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Home My WebLink AboutMINUTES - 03162004 - C.34 040 3f •: Contra '� �" ' Costa `� County TO: BOARD OF SUPERVISORS FROM: Dennis M. Barry, AICP Community Development Director DATE: March 16, 2004 SUBJECT: Multi-Family Housing Revenue Refunding Bonds SPECIFIC REQUEST(S) OR RECOMMENDATIONS(S) & BACKGROUND AND JUSTIFICATION RECOMMENDATIONS AFFIRM the County of Contra Costa's policy to preserve affordability in assisted projects, as set forth in Housing Program#8, and Table 6-47 of the Housing Element of the General Plan adopted on December 18, 2001 by, among other things, issuing multi-family mortgage revenue refunding bonds for projects previously financed by the County; APPROVE&AUTHORIZE the Deputy Director- Redevelopment to execute an Agreement for Subsequent Refunding of Multi-Family Mortgage Revenue Refunding Bonds—Byron Park Project by and between the County of Contra Costa and Byron Park, a California limited partnership; and APPROVE and AUTHORIZE the Chair of the Board of Supervisors to execute a letter to the Chair of the Board of the California Statewide Communities Development Authority and to the Chair of the Board of the California State Association of Counties advising these joints exercise of powers authority of the County's policy. FISCAL IMPACT None. This action will preserve the right of the County to preserve the affordability of affordable rental housing projects assisted by the County's previous issuance of tax exempt multi-family housing bonds. The County's costs in the issuance of such bonds, and the administration of affordability covenants and requirements are covered by the owners/developers of such projects. CONTINUED ON ATTACHMENT: X YES SIGNATURE: RECOMMENDATION OF COUNTY ADMINISTRATOR )kE OMMEND ON OF BOAR COMMITTEE PPROVE OTHER SIGNATURE(S): 4 ACTION OF BO R ON-March 16, 2004 APPROVED AS RECOMMENDED x OTHER VIS VOTE OF SU2711 ORS I HEREBY CERTIFY THAT THIS ISA x . UNANIMOUS (ABSENT TRUE AND CORRECT COPY OF AN AYES: NOES: ACTION TAKEN AND ENTERED ON THE MINUTES OF THE BOARD OF ABSENT: ABSTAIN: SUPERVISORS ON THE DATE SHOWN. Contact: Jim Kennedy 335-1255 orig: Redevelopment cc: County Administrator's Office ATTESTED March 16., 2004 County Counsel JOHN SWEETEN, CLERK OF THE Auditor Controller BOARD OF SUPERVISORS Community Development AND THE COUNTY 'DMINISTRATOR B4 . Ln Ld4EPUTY V s-cd\users$\I nobleVersonal\Board Orders and Greenies\BOA RI).ref u nd i n9bonds.3.04.doc BACKGROUND/REASONS FOR RECOMMENDATIONS In 1989 the County issued$20 million in Multi-Family Bonds to finance the construction of Byron Park,a 187- unit senior citizen congregate care facility in the Rossmoor area of the unincorporated County. The County's public benefit is 38 units(20%of the project)being restricted to affordable rents for the greater of 15 years,or the life of the bonds(term bonds with nominal term of 2031). The minimum 15 years runs from December, 1991 (when 50%of the units became occupied)to December,2006. The property is in an area that recently (11/03)annexed to the City of Walnut Creek. The developer recently refunded the County bonds to lower his interest rates. The issuer of the refunding bonds was the California Statewide Communities Development Authority(CSCDA). When the County renews its partnership with a project owners desiring a lower interest rate(or other deal changes that are generally viewed to be financially advantageous to the owner)by agreeing to issue refunding bonds,we do so in exchange for the owner agreeing greeing to at least a 10-year extension to the minimum term of affordability set forth at the time of the original deal, i.e., for Byron Park 10 years from December, 2006, to December, 2016. Generally speaking the developer recognizes that the affordable housing restriction will be longer than the minimum because it will be governed by the requirement that an affordability obligation exists so long as tax-exempt bonds are outstanding, however, there is always the potential where an owner could pay-off the bonds and avoid the affordability restriction before any minimum term has been reached. This is more likely to occur w*hen properties are sold,and new owners come on the scene. The likelihood of this occurring is greater for properties in higher value areas where market rents may make it financially attractive to get out from any restrictions. The Walnut Creek market is certainly a higher value market. CSCDA has no such policy;therefore their refunding bonds did not extend the minimum term of