FRANMAR MANOR REPORT LETTER.PDF

A PROFESSIONAL CORPORATION
One North Central Avenue, Suite 1200
Phoenix, Arizona 85004-4417
P 602.440.4800 F 602.257.9582
Offices in Arizona & Colorado
John J. Fries www,rcelaw.co.m
Direct Line: 602-440-4819
Direct Fax: 602-257-6919
E-mail: pies(Mrcalaw.com
December 26, 2018
To: Board of Supervisors Board of Directors of
Maricopa County, Arizona The Industrial Development Authority
of the County of Maricopa
Re: Not to Exceed $8,500,000 The Industrial Development Authority of the County of
Maricopa Multifamily Housing Tax-Exempt Mortgage-Backed Bonds (M-Tems)
Series 2019 (Franmar Manor Apartments)
Ladies and Gentlemen:
At the January 8, 2019 meeting of The Industrial Development Authority of the
County of Maricopa (the "Authority"), the Authority Board will be asked to grant approval to the
financing for the Franmar Manor Apartments Project and to adopt a resolution authorizing the
issuance and sale of the bonds as described above (the "Bonds"). The purpose of this letter is to
provide a summary review of the proposed transaction.
THE AUTHORITY
The Authority is an Arizona nonprofit corporation, formed with the permission of
Maricopa County and incorporated under and pursuant to the Arizona Industrial Development
Financing Act, Title 35, Chapter 5, Arizona Revised Statutes, as amended (the "Act"), and the
Authority is designated by law to be a political subdivision of the State of Arizona.
THE APPLICANT/BORROWER
The Applicant/Borrower for financing is Franmar Affordable Housing, L.P., an
Arizona limited partnership. The general partner of the Borrower is Franmar CDP, LLC, an
Arizona limited liability company and its sole member is Community Development Partners,
Inc., a California corporation, doing business in Arizona as CDP Affordable Housing
Corporation.
THE PROJECT
The Project to be financed consists of the acquisition. rehabilitation. equipping
and operating of an existing 78-unit multifamily rental housing project located at 3825 W.
McDowell Road, Phoenix, Arizona, commonly known as Franmar Manor Apartments.
4506309.1
12/26/18

Board of Supervisors
Maricopa County, Arizona torn,f s
Board of Directors
of The Industrial Development Authority
of the County of Maricopa
December 26, 2018
Page 2
NOTIFICATION TO ARIZONA ATTORNEY GENERAL
As required by the provisions of Arizona Revised Statutes, Section 35-721.F, the
Authority has notified the Arizona Attorney General of the Authority's intention to issue the
Bonds.
PUBLIC HEARING
A public hearing pursuant to Section 147(1) of the Internal Revenue Code of
1986, as amended (the "Code"), relating to the issuance of the Bonds, was held by a
representative of the Authority on December 14, 2018, and a Report of Public Hearing will be
submitted to the Clerk of the Maricopa County Board of Supervisors.
ALLOCATION FOR TAX EXEMPT FINANCING
The Applicant/Borrower must receive from the Arizona Finance Authority an
allocation of the Arizona "volume cap" in order for interest on the Bonds to be tax exempt.
The Applicant/Borrower intends to proceed with the issuance of the Bonds on a
tax-exempt basis and the Project operated in a manner to meet the requirements of the Internal
Revenue Code for a tax exempt financing.
FINANCING PARTICIPANTS
The major participants in the financing are as follows:
Issuer: The Industrial Development Authority of the County of
Maricopa
Issuer Counsel: Ryley Carlock & Applewhite, a professional
corporation
Applicant/Borrower: Franmar Affordable Housing, L.P.
Applicant/Borrower Counsel: Lotzar Law Firm, P.C.
Mortgage Lender: PGIM Real Estate Finance
Mortgage Lender Counsel: Cassin & Cassin LLP

