LA VICTORIA COMMONS 2024 - SUMMARY LETTER FOR BD AND BOS.PDF
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Squire Patton Boggs (US) LLP 2325 E. Camelback Road, Suite 700 Phoenix, Arizona 85016 O +1 602 528 4000 F +1 602 253 8129 squirepattonboggs.com 1100115501\2\ March 5, 2024 To: Board of Supervisors Board of Directors Maricopa County, Arizona The Industrial Development Authority of the County of Maricopa Re: Not to Exceed $15,000,000 – The Industrial Development Authority of the County of Maricopa Multifamily Housing Revenue Note (La Victoria Commons 4% Project), Series 2024 Ladies and Gentlemen: At the Board of Directors’ meeting of The Industrial Development Authority of the County of Maricopa (“Maricopa IDA” or “Issuer”) on March 12, 2024, the Maricopa IDA Board will be asked to grant final approval and adopt a resolution authorizing the issuance and sale of the note described above (the “Funding Note/Bond”) as tax-exempt or taxable “bonds” (within the meaning of the Act (defined below)). This letter provides a summary of the proposed financing. AUTHORITY The Maricopa IDA 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”). THE APPLICANT/BORROWER The Applicant/Borrower, La Victoria Commons 4% LIHTC, LP (“Borrower”) is an Arizona limited partnership, having La Victoria Commons 4% LIHTC, LLC, an Arizona limited liability company, as its general partner (“General Partner”). Copa Health, Inc., an Arizona nonprofit corporation, is the sole member of Marc Community Resources, Inc., an Arizona nonprofit corporation and the sole member of the General Partner. THE PROJECT The Borrower will use the proceeds of the Funding Note/Bond to finance the construction, improvement and equipping of 52 low-income apartment units on the 4th and 5th floors of a 5-story mixed-use building to be known as “La Victoria Commons” (the "Project"). The ground floor of the building will be composed of commercial space, including a health clinic and a social enterprise café, and community space, as well as parking. The 2nd and 3rd floors will have an identical number of low- income apartment units. The building will include a total of 104 income-restricted apartment units to be leased to tenants with incomes between 30-60% of the area medium income. The Project will be Board of Supervisors Board of Directors March 5, 2024 Page 2 1100115501\2\ constructed on property owned by the City of Tempe pursuant to the terms of a development agreement and a 60-year ground lease. The property is located generally at 2320 E. Apache Blvd, Tempe, Arizona 85288 and is in Supervisorial District No. 2. NOTIFICATION TO ARIZONA ATTORNEY GENERAL As required by the provisions of Arizona Revised Statutes, Section 35-721.F, the Maricopa IDA has notified the Arizona Attorney General of its intention to issue the Funding Note/Bond. TAX EXEMPT FINANCING Pursuant to Section 147(f) of the Internal Revenue Code of 1986, as amended (the “Code”), the Maricopa County Board of Supervisors must approve the issuance of the Funding Note/Bond after a public hearing following reasonable public notice. On or prior to closing, the Maricopa IDA will receive an opinion from Squire Patton Boggs (US) LLP, as bond counsel, to the effect that interest on any tax- exempt series of the Funding Note/Bond will be exempt from federal and State income taxes. ALLOCATION FOR TAX EXEMPT FINANCING An allocation of the Arizona “volume cap” has been obtained for the Project as is required for the issuance of tax-exempt bonds under Section 142(d) of the Code. FINANCING PARTICIPANTS The major participants in the financing are as follows: Issuer: The Industrial Development Authority of the County of Maricopa Issuer/Bond Counsel: Squire Patton Boggs (US) LLP Borrower: La Victoria Commons 4% LIHTC, LP Applicant/Borrower Counsel: Lotzar Law Firm, P.C. Holder/Purchaser: Wells Fargo Bank, National Association PRINCIPAL FINANCING DOCUMENTS Document Parties Funding Loan Agreement, with Funding Note/Bond Issuer, Wells Fargo Bank and corporate fiscal agent Project Loan Agreement Issuer, Borrower and corporate fiscal agent Promissory Note Borrower Board of Supervisors Board of Directors March 5, 2024 Page 3 1100115501\2\ Regulatory Agreement (Land Use Restriction Agreement) Issuer and Borrower Leasehold Deed(s) of Trust, Security Agreement, Assignment of Rents and Leases and Fixture Filing Borrower Tax Certificate Issuer and Borrower PLAN OF FINANCING The La Victoria Commons residential apartment project will be financed, in part, with private activity bonds issued by the Maricopa IDA. The Borrower is also expecting to seek a reservation of 4% Low Income Housing Tax Credits from the Arizona Department of Housing under its Qualified Allocation Plan. The Issuer will issue the Funding Note/Bond under and pursuant to the terms and provisions of the Funding Loan Agreement in one or more tax-exempt and taxable series in an aggregate principal amount of not to exceed $15,000,000. The proceeds from the sale of the Funding Note/Bond will be loaned by the Maricopa IDA to the Borrower and the Borrower will be obligated to make loan repayments in amounts and at such times as required to pay principal and interest on the Funding Note/Bond on the due dates under the Promissory Note. The obligations of the Borrower will be secured by the Leasehold Deed(s) of Trust that will encumber the Project. The Funding Note/Bond will be privately placed with Wells Fargo Bank. The Funding Note/Bond will not receive a rating from any rating agency. Finally, the Tax Certificate will be executed by the Maricopa IDA and the Borrower to evidence various representations and agreements aimed at establishing and preserving the tax-exempt status of the Funding Note/Bond. FINAL APPROVAL At the Maricopa IDA Board meeting on March 12, 2024, the Maricopa IDA Board will be asked to grant final approval and adopt a resolution authorizing the issuance and sale of the Funding Note/Bond and related matters. BOARD OF SUPERVISORS APPROVAL Under the provisions of A.R.S. § 35-721.B., the Funding Note/Bond to be issued by the Maricopa IDA requires the approval of the Maricopa County Board of Supervisors. The Maricopa County Board of Supervisors is being requested, at its meeting on March 27, 2024, to act as required by law to adopt a resolution approving the issuance of the Funding Note/Bond under the Act and with respect to Section 147(f) of the Code. Board of Supervisors Board of Directors March 5, 2024 Page 4 1100115501\2\ Under the provisions of the Act, specifically A.R.S. § 35-742, Maricopa County is not in any event liable for the payment of principal or interest on any bonds, notes or other obligations issued by the Maricopa IDA or for the performance of any pledge, mortgage, obligation or agreement of any kind undertaken by the Maricopa IDA, and none of the bonds, notes or other obligations, or any of its obligations thereunder, shall be construed to constitute an indebtedness of Maricopa County within the meaning of any constitutional or statutory provision. LEGAL COUNSEL RECOMMENDATION As bond counsel and legal counsel to Maricopa IDA, we have reviewed drafts of the principal financing documents and based upon our review of such and our review of the proceedings to date relating to the proposed issuance of the Funding Note/Bond, we believe the principal financing documents are now in substantially final form, adequately meet the requirements of the Act, and are in both form and substance acceptable for the Maricopa IDA Board and Maricopa County Board of Supervisors to act upon, and that the Resolution of the Maricopa IDA Board authorizing the issuance and sale of the Funding Note/Bond and related matters and the Resolution of the Maricopa County Board of Supervisors approving the Funding Note/Bond to be issued and related matters, are in form and substance acceptable for adoption.