To: Board of Supervisors
From: John Kopchik, Director, Conservation and Development
Report Title: Multifamily Housing Revenue Bonds - Mayfair Affordable in El Cerrito
☒Recommendation of the County Administrator ☐ Recommendation of Board Committee
RECOMMENDATIONS:
ADOPT a resolution authorizing the issuance of multifamily housing revenue bonds ("Bonds") designated as “County of Contra Costa, California, Multifamily Housing Revenue Note (Mayfair Affordable), 2024 Series A” in an amount not to exceed $35,141,577, to finance the acquisition and construction of a 69-unit multifamily residential rental housing development known as Mayfair Affordable located at 11690 San Pablo Avenue in El Cerrito, California (the "Development").
1) FIND and DECLARE that the recitals contained in the proposed resolution are true and correct;
2) APPROVE the form of, and authorizing the County to execute, the Funding Loan Agreement among the County (the “Governmental Lender”), BMO Bank N.A, a national banking association, in its capacity as Initial Funding Lender (the “Initial Funding Lender”), and U.S. Bank Trust Company, National Association (the “Fiscal Agent”) regarding the Governmental Lender sale of the Bonds to the Initial Funding Lender for the purpose of loaning the proceeds to Mayfair Affordable Housing L.P., a limited partnership duly organized and existing under the laws of the State of California (the “Borrower”);
3) APPROVE the form of, and authorizing the County to execute, the Project Loan Agreement among the Government Lender, the Fiscal Agent, and the Borrower regarding the County loan of Bonds proceeds to the Borrower;
4) APPROVE the form of, and authorize the County to execute, the Regulatory Agreement and Declaration of Restrictive Covenants among the County and Borrower;
5) Authorize the delivery of the Note by the County to the Funding Lender as the initial purchaser of the Note;
6) APPOINT Stradling Yocca & Rauth, LLP as bond counsel for the transaction;
7) ACKNOWLEDGE that adoption of this resolution does not relieve or exempt the project sponsor from obtaining required permits or approvals, nor obligate the County to incur any obligation to provide financial assistance with respect to the Bonds or the Development; and
8) AUTHORIZE and DIRECT the Chair of the Board of Supervisors, the Vice-chair of the Board of Supervisors, the County Administrator, the Director of the Department of Conservation and Development, the Assistant Deputy Director of the Department of Conservation and Development, County Counsel and the Clerk of the Board to take any and all actions and execute and deliver any and all certifications, agreements, and other documents needed in connection with the Bonds.
FISCAL IMPACT:
No impact to the General Fund. At the closing for the Bonds, the County will be reimbursed for any costs incurred in the issuance process. Annual expenses for monitoring of Regulatory Agreement provisions ensuring units in the Development will be rented to low-income households will be reimbursed through issuer fees established in the documents for the Note. The Note will be solely secured by and payable from revenues (e.g. Development rents, reserves, etc.) pledged under the Note documents. No County funds are pledged to secure the repayment of the Note.
BACKGROUND:
The recommended action is the adoption of a resolution by the Board of Supervisors, as the legislative body of the County, authorizing the issuance of multifamily housing revenue bonds, the proceeds of which will be used to finance the acquisition and construction of a residential housing development known as Mayfair Affordable, a single 6-story building with 69-units, which includes 68 low-income and very low-income units for households earning between 30% and 60% of area median income (AMI) and one manager’s unit located at 11690 San Pablo Avenue in El Cerrito (the “Development”). The ownership and operating entity for the Development will be Mayfair Affordable Housing LP (the “Borrower”), a California limited partnership. The Development will be managed by BRIDGE Property Management Company (BPMC).
Department of Conservation and Development staff held a noticed public hearing on January 9, 2024, to permit interested parties to comment on the proposed financing and the Development. No comments were received from the public. The Board adopted Resolution No. 2024-33 on February 6, 2024, to authorize proceeding with the issuance of the Note for the Development pursuant to Section 147(f) of the Internal Revenue Code and the submittal of an application by the County for tax-exempt private activity bond authority from the California Debt Limit Allocation Committee (CDLAC). On December 6, 2023, CDLAC awarded the County authority to issue the Bonds in a maximum principal amount of $35,141,577 through its Resolution No. 23-247.
