City Council Agenda
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Memo to: |
Manteca City Council |
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From: |
Shay Narayan, Director of Finance, Barbara Harb, Interim Director of Development Services, Vielka Guarascio, Homeless & Housing Services Manager |
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Prepared by: |
Shay Narayan, Director of Finance and Vielka Guarascio, Homeless & Housing Services Manager |
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Date: |
October 1, 2024 |
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Subject: |
Conduct a public hearing under the Tax and Equity Fiscal Responsibility Act (TEFRA) in connection with the proposed issuance of revenue bonds by the California Municipal Finance Authority (CMFA) |
Recommendation:
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Conduct the public hearing under the requirements of TEFRA and the Internal Revenue Code of 1986, as amended (“Code”) and adopt a resolution approving the issuance of the Bonds by the CMFA for the benefit of Bold Communities (“Sponsor” and, together with the LP, “Borrower”), to provide financing of the potential Project (not a project pursuant to CEQA guidelines 15378(b)(4))
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Background:
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. 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. To date, over 200 municipalities have become members of CMFA.
The Borrower requested that the CMFA serve as the municipal issuer of the Bonds in an aggregate principal amount not to exceed $40,000,000 (together with a like amount of refunding bonds) (“Bonds”) of tax-exempt revenue bonds. The proceeds of the Bonds will be used to finance and refinance the acquisition, construction, development and equipping of a 100-unit qualified residential rental project (“Project”) to be owned and operated by the Borrower and located at 1195 and 1241 North Main Street, respectively, situated generally behind a fuel service station and bordered generally by the Charter school to the north, a residential neighborhood to the west, the Manteca Moose Lodge to the south, and North Main Street to the east, within the City of Manteca (“City”).
In order for the Bonds to qualify as tax-exempt bonds, the City of Manteca must conduct a public hearing (“TEFRA Hearing”) providing members of the community an opportunity to speak in favor of or against the use of tax-exempt bonds for the financing of the potential 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.
Fiscal Impact:
The Bonds to be issued by the CMFA for the Project will be the sole responsibility of the Borrower, and the City 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 obligations of the City or the State of California but are to be paid for solely from funds provided by the Borrower.
The Board of Directors of the California Foundation for Stronger Communities, a California non-profit public benefit corporation (“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 City of Manteca, it is expected that that a portion of the issuance fee attributable to the City will be granted by the CMFA to the general fund of the City. Such grant may be used for any lawful purpose of the City. The Borrower will be the beneficiary of the CMFA’s charitable donation through a 25% reduction in issuance fees.
Documents Attached:
Attachment 1 - Resolution