Agenda Item Wording:
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TEFRA Public Hearing - Conduct a public hearing for the proposed issuance of revenue bonds by the California Municipal Finance Authority, in an amount not to exceed $28,000,000, to finance and refinance the acquisition, construction, development and equipping of an 80-unit senior residential rental project located at the northwest corner of Ferguson Ave. and N. Dinuba Blvd.; adopt Resolution 2025-49 to approve the financing of the project by the CMFA; and appropriate bond issuance funds to the HOME Crescent Meadows project.
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Prepared by:
Margie Perez, Housing Specialist, margie.perez@visalia.city, (559) 713-4460;
Melody Murch, Assistant Finance Director, melody.murch@visalia.city, (559) 713-4379; Renee Nagel, Finance Director, renee.nagel@visalia.city, (559) 713-4375.
Department Recommendation: Staff recommends:
1) Conduct the public hearing under the requirements of TEFRA and the Internal Revenue Code of 1986.
2) Adopt Resolution 2025-49 approving the issuance of the Bonds by the CMFA for the benefit of Crescent Meadows, L.P., to provide for the financing of the Project, to satisfy the requirements of TEFRA, the Code and the California Government Code Section 6500.
3) Appropriate bond issuance funds to the HOME Crescent Meadows project.
Summary:
Self-Help Enterprises (SHE) submitted an application to the CMFA to be the Issuer of tax-exempt financing for a project in the City of Visalia. The project is expected to be financed in an amount not to exceed $28,000,000 of tax-exempt revenue bonds. The proceeds of the Bonds will be used to finance and refinance the acquisition, construction, development and equipping of Crescent Meadows an 80-unit senior residential rental project to be owned and operated by the Borrower and located at the northwest corner of Ferguson Ave. and N. Dinuba Blvd.
To satisfy the Federal and State tax code, the City is required to complete the following:
• Conduct the public hearing, under the requirements of TEFRA and the Internal Revenue Code of 1986.
• Adopt Resolution 2025-49 (Attachment A - TEFRA Resolution) approving the issuance of the Bonds by the CMFA for the benefit of Crescent Meadows, L.P. (the “Borrower”) to provide for the financing of the Project. Such adoption is solely for the purposes of satisfying the public approval requirements of TEFRA, the Code and the California Government Code Section 6500 and does not create any financial liability or obligation on the part of the City of Visalia.
• Appropriate Bond Issuance Funds to the HOME Crescent Meadows project.
• Publish a public notice (Attachment B - TEFRA Public Notice) at least 7 days prior to the hearing.
Background Discussion:
SHE has requested that the CMFA serve as the municipal issuer of the Bonds in an aggregate principal amount not to exceed $28,000,000 of tax-exempt revenue bonds. The proceeds of the Bonds will be used to finance and refinance the acquisition, construction, development and equipping of an 80-unit senior residential rental project to be owned and operated by SHE and located at the northwest corner of Ferguson Avenue and North Dinuba Boulevard.
In order for the Bonds to qualify as tax-exempt bonds, the City of Visalia must conduct a public hearing (the “TEFRA Hearing”) providing for the members of the community an opportunity to speak in favor of or against the use of tax-exempt bonds for the financing of the 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.
CALIFORNIA MUNICIPAL FINANCE AUTHORITY:
The 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. To date, over 350 municipalities have become members of CMFA.
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.
Joint Exercise of Powers Agreement:
In order for the CMFA to have the authority to serve as the issuer of the bonds for the Project, it is necessary for the City of Visalia to be a member of the CMFA. The City became a member of the CMFA during the development of the Lofts Project that also received tax-exempt revenue bonds. A copy of the City’s executed Joint Exercise of Powers Agreement is included as Attachment C - CMFA JPA Agreement.
The Joint Exercise of Powers Agreement provides that the CMFA is a public entity, separate and apart from each member executing such agreement. The debts, liabilities, and obligations of the CMFA do not constitute debts, liabilities or obligations of the members executing such agreement.
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 repaid solely from funds provided by the Borrower.
There are no costs associated with membership in the CMFA and the City will in no way become exposed to any financial liability by reason of its membership in the CMFA. In addition, participation by the City in the CMFA does not impact the City’s appropriations limits and does not constitute any type of indebtedness by the City. Outside of holding the TEFRA hearing, adopting the required resolution and executing the Joint Exercise of Powers Agreement of the CMFA, no other participation or activity of the City or the City Council with respect to the issuance of the Bonds will be required. The City is simply holding the public hearing pursuant to the TEFRA act, and will assume no responsibility for the repayment of the tax-exempt bonds. There will be no fiscal liability to the City, and legal documents related to the issuance of the refinanced bonds will provide that the non-profit indemnifies, holds harmless, and defends the City and its officers, officials, and employees, against any costs, claims, demands, or actions against the project.
The Joint Exercise of Powers Agreement expressly provides that any member may withdraw from such agreement upon written notice to the Board of Directors of the CMFA. In the case of the proposed bond financing for the Borrower, the City following its execution of the Joint Exercise of Powers Agreement, could, at any time following the issuance of the Bonds, withdraw from the CMFA by providing written notice to the Board of Directors of the CMFA.
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 (the “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 Visalia, it is expected that a portion of the issuance fee attributable to the City will be granted by the CMFA to the HOME fund (321) of the City to be used for the originated project or the next HOME CHDO affordable housing development project. Staff recommends appropriating the City’s issuance funds towards the project to assist with FY 25/26 HOME funding reduction. Staff anticipates that this funding will be in the range of $12,500 to $18,000.
Prior Council Action:
February 3, 2025 - Authorization to apply in conjunction with Crescent Meadows, L.P. for $12 million in Homekey+ funds for the development of Crescent Meadows a senior affordable housing project.
April 21, 2025 - Approval of the FY 2025/26 - FY 2029/30 Consolidated Plan that include the development of a HOME senior housing project.
Other: None
Alternatives: None recommended.
Recommended Motion (and Alternative Motions if expected):
recommendation
Move to:
1) Adopt Resolution 2025-49 approving the issuance of Bonds not to exceed $28,000,000, by the CMFA for the benefit of Crescent Meadows, L.P. (the “Borrower”), to provide for the financing of the Project, and to satisfy the requirements of TEFRA, the Code and the California Government Code Section 6500; and
2) Appropriate bond issuance funds to the HOME Crescent Meadows project.
Environmental Assessment Status: N/A
CEQA Review: N/A
Deadline for Action: 7/21/2025
Attachments: ● Attachment A - TEFRA Resolution: ● Attachment B - TEFRA Public Notice; ● Attachment C - CMFA JPA Agreement