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File #: 2021-0357   
Type: Consent Calendar Item Status: Agenda Ready
File created: 4/1/2021 In control: Community Development Commission
On agenda: 6/8/2021 Final action:
Title: County of Sonoma Note Renewal
Department or Agency Name(s): Community Development Commission , County Administrator
Attachments: 1. Summary Report, 2. Attachment 1 - Resolution, 3. Attachment 2 - June 15, 2021 Note, 4. Attachment 3 - July 21, 2020 Note, 5. Attachment 4 - Original Note dated July 15, 2017
Date Action ByActionResultAction DetailsMeeting DetailsVideo
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To: Board of Supervisors of Sonoma County and Board of Commissioners of the Community Development Commission

Department or Agency Name(s): Community Development Commission and County Administrator’s Office

Staff Name and Phone Number: Tina Rivera, 565-4774

Vote Requirement: 4/5th

Supervisorial District(s): Countywide

 

Title:

Title

County of Sonoma Note Renewal

End

 

Recommended Action:

Recommended action

Adopt resolution authorizing issuance of a 1-year note in the principal amount of $840,000 to be sold to the Sonoma County Treasurer to continue to facilitate the financing of the Sonoma County Community Development Commission’s purchase of the surplus real property at 2150 W. College Avenue in Santa Rosa. (4/5th Vote Required)

end

 

Executive Summary:

In July 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 $4.2 million note sold to the Sonoma County Treasurer. Using the proceeds of the note, the County loaned the Commission $4.2 million 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, in the principal amount of $840,000.

 

Discussion:

In July 2017 the County of Sonoma issued a one-year note (see Attachment 3) 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 2021-2022:

Purpose: Affordable Housing Development - Financing the 2017 acquisition of 2150 W. College Ave

2021 Note Amount: $840,000

Note Term: 12 months - Note due June 15, 2022

Loan Interest Rate: The most recent calendar quarter pooled interest rate plus 75 basis points rounded up to the nearest tenth

Loan Guarantee: General Fund - although the note is guaranteed by the General Fund, actual repayment is programmed to 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 $2 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 by June 15, 2022. 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.

The Sonoma County Auditor-Controller-Treasurer-Tax Collector has reviewed the extension request of the Note and agrees with the recommendation action in this Board Item.

The Commission has entered into a Disposition and Development Agreement with the Developer (USA Properties), the site is fully entitled, and the Developer plans to close escrow by the end of 2021 and take possession of the property to start the development process. The site is approved for 164 affordable units.

 

Prior Board Actions:

On July 7, 2020 the Board adopted a resolution authorizing issuance of a 1-year note in the current principal amount of $1,680,000.00 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.

May 14, 2019 - Item #38, County of Sonoma Note Issuance

June 11, 2018 - Item #51, County of Sonoma Note Issuance

June 20, 2017 - Item # 31, Purchase and Sale of Real Property Located at 2150 W. College Ave. Santa Rosa

 

Fiscal Summary

Expenditures

FY 20-21 Adopted

FY 21-22 Projected

FY 22-23 Projected

Budgeted Expenses

42,000

21,000

 

Additional Appropriation Requested

 

 

 

Total Expenditures

42,000

21,000

 

Funding Sources

 

 

 

General Fund/WA GF

 

 

 

State/Federal

 

 

 

Fees/Other

42,000

21,000

 

Use of Fund Balance

 

 

 

Contingencies

 

 

 

Total Sources

42,000

21,000

 

 

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 transaction for the principal occurs on the Balance Sheet, which will reduce CDC’s current liabilities.

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%

7/21/2020         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

 

Staffing Impacts:

 

 

 

Position Title (Payroll Classification)

Monthly Salary Range (A-I Step)

Additions (Number)

Deletions (Number)

 

 

 

 

 

Narrative Explanation of Staffing Impacts (If Required):

N/A

 

Attachments:

Attachment 1 - Resolution

Attachment 2 - June 15, 2021 Note

Attachment 3 - July 21, 2020 Note

Attachment 4 - Original Note dated July 15, 2017

 

Related Items “On File” with the Clerk of the Board:

N/A