The structure of the financing will be one note (the term “note” is interchangeable with “bond” as they both evidence a borrowing). The County of Contra Costa, California Multifamily Housing Revenue Note (Mayfair Affordable Apartments), 2024 Series A (the “Note”) will be purchased by BMO Bank (the “Initial Funding Lender”) and the proceeds of the sale will be loaned by the County to Mayfair Affordable Housing LP (“the Borrower”) to finance the construction of the Development. The loan will be assigned to US Bank Trust Company (the “Fiscal Agent”). The transaction is expected to Close on or about May 22, 2024.
The Development will be one hundred percent affordable with 68 units affordable to households earning between 30% and 60% of AMI, plus one manager’s unit. A Regulatory Agreement governing these affordability restrictions will be recorded against the property.
CONSEQUENCE OF NEGATIVE ACTION:
Negative action would prevent the County from issuing the Multifamily Housing Revenue Note in order to provide a loan to Mayfair Affordable Housing LP to finance the acquisition and construction. Without the loan to Mayfair Affordable Housing LP, the development will be delayed or possibly not be built.
THE BOARD OF SUPERVISORS OF CONTRA COSTA COUNTY, CALIFORNIA
and for Special Districts, Agencies and Authorities Governed by the Board
body
IN THE MATTER OF Resolution No. 2024/
RESOLUTION AUTHORIZING THE ISSUANCE OF A MULTIFAMILY HOUSING REVENUE NOTE IN A PRINCIPAL AMOUNT NOT TO EXCEED $35,141,577 TO FINANCE THE CONSTRUCTION OF A MULTIFAMILY RENTAL HOUSING PROJECT FOR MAYFAIR AFFORDABLE HOUSING LP, AND OTHER MATTERS RELATING THERETO
WHEREAS, the County of Contra Costa (the “County”) is authorized pursuant to Chapter 7 of Part 5 of Division 31 of the Health and Safety Code of the State of California (the “Act”) to issue bonds and notes for the purpose of financing multifamily rental housing facilities; and
WHEREAS, Mayfair Affordable Housing LP, a California limited partnership (the “Borrower”) has requested that the County issue a multifamily housing revenue note (the “Note”) and loan the proceeds of the Note to the Borrower to finance the development by the Borrower of 69 units of residential rental housing located at 11690 San Pablo Avenue in the City of El Cerrito, California (the “Development”); and
WHEREAS, on January 9, 2024, the Community Development Bond Program Manager of the County held a public hearing on the proposed issuance of the Note by the County for, and the financing, ownership and operation of, the Development, as required under the provisions of the Internal Revenue Code (the “Code”) applicable to tax-exempt obligations, following published notice of such hearing, and communicated to the Board of Supervisors of the County all written and oral testimony received at the hearing; and
WHEREAS, on February 6, 2024, the Board of Supervisors of the County adopted Resolution No. 2024-33 authorizing the issuance of the Note to finance the Development in satisfaction of public approval requirements of the Code; and
WHEREAS, the California Debt Limit Allocation Committee adopted its Resolution No. 23-247 on December 6, 2023, allocating $35,141,577.00, of the State of California ceiling on private activity bonds for 2023 to the County for the purpose of financing the Development; and
WHEREAS, in order to assist in the financing of the Development, the County has determined to issue the Note, as authorized by the Act, and sell the Note to BMO Bank N.A., as initial funding lender (the “Funding Lender”) pursuant to a funding loan agreement (the “Funding Loan Agreement”) among the County, U.S. Bank Trust Company, National Association, as fiscal agent (the “Fiscal Agent”), and the Funding Lender, and to use the proceeds of the sale of the Note to the Funding Lender to make a loan to the Borrower pursuant to a project loan agreement (the “Project Loan Agreement”) among the Fiscal Agent, the County and the Borrower, with amounts due from the County to the Funding Lender under the Note and the Funding Loan Agreement to be payable solely from amounts paid by the Borrower under the Project Loan Agreement; and
WHEREAS, there have been prepared various documents with respect to the issuance by the County of the Note, copies of which are on file with the Clerk of the Board, and the Board of Supervisors now desires to approve the issuance of the Note and the execution and delivery of such documents by the County; and
WHEREAS, all conditions, things and acts required to exist, to have happened and to have been performed precedent to and in connection with the issuance of the Note as contemplated by this Resolution and the documents referred to herein exist, have happened and have been performed in due time, form and manner as required by the laws of the State of California, including the Act.
NOW, THEREFORE, BE IT RESOLVED, by the Board of Supervisors of the County of Contra Costa, as follows:
Section 1. The Board of Supervisors hereby finds and declares that the foregoing recitals are true and correct.
