AgdaPkt 2000-08-28 - Laserfiche WebLink

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8 Ai. REPORT To the Honorable Mayor and City Council From the City Manager August 28, 2000 Subject Redwood Shores Apartments Refunding Recommendation It is recommended that the City Council take the following actions to enable Archstone Communities Trust to refinance the existing tax-exempt debt associated with the Redwood Shores Apartment complex: 1. Adopt a resolution for the City to become a member of the Association of Bay Area Governments (ABAG) Finance Authority for Non-Profit Corporations; 2. Approve the proposed Regulatory Agreement between ABAG and Archstone; and 3. Conduct a public hearing in accordance with Federal "Tax Equity and Fiscal Responsibility Act of 1982" (known as a TEFRA hearing). Background On October 1 1985, the City of Redwood City, California approved the issuance of $28,000,000 of non-recourse (to the City) Multifamily Housing Revenue Bonds to make a loan to Redwood Shores Apartment Associates, Ltd., to finance the acquisition, construction, and equipping of a 304 unit multifamily residential rental development located at 850 Davit Lane, intended for the occupancy in part (20%) by individuals or families of low or moderate income.1 The City acted solely as a conduit issuer and is under no obligation to repay any unpaid principal or interest on the Bonds. In return for the City's cooperation, the original developer, Sequoia Shores, Inc. and The Balcor Company, general partners of Redwood Partners, agreed to rent 20% of the total units of the property to tenants earning no more than 80% of the area median gross income for the duration of the Qualified Project Period ("QPP"). In accordance with the Loan Agreement between the City and the developer, the QPP expired in 1998. When the bonds were originally issued, a surety bond from Continental Casualty Insurance Company served as credit enhancement for the Bonds ("CNA"). At the time of issuance in 1985, the enhancement resulted in a AAA rating from Standard & Poors. In September of 1996, the property was sold to Archstone Communities Trust ("Archstone"). When Archstone became the owner, it assumed the obligations to repay the Bonds. CNA remained as the credit enhancer of the Bonds. The CNA surety bond expires on October 1, 2000 and CNA has recently indicated that it does not wish to extend the expiration date as it no longer provides credit enhancement for tax exempt bonds. 1 The term non-recourse refers to the provisions under which these bonds were issued that removes the City from any financial responsibility associated with these bonds. 1 ""'r"-""'--""T""-'" .