HomeMy WebLinkAbout5/5/2004 - STAFF REPORTS (20) DATE: MAY 5, 2004
TO: CITY COUNCIL
FROM: DIRECTOR OF COMMUNITY& ECONOMIC DEVELOPMENT
APPROVAL OF MULTIFAMILY MORTGAGE REVENUE BOND FINANCING ISSUE BY
THE CITY OF PALM SPRINGS (CONDUIT FINANCING) ON BEHALF OF SANTIAGO
SUNRISE VILLAGE MOBILE HOME PARK CORPORATION,A CALIFORNIA NON-PROFIT
CORPORATION ("SSVMHPC"), FORA PROPERTYAT 1500 EAST SAN RAFAEL ROAD,
KNOWN AS SUNRISE VILLAGE MOBILE HOME PARK, TO FACILITATE GNMA-
INSURED BOND FINANCING IN THE AMOUNT OF $3,800,000, FOR THE PURCHASE
AND REHABILITATION OF THE PARK
RECOMMENDATION:
It is recommended that the City Council approve a multifamily mortgage revenue
bond issue in the amount of $3,800,000, on the part of Santiago Sunrise Village
Mobile Home Park Corporation, a California non-profit("SSVMHPC"), a Santa Ana
non-profit,for the purchase and rehabilitation of the Sunrise Village Mobile Home,a
176-space park located at 1500 East San Rafael Road in Palm Springs.
SUMMARY:
The Community Redevelopment Agency approved a DDA with Santiago Sunrise
Village Mobile Home Park Corporation, a California non-profit ("SSVMHPC"), and
Santiago Sunrise Village, a California Limited Partnership, to allow SSVMHPC to
acquire the Sunrise Village Mobile Home Park, including the Agency-owned
underlying fee interest in the site, on November 19, 2003. This is a project the
Agency had worked on for three years. The non-profit corporation is acquiring the
park to upgrade it, including adding a clubhouse. In return for the value of the land
and as part of the covenants to the bond issue,the non-profit agrees to preserve the
long-term affordability of a portion of the spaces. This action approves a GNMA-
secured multifamily mortgage revenue bond issue in the amount of$3,800,000 on
behalf of the Borrower. The City Council conducted the required TEFRA public
hearing on November 19, 2003 concurrently with the approval of the Agency
Disposition and Development Agreement. The bonds are issued Bonds pursuant to
Sections 52030 and 52075 of the Health & Safety Code of the State of California.
BACKGROUND:
The City of Palm Springs, California (the"City"),acquired approximately 100 acres of
land over a period from the 1960's through the 1980's in the area commonly referred
to then as North Palm Springs (it is now the geographic center of the city). The
purpose of this land acquisition was intended to provide low income housing, in part
to relocate low-income residents of several mobile home parks thatwere demolished
in the 1970's and 1980's. It was the expectation of the City when it acquired the
acreage that the property be developed within a few years into affordable lower
income housing projects.
The City responded to a need in the community to provide affordable housing on a
portion of this parcel and sought to develop a mobile home park on up to 40 acres.
In 1982, the City executed a lease with Fredricks Development Corporation for 60
acres to develop affordable housing. The Sunrise Village Mobile Home Park
("Sunrise Village") was opened with the first residents taking occupancy shortly
thereafter. Fredericks developed approximately 2/3 of the first twenty acre phase of
the 40 acre park, as well as Sunrise Norte to the west. Sunrise Norte is a
development of deed-restricted single family homes on which the Council recently
amended the leases to allow residents to purchase their lots and remove the resale
restrictions. In 1987, the ground lease with Fredricks on the mobile home park was
terminated and a new lease with Santiago Sunrise Village, a California Limited
Partnership ("Santiago") was entered into for the 40 acre parcel. Santiago
completed the build-out of the final 1/3 of the first 20 acre phase but never
commenced construction on the second (19.17+ acre) phase. This second 19.17
acre parcel was intended for future expansion of the original 176 spaces but was
never developed. Fredericks also quit-claimed their remaining interest in the
property in December 1991, including the land that is now Coyote Run Apartments.
In 1995, the City sold the entire 40 acre mobile home park parcel to the Community
Redevelopment Agency of the City of Palm Springs (the "Agency") for a purchase
price of$1,510,000 based upon a fair market value appraisal conducted at that time.
The Agency acquired title to the 40 acre parcel, subject to the ground lease with
Santiago. The Agency in 2000 received an offer from Burnett Development to
purchase the remaining unused 19.17 acre mobile home park remainder parcel, as
well as a 22.21 acre City-owned parcel located immediately to the north of it,for the
purpose of constructing single family, market rate homes. The Agency sold those
parcels to Burnett for fair market value, which at the time was appraised for
$1,080,000 for the 41.39 acres. The DDA with Burnett was approved by the Agency
on December 18, 2002 and the sale closed in May, 2003; the land has since been
transferred to the ultimate builder, K. Hovnanian Companies of California,which will
construct 400 market rate, active adult single family homes called Four Seasons on
the 41.39 acres and an additional site on the east side of Sunrise Way. In order to
facilitate the DDA with Burnett, Santiago Sunrise Village, LP was asked to amend its
lease with the Agency to relinquish its rights to the 19.17 acres; the partnership
cooperated because of the ongoing negotiations with the Agency and City over the
DDA and this bond issue.
