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Home My WebLink About90-15 RESOLUTIONRESOLUTION NO. 90-15 A RESOLUTION TO APPROVE THE ISSUANCE OF NOT TO EXCEED $50,000,000.00 OF THE PUBLIC FINANCE AUTHORITY REVENUE BONDS TO FINANCE OR REFINANCE CERTAIN COSTS OF VARIOUS PROJECTS, INCLUDING THE ACQUISITION AND RENOVATION OF THE 91 -UNIT PARK LAKE APARTMENTS LOCATED AT 1753 E. ZION ROAD, ON BEHALF OF AMERICAN AGAPE FOUNDATION, INC. OF SAN ANTONIO, TEXAS WHEREAS, American Agape Foundation, Inc., a non-profit tax exempt entity under Section 501(c)(3) of the Internal Revenue Code, has proposed to acquire and rehabilitate the 91 unit residential rental community known as Park Lake Apartments, located at 1752 E. Zion Road, Fayetteville, Arkansas 72703; and WHEREAS, American Agape Foundation, Inc. intends to fund this project and three other projects located in Louisiana and Florida by issuing Public Finance Authority Multifamily Housing Revenue Bonds (American Agape Foundation Portfolio Project), Series 2015, which are private activity bonds governed by 26 U.S.C. §§ 141-147, issued through the Public Finance Authority of Wisconsin; and WHEREAS, 26 U.S.C. § 147(f) and 26 C.F.R. § 5f.103-2 require the approval of the local government entity with geographic jurisdiction over projects funded by such private activity bonds in order for American Agape Foundation, Inc. to qualify for tax exempt bond financing; and WHEREAS, approval of the issuance of these private activity bonds does not constitute a debt of the City of Fayetteville and in no way makes the City of Fayetteville liable for such bonds, nor will the City's bond rating or bonding capacity be affected by the issuance of these bonds. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF FAYETTEVILLE, ARKANSAS: Section 1: That the City Council of the City of Fayetteville Arkansas, for the sole purpose of satisfying the public approval requirement of 26 U.S.C. § 147(f) of the Internal Revenue Code and 26 C.F.R. § 5f.103-2, hereby approves the issuance of the Public Finance Authority Multifamily Housing Revenue Bonds (American Agape Foundation Portfolio Project), Series 2015 by the Public Finance Authority in the aggregate principal amount not to exceed $50,000,000 and the financing of the Projects with the proceeds of the Bonds and hereby authorizes the Mayor to sign the document entitled "TEFRA APPROVAL OF THE CITY OF FAYETTEVILLE, ARKANSAS, a copy of which is attached to this Resolution and made a part hereof, provided that in no event shall the City of Fayetteville, Arkansas be liable for such Bonds nor shall the Bonds constitute a debt of the City of Fayetteville, Arkansas. Page 2 Resolution No. 90-15 PASSED and APPROVED this 21St day of April, 2015. ATTEST: By: AWJ44'jwk SONDRA E. SMITH, City Clerk Treasurer `> OT Y sFAYETTEVILL E '�� a a i ii t tO ' City. of Fayetteville, Arkansas 113 West Mountain Street Fayetteville, AR 72701 (479) 575-8323 Text File File Number: 2015-0188 Agenda Date: 4/21/2015 Version: 1 Status: Agenda Ready In Control: City Council File Type: Resolution Agenda Number: C. 1 PARK LAKE APARTMENTS ACQUISITION AND RENOVATION A RESOLUTION TO APPROVE THE ISSUANCE OF NOT TO EXCEED $50,000,000.00 OF THE PUBLIC FINANCE AUTHORITY REVENUE BONDS TO FINANCE OR REFINANCE CERTAIN COSTS OF VARIOUS PROJECTS, INCLUDING THE ACQUISITION AND RENOVATION OF THE 91 -UNIT PARK LAKE APARTMENTS LOCATED AT 1753 E. ZION ROAD, ON BEHALF OF AMERICAN AGAPE FOUNDATION, INC. OF SAN ANTONIO, TEXAS WHEREAS, American Agape Foundation, Inc., a non-profit tax exempt entity under Section 501(c)(3) of the Internal Revenue Code, has proposed to acquire and rehabilitate the 91 unit residential rental community known as Park Lake Apartments, located at 1752 E. Zion Road, Fayetteville, Arkansas 72703; and WHEREAS, American Agape Foundation, Inc. intends to fund this project and three other projects located in Louisiana and Florida by issuing Public Finance Authority Multifamily Housing Revenue Bonds (American Agape Foundation Portfolio Project), Series 2015, which are private activity bonds governed by 26 U.S.C. §§ 