Section 2. Pursuant to the Act and the Funding Loan Agreement, the Note designated as “County of Contra Costa, California, Multifamily Housing Revenue Note (Mayfair Affordable Apartments), 2024 Series A” in an aggregate principal amount of not to exceed $35,141,577.00, is hereby authorized to be issued. The Note shall be executed by the manual or facsimile signature of the Chair of the Board of Supervisors (the “Chair”), in the form set forth in and otherwise in accordance with the Funding Loan Agreement.
Section 3. The Funding Loan Agreement between the County and the Funding Lender, in the form on file with the Clerk of the Board, is hereby approved. Any one of the Chair of the Board of Supervisors, the Vice-Chair of the Board of Supervisors, the County Administrator, the Director of the Department of Conservation and Development, the Assistant Deputy Director of the Department of Conservation and Development and the Community Development Bond Program Manager (collectively, the “Designated Officers”) is hereby authorized, for and in the name and on behalf of the County, to execute and deliver the Funding Loan Agreement in said form, together with such additions thereto or changes therein as are recommended or approved by the Designated Officer executing the Funding Loan Agreement upon consultation with Bond Counsel to the County (including such additions or changes as are necessary or advisable in accordance with Section 8 hereof, provided that no additions or changes shall authorize an aggregate principal amount of the Note in excess of the amount set forth in Section 2 above), the approval of such additions or changes to be conclusively evidenced by the execution and delivery of the Funding Loan Agreement by the County. The date, maturity date, interest rate or rates, privileges, manner of execution, place of payment, terms of redemption and other terms of the Note shall be as provided in the Funding Loan Agreement as finally executed.
Section 4. The Project Loan Agreement among the Fiscal Agent, the County, and the Borrower, in the form on file with the Clerk of the Board, is hereby approved. Any one of the Designated Officers is hereby authorized to execute and deliver the Project Loan Agreement in said form, together with such additions thereto or changes therein as are recommended or approved by the Designated Officer executing the Project Loan Agreement upon consultation with Bond Counsel to the County (including such additions or changes as are necessary or advisable in accordance with Section 8 hereof), the approval of such changes to be conclusively evidenced by the execution and delivery of the Project Loan Agreement by the County.
Section 5. The regulatory agreement and declaration of restrictive covenants between the County and the Borrower (the “Regulatory Agreement”), in the form on file with the Clerk of the Board, is hereby approved. Any one of the Designated Officers is hereby authorized, for and in the name and on behalf of the County, to execute and deliver the Regulatory Agreement in said form, together with such additions thereto or changes therein as are recommended or approved by the Designated Officer executing the Regulatory Agreement upon consultation with Bond Counsel to the County (including such additions or changes as are necessary or advisable in accordance with Section 8 hereof), the approval of such additions or changes to be conclusively evidenced by the execution and delivery of the Regulatory Agreement by the County.
Section 6. The Note, when executed, shall be delivered by the Fiscal Agent to the Funding Lender (as the initial purchaser of the Note), in accordance with written instructions executed on behalf of the County by any one of the Designated Officers of the County, which instructions said officers are hereby authorized, for and in the name and behalf of the County, to execute and deliver. Such instructions shall provide for the delivery of the Note by the Fiscal Agent to the Funding Lender upon the funding by the Funding Lender of the purchase price of the Note as described in the Funding Loan Agreement.
Section 7. The law firm of Stradling Yocca Carlson & Rauth LLP is hereby designated as Bond Counsel to the County for the Note. The fees and expenses of such firm for matters related to the Note shall be payable solely from the proceeds of the Note or contributions by the Borrower.
Section 8. All actions heretofore taken by the officers and agents of the County with respect to the issuance of the Note are hereby approved, confirmed and ratified, and the proper officers of the County, including the Designated Officers, are hereby authorized and directed, for and in the name and on behalf of the County, to do any and all things and take any and all actions and execute any and all certificates, agreements and other documents, which they, or any of them, may deem necessary or advisable in order to consummate the lawful issuance and delivery of the Note in accordance with this Resolution, including but not limited to subordination agreements providing for the seniority of the covenants and affordability restrictions in the Regulatory Agreement and any other certificates, agreements and documents described in the Funding Loan Agreement, the Project Loan Agreement or the Regulatory Agreement, or otherwise necessary to issue the Note and consummate the transactions contemplated by the documents approved by this Resolution.
Section 9. This Resolution shall take effect upon its adoption.