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Time Set # 43.
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| Board of Supervisors Meeting |
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| Subject |
| Public hearing to approve the issuance of tax-exempt bonds by the California Municipal Finance Authority for the Esperanza Crossing Affordable Housing Project, and to adopt the resolution approving the issuance of the Bonds by the CMFA. (No general fund impact) (Nunes/Eby) |
| Recommended Action |
- Conduct the public hearing under the requirements of the Tax and Equity Fiscal Responsibility Act ("TEFRA") and the Internal Revenue Code of 1986, as amended (the "Code").
- Adopt the resolution approving the issuance of the Bonds by the CMFA for the benefit of Mercy Housing California or another entity to be formed by Mercy Housing a California nonprofit public benefit corporation (the "Borrower"), to provide for the financing of the Project, such adoption is solely for the purposes of satisfying the requirements of TEFRA, the Code and the California Government Code Section 6500 (and following).
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| Strategic Plan Goal(s) |
Thriving Residents
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| Reason for Recommended Action/Background |
BACKGROUND
Mercy Housing California requested that the CMFA serve as the municipal issuer of the Bonds in an aggregate principal amount not to exceed $10,000,000. The proceeds of the Bonds will be used to: (1) finance the acquisition, construction and improvement of a 41-unit affordable rental housing project located at either side of Winter Street on Woodland Avenue (adjacent to the apartment project located at 16797 County Road 87) in Esparto, County of Yolo, California 95627, and known as Esperanza Crossing; and (2) pay certain expenses incurred in connection with the issuance of the Bonds.
In order for all or a portion of the Bonds to qualify as tax-exempt Bonds, the County of Yolo 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.
California Municipal Finance Authority
The California Municipal Finance Authority (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 200 municipalities have become members of CMFA.
The CMFA was formed to assist local governments, non-profit 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 financings.
The Joint Exercise of Powers Agreement provides that the CMFA is a public entity, separate and apart from each member executing such agreement. The debts, liabilities and Bonds of the CMFA do not constitute debts, liabilities or Bonds of the members executing such agreement.
The Bonds to be issued by the CMFA for the Project will be the sole responsibility of the Borrower, and the County will have no financial, legal, moral obligation, 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 Bonds of the County or the State of California, but are to be paid for solely from funds provided by the Borrower.
Participation by the County in the CMFA will not impact the County’s appropriations limits and will not constitute any type of indebtedness by the County. Outside of holding the TEFRA hearing, adopting the required resolution, no other participation or activity of the County or the County Supervisors with respect to the issuance of the Bonds will be required.
Financial Considerations
There is no direct or indirect financial impact to the County of Yolo as a result of this proposed financing. The Authority will issue tax-exempt bonds on behalf of the Project. The tax-exempt bonds are payable solely out of the revenues derived by the Borrower form the applicable project. No financial obligations are place on the County for project financing costs or debt repayment.
The Board of Directors of the California Foundation for Stronger Communities, a California non-profit 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 County of Yolo, it is expected that 25% of the issuance fee will be granted by the CMFA to the general fund of the County. Such grant may be used for any lawful purpose of the County. The Borrower will be the beneficiary of the CMFA’s charitable donation through a 25% reduction in issuance fees.
SUMMARY
In light of the foregoing, and in order to support affordable housing, staff recommends that the County conduct the TEFRA Hearing and adopt the resolution in favor of the issuance of the Bonds by the CMFA. |
| Collaborations (including Board advisory groups and external partner agencies) |
Mercy Housing
California Municipal Finance Authority
Yolo County Board of Supervisors |
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| Fiscal Impact |
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| Source of Funds for this Expenditure |
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