Today there is a mix of housing types in the neighborhood, including affordable
multi-family housing, deed-restricted single-family housing, the mobile home park,
and market rate single family homes and condominiums. The general neighborhood
has, in the recent past, expressed concern about the City's intent to "over-
concentrate" low-income housing in that area, which led to a re-examination of the
objectives of the entire 100-acre site. With the sale of the 41.39 acres to Burnett
(and then to K. Hovnanian) to construct hundreds of market rate homes, plus a
proposed development to the west of 1,200 market rate homes (PS Village), the
demographic balance of that area has shifted to the point where preserving
affordable housing stock is increasingly important to the City and Agency, as more
land is used for market rate housing and less available for affordable.
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In July, 2001, staff brought to the City Council and Agency a resolution allowing the
California Mobile Home Park Corporation to undertake mobile home park conversion
activities in Palm Springs; and, that the Agency approve a resolution requesting the
CMHPC to acquire the Sunrise Village Mobile Home Park and to terminate the
leasehold interest in the Park and the Undeveloped Parcel. SSVMHPC is a
subsidiary non-profit of CMHPC.
Today the status of the original 100 acres comprising the original City acquisition of
land for affordable housing purposes is as follows:
20 acres Sunrise Village mobile home park,to be sold to a non-profit in
order to upgrade the park and preserve ongoing affordability
41.39 acres Combined with 60+acres on the east side of Sunrise Way to
become a 400-home market rate active adult community, Four Seasons of
Palm Springs, built by K. Hovnanian Companies
7.5 acres Expansion site for Coyote Run Apartments(Coyote Run 2);68
apartments financed by HOME funds, state Multifamily Housing Program
Funds, and Agency funds, to commence construction in 2004
30 acres (i)Coyote Run Low-Income Multi-Family Project financed with
low income housing tax credits,and (ii)Sunrise Norte, 53 single family home
subdivision built in the 1980's and which have City land leases and resale
price restrictions
1.2 acres Small neighborhood park site
The Agency received $615,000 from the sale of the 19.17 undeveloped acres at
Sunrise Village to Burnett Development. The remaining value underlying the mobile
home park was $392,000, based on the appraisal of the park commissioned by the
Agency. That amount will go to the non-profit as part of the DDA (in land, not cash)
and is secured by Regulatory Agreement and a performance-based Deed of Trust
to ensure continued compliance with the terms of the DDA (affordability and
maintenance).
The Agency and City Council approved the DDA with SSVMHPC and Santiago
Sunrise Village, LP to facilitate the sale of the park to the non-profit on November 19,
2003. In addition,at the same meeting the City Council conducted a TEFRA hearing
on HUD-insured tax-exempt bond issue not to exceed$5,000,000 and approved the
TEFRA resolution. That hearing was noticed to comply with the public notice
requirements of Section 147(f) of the Internal Revenue Code of 1986, as amended
and applicable provisions of California law. Staff and the non-profit then began
working on finalizing the bond issue, which is now before Council.
All of these actions — the DDA and the bond issue -- were anticipated in the prior
action by the Agency and Council in July, 2001 and confirmed again when the
Agency approved the lease amendment with Santiago Sunrise Village, LP(the seller
of the park) in December, 2002 to release the 19.17 acres for sale to Burnett
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Corporation. All of the outstanding issues related to the Deed of Trust and
Supplemental Regulatory Agreement, and HUD's approval of the same, were
resolved as part of the DDA negotiation.
The Park
Sunrise Village Mobile Home Park is an existing mobile home park located at 1500
East San Rafael Road, near Sunrise Way. Built in 1982, the gated community
Project encompasses 871,200 square feet or approximately 20 acres and includes
176 residential pads, 2 of which are for employee living units. Of the 176 spaces,
138 are single-wide and 29 are double-wide. The Project's common areas include a
swimming pool, a tot lot/playground, a picnic/barbeque area, 2 laundry rooms, 2
trash areas, and a leasing office. Additionally, the Project includes 250 parking
spaces, consisting of 171 carport spaces and 79 open spaces.
As of January 29, 2004, the Project was approximately 95% occupied. The mobile
home spaces are leased at$300 per month to the individual homeowners,generally
on a month-to-month basis. The ratio of families to seniors in the Project is
approximately 50%-50%. All off-site utilities are available. Sewer,trash,water, gas
and electricity are billed individually to the resident.
The Project is located in primarily a residential neighborhood with other land uses
including limited commercial and light industrial developments along Indian Canyon
Drive and San Rafael Road. Significant neighborhood developments include Palm
Springs Country Club to the east and several adjacent residential communities
including the Four Seasons project,Vintage Palms,Sunrise Norte,and the proposed
PS Village. With the general improvement of the neighborhood,the City and Agency
have sought ways to improve the accountability of the park's management as well as
the general appearance of the park as it relates to its neighbors. The clubhouse and
the perimeter improvements are some of the priority improvements identified in the
needs assessment.
An appraisal of the market value of the Project was completed as of January 9,2004
by John P. Neet, MAI of Temecula, California ("Appraiser"). It is the conclusion of
the Appraiser that the fair market value of the Project, when owned by a non-profit
entity, as of January 9, 2004 was $4,200,000 in an "as is" condition.