141-147, issued through the Public Finance Authority of Wisconsin; and WHEREAS, 26 U.S.C. § 147(f) and 26 C.F.R. § 5f.103-2 require the approval of the local government entity with geographic jurisdiction over projects funded by such private activity bonds in order for American Agape Foundation, Inc. to qualify for tax exempt bond financing; and WHEREAS, approval of the issuance of these private activity bonds does not constitute a debt of the City of Fayetteville and in no way makes the City of Fayetteville liable for such bonds, nor will the City's bond rating or bonding capacity be affected by the issuance of these bonds. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF FAYETTEVILLE, ARKANSAS: Section 1: That the City Council of the City of Fayetteville Arkansas, for the sole purpose of satisfying the public approval requirement of 26 U.S.C. § 147(f) of the Internal Revenue Code and 26 C.F.R. § 5f.103-2, hereby approves the issuance of the Public Finance Authority Multifamily Housing Revenue Bonds (American Agape Foundation Portfolio Project), Series 2015 by the Public Finance Authority in the aggregate principal amount not to exceed $50,000,000 and the financing of the Projects with the proceeds of the Bonds and hereby authorizes the Mayor to sign the document entitled "TEFRA APPROVAL OF THE CITY OF FAYETTEVILLE, ARKANSAS, a copy of which is attached to this Resolution and made a part hereof, provided that in no event shall the City of Fayetteville, Arkansas be City of Fayetteville, Arkansas Page 1 Printed on 411412015 File Number: 2015-0188 liable for such Bonds nor shall the Bonds constitute a debt of the City of Fayetteville, Arkansas. City of Fayetteville, Arkansas Page 2 Printed on 4114/2015 City of Fayetteville Staff Review Form 2015-0188 Legistar File ID 4/21/2015 City Council Meeting Date -Agenda Item Only N/A for Non -Agenda Item Accounting & Audit / Paul A Becker 4/3/2015 Finance & Internal Services Department Submitted By Submitted Date Division / Department Action Recommendation: This is a request to the City Council by American Agape Foundation to conduct a public hearing for an acquisition and rehabilitation project at the Park Lake apartments on East Zion Road. It also requests the Council to approve to use TEFRA bonds for this project. TEFRA bonds are private activity bonds which would be issued by the Public Finance Authority in Wisconsin which has nationwide authority. The City of Fayetteville would not be an issuer of these bonds nor would the City be in any way responsible for the principal or interest payments associated with these bonds. Neither the City bond rating nor bonding capacity would be affected by these bonds. Budget Impact: Account Number Project Number Budgeted Item? NA Does item have a cost? No Budget Adjustment Attached? No Fund Project Title Current Budget $ - Funds Obligated $ - Current Balance $ - I Item Cost Budget Adjustment Remaining Budget $ V20140710 Previous Ordinance or Resolution # Original Contract Number: Comments: Approval Date: d - a • a �ttVi1e ARKANSAS® AGENDA ITEM MEMO To: Mayor Jordan and City Council From: Paul A Becker Date: April 3, 2015 THE CITY OF FAYETTEVILLE, ARKANSAS DEPARTMENT CORRESPONDENCE Subject: Public Hearing and approval of Acquisition and Rehabilitation Project at the Park Lake apartments by the American Agape Foundation through the use of TEFRA bonds BACKGROUND: The Lake Park apartments are located on East Zion Road in Fayetteville. These apartments help benefit low and very low income individuals and families by providing low cost housing in Fayetteville. The American Agape Foundation (a non-profit tax exempt entity) would like approximately $580,596 for immediate repairs and upgrades in this apartment complex. A detailed listing of the nature of these upgrades and repairs is included in this packet for your information. This project would be financed through the use of TEFRA bonds issued by the Public Finance authority in Wisconsin which has national jurisdiction. These bonds would not be an obligation of the City of Fayetteville. The City of Fayetteville would