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Home My WebLink About0517.094TO: HONORABLE CITY COUNCIL FROM: CITY MANAGER DEPARTMElII.: PIoaai., AGElIIllA DATE: Nov.mber 21, 1'194 CMR:517:94 SUBJECI': g...,l.tio. A ppro'i11 , Cooponoti ... Acn<lJIn, !knr.u t ... HOIl<iBI Authority of the CO.DIy of SantA C1u1I ~.d the Cit} of P.1o Alto to Issue Revenut Bo~d.s t(l Finlncf tbe Prf'5.f'n-:ation Dr Ar2H!'ldfY'O Park ApartmtDh: .s i..o,"' Tn('omr Rent .. J HOY!iflg COUIlCil aClkm is reque$ted to J(hp! a rCO::01uitOn ;lrrr(1.\'i;1~ '" ('~<>r'-"..'ll\ c 3~·\:t'mer~1 \" iLh the I-lousing Authority of Shlltd Cla.ra Cown;.' [n pemlil ~h i'~U.l.!-I~'l~ of L,l,\-nemri n.'"\-.l1U;: bonds by the Housing Authority to finance the rr~~er\'a(ion ,)f A!J.:'Ir,l{Jer.) P,:r!.. Apartmt:n!s as low income rental hou.s~ng. RECOMMENDATIONS Staff ,eeonunends lhat the City Counci I: I. Adopt the attached rcro]ution appro\·jng the attached cooperatin:· agreement with !tIe Housing At..1hority of the County of Santa Clara.,. .. shieh aiut."oriz.es til:: Howing Authority to issue tax-exempt revenue bonds to finance !.he acquisition and rehabilitation of the Arastradero Park Apartments for its (ontinueJ use 4. .. low i.ncome renlal housing. 2. Authorize the: Mayor to execute the cooperative agreement in substantially similar form to the attacheJ agreement fonn. POLICY IMPLICATIONS This agreement does not represent any change to existing City policies. CMJI,517,94 "",'0(4 i I I I ----", , "-. • Ii 11. EXECUTIVE SUMMAlti On September 20, 1994, the Housing Authority adopted. resolution of intent to act as th, bond issuer. Approval of a tooperntive agreement is. necessary ul1d,er State lav.. to authorize the Housing Authority to act as bond issuer for a housing project within the City's boundaries. Tax-exempt bond fmancing is nccC'ssat')' to make the p~"ct financially feasible under federal regulations. UtiliUlion of bond fmancing will significantly reduce ~~e totil project costs, which, in nun. ~illlimit the need for Cit)' assistance. BACKGROUND The Palo Aita Housing CO!pQTation (PAi·Ie) is sponsoring the purchase of the 6Ii unit A.rastradero Park Apartments under th: provisions of Tille Vl of the federaf Low Jncc'm~ Housing Preservation and Resident Hmneownership Act (UHPR1L<\) PAHC nas formed a ne ..... ', tax-exempt nonprofit cntily(.;alled Arastradero Park Aranmel1t" Corporal ion (AP . .!..C) to ov.'!1 and operate thl'! project. Two of the fLve board nH~mher:, of APAC art (enanb in the project. APAC entered into n purch!.3se agreem~J1t for the property on ~.-i;"." j, 19.9-t. Es.:row i~ scheduled to dose by March 1,1995. 011 fvfay 16, 1994, Council iiHocated $345,000 in FY 94-95 Curnmunity Development Block Granl funds for acquisition and rel.:ttcd C,1StS and, (m June 20, 1994, the Cit), entered into a contI-ac( w~th PAHC 'Providing lip to S10,OOG fo.,r predcve!opmcnt expenses. In addition, PAHC has a tcdmic.l1 assistance gran! from HUD fl',r third pany costs and PAHC administration. On August 30, 1994, PlIHC submitted its Plan of AClion 10 HUD. as ,,~uired by Ti,1< VI. The Plan is ba..~ically an appllcation for Hlf» insurance on the Hnandng and for a rent subsidy assistance package tha! will make the projecl feasible. It is hoped that HUD will complete its review of the Plan by the end of Tlle )'ear. Tax-exempt bond fmancing results in a lower mortgage i:J.terest rate. However, even \\.ith bond financing, the project exceeds the Title Vl progra.'fJl'S CO:it limits, due to a combination of facton;. One faclor is the acquisition price of $7,029,000; the price was sct b), mID based on HUD's appraisal and that of the ,eller. Another factor is the amount of rehabilitation ($518,000) L'at PARC has detennioed is necessary to correct deterioration. deferred maintenance and ~afety problems cited b)' PARe's inspec!;ion reports. This amOUl1t contrasts with the $74,038 in repairs tIl.t HUD initially identifled