The Borrower
Santiago Sunrise Village Mobile Home Park Corporation, a California non-profit
("SSVMHPC"), the Borrower, is a California nonprofit corporation,wholly controlled
by the California Mobilehome Park Corporation (the "Parent"). The Parent was
originally organized bythe Redevelopment Agency of the City of San Bernardino on
May 2, 1996 as a California nonprofit corporation. The original purpose of the Parent
was to assume ownership of certain mobilehome projects located in the City of San
Bernardino, California. Ownership of such projects was fully assigned to the Parent
in 1998 and new management was retained in June 1999. Since that time, the
Parent has assumed full responsibility for the ownership and operation of such
projects and has elected new board members.
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Financing of the Purchase
The City as the Issuer will loan the proceeds derived from the sale of the Bonds to
SSVMHP (the"Borrower")pursuant to the terms of the Financing in orderto fund the
acquisition and rehabilitation by the Borrower of the Park,to make deposits to certain
reserve funds established pursuant to the Indenture, and to pay certain costs in
connection with the issuance of the Bonds. The Bonds are being issued under
Sections 52030 and 52075 of the Health & Safety Code of the State of California
(the "Act") and are backed by the Government National Mortgage Association
("GNMA"). In addition to the indebtedness of the Bonds, the Borrower will, at
closing, issue a subordinated debt obligation to the seller of the Project in the
amount of$750,000. Payments on such subordinated debt obligation will be based
upon the available cash flow from the Project after all senior obligations have been
satisfied, including payments on the Bonds.
Union Bank of California is the bond trustee. Subsequent to the Trustee's
acquisition of the GNMA Security, the Bonds are to be secured primarily by a fully
modified mortgage-backed security in the aggregate principal amount of$3,800,000
(the "GNMA Security") to be issued by Red Mortgage Capital, Inc., an Ohio
corporation (the "Lender'), guaranteed as to principal and interest by the
Government National Mortgage Association ("GNMA")and backed bythe Mortgage
Loan from the Lender to the Borrower as evidenced by the Mortgage Note. In the
event the GNMA Security is not delivered to the Trustee on or prior to September 30,
2004 (unless extended pursuant to the Indenture), the Bonds will be subject to
redemption on or before October 15, 2004, at specified redemption prices, plus
accrued interest.
THE GNMA MORTGAGE-BACKED SECURITIES PROGRAM
Previous staff reports have referred to HUD insurance on the bonds. The
Government National Mortgage Association ("GNMA") is a non-stock corporate
instrumentality of the United States within the Department of Housing and Urban
Development ("HUD)")with its principal office in Washington, D.C.
The GNMA Securitywill be a"fully modified pass-through"mortgage-backed security
issued and serviced by the Lender.The total face amount of the GNMA Security will
be in approximately the same principal balance as the Mortgage Note, subject to a
rounding convention. The Lender will be required to pass through to the Trustee or
its nominee,as the holder of the GNMA Security, by the 15th day of each month,the
monthly scheduled installments of principal and interest on the Mortgage Note(less
the GNMA guarantee fee and the Lender's servicing fee),whether or not the Lender
receives such payment from the Borrower, plus any unscheduled prepayments of
principal of the Mortgage Note received by the Lender. GNMA guarantees the timely
payment of the principal of and interest on the GNMA Security.
GNMA is authorized by Section 306(g) of Title III of the National Housing Act, as
amended (the "National Housing Act"), to guarantee the timely payment of the
principal of,and interest on,securities which are based on and backed by mortgage
pools consisting of a single mortgage insured by the Federal Housing Administration
("FHA") pursuant to Section 207 of the National Housing Act. Section 306(g) of the
National Housing Act further provides that "[T]he full faith and credit of the United
States is pledged to the payment of all amounts which may be required to be paid
under any guaranty under this subsection."An opinion, dated March 12, 1969,of the
then Assistant Attorney General of the United States, states that such guaranties
under Section 306(g) of mortgage-backed securities of the type being delivered to
the Trustee on behalf of the City are authorized to be made by GNMA and "would
constitute general obligations of the United States backed by its full faith and credit."
Pursuant to such authority, GNMA, upon delivery of a GNMA Security to the Lender
in accordance with the related GNMA Guaranty Agreement,will have guaranteed the
timely payment of the principal of and interest on such GNMA Security.
Red Mortgage Capital, Inc. (the "Lender") an Ohio corporation, is a mortgage
banking firm specializing in FHA-insured construction and permanent mortgage
loans, Fannie Mae forward commitment and permanent mortgage loans, and both
Fannie Mae and FHA bond credit enhancements for multifamilyand seniors housing
projects across the United States. The Lender is also approved by GNMA to issue
modified pass-through securities.
The Lender is responsible for servicing and otherwise administering the Mortgage in
accordance with generally accepted practices of the mortgage banking industry and
the GNMA I Guide. The Loan Servicer is one of the most active FHA mortgagees
and GNMA issuers for HUD insured project loans and one of the top Fannie Mae
DUS lenders (by annual volume)in the country. As of December 31, 2003,the Loan
Servicer serviced 737 multifamily and seniors housing project loans aggregating
nearly $_billion, which includes FHA-insured mortgage loans totaling $
million and_Fannie Mae mortgage loans totaling $_billion.
