To: Board of Supervisors
Department or Agency Name(s): Sonoma County Community Development Commission; County Administrator’s Office
Staff Name and Phone Number: Margaret Van Vliet, 565-7505
Vote Requirement: 4/5th
Supervisorial District(s): 5th District
Title:
Title
County of Sonoma Note Renewal
End
Recommended Actions:
Recommended action
Approve resolution authorizing renewal of a 1-year note in the current principal amount of $2,520,000 to be sold to the Sonoma County Treasurer to continue to facilitate the financing of the Sonoma County Development Commission’s purchase of the surplus real property at 2150 W. College Avenue in Santa Rosa.(Fifth District)(4/5th Vote Required)
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Executive Summary:
In July of 2017, the Board facilitated the Sonoma County Community Development Commission’s
(Commission) purchase of real property located at 2150 W. College Avenue by issuing a $4.2M note sold to the Sonoma County Treasurer. Using the proceeds of the note, the County loaned the Commission $4.2M to purchase the property, and the Commission committed to repay that debt with future County Fund for Housing resources, in the approximate amount of $900,000 per year over five years.
This item allows the County and Treasurer to review the feasibility for issuance of a new note, to be purchased as an investment for the Treasury Pool, subject to the consent of the Treasurer, at the reduced principal of $2,520,000 for this year.
Discussion:
In July of 2017, the County of Sonoma issued a one-year note (see Attachment 2) in the amount of $4.2 million, and the Sonoma County Treasurer purchased said note at an interest rate not exceeding 2.5 percent per annum, reflecting the Treasury Pool Investment rate plus 75 basis points (0.75%) to facilitate the Commission’s purchase of 2150 W. College. The Commission is not authorized to issue debt, which is why the County was a party to these transactions.
The County and the Treasurer will annually review and the County will seek approval from the Board of Supervisors for issuance of a new note, to be purchased as an investment for the Treasury Pool, subject to the consent of the Treasurer, at the then-reduced principal for an additional year, until the amount borrowed is fully paid off (must be no later than at the end of five years from the original loan date.)
The Debt Advisory Committee gave its consent to the original financing arrangement at its meeting on April 17, 2017.
NOTE REQUEST 2019-2020:
Loan Purpose: Affordable Housing Development: Financing the 2017 acquisition of 2150 W. College Ave
Loan Amount: $2,520,000
Loan Term: 12 months - Note due June 15, 2020
Loan Interest Rate: The most recent calendar quarter pooled interest rate plus 75 basis points rounded up to the nearest tenth, not to exceed 2.5%
Loan Guarantee: General Fund - although the loan is guaranteed by the General Fund, actual repayment will come from County Fund for Housing Affordable Housing In-Lieu Fees.
REPAYMENT SOURCE:
Principal and Accrued Interest: County Fund for Housing Affordable Housing In-Lieu Fees.
RISK OF NON-PAYMENT:
The County Fund for Housing is anticipated to have annual funding of approximately $4 million per year, between County Reinvestment and Revitalization contributions and the collection of developer Affordable Housing In-Lieu fees. An allocation of approximately $900,000 per year from the County Fund for Housing will retire the debt within five years of the original note. Your Board would also have the flexibility to approve the allocation of more or less funding for County Fund for Housing from County Reinvestment and Revitalization funds in any particular year, should that alternative be necessary or desirable.
Prior Board Actions:
06.20.17 - Agenda Item # 31 - Purchase and Sale of Real Property Located at 2150 W. College Ave. Santa Rosa
06.11.18 - Agenda Item #51 - County of Sonoma Note Renewal
Fiscal Summary
|
Expenditures |
FY 18-19 Adopted |
FY19-20 Projected |
FY 20-21 Projected |
|
Budgeted Expenses |
77,280 |
63,000 |
42,000 |
|
Additional Appropriation Requested |
|
|
|
|
Total Expenditures |
77,280 |
63,000 |
42,000 |
|
Funding Sources |
|
|
|
|
General Fund/WA GF |
|
|
|
|
State/Federal |
|
|
|
|
Fees/Other |
77,280 |
63,000 |
42,000 |
|
Use of Fund Balance |
|
|
|
|
Contingencies |
|
|
|
|
Total Sources |
77,280 |
63,000 |
42,000 |
Narrative Explanation of Fiscal Impacts:
Yearly principal and interest payments will be made from the County Fund for Housing using revenue received from Affordable Housing In-Lieu fees; however, appropriations will only be needed for interest expense as the principal payment will reduce the liability of the loan.
The following is an estimated schedule of repayment of the original note:
Date of Note: 7/15/2017
Principal: $4,200,000
Rate: 2.3%
Payment
Date Principal Interest Balance Comments
6/15/2018 840,000.00 77,095.89 3,360,000.00 11 months of interest - paid 6/13/18
6/15/2019 840,000.00 77,280.00 2,520,000.00 Rate Increased @ 6/15/2019 to 2.5%
6/15/2020 840,000.00 63,000.00 1,680,000.00
6/15/2021 840,000.00 42,000.00 840,000.00
6/15/2022 840,000.00 21,000.00
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Staffing Impacts: |
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Position Title (Payroll Classification) |
Monthly Salary Range (A - I Step) |
Additions (number) |
Deletions (number) |
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Narrative Explanation of Staffing Impacts (If Required):
N/A
Attachments:
1. Resolution for County of Sonoma Note Renewal
2. Copy of original note dated July 15, 2017
Related Items “On File” with the Clerk of the Board:
None