last January as part of HUD's appraisal process. PAHC has applied to HUrl for a grant of almost $600,000 10 cover the excess costs. If HUD refuses to make the gran~ or offers 001)' partial funding, PAHC pwoobly wili ask the Cily for additional CDBG funds. Acquisition, prede\'eiopment and rehabilitation are eligible cost .. under CDBO re.g:ulatiGm. There is presently (l S27Y,5l:' unallocated balance in the FY 94-95 CDBG housing fund that could be added to the CMR:517:94 Pagt 2 or 4 \ 5345,000 in CDBG funds already ~udgeted for acquisition and predevelopment costs for the ArasIradc:ro Park project. "seAL WPAcr Approval oftbe cooperative agreement does not involve any financial obligation or risk on !he part of the City in COIIJlection with the bond issuance. The costs of the bond issuance wiU be paid out of the bond~. A default by the borrower would not affect the City's booci r.uing. That risk, to fu<, extent that it does exist, will be borne by the Housing Authority as the bond issuer. Ufr.1RONMENTAL .ASSESSMENT Ap:proval of thi,; agreement i8 categorically exempt under Se .. ·tion 15326 of the California Environmental Qualii)' Act (CEQA) Guidelin.s. ATTA.CHMENTS !. Re'iolution Approvlng Cooperafive Agrceme,nt Between the Housing Authority of the Count)' of Santa Clara and t.~, Cit)" of Palo AIiQ 2. Cooperative Agreement Bel\;'een the Housing Authority of the County of Santa Clara and the City of Palo Alto PREPARED BY: Catherine Siegel, Housing Coordinator DEPARTMENT HEAD REVIEW: CITY MANAGER APPROVAL: CMIt:$I7,<U Director of Planning and Community Envirorunent Bcp..,,"=' hi. STROJNY A.!sistaat Manager Pqe30f4 o cc: Housing AtIIhorit)' of the Coon!)' of Santa Clara Palo Alto Housing Corporation c..Iifurnia Housing Parm=hip CO<pOnItion Orrick. Henington ond Sut< liffe CDBG Ci!izzn ,\chi"", Committee CMR.:511:frr4 • Pq. 4 ol4 . ...;:' RESOLUTION NO. RESOLOTION APPROVING COOPERATIVE AGRE~ENT BE1"WE!:H THE HOUSING AlITHORlTY OF T:ofE CO'ON'l''t OF SANTA CI..A.RA J\N1) THE eIT't OF PALO ~'i'O WHEREAS, the Bousinq Authority of the County of Santa Clara (tb. -County Rousing Authority·) h~s deterained to enq~q~ in a .ulti!a.ily rental housing finance p~oqra. pursuant to Section 34312.3 of th~ Health and Safety Code of th8 State of CalifQrnia and related provisions (the WAct-) I and to issue reVEnUe bonds to finance the construc~ion ~r acquisition of sultitnily rental housing in the: county of. Santa Clara, all as provided for in toe Act (the ~Progr~~~}i .... '"!iERE.-\.Sr the County Eo,,"sing .J,uthi)["ity h:;s deten=ined to cooperate. with tne City pursuant to the Act in tr,,,,: exercise of its pO',wers under tt~t> Ac{ dr,d t'r:e Frogr,,)!,, to!: tr."" F',"rposc at financing the acquisition an::!; reh.~"}):~L:ticn cd d J::1.11tifa1:.11y rental housing deveicp~£'.nt: in. t;--,p Cit), -:,f Palo !-,.lto (the:, "cityll) known as AI:"a£trad~rQ Par)~ f'f'.:o:rt!"'.ents [t'nr "f'rc~lcct":, ' .. ·hich \,,rill be (;'<med by a nonprofit p'.,bli.c cent,.{jt cOr'{:."or.:tict) r,.nd is int~nd€d to be o~cupied ill part Ly lG~ inco~e fe~5cns; ar~d hl-iEF.fAS, the City has d<=t~r::-,inej to cc'cperat.e · ... ith the County Housing Authority pursuant to the Act in t.he exercise ot' its pO'Jiers under the Act and the Pr09::-a~ for 5~ id purposes; NOW I THEREFORE r the Co:.!ncil of t.he City of Palo Alt.Q does RESOLVE as !0110"'5 ~ 1. The proposed forn of' coopE.!.rativE agree'I!JE".nt (the "Cooperative Agree.ment") between U.e CO'Jnty Hou.;; j r:g Author i ty and the CitYI in sUhstantially t-he [orit! presonted to t.'1ls I:.eeti.'1g, is hereby approved~ 2. The Mayor if> here.by aut-h.;)rized arHj directed, for and in the name and on bP....halr of tt-.e Cit)', to execute and deliver the Cooperative Aqreement in substantially said fora, with such additions thereto or changes therein as suet! officers =ay recommend or approve upon con5~ltation vitn counsell tr.e approval of such. additions or changes to be evidenced c.:1-nclusive1't' by the execution and delivery of the COC1perative A'::Jree:7.ent. .' • o • ""l..