Deal Structure
In order to prevent problems in tax-exempt issues that may threaten the tax-exempt
status of the issue or otherwise cause problems to the City, it is the City's policy to
use its own Bond Counsel and Financial Advisor on all bond deals, even conduit
issues. The City of Palm Springs is the issuer of the bonds, and will use the bond
proceeds to make a loan to the Borrower to carry out the deal. The Borrower will
repay the bonds from the net income from the park. The other parties in the
transaction are as follows:
ISSUER
CITY OF PALM SPRINGS
3200 E. Tahquitz Canyon Way
Palm Springs, CA 92263
John Raymond, Director of Community& Economic Development
T (760) 323-8228
F (760) 322-8325
johnr@ci.palm-springs.ca.us IfI16
Tom Kanarr, City Treasurer and Director of Finance
T (760) 323-8229
F (760) 322-8325
tomk@ci.palm-springs.ca.us
BOND COUNSEL
ALESHIRE & WYNDER ATTORNEYS AT LAW
18881 Von Karmen Avenue, Suite 400
Irvine, CA 92612
Urban Schreiner
T (949) 223-1170 Ext 216
F (949) 223-1180
uschreiner@awattorneys.com
DISCLOSURE COUNSEL
MESSERLI & KRAMER
150 S. 5T" Street, #1800
Minneapolis, MN 55402
John Larson
T (612) 672-3600
F (612) 672-3777
jlarson@mandklaw.com
UNDERWRITER
KINSELL, NEWCOMB & DE DIOS, INC.
462 Stevens Ave., Suite 308
Solana Beach, CA 92075
Todd Smith, Vice President
T (858) 793-5900
F (858) 793-8340
tsmith@kndinc.com
Pamela D. Newcomb
T (858) 793-5900
F (858) 793-8340
pnewcomb@kndinc.com
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UNDERWRITERS COUNSEL
EICHNER & NORRIS, PLLC
The Jefferson Building
1225 191h Street, NW, 71h Floor
Washington, DC 20036
Kent Nuemann
T (202) 973-0107
F (202) 296-6990
knuemann@enbonds.com
FHA MORTGAGE LENDER
RED MORTGAGE CAPITAL
33475 Cockleshell Drive
Monarch Beach, CA 92629
Rick Andrews
T (949)489-9465
F (949) 471-0125
rrandrews@redcapitalgroup.com
DUS COUNSEL
KROOTH & ALTMAN, LLP
1850 M Street, NW
Washington, DC
Joseph Knoll
T (202) 293-8200
F (202) 775-5872
EJKnoll@krooth.com
BORROWER'S FINANCIAL ADVISOR
CONNOLLY CAPITAL GROUP
3306 Bunmann Rd
Encinitas, CA 92024
Rhonda Connolly
T (858) 756-7488
F (858) 756-1059
RMCONNOLLY@aol.com
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ISSUER'S FINANCIAL ADVISOR
Harrell & Company Advisors, LLC
The City Tower, 333 City Blvd. West, Suite 1430
Orange, CA 92868
Suzanne Q. Harrell
T (714) 939-1464
F (714) 939-1462
s.Harrell@harrellco.com
501(C) (3) BORROWER
Santiago Sunrise Village Mobile Home Park Corporation, a California non-profit
PO Box 11927
Santa Ana, CA 92711
Richard Simonian
T (714) 744-4993
F (714) 744-3955
richardsimonian@msn.com
501(C)(3) CORPORATE COUNSEL
THE LAW OFFICES OF MARLA MERHAB ROBINSON
1551 North Tustin Avenue, Suite 910
Santa Ana, CA 92705
Marla Robinson
T (714) 972-2333
F (714) 972-2296
marlarobinson@mmrlaw.cncdsl.com
501(C)(3) SPECIAL COUNSEL
KUTAK ROCK, LLP
9601 North Scottsdale Road, Suite 300
Scottsdale, AZ 85253
Wayne B. Henry
T (480)429-5000 Ext. 7101
F (480) 429-5001
wayne.henry@kutakrock.com
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TRUSTEE
UNION BANK OF CALIFORNIA
120 S San Pedro Street, Suite 400
Los Angeles, CA 90012
Alison Braunstein
T (213) 972-5674
F (213) 972-5694
alison.braunstein@uboc.com
TRUSTEE'S COUNSEL
UNION BANK OF CALIFORNIA
445 S. Figueroa Street, Suite 1203
Los Angeles, CA 90071
Janis Penton
T (213) 236-5454
F (213) 236-7575
janis.penton@uboc.com
The project is truly of benefit to the residents of the park, who now have a funding
source for necessary improvements without special rent increases. These project
objectives could not be accomplished without the use of tax-exempt financing by a
non-profit,as the lower interest cost and property tax waivers help to create the cash
flow necessary to fund ongoing replacement of needed items. In addition, the
GNMA guaranty allows for a cost-competitive interest rate on the bonds; because of
the quality of the park the bond issue would not have been able to obtain bond
insurance which would have lead to a lower rate and provided additional security for
the City.
John S Ray of d Thomas M. Kanarr
Dke_ct6r of Cbfnmunity& Economic Director of Finance & City Treasurer
Development
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Approved by:
City Manager
ATTACHMENTS:
1. City Resolution
2. Preliminary Sources and Uses of Funds Schedule
City of Palm Springs,California
Multifamily Housing Mortgage Reserve Bonds,Series 2004
(GNMA Collateralized-Santiago Sunrise Village Mobile Home Park)
Preliminary Sources and Uses of Funds Schedule
FHA Insured Mortgage I GNMA Backed I Fixed Rate Bond Structure
Draft Prepared by Red Capital Markets,Inc.
