MEETING DATE:
FEBRUARY 24, 2015
SUBJECT:
Title
RESOLUTION NOS. 2015-8032, 2015-8033 & CMP 2015-12 - PALOMAR ESTATES MOBILEHOME PARK REFINANCING.
Body
Recommendation
Recommendation
ACCEPT public testimony and ADOPT resolutions and agreements needed for the proposed refinancing of the existing debt on the Palomar Estates East and West Mobilehome Park.
Body
Board or Commission Action
Not applicable
Relevant Council Strategic Theme
Not applicable
Relevant Department Goal
Not applicable
Introduction
On November 12, 2002, the City Council unanimously approved Resolution No. 2002-5994 and CMP Resolution No. 2002-9 approving the issuance of California Mobilehome Park Financing Authority (CMPFA) Mobile Home Park Revenue Bonds for the purpose of financing the acquisition of Palomar Estates East and West Mobilehome Parks (Parks) by Millennium Housing Corporation (Millennium). Millennium is a non-profit public benefit corporation located in Irvine which owns and operates nineteen mobile home parks throughout California. Three of the mobile home parks owned by Millennium are located in San Marcos; Palomar Estates East and West and Rancho Vallecitos Mobilehome Park. On March 12, 2013, the City Council also unanimously approved Resolution No. 2013-7759, 2013-7760 and CMP Resolution No. 2013-011 approving the refinancing of bonds used to purchase Rancho Vallecitos Mobilehome Park.
Discussion
The City Council is being asked to adopt resolutions which would approve the issuance of bonds in a not to exceed amount of $38,500,000 (Bonds) by the Independent Cities Finance Authority (Authority) for the purpose of refinancing the CMPFA Bonds that were used to purchase the two Parks in 2003. Millennium projects that with the interest rates as low as they currently are they can lower their net debt payment by approximately $250,000 a year and generate an additional $900,000 in Capital Improvement Funds for improvements in the Parks. The purpose of the resolution is to allow the refinancing to meet a requirement of the Internal Revenue Code. The adoption of this resolution is the first step in the process of refinancing the existing bonds.
The existing bonds used by Millennium to purchase the Parks in 2003 were issued by the CMPFA, an arm of the City. Millennium proposes to issue the new bonds via the Authority, which the City is an Associate Member of. This would remove the City from the bonds completely. In order to move forward with the refinancing, Millennium needs a number of actions from the City.
As the California Mobilehome Park Finance Authority:
· Adopt a Resolution directing the redemption of prior bonds issued by the CMPFA for the purchase of the Parks, and
· Adopt a Resolution authorizing the release of the regulatory agreement and declarations of restrictive covenants recorded relating to the Parks
As the City Council:
· Adopt a Resolution approving, authorizing and directing execution of a subordination agreement related to the Parks
· Adopt a Resolution approving the issuance of Bonds by the Authority for the refinancing of the Parks.
As the "host" jurisdiction for the two Parks for which bond proceeds will be expended, the City of San Marcos has been asked to hold a publicly advertised Tax and Equity Fiscal Responsibility Act (TEFRA) hearing as a necessary step in conferring tax exempt status on those bonds and enabling their issuance. The proposed resolution would act as the approval by the City Council with respect to the two Parks located within the City. Although the Authority will be the issuer of the tax-exempt revenue obligations for Millennium, the financing cannot proceed without the City's approval of the financing.
As announced in the published notice, this hearing is also an opportunity for all interested persons to speak or to submit written comments concerning the proposal to refund the debt. There is no obligation on the part of the City Council to respond to any specific comments made or submitted.
The City would not be a party to the financing documents. As set forth in the attached documents of the Authority, the debt would not be secured by any form of taxation, or by any obligation of either the City or the Authority. Neither would the debt represent or constitute a general obligation of either the City or Authority. Pursuant to the governing California statutes and the JPA Agreement, a member of the Authority is not responsible for the repayment of obligations incurred by the Authority. The debt would be payable solely from amounts received pursuant to the terms and provisions of financing agreements to be executed by Millennium. In the financing documents Millennium will also provide comprehensive indemnification to the Authority and its members, including the City.
The Authority is a joint exercise of powers authority consisting of numerous California cities, counties and special districts, including the City of San Marcos. The City's membership in the Authority bears with it no cost or other financing obligation, but serves as a public acknowledgement by the host jurisdiction of the project financing.
Fiscal Impact
The fiscal impact to the City is the loss of an annual fee of approximately $55,000 to administer the CMPFA Bonds that were issued to originally purchase the Parks by Millennium in 2003. However, this loss of revenue is off-set by the cost incurred by the City to monitor the existing CMPFA Bonds. With the refinancing of the Bonds, the City will pass the responsibility and cost of the on-going monitoring of the new Bonds to Independent Cities Finance Authority.
Attachment(s)
CMPFA Resolution to redeem prior bonds and release regulatory agreement
Release of regulatory agreement
City Resolution approving the execution of a subordination agreement related to the Parks
Subordination Agreement
City Resolution approving the issuance of Bonds by the Authority for the refinancing of the Parks.
Prepared by: Karl Schwarm, HANS Director
Reviewed by: Lydia Romero, Deputy City Manager
Approved by: Jack Griffin, City Manager