not have any responsibility in the issuance, redemption or payment of interest on these bonds .They would not affect our bonding capacity or credit ration. However, Federal law requires the governing body with geographic jurisdiction over the project financed by these bonds to approve the project, as well as the bond issuance, and to hold a public hearing for the project. RECOMMENDATION: This project will make improvements to a community that provides housing to low and very low income families and individuals here in Fayetteville at no cost to the City. It is recommended by the administration that this very worthwhile project be approved and that a public hearing be conducted as required by law. BUDGET IMPACT This request will have no cost to the City. It will not affect the Cities bond rating or bonding capacity in any way. AMERICAN AGAPE FOUNDATION, INC. 7334 BLANCO ROAD, SUITE 200 SAN ANTONIO, TEXAS 78216 PH: (210) 341-8097 March 24, 2015 City of Fayetteville, Arkansas 113 West Mountain Street Fayetteville, Arkansas 72701 Re: Park Lake Community Request for Public Hearing and Approval Ladies and Gentlemen, American Agape Foundation, Inc. and its subsidiary affiliates are treated as non-profit, tax exempt entities under Section 501 (c)(3) of the Internal Revenue Code, as amended (the "Code"). Our charitable purpose is to provide high quality, low cost affordable rental housing for low to moderate income individuals, families and senior citizens. In furtherance of our charitable purpose, we plan (through our Arkansas affiliate, Agape - Park Lake, LLC) to acquire and rehabilitate an existing 91 -unit residential rental community known as Park Lake (the "Community"), located at 1753 E. Zion Road in the City of Fayetteville. Upon acquisition, Agape -Park Lake, LLC will operate the Community in the same manner as it is currently operated, and there will be no change in the mission of the Community. The Community serves low to very low income families and individuals and receives financial assistance from the United States Department of Housing and Urban Development. In exchange for such financial assistance, Agape -Park Lake, LLC will agree to continue operating the Community for the benefit of low and very low income families and individuals. At the present time, Agape -Park Lake, LLC expects to spend approximately $580,000 in immediate repairs and upgrades to the Community. Those improvements are expected to include: upgrades to the existing parking lot, repairs to interior areas, replacements of air conditioning units and repairs to exterior wood surfaces. In addition, we are analyzing the results of a physical needs study we commissioned from a third party engineer. Additional monies may be expended on other improvements at the Community based on the findings of such study. We are proposing to use tax exempt bond financing available to non-profit entities under Section 501(c)(3) of the Code (the "Bonds") to fund the acquisition and rehabilitation of the Community. We expect the Public Finance Authority, a bond issuer with national jurisdiction based in the State of Wisconsin, to issue the Bonds. No bonds or other obligations will be issued by the City and neither the City nor any other political subdivision of the State of Arkansas will have any obligation whatsoever with respect to the Bonds. 4833-3073.0530 I Under Code provisions applicable to the proposed Bonds, a public body with an elected official having jurisdiction over the Community must approve the issuance of the Bonds after a public hearing. Consequently, we ask the City to hold such a hearing and authorize approval of the Bonds solely for purposes of satisfying those applicable Code provisions after publication of a notice of such hearing at least 14 days prior to the hearing date. We respectfully request that the City hold the hearing and authorize such approval at the regularly scheduled City Council meeting on April 21, 2015. In connection with this request and for your convenience, we have enclosed drafts of the notice of public hearing (which will be published in a newspaper of general circulation within the City) and the form of the approval. We sincerely appreciate your consideration of these matters and would be pleased to discuss them in more detail should there be any questions. 