This is a preliminary breakdown of costs and provisions for payment The discount amount,if any,and the Interest Rate indicated below are based on market conditions
anticipated over the 2 or 3 day period Following the date hereof and assumes that the bonds will be rated"AAA"by Standard&Poor's. This quote is subject to market
conditions at the time of issuance and is contingent upon Standard&Poor's releasing its rating of"AAA"on the Bonds and upon the terms and conditions of the Bond
Purchase Agreement being satisfied (1)
Project: Santiago Sunrise Mobile Home Park
Issuer: City of Palm Springs,California
Tax Exempt Bond Proceeds:FHA Credit Enhanced 3,770,000 Est
Assumptions-
Market Conditions as of: March 31,2004
Assumed Closing Dale, June 1,2004
Estimated FHA Mortgage Amount 3.770,000
Assumed Mortgage Term/Amortization: 40 Years
Estimated Mortgage Rate 6750% (2)-not inclusive of MIP of.50%
Financing Structure -Fixed Rate FHA Insured Tax-Exempt Bonds
Assumed Construction and
Stabilization Period. 12 Months
Tax-Exempt Bond Rate: 6 500% Est.
Tax-Exempt Bond Maturity
Sources of Funds:
Par Amount of Bonds 3.770,000 (3)
Reoffering Premium 250,000
Subordinate City or Palm Springs Debt 884.159 (Est)
Cash Required to Close 0
Total Sources: 4,904,159
Uses of Funds:
Outstanding Bal of Purchase Cost 4,200,000
Initial Deposit to Reserve Fund 36,184
Repairs escrow 166,164
GNMA Issuance&Placement Fee 18.600
Legal&Organizational(Borrower's) 10,000
First Year MIP 18,850
Financing Fee 75,400
Discount 56,550
Title&Recording 10,000
FHA Exam Fee 11.310
FHA Inspection Fee 1,101
Thud Party Reports&Survey 17,000
Bond Cost of Issuance 284,000 (4)
Total Uses: 4,904,159
PLEASE SEE FOOTNOTES ON ATTACHED PAGE. THEY ARE AN INTEGRAL PART OF THIS ANALYSIS.
Noll
City of Palm Springs,California
Multifamily Housing Mortgage Reserve Bonds,Series 2004
(GNMA Collateralized-Santiago Sunrise Village Mobile Home Park)
Notes to Preliminary Sources&Uses Breakdown
Note 1 Our analysis is predicated on structuring requirements which have on recent transactions resulted in the highest ratings available From the rating services
However,these requirements change periodically and this quote is conditioned upon all current requirements of Standard&Poor's being satisfied
Note 2: The structure assumes that the Bonds and the FHA Mortgage Note will be locked to prepayment for ten years and open thereafter at a premium of 2%decir
1%annually. The estimated mortgage rate does not Include FHA VIP(50%),but it does include all other on-going fees related to the bands and mortgage.
Estimated Bond Coupon 6,500% Est
GNMA Guaranty/Servicing Fee 0 250%
IssuenTrustee Fee 0000% Est
Mortgage Rate 6,750%
Note 3. The Bonds may not exceed the total security for the Bonds(the amount of GNMA Securities obtained for the FHA Insured Mortgage Note) Assumes
that(1)bond counsel provides the requisite legal opinion supporting the amount of refunding bonds issued and(ii)the HUD approved mortgage amount
supports the bond issue size The mortgage amounts are estimates based on information provided to Red Mortgage Capital,Inc to date by the Owner
and on current Interest rates. The actual mortgage amount will be determined based upon a detailed real estate underwriting which has yet to be completed
which underwriting will be based in part upon a market study and appraisal,and other factors and information required by HUD. To the extent that
such information does not support the current estimate of the mortgage amount,the actual mortgage amount available will vary from the estimates.
Note 4 See preliminary breakdown of Costs of Issuance below(Schedule A). Financial Advisor to the City of Palm Springs has attempted to Identify all bond
casts and expenses but cannot guarantee that there are no additional costs.
City of Palm Springs,California
Multifamily Housing Mortgage Reserve Bonds,Series 2004
(GNMA Collateralized-Santiago Sunrise Village Mobile Home Park)
Schedule A-Preliminary Breakdown of Costs of Issuance
Project: Santiago Sunrise Mobile Home Park
Issuer: City of Palm Springs,California
Tax Exempt Bond Proceeds:FHA Credit Enhanced 3,770,000 Est
Estimated Bond Costs of Issuance
Financial Advisor 39,000
Consulting Fees 65,000
Issuer Fee 5.000
Bond Counsel 40,000
Underwriter's Counsel 15,000
Disclosure Cousel 15,000
Local Counsel 7,500
Trustee&Counsel Fees 4,500
Rating Agency Fee 12,000
POS/Official Statement 10,000
Prepaid Interest 22.000
Hazard Insurance 7,500
501 c 3 Legal Tax Opinion 21,500
Lag 20,000
Total Estimated Bond Costs of Issuance 284,000
City of Palm Springs,California
Multifamily housing Mortgage Rese(ve Bonds,Series 2004
(GNMA Collateralized-Santrngo Sunrise Village Mobile Monte Park)
Prelindnmy Sources and Uses ofFnnrls Schedule
FEL&moored Mortgage I GNMA Backed/Pi>ed Rate Bond Structure
Draft Prepared by Red Capital Markets,Inc.