affordability at all. Despite the County being the issuer of the 1989 bonds,the owner of the Byron Park filed an application with CSCDA to refund (refinance) the bonds without the knowledge of the County. CSCDA is a joint powers authority created as a member service organization by the membership of the CSAC and the League of California Cities. When requested to complete the refunding with the County the owner of Byron Park, AF Evans Company, declined citing the adverse economic impacts of the County's requirement to extend the minimum term of affordability by 10 years. CSCDA refused to transfer the refunding transaction to the County as well,saying they had received an application from the owner. The recommendations are designed to affirm the County's policy objectives with respect to such transactions,and to serve notice to member organizations such as CSCDA and CSAC that the County is both capable of,and desires to complete its own transactions. The owner of Byron Park has also indicated a willingness to commit to the County that any subsequent refunding of the multi-family bonds on the property will be accomplished through the County. \\fs-cd\users$\lnoble\Personal\Board Orders and Greenies\BOARD.refundingbonds-3-04-doc The Board of Supervisors Contra John Sweeten County Administration Building Clerk of the Board 551 Pine Street,Room 106 Costa and Martinez,California 94553-1293 {925}335-1900 County Administrator John Gioia,1st District Counli-Y Gayle B.Uilkema,2nd District EA Millie Greenberg,3rd District •-� `"_ ': Mark DeSaulnier,4th District Federal D.Glover,5th District '�'• r v14c SyACUU='t�, March 16, 2044 Steve Szalay,Executive Director California State Association of Counties 1100 K Street,Ste.101 Sacramento,CA 95814 Jerry Burke,General Manager California Statewide Communities Development Authority 2175 North California Blvd.,#554 Walnut Creek,CA 94596 Dear Mr. Szalay and Mr. Burke: The County of Contra Costa has a long-standing commitment to achieving its affordable housing goals. A primary means by which we have accomplished this is by issuing tax-exempt bonds for multi-family housing. The County has financed almost 5,500 rental units with tax exempt bonds,over half of which have been in cities within the County. We are proud of our accomplishments in addressing this public policy need,and our record of partnership with our cities. As you may know,many of the tax exempt bonds issued for multi-f amily housing get ref inanced,or refunded,to deliver interest rate savings to owners,and to achieve other financial and operational objections.The County has done many of these ref undings. Pursuant to adopted policy of the Board of Supervisors the County requires a 14-year minimum extension to the term of affordability for project benefiting from a refunding. Recently the Byron Park Senior Assisted Living project in the Walnut Creek area requested and received the benefit of the sale of refunding bonds by CSCDA. The County policy of a minimum 10-year extension to the term of affordability was not part of the deal. The County was unaware that the owner had filed an application with CSCDA until it was too late to switch the refunding to the County. The issues surrounding the Byron Park transaction are of significant concern to us.CSCDA was created as a vehicle for conducting financial transactions. CSCDA is to be applauded for this service because,for many members,the issuance of multi-family bonds is an arcane area of public finance that is administratively complex to manage efficiently. This is not the case for Contra Costa County. Furthermore, it appears that CSCDA was as a competitor to the County,a member agency. This is not an appropriate activity for a member services organization. We are pleased that the owner of Byron Park has been sensitive to the public policy objectives of the County,and Has agreed to work with us in the future in pursuit of those objectives. In view of this episode, however,the Contra Costa County Board of Supervisors has reaff irmed its prior policies,and desires to put CSCDA and CSAC on notice of our position. G:\CDBG-REDEV\redev\JKennedy\board.szalay.3.04.doc Page 2 of 2 March 16,2004 If you or your staff have any questions please feel free to call Jim Kennedy, Deputy Community Development Director at (925)335-1255. Sincerely, F eral 6lo er,Chair and of Supervisors cc. Board of Supervisors John Sweeten,CAO Dennis Barry, Director of Community Director Norma Lammers, Deputy Executive Director,CSAC File JK:ln G:\CDBG-REDEV\redevVKennedy\board.szalay.3.04.doc