuer of the Bonds in an aggregate
principal amount not to exceed $80,000,000 (together with a like amount of refunding bonds)
(the "Bonds") of tax-exempt revenue bonds. The proceeds of the Bonds will be used to
finance and refinance the acquisition, construction, development and equipping of a 334-
Docusign Envelope ID: A4C4519A-7DF8-43A1-B788-1E7EA41473BF
City Council Agenda Report
Conduit Financing for USA Tustin Legacy 5 & 6 Apartments Project
April 21, 2026
Page 3
unit (including four manager's units) multifamily rental housing project located on an
approximately 5.46-acre site located at Tustin Legacy.
In order for the Bonds to qualify as tax-exempt bonds, the City of Tustin must conduct a
public hearing (the "TEFRA Hearing") providing for the members of the community an
opportunity to speak in favor of or against the use of tax-exempt bonds for the financing of
the Project. Prior to such TEFRA Hearing, reasonable notice must be provided to the
members of the community. Following the close of the TEFRA Hearing, an "applicable
elected representative" of the governmental unit hosting the Project must provide its
approval of the issuance of the Bonds for the financing of the Project.
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Jennifer King
Finance Director/City Treasurer
Attachment:
1. Resolution No. 26-19
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RESOLUTION NO. 26-19
RESOLUTION OF THE CITY COUNCIL OF THE CITY OF TUSTIN APPROVING
A PLAN OF FINANCE INCLUDING THE ISSUANCE OF EXEMPT FACILITY
BONDS BY THE CALIFORNIA MUNICIPAL FINANCE AUTHORITY IN AN
AGGREGATE OUTSTANDING PRINCIPAL AMOUNT NOT TO EXCEED
$80,000,000 TO FINANCE AND REFINANCE A QUALIFIED RESIDENTIAL
RENTAL PROJECT FOR THE BENEFIT OF TUSTIN 738, L.P. (OR AN
AFFILIATE), AND CERTAIN OTHER MATTERS RELATING THERETO
WHEREAS, USA Properties Fund, Inc. (the "Sponsor"), on behalf of Tustin 738,
L.P., a California limited partnership, or another limited partnership of which the Sponsor
or a related person to the Sponsor is the general partner (such limited partnership being
referred to herein as the "Borrower"), has requested that the California Municipal Finance
Authority (the "Authority") undertake a proposed plan of finance that includes the issuance
and reissuance from time to time of one or more series of exempt facility bonds for a
qualified residential rental project pursuant to Section 142(a)(7) of the Internal Revenue
Code of 1986, as amended (the "Code"), in an aggregate principal amount not to exceed
$80,000,000 (the "Bonds") to finance and refinance the acquisition, development,
construction and equipping of a 334-unit (including four manager's units) multifamilyrental
housing project (the "Project") to be owned and operated by the Borrower and located on
an approximately 5.46-acre site generally bounded by Warner Avenue to the north,
Compass Avenue to the west, Legacy Road to the east and Airpship Avenue to the south
within the City of Tustin, California (the "City"), and;
WHEREAS, an "applicable elected representative" of the jurisdiction in which the
Project is located is required to approve the proposed plan of finance for the Project under
Section 147(f) of the Code; and
WHEREAS, the City Council of the City (the "City Council") is the elected legislative
body of the City and is an "applicable elected representative" of a governmental unit
having jurisdiction over the area in which the Project is located for purposes of conducting
a public hearing pursuant to Section 147(f) of the Code and Treasury Regulation Section
1.147(f)-1; and
WHEREAS, the Authority has requested that the City Council approve the
proposed plan of finance for the Project in order to satisfy the public approval requirement
of Section 147(f) of the Code and the requirements of Section 4 of the Joint Exercise of
Powers Agreement Relating to the California Municipal Finance Authority, dated as of
January 1, 2004 (the "Agreement"), among certain local agencies, including the City; and
WHEREAS, pursuant to Section 147(f) of the Code, the City Council has, following
notice duly given, held a public hearing regarding the issuance of the Bonds (the "TEFRA
Hearing") and now desires to approve the proposed plan of finance for the Project; and
WHEREAS, in evaluating the Project for purposes of this public hearing, the City
Council has relied upon the written facts, representations, and information presented by
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the Authority and the Borrower, and the City has made no independent investigation or
verification of such facts, representations, or information; and
WHEREAS, it is in the public interest and for the public benefit that the City Council
adopt this Resolution.
NOW, THEREFORE, BE IT RESOLVED, by the City Council of the City of Tustin,
California, as follows:
Section 1. The foregoing recitals are true and correct.
Section 2. The City Council hereby approves the proposed plan of finance for the
Project that includes the issuance and reissuance from time to time of the Bonds in an
outstanding principal amount not to exceed $80,000,000. It is the purpose and intent of
the City Council that this Resolution constitute approval of the proposed plan of finance
for the Project for the purposes of: (a) Section 147(f) of the Code by the applicable elected
representative of a governmental unit having jurisdiction over the area in which the Project
is located, in accordance with said Section 147(f) and Treasury Regulation Section
1.147(f)-1, and (b) Section 4 of the Agreement. Such approval is given solely to satisfy
the public approval requirement of Code Section 147(f) and Treasury Regulation
Section 1.147(f)-1, and does not constitute an endorsement, guaranty, or approval of the
Project or the financing thereof for any other purpose.
Section 3. The City, the County of Orange, and the State of California (and any
political subdivision, agency, or instrumentality thereof) shall have no obligation or liability
whatsoever with respect to the Bonds, the Project, or the plan of finance therefor, beyond
(i) conducting the TEFRA Hearing and (ii) making the findings set forth in this Resolution.
The Bonds shall not constitute a debt, liability, or obligation of the City, the County of
Orange, or the State of California, and neither the faith and credit nor the taxing power of
the City, the County, or the State shall be pledged to the payment of the principal of or
interest on the Bonds.
Section 4. The officers of the City 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.
Section 5. The City Clerk shall forward a certified copy of this Resolution to the
Authority in care of its counsel:
Ronald E. Lee, Esq.
Jones Hall LLP
4 West Fourth Avenue, Suite 406
San Mateo, CA 94402
Section 6. This Resolution shall take effect immediately upon its adoption.
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PASSED AND ADOPTED by the City Council of the City of Tustin, California, at a
regular meeting held on the 21st day of April, 2026.
AUSTIN LUMBARD,
Mayor
ATTEST:
ERICA N. YASUDA,
City Clerk
APPROVED AS TO FORM:
`v-K-
DAVID E. KENDIG,
City Attorney
STATE OF CALIFORNIA )
COUNTY OF ORANGE ) SS
CITY OF TUSTIN )
I, Erica N. Yasuda, 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. 26-19 was duly passed
and adopted at a regular meeting of the Tustin City Council, held on the 21st day of April,
2026, by the following vote:
COUNCILMEMBER AYES:
COUNCILMEMBER NOES:
COUNCILMEMBER ABSTAINED:
COUNCILMEMBER ABSENT:
COUNCILMEMBER RECUSED:
ERICA N. YASUDA,
City Clerk