AgdaPkt 2000-09-11 - Laserfiche WebLink

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'ì A ..1- Tom Downey, Bond Counsel, has indicated that ABAG has moved their decision on the refunding to September 13, 2000, so the decision on the Regulatory Agreement can still be made, should Council agree to move ahead with this proposal. Fiscal Impact These bonds are obligations of the owners of the apartment complex. The City is not obligated to advance or expend any funds under the City's control should the owners default on these bonds. Owner's Request Archstone requests the City to permit Refunding Bonds to be issued by the Association of Bay Area Governments ("ABAG"). ABAG is a joint powers authority of which the City is a member with the standing to issue tax-exempt bonds on behalf of its members. Archstone wishes to use ABAG to ultimately consolidate many of its California bond issues under one Issuer. ABAG will also monitor the project for compliance with the Regulatory Agreement. ABAG has agreed to issue the Refunding Bonds provided that this is acceptable to the City. The issuance of Refunding Bonds will not incur any obligation to maintain the 61 set aside units. However, in exchange for the City's approval, Archstone will agree to a Regulatory Agreement with ABAG to include the following: 1. Thirty units (1/2 of the current amount) to be rented to tenants earning 80% or less of area median income. 2. Rents on those units to be capped at 30% of 80% of area median income. . 3. Archstone will agree to a transition period of up to one year to reduce the low- income units through attrition. 4. Modified Qualified Project Period (the period during which the Regulatory Agreement is in effect and during which rents are restricted) to be extended and expire in 2006 or 2007, depending on bond counsel's determinations. Conclusion Staff still recommends this transaction to the Council. If the Council approves this refunding, 30 of an original 61 units receive an additional six years of affordability. In fact, the last six years of affordability is enhanced because the developer will agree to a requirement that the tenants rent not exceed 30% of their income. When the development was built, the IRS provisions at the time required that 20% of the units in the development be occupied by people at 80% of the median income (the 61 units) but there was no legal limit on how much of their income they could spend for housing 1. 1 Archstone points out in their memo that if they choose to refund the bonds again in 2008, they would then have to meet the new IRS provisions regarding affordability, which require that the lower-income occupants not spend more than 50% of their income for housing, 2