- z.~~~~r :''};-~. ~\\'. ·'·~f.f· 3. This resolut.l.on sh.all take ett"ect h:.mediately upon its passage and adoption. INTRODOCED AND PASSED: A'lES: NOES: ABSENT: ABSTENTIONS: ATTEST, City Clerk ---- APPROVED AS 'TO F0R11: SPHkl'U 2 Jo..PPR0VEO: -------C-ity .~~;na']er- Directoi of Finance- --oTre-ct-or of PlannTf,~- Con-.rtI.unity Environ=:ent. ---..:.---" ~-..-.-.. <.-- -ATTACHMENT ? COOPEAATIVE AGREEMnIT BETWEEN TIlE HOUSING AUTHORITY OF THE COUIITY OF SANTA CLAM AND THE CITY OF Pt.LO ALTO THIS COOPERATIVE AG~ (the -Aqreement M ) t dated for convenience as of November ,1994, by and between the Housinq Authority of the county of santa Clara (the "county Housinq AuthoritY")1 and the City of Palo A1to (the ~City~). Ii'ITNESSETIl: WHEREAS, the County Housing Authority has determined to anqaqe in a .ultife~ily rental housing finance proqrAm pursuant to Section 34312.3 ot the Health and safety Code of the State of California a.nd rela.t.ed provisions (the "Act"} to issue. 'revenue bonds to finance the construction or acquisition and rehabilitation of multifamily rental housing in the County. all as: provided for in the Act {the lIProgral'!l"}; WHEREAS, the county Housing Authority has determined to c(,).'lperate with the city pursuant to the Act in th~ exercise of :i.t!l p::lwers under the "l\ct and the Program fen" the purpose. of financing tt~6 acquisition ano rehabil i te'l.tion of a !:luI tifanil~' re.ntal housing clevelopment in the City knmm as Ar2lstrads .. "o Padt. Apartments (the i!Proj.ect"J; and WH~"S, the City has determined to cooperatp. with the county Housing Authority pursuant to the Act in the exercise of its po~er~ under the Act and the Program for said purpose; NOW, THEREFORE I in consideration of the mutual covenants hereinafter provided/ the parties hereto agree as follows: SECTION 1. The terms u~ed in this Agreement shall. for all Purp¢s~s of this Agreement, unlees otherwise d~fined herein, have the me3n'inqs essiqned to such tel"lnS in the Act. SECTION 2~ The county Housing Authority agrees to undertake the Proqram and to issue revenue bonds for the Project pursuant to the Act as soon as practicable. SE'CTIDH ;). The city hereby agrees that the county Housing Authority :may ma.ke or acquire mortgaqe loans uncier the Proqram, all as Qore specifically set forth in the Act, with respect to the Proje.ct and further agrees that the County Housing Authority way exercise any Qt' all of the powers of the City for the purpose of rlnancinq mortgage loans pursuant to the Act and the Program wit~ respect to the Project. SEctION 4. Nothing in this Agreement shall prevent the county Housing Authority from entering into one or more. agreements with other political subdivisions within the County, • I -,'1 • o it d...-d necessary and advisable to de so by the county Housing Authority. SICTIOH 5. This Agreement ma:), be amended .by one or sor. auppleaental aqreaaanta executed by the county Housinq Authority and the city at any tUwt, except that no such amendment or aupple.ent ahall be .. de which shall adversely affect the right. ot the holder. ot any bonds issued hy the County Housing Authority purauant to the Act in connection with the Program. SECtION 6, The tara of this Agreement shall extend until the bonds ia&ued to finance the Project are fully paid and reti--ed, or, it bonds are not issued to finance the Project, throuqh Decesbe.J' 31, 1995 ~ IN WITNESS WHEREOF, the parties have caused this Agreeeent to be executed by their proper officers thereunto duly authorized, all as of the day first above Written. CITY OF PALO AL'i'O ;We,yor----- ATTEST: city Clerk APPROVED AS TO FORM: Senlor Asst. city Attorney APPROVED: Di~ector or PlannIng ~nd Comaunity Environment oirector of Flnance 2 --~----~-- HOUSINr. AUTHOJUT'i OF THE COUNTY OF SANTA CI..ARA