4s.eibmitted, ubmitted, esident 4833-3073-0530 I AGAPE - PARK LAKE, LLC TRANSACTION SUMMARY American Agape Foundation ("AAF") is a non-profit corporation, recognized as a 501c3 tax-exempt organization, engaged in the creation and preservation of affordable housing opportunities. AAF has identified 4 apartment properties in 3 states that it wishes to acquire and rehabilitate through one or more affiliated non-profit entities. One of those properties is the 91 unit apartment complex known as Park Lake Apartments located at 1753 E. Zion Road, Fayetteville, AR 72703. Agape — Park Lake, LLC is an Arkansas Limited Liability Company formed for the specific purpose of acquiring and owning the Park Lake Apartments. The property has a Housing Assistance Payments (HAP) Contract with the Department of Housing and Urban Development which will provide for rental assistance for the residents of each unit under the HAP Contract. Provisions of the Contract also restrict occupancy to Very Low Income families (Families whose Adjusted Gross Income is at or below 50% of the Area Medium Income). To maximize efficiencies, AAF has approached the Public Finance Authority (OFA) to facilitate financing for all four properties through a single tax-exempt bond financing. Federal Law requirements for such financings include conducting public hearings and obtaining approvals from the PFA as issuer and form the local governmental entity having jurisdiction over the area in which the property is located. In this instance, the City of Fayetteville is the appropriate jurisdiction for Park Lake Apartments. Solely for purposes of satisfying those federal requirements, the Mayor (as the City's highest elected official) would need to "approve" these matters after a public hearing is held. That approval neither obligates the City to take any action with respect to the proposed financing or the financed property nor does it commit or otherwise expose the City to liability with respect to the financing or otherwise. AAF will make all arrangements and pay for publication of Notice of the hearing which will be held at a time and place determined after consultation with City staff. AAF and its team of assembled municipal bond professionals would be pleased to answer any questions. We have attached a copy of the proposed repairs to be accomplished (which will encompass energy efficiency products and methods where feasible), and a copy of the income set asides applicable to the Project. Repairs Program Agape - Park Lake, LLC Park Lake Apartments Description Quantity Unit Cost Critical Repairs Install Smoke Detectors in Bedrooms 196 $20 Accessibility Provide Van Accessible Parking Space 1 $300 Non -Critical Repairs Repair Damaged Parking Lot (Sq. Ft.) 12000 $12 Seal Cracks in Parking Lot (Linear Ft.) 2400 $3 Restripe Parking Lot 125 $4 Repair Swimming Pool 1 $13,892 Replace Pool Pump 1 $665 Replace Backwash Line 1 $3,200 Repair/Replace Balcony Rails With Vinyl Replace all Windows with 7/8" Dual Pane 304 $312 Install Vinyl Siding on all Exterior 1 $218,461 Rehab Down Units 5 8000 Allowance for Landscape 1 $10,000 New Building Signs 12 $150 Sweep Chimneys 86 $35 Contingency 1 $40,000 Estimate $3,920 $300 $0 $144,000 $6,000 $500 $13,892 $665 $3,200 $94,848 $218,461 $40,000 $10,000 $1,800 $3,010 $40,000 $0 $0 Total $580,596 AGAPE - PARK LAKE, LLC PARK LAKE APARTMENTS AFFORDABLE HOUSING SET ASIDE AND APPLICABLE INCOME LIMITS Acquisition and repair of Park Lake Apartments will be funded with 501 (c)3 Tax Exempt Bonds. 