This is a preliminary breakdown of costs and provisions for payment.The discount amount,if any,and the Intel eat Rate indicated below are based on market conditions
anticipated over We 2 or 3 day period following die date het cop and assumes tlmt the bonds will be rated"AAA"by Standard&Poore This quote Is subject o market
conditions at the time of issuance mid is contingent upon Standard&Po a's releasing its iahng of"AAA"on the Bonds mid upon the terms and conditions of the Bond
Pun chase Agieementbeingmed,fled (1)
Prnjert Santiago Sunrise Mobile home Park
Issuer: City of Palm Springs,Culifm its
T:u Excin tBond Proceeds PIIA Credit Enhuaccd 3,770,000 Est
Almoupnnax-
Markct Condoions as of Much 31,2004
Assumed Closing Date June 1,2004
Estimated FIIA Me,tgage Amount 3,770,000
Assumed Mortgage TermilAmon tization 40 Ycros
Estimated Mortgage Rate 6 950Yo(2)-not inclusive of MIP of 50
Financing Structure: -Fixed Rare FDA Insmed Tux-Exempt➢onda
Assumed Cansnucnon and
Smbdizmmn Period 12 Months
T,rx-Exempt Bond Rate: 6 500y,Est.
Tax-Exempt Bond Maturity, December 20,2045
Sconces of Funds:
Pm Amount of Bands 3,770,000 (3)
Rreffeiing Premium 250,000
Soboidinato City of Palm Springs Debt 994,159 (Est)
Cash Reason to to Close 0
Tidal Sconces: 4,9114,159
Uses of Frs t,:
Outstanding Bel of Pumhasa Cost 4,200,000
Initial Deposit to Reserve Fund 36,184
Repairs csmow 165,164
GNMA Issuance&Numerical Fee 18,600
Legal&Oigammumnal(Boriowei's) 10,000
Fire(Year MIP 18,850
Financing Fee 95,400
Dreemal 56,550
Title&Rems dmg 10,000
FHA Exam pen 11,310
FFIA Inspeman Fee 1,101
Thud Pm(y Reports&Suivcy 17,OOD -
Bond Cost of Issuance 284,000 (4)
Total Uses: 4,904,159
PLEASESEEFOOTNOTES ONATTICHED PAGE, THEYARE'AN INTEGRAL PART OFTHISANALYSIS
19A13
City of Pahn Springs,California
Multifamily housing Mortgage Reserve Bards,Series 2004
(GNMA Collaterahned-Smungo Sunrise Village Mabde home Par k)
Notes to Preliminary Sources&Uses Breaksim,
Note I Our analysis is predicated on structuring requirements winch have on r cant transactions resulted in the highest ratings available from the rating services
However,these requiremenu change pm radically and this quote is conditioned upon all correct requn meats of Standard&Pam',being satisfied
Note The stiucmre assumes clot We Bands and the FllA Mortgage Now will be locked to prepayment for urn years mid open that ether at a pr emmm of 2%declining
I G annually The estimated mortgage rate does not include FHA NIP(50'%),but it does include all oWm on-going fees related to are bonds and mortgage
Estimated Bond Coupon 6.500'%,Est
GNMA Guaranty/Servicing Fee 0250%
LauerlTru.too Fee 00 0�Est
Mortgage Rule 6,750%
Noma The Bonds may ear exceed do total secunty Can the Bond,line amount of GNMA Securities oloa fur the FHA Insured Mortgage Nom) Assumes
Jim(i)bond counsel p,esdes the requisite legal opinion supporting the amount of refunding bands issued and(i i)the IIUD approved mar[gage amount
supparrs the bond issue size The mortgage amounts ate cstimams based on in fmmnano r pa ovided to Red Mortgage Capital,Inc to date by the Owner
und.ocurnemiresocrostes Theommalenougage co um will be detemrined based upon a detailed real estate undersvutmg which has yet to be completed
which under writing will be based or part upon am at ket study and up,msal,and other facme,and in domineer reger ed by HUD To(lie extent final
such information does not support the cement estimate of the mortgage amount,the actual mortgage amount available will vary from the estimates
Note Sec preliminary breakdown of Costs oflssuance below(Schedule A) Financial Advisor to the City of Palm Springs lms adempredro identify all bond
costs and enpen es but cannot guaranrec that there me no addaional cos¢
City of Pahn Springs,California
Multifamily finish,Mortgage Restore Bonds,Series 2004
(GNMA Collateralized-Sorting.Sunrise Village Mabde home Poi k)
Schedule A-Pfelinueary Prenkdmvn of Coals of issuance
Pro,act: Santiago Sunrise Mobile Horne Park
Issti City of Pabn Sponge,California
Tax Exempt Bond Pi records:FHA Credit Enhanced 3,770,000 Est
Estimated Bond Costs of kvemes
Financial Advisor 39,000
Consulting Fees 65,000
Issuer Fee 5,000
Band Counsel 40,000
Underwriter's Counsel 15,000
Disclosure Causal 15,000
Local Counsel 7,500
Tmnee&Counsel Fees 4,500
Rating Agency Fee 12,000
POSIOfficial Statement 10,000
Prepaid Interest 22,000
Hazaid Insumncc 7,500
501 c 3 Legal Tax Opinion 21,500
Lag 20,000
Total Estimated Bond Costs oflssuunce 284,000
19NIY
RESOLUTION NO.
RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PALM
SPRINGS AUTHORIZING THE ISSUANCE OF NOT TO EXCEED
$3,800,000 MULTIFAMILY MORTGAGE REVENUE BONDS
(GNMA COLLATERALIZED - SUNRISE VILLAGE MOBILEHOME
PARK PROJECT) SERIES 2004, APPROVING THE FORM OF
LEGAL DOCUMENTS RELATED THERETO AND AUTHORIZING
AND DIRECTING PREPARATION, EXECUTION AND DELIVERY
OF THE FINAL FORMS THEREOF
WHEREAS, the City of Palm Springs (the "City") is a municipal corporation and charter
city organized and existing pursuant to the Constitution and laws of the State of California and
the charter of the City (collectively, the "Law") and is authorized to issue bonds to be used to
make loans to finance or refinance acquisition and rehabilitation of multifamily housing projects,
including mobile home parks; and
WHEREAS, the Santiago Sunrise Village Mobilehome Park Corporation (the `Borrower")
has requested that the City assist it in acquiring and rehabilitating Sunrise Village Mobilehome
Park and the City desires to issue its not to exceed $3,800,000 Multifamily Mortgage Revenue
Bonds (GNMA Collateralized - Sunrise Village Mobilehome Park Project) Series 2004 (the
`Bonds"); and
WHEREAS, the Bonds will be issued pursuant to that certain Indenture of Trust which
shall be entered into by and between the City and Union Bank of California, as trustee (the
"Trustee"), the form of which is presently on file with the City Clerk (the 'Indenture"); and
WHEREAS, the proceeds of the Bonds will be loaned to the Borrower pursuant to and in
accordance with that certain Financing Agreement which shall be entered into by and between
the City, the Borrower and Red Mortgage Capital, Inc. (the "Lender") the form of which is
presently on file with the City Clerk (the "Financing Agreement") in order to (i) acquire and
rehabilitate the Project, and (ii) pay costs of issuance of the Bonds; and
WHEREAS, the Bonds shall be secured by rental revenues from the Project as further
provided in the Financing Agreement, a pledge of moneys in the funds and accounts
established by the Indenture and by a guarantee by the Government National Mortgage
Association ("GNMA"); and
WHEREAS, Kinsell, Newcomb & DeDios, Inc., as prospective underwriter of the Bonds
(the "Underwriter') has informed the City that it intends to submit an offer to purchase the Bonds
and shall cause to be prepared a Preliminary Official Statement and an Official Statement
relating to such Bonds, as may be necessary in the sale and marketing of the Bonds, the form
of which Preliminary Official Statement is presently on file with the City Clerk; and
WHEREAS, the City of Palm Springs held a public hearing on November 19, 2003 to
approve the issuance of the Bonds in accordance with the public approval requirements of
Section 147(f) of the Internal Revenue Code of 1986, as amended; and
WHEREAS, the City has considered the terms of the transaction as contemplated herein
and desires at this time to approve the terms of said transaction in the public interests of the
City.
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1003/065/30801 02
NOW, THEREFORE, the City Council of the City of Palm Springs hereby finds and
resolves as follows:
SECTION 1. Issuance of the Bonds: Approval of Form of Indenture; Authorization and
Direction of Preparation of Final Form Thereof. The City hereby
authorizes the issuance of the Bonds under and pursuant to the Law and
the Indenture in the principal amount of not to exceed $ and
the preparation of certain financing documents related thereto which are
necessary to carry out the issuance of the Bonds and the loan of
proceeds therefrom to the Borrower. The City hereby approves the form
of Indenture as presently on file with the City Clerk with such changes
thereto as may be approved by the Mayor, Finance Director, or City
Manager of the City and as necessary to incorporate the principal
amount, interest rate, maturity and redemption dates and such other
terms and conditions with respect to the Bonds when such terms and
conditions have been ascertained. The City hereby further authorizes and
directs that the form of Indenture presently on file with the City Clerk be
converted into the final form of Indenture, authorizing the issuance of the
Bonds together with such changes or modifications as deemed necessary
or desirable by the Mayor, Finance Director or City Manager, upon the
recommendation of Bond Counsel. The Mayor, Finance Director, City
Manager or such other authorized officer of the City is hereby authorized
and directed to execute and deliver, and the City Clerk or Assistant City
Clerk is hereby authorized and directed to attest to, the final form of the
Indenture when the same has been prepared for and in the name of the
City, and such execution and delivery shall be deemed to be conclusive
evidence of the approval thereof. The City hereby authorizes the delivery
and performance of the obligations under the Indenture.
SECTION 2. Approval of Final Form of Financing Agreement. The City hereby
approves the form of Financing Agreement presently on file with the City
Clerk together with any changes therein or additions thereto as may be
approved by the Mayor, Finance Director or City Manager and as
necessary to incorporate the principal amount, interest rate, maturity and
prepayment dates, pledge of security thereunder and such other terms
and conditions when such terms and conditions have been ascertained.
