Extracted text (via pymupdf_layout)
8842 characters
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 William F. Wilder www.rcalaw.com Direct Line: 602-440-4802 Direct Fax: 602-257-6902 E-mail: wwilderrcalaw.com March 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 $65,000,000 The Industrial Development Authority of the County of Maricopa Multifamily Housing Revenue Bonds (Capri on Camelback Project) Series 2018 Ladies and Gentlemen: At the April 10, 2018 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 Capri on Camelback 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 CVIII Capri on Camelback, LLC, a Delaware limited liability company. The Applicant/Borrower is an affiliate of an investment fund, THRE Global Investments, LLC, an indirect wholly-owned subsidiary of Teachers Insurance and Annuity Association of America (TIAA). THE PROJECT The Project to be financed consists of the acquisition, rehabilitation, equipping and operating of an existing 556-unit multifamily rental housing project located at 5115 North 40th Street, Phoenix, Arizona, commonly known as Capri on Camelback. 4362249.1 03/26/18 Board of Supervisors Maricopa County, Arizona Board of Directors of The Industrial Development Authority of the County of Maricopa March 26, 2018 Page 2 NOTIFICATION TO ARIZONA ATTORNEY GENERAL As required by the provisions of Arizona Revised Statutes, Section 35-721.F, the Authority will notify the Arizona Attorney General of the Authority's intention to issue the Bonds. PUBLIC HEARING A public hearing pursuant to Section 147(f) of the Internal Revenue Code of 1986, as amended (the "Code -), relating to the issuance of the Bonds, will be held by a representative of the Authority on April 10, 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 2018 "volume cap" in order for interest on the Bonds to be tax exempt. The Applicant/Borrower intends to initially proceed with the issuance of the Bonds on the basis they will (or at least in part) be "taxable" Bonds which will then be converted to "tax-exempt" Bonds at such time as sufficient volume cap is available. From the outset, the structure of the financing will be focused on the Bonds and related documents being structured 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: Capri on Camelback, LLC Bond Trustee: Wilmington Trust, National Association Board of Supervisors Maricopa County, Arizona Board of Directors of The Industrial Development Authority of the County of Maricopa March 26, 2018 Page 3 Bond Purchaser: Bank of America or an affiliate thereof Bond Purchaser Counsel: Kutak Rock LLP Bond Counsel: Lewis Roca Rothgerber Christie LLP Applicant/Borrower Counsel: Locke Lord, LLP PRINCIPAL FINANCING DOCUMENTS Document Parties Trust Indenture (the "Indenture") Issuer and Trustee Loan Agreement (the "Loan Agreement") Issuer and Borrower Land Use Restriction Agreement (the "Land Use Issuer, Trustee and Borrower Agreement") Deed of Trust, Security Agreement, Assignment Borrower of Rents and Leases and Fixture Filing (Arizona) (the "Deed of Trust") Tax Certificate and Agreement (the "Tax Issuer and Borrower Certificate") Various assignment of contract instruments Borrower PLAN OF FINANCING The Bonds will be issued in one or more series in an aggregate principal amount of not to exceed $65.000,000. 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 Board of Directors of The Industrial Development Authority of the County of Maricopa March 26, 2018 Page 4 The Project will be encumbered by the Land Use Agreement. Under this agreement, the Applicant/Borrower will be required to set aside and receive 20% of the Project units for persons with annual incomes no greater than 50% of the area median income, thereby assuring a significant affordable aspect to the Project. The proceeds received from the sale of the Bonds, together with contributed equity capital, 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 be placed with a "qualified institutional buyer" or "accredited investor" who will execute and deliver an investor letter in a form acceptable to Authority. Transfer of the Bonds will be restricted to a "qualified institutional buyer" or "accredited investor." It is currently planned the Bonds will be placed with Bank of America or an affiliate thereof The Bonds will bear interest at a fixed rate. The Bonds will be secured by the Deed of Trust. Under the plan of financing presented by the Applicant/Borrower, it will be making an "equity" contribution of approximately $16,000,000 (approximately 24%) to the Project financing and in addition, the Applicant plans to spend approximately $3,000,000 to renovate and refresh the property and living units. AUTHORITY APPROVAL At the Authority Board meeting on April 10, 2018, 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 Board of Directors of The Industrial Development Authority of the County of Maricopa March 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 April 11, 2018, 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 mid to late April, 2018. 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, and related matters, is in form and substance acceptable for the Authority Board to adopt.