BRIDGE Housing Corporation, sponsor for the development of Trestle Glen Apartments, a 119-unit affordable housing project located adjacent the Colma BART Station, would like to finance the construction with tax-exempt bond proceeds issued by CMFA. This project has appeared in front of the Board seven times – related to requesting County approval for various types of financing, including restructuring the financing, and once related to relocation issues. In terms of financing, the Board has specifically approved a total of $10.645 million of loans comprising the following: HOME ($1,378,492); CDBG ($621,508), HELP ($1.5 million), and a Section 108 ($7.145 million).
BRIDGE has requested the County to hold the subject public hearing and to adopt a resolution approving the bond financing to be issued by a third party, CMFA.
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BRIDGE, through Trestle Glen Associates, L.P., an affiliate limited partnership formed for the Project, desires to secure tax-exempt multi-family housing revenue bond financing of up to $30 million for construction, with $9 million to be converted to permanent financing upon Project completion. Tax-exempt bond financing for this project would be issued by CMFA, a joint powers authority created with the specific goal of strengthening local communities through issuance of tax-exempt bonds for economic development activities throughout the State of California. As part of CMFA’ s normal course of business, it shares 25% of its fees with the host jurisdiction, in this case, the County, and donates another 25% to the California Foundation for Stronger Communities for the support of local charities.
For the multi-family housing bonds to earn a tax-exempt status, the governing body of the local jurisdiction in which the project is located must hold a public hearing following a reasonable public notice and adopt a resolution approving the proposed tax-exempt financing. Known as the TEFRA hearing under the Tax Equity and Fiscal Responsibility Act of 1982, Section 147(f) of the Internal Revenue Code of 1986, this public hearing is to provide interested parties the opportunity to testify on matters related to the bond issue, including the nature and location of the proposed project.
The interest on the bonds would be tax-exempt for the bond buyer and, as such, bond buyers would accept a lower interest rate on the bonds. This would ultimately result in a lower interest cost to construct Trestle Glen Apartments. In return, the housing is required to meet certain affordability requirements, which is not an issue for Trestle Glen Apartments, which will be 100% affordable to extremely low- and very low-income families.
Although the County would be approving the bond financing for the purposes of federal tax law and the IRS, the County will not have any financial liability for the bond. The County, in holding the hearing, assumes no liability for the financing. Evidence of the TEFRA hearing, including an affidavit of publication, and the Board resolution approving the bond financing are prerequisites before the California Debt Limit Allocation Committee (CDLAC) can review BRIDGE’s applications for private activity bond allocation needed to issue tax-exempt bonds. BRIDGE intends to submit the appropriate documentation for the May 28, 2008 CDLAC meeting.
Obtaining an allocation of tax-exempt private activity bonds for multi-family housing will automatically entitle the project to receive 4% Low Income Housing Tax Credits (LIHTC). It is BRIDGE’s intention to leverage tax-exempt financing with LIHTC.
A complete electronic copy of this report and all referenced resolutions and agreements are available online and a complete paper version is available for review in the Clerk of the Board’s office.
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