The City hereby further authorizes and directs that the form of Financing
Agreement presently on file with the City Clerk be converted into the final
form of Financing Agreement, together with such changes or
modifications as deemed necessary or desirable by the Mayor, Finance
Director or City Manager upon the recommendation of Bond Counsel.
The Mayor, Finance Director, City Manager or such other authorized
officer of the City is hereby authorized and directed to execute and
deliver, and the City Clerk or Assistant City Clerk is hereby authorized
and directed to attest to, the final form of the Financing Agreement when
the same has been prepared and such execution and delivery shall be
deemed to be conclusive evidence of the approval thereof. The City
hereby authorizes the delivery and performance of the Financing
Agreement.
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1003/065/30901M
SECTION 3. Sale of the Bonds. The City hereby approves the sale of the Bonds by
negotiated purchase with the Underwriter, pursuant to that certain Bond
Purchase Agreement on file with the City Manager (the "Purchase
Agreement"), together with any changes therein or additions thereto
approved by the Mayor, Finance Director or City Manager or an
authorized representative of the Mayor and as necessary to incorporate
the principal amount, the interest rate, the purchase price and such other
terms and conditions when such terms and conditions have been
ascertained. The sale of the Bonds pursuant to the Purchase Agreement
is hereby approved. The City hereby authorizes and directs the
Underwriter to cause the preparation of the final Purchase Agreement of
which such terms are a part, and the Mayor, Finance Director, City
Manager or such other authorized officer of the City is hereby authorized
and directed to evidence the City's acceptance of the offer made by the
Purchase Agreement by executing and delivering the Purchase
Agreement in said form as on file with such changes therein as the officer
or the officers executing the same may approve, such approval to be
conclusively evidenced by the execution and delivery thereof.
SECTION 4. Official Statement. The City hereby approves the form of the Preliminary
Official Statement presently on file with the City Clerk and acknowledges
that the Preliminary Official Statement is in substantially final form in
accordance with Rule 15c2-12 of the Securities Exchange Act of 1934.
The City further authorizes the distribution of a Preliminary Official
Statement as shall be necessary or required in connection with the sale of
the Bonds to prospective purchasers thereof. The City hereby authorizes
and directs that the Preliminary Official Statement be converted to a final
Official Statement together with such changes or modifications as
deemed desirable or necessary in the sale and marketing of the Bonds
and as approved by the Mayor, Finance Director or City Manager upon
the recommendation of Bond Counsel, and the Underwriter. The City
hereby authorizes distribution of the Preliminary Official Statement and
the final Official Statement by the Underwriter when the same has been
prepared. The Mayor is hereby authorized and directed to execute the
final form of said Official Statement in the name and on behalf of the City
and to deliver the same to the Underwriter upon execution thereof,
together with the changes or modifications approved by the Mayor.
Execution of said final Official Statement shall be conclusive evidence of
approval thereof, including any such changes and additions.
SECTION 5. Approval of Final Form of Tax RegulatorV Agreement. The City hereby
approves the form of Tax Regulatory Agreement presently on file with the
City Clerk together with any changes therein or additions thereto as may
be approved by the Mayor, Finance Director or City Manager. The City
hereby further authorizes and directs that the form of Tax Regulatory
Agreement presently on file with the City Clerk be converted into the final
form of Tax Regulatory Agreement, together with such changes or
modifications as deemed necessary or desirable by the Mayor, Finance
Director or City Manager upon the recommendation of Bond Counsel and
City Attorney. The Mayor, Finance Director, City Manager or such other
3 1 ,33
1003/O(5/30801 02
authorized officer of the City is hereby authorized and directed to execute
and deliver, and the City Clerk or Assistant City Clerk is hereby
authorized and directed to attest to the final form of the Tax Regulatory
Agreement when the same has been prepared and such execution and
delivery shall be deemed to be conclusive evidence of the approval
thereof.
SECTION 6. Official Action. The Mayor, Finance Director, City Manager, City Clerk,
Bond Counsel and any and all other officers of the City are hereby
authorized and directed, for and in the name and on behalf of the City, to
do any and all things and take any and all actions, including execution
and delivery of any and all assignments, certificates, requisitions,
agreements, notices, consents, instruments of conveyance, warrants and
other documents, which they, or any of them, may deem necessary or
advisable in order to consummate the lawful issuance and sale of the
Bonds as described herein, including the distribution of the Preliminary
Official Statement to any prospective purchasers when the same shall
become available for distribution. Whenever in this Resolution any officer
of the City is authorized to execute or countersign any document or take
any action, such execution, countersigning or action may be taken on
behalf of such officer by any person designated by such officer to act on
his or her behalf in the case such officer shall be absent or unavailable.
The City hereby appoints its City Manager as agent of the City for
purposes of executing any and all documents and instruments which any
officer of the City is authorized to execute hereunder.
SECTION 7. Approval of Parties to the Financing Transaction. The City hereby
approves the followina entities for the transaction contemplated hereby:
Aleshire & Wynder, LLP Bond Counsel and City Attorney
Kinsell, Newcomb & De Dios, Inc. Underwriter
Union Bank of California Trustee
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4
1 003/065/3 090 1.02
ADOPTED this_day of , 2004.
AYES:
NOES:
ABSENT:
ATTEST: CITY COUNCIL OF THE CITY OF PALM
SPRINGS, CALIFORNIA
By:
City Clerk Mayor
i f 8 .500*
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1003/065/30801 02