Board of Supervisors
Maricopa County, Arizona
Board of Directors
of The Industrial Development Authority
of the County of Maricopa
December 26, 2018
Page 3
Bond Trustee: Zions Bancorporation, National Association
Bond Counsel: Orrick Herrington & Sutcliffe LLP
Underwriter: Stifel
Underwriter Counsel: Tiber Hudson LLC
PRINCIPAL FINANCING DOCUMENTS
Document Parties
Trust Indenture (the "Indenture") Issuer and Trustee
Financing Agreement Issuer, Borrower and Trustee
Regulatory Agreement and Declaration of Issuer, Trustee and Borrower
Restrictive Covenants
Deed of Trust, Security Agreement, Assignment Borrower and Mortgage Lender
of Rents and Leases and Fixture Filing (Arizona)
(the "Deed of Trust")
Tax Certificate and Agreement (the "Tax Issuer and Borrower
Certificate")
Bond Purchase Agreement Issuer, Borrower and Underwriter
PLAN OF FINANCING
The Bonds will be issued in one or more series in an aggregate principal amount
of not to exceed $8,500,000.
The Bonds will be issued under and pursuant to the terms and provisions of the
Indenture. The proceeds from the sale of the Bonds will be loaned by the Authority to the
Borrower pursuant to the terms of the Loan Agreement. The Borrower will be obligated to make
loan repayments in amounts and at such times as required to pay principal and interest on the
Bonds on their respective due dates.

Board of Supervisors
Maricopa County, Arizona Attori„
Board of Directors
of The Industrial Development Authority
of the County of Maricopa
December 26, 2018
Page 4
The Project will be subject to a Section 8 Housing Assistance Payment ("HAP")
contract, which currently requires residents to pay 30% of their annual income for rent, with the
Department of Housing and Urban Development subsidizing the balance of the rent to
comparable market levels. The Project will be subject to a Regulatory Agreement and
Declaration of Restrictive Covenants, under which the Applicant/Borrower will be required to
set aside 40% of the Project units for persons with annual incomes no greater than 60% of the
area median income, thereby assuring a significant affordable aspect to the Project. Mercy
House, a non-profit organization dedicated to ending homelessness, will provide on-site
supportive services at the Project.
The Arizona Department of Housing has committed over $2,800,000 in gap
financing and 4% Low income Housing Tax Credits will be utilized to support this affordable
housing Project.
The proceeds received from the sale of the Bonds, together with contributed
equity and other capital sources, will be used to finance the acquisition of the Project and to pay
the necessary costs to acquire, rehabilitate, furnish and equip the Project and pay certain costs of
issuance of the Bonds.
The Bonds will bear interest at a fixed rate and be sold in a public offering, with
credit enhancement provided by The Federal National Mortgage Association (Fannie Mae).
AUTHORITY APPROVAL
At the Authority Board meeting on January 8, 2019, the Board will be asked by
the Applicant/Borrower to grant approval to the application for financing and to adopt a
resolution authorizing the issuance and sale of the Bonds.
NO LIABILITY ON THE COUNTY OF MARICOPA
Under the provisions of A.R.S. § 35-742, the County of Maricopa shall not in
any event be liable for the payment of the principal or interest on the bonds of the
Authority or for the performance by the Authority of any of its obligations with respect to
its bonds nor shall any agreements or obligations of the Authority constitute an
indebtedness of the County of Maricopa within the meaning of any constitutional or
statutory provision whatsoever.

Board of Supervisors
Maricopa County, Arizona ntturi2cyS
Board of Directors
of The Industrial Development Authority
of the County of Maricopa
December 26, 2018
Page 5
BOARD OF SUPERVISORS APPROVAL
If the Authority Board acts to grant final approval for the financing and to adopt a
resolution authorizing the issuance and sale of the Bonds, the Maricopa County Board of
Supervisors will be requested, at its meeting on January 16, 2019, to act as required by law to
adopt a resolution approving the proceedings of the Authority for the issuance of the Bonds.
TRANSACTION CLOSING
Assuming the required approvals of the Authority and the Maricopa County
Board of Supervisors are received, it is anticipated that the Bonds will be issued in late January,
2019.
LEGAL COUNSEL RECOMMENDATION
As counsel to the Authority, we have reviewed drafts of the principal financing
documents, we have been advised that these documents are now in substantially final form, and
based upon our review of such and our review of the proceedings of the Authority to date
relating to the proposed issuance of the Bonds, we believe the financing documents and
proceedings are in substantial conformance with the policies and guidelines of the Authority and
are in both form and substance acceptable for the Authority Board to act upon and that the
Resolution presented to the Authority Board relating to authorizing the issuance and sale of the
Bonds is in form and substance acceptable for the Authority Board to adopt.