501 (C)3 Bond set aside requirements: 20% of Units to be occupied by households with income at or below 50% of Area Median Income 75 % of Units to be occupied by households with income at or below 80% of Area Median Income Park Lake has a Housing Assistance Payment (HAP) Contract with the U. S. Department of Housing and Urban Development to provide Rental Assistance to qualifying households for all 91 units at the Project. The household portion of the rent payment will be no more than 30% of their adjusted income. The Income Limit requirements of the HAP contract exceed those of the Bond documents and will govern the rental of all units. HAP Contract set aside requirements: All of the units to be occupied by households with income at or below 50% of Area Median Income. On an annual basis, the goal is for 40% of all new households renting at the Project have incomes at or below 30% of Area Medium Income OFFICE OF THE CITY ATTORNEY TO: Mayor Jordan City Council CC: Dan Marr, Chief of Staff FROM: Kit Williams, City Attorneye64—k-- DATE: April 15, 2015 RE: TEFRA Hearing for Bonds Kit Williams City Attorney Blake Pennington Assistant City Attorney Patti Mulford Paralegal Paul Becker and I are always somewhat skeptical when the City is requested to lend its approval to bonds or other financial instruments. Some of our initial concerns were alleviated when we learned that Gordon Wilburn was the Underwriters Counsel. After discussing this situation with Gordon, we asked that he write us a letter that we could share with the City Council to further explain why the City of Fayetteville should approve the issuance of TEFRA bonds. That letter is attached. 1 KUTAK TA K ROCK LLP P ATLANTA CHICAGO SUITE 2000 DENVER FAYETTEVILLE IRVINE 124 WEST CAPITOL AVENUE IRVINE NORTHWEST ARKANSAS OFFICE LITTLE ROCK, AR 72201-3706 KANSAS CITY LITTLE ROCK SUITE 200 501 -975-3000 LOS ANGELES 234 EAST MILLSAP ROAD FACSIMILE 501-975-3001 MINNEAPOLIS FAYETTEVILLE. ARKANSAS 72703-4099 OKLAHOMA CITY 479-973-4200 www.kutakrock.com OMAHA PHILADELPHIA RICHMOND SCOTTSDALE SPOKANE WASHINGTON. D.C. WICHITA GORDON M. WILBOURN gordon.wilboum @kutakrock.com (501) 975-3101 Mr. Paul Becker Chief Financial Officer City of Fayetteville 113 West Mountain Fayetteville, AR 72701 April 15, 2015 RE: TEFRA Hearing for the Public Finance Authority's Multifamily Revenue Bonds (Park Lake Apartments Project) Dear Paul: Pursuant to your request, I am providing this explanatory letter setting forth the rationale for and the legal ramifications associated with the public hearing and Mayor's approval scheduled to take place at the April 21St City Council meeting in connection with the proposed bond financing of the acquisition, renovation, furnishing and equipping of Park Lake Apartments in Fayetteville. As you are aware, the Public Finance Authority, a Wisconsin political subdivision (the "Authority"), has determined to assist American Agape Foundation, Inc., a Texas nonprofit corporation, in the acquisition and rehabilitation of four multifamily residential housing communities located in Arkansas, Florida and Louisiana. The Authority is empowered with multi jurisdictional bond issuance authority to assist conduit borrowers nationwide in the financing of various types of capital improvements. Because the proposed acquisition/rehab projects are located in four different legal jurisdictions, the Authority was selected as the bond issuer in order to reduce transaction costs and thereby enhance the financial feasibility of the projects. Section 147(f) of the Internal Revenue Code of 1986, as amended (the "Code"), requires that a public hearing be held prior to the issuance of tax-exempt bonds benefitting certain enumerated improvements, including multifamily housing projects. Further, Section 147(f) requires that the hearing be held in the area in which the bond -financed improvement is to be located and that an elected official having jurisdiction over such area "approve" the issuance of the bonds after the public hearing. This approval is solely for the purpose of satisfying the 4824-5448-4515.1 KUTAK ROCK LLP April 15, 2015 Page 2 requirements of Section 147(f) and will not subject the City to any legal liability with respect to the proposed bonds or projects. The City will not be a party to any of the bond documents. If you have additional questions regarding this issue, please do not hesitate to call. Si cerely, G n M. Wilbourn cc: Kit Williams, City Attorney 4824-5448-4515.1