REPORT TO COUNCIL
SUBJECT
Title
Hold a Public TEFRA Hearing and Action on the Adoption of a Resolution Approving the California Municipal Finance Authority (CMFA) Issuance of Tax-Exempt Bonds Relating to the Financing of a 200-unit Multifamily Rental Housing Project for Low-income Households to be Located in the City of Santa Clara, California at 80 Saratoga Avenue
Report
COUNCIL PILLAR
Promote and Enhance Economic, Housing and Transportation Development
BACKGROUND
Pacific West Communities, Inc (the “Developer”) is proposing to build a 200-unit multifamily rental housing project for low-income households at 80 Saratoga Avenue (Project). The Project has already received land use entitlements from the City and the Developer has now applied to the State for tax-exempt bonds to help finance their project. As part of the financing process for affordable housing projects seeking to utilize State tax-exempt bonds, the local jurisdiction, in this case the City of Santa Clara, is required by State law to conduct a public hearing. The City is conducting this public hearing as a result of Pacific West Communities, Inc’s application to the State.
For all or a portion of the bonds to qualify as tax-exempt bonds, the City of Santa Clara must conduct a public hearing under the Tax Equity and Fiscal Responsibility Act (the “TEFRA Hearing”) to provide the members of the community an opportunity to speak in favor of or against the use of tax-exempt bonds for financing the Project. Public notice must be provided to the members of the community prior to the TEFRA Hearing. Following the close of the TEFRA Hearing, an “applicable elected representative” of the City must provide its approval of the issuance of the bonds for financing the Project.
California Municipal Finance Authority (CMFA)
The CMFA was created on January 1, 2004, pursuant to a joint exercise of powers agreement to promote economic, cultural and community development, through the financing of economic development and charitable activities throughout California. To date, over 350 municipalities, including the City of Santa Clara have become members of CMFA.
The CMFA was formed to assist local governments, non-profit organizations and businesses with the issuance of taxable and tax-exempt bonds aimed at improving the standard of living in California. The CMFA’s representatives and its Board of Directors have considerable experience in bond financings.
Santa Clara Pacific Associates, a California Limited Partnership (the “Borrower”), a partnership of which the Developer or a related person to the Developer is the general partner, has requested that the CMFA issue exempt facility bonds in the maximum principal amount of $95,000,000 to finance or refinance the acquisition, construction, improvement and equipping of an 200-unit multifamily rental project to be located in the City of Santa Clara, California at 80 Saratoga Avenue.
DISCUSSION
The debts, liabilities, and obligations of the CMFA do not constitute debts, liabilities or obligations of the members executing such an agreement. The bonds to be issued by the CMFA for the Project will thus be the sole responsibility of the Borrower, and the City will have no financial, legal, moral obligation, liability or responsibility for the Project or the repayment of the bonds for the financing of the Project. All financing documents with respect to the issuance of the bonds will contain clear disclaimers that the bonds are not obligations of the City or the State of California but are to be paid for solely from funds provided by the Borrower.
The Board of Directors of the California Foundation for Stronger Communities, a California non-profit public benefit corporation (the “Foundation”), acts as the Board of Directors for the CMFA. Through its conduit issuance activities, the CMFA shares a portion of the issuance fees it receives with its member communities and donates a portion of these issuance fees to the Foundation for the support of local charities. With respect to the City of Santa Clara, it is expected that that a portion of the issuance fee attributable to the City will be granted by the CMFA to the General Fund of the City (estimated to be approximately $15,000). Such grant may be used for any lawful purpose of the City.
The City of Santa Clara is already a member with CMFA and there are no costs associated with membership in the CMFA, and the City will in no way become exposed to any financial liability by reason of its membership in the CMFA. Outside of holding the TEFRA hearing and adopting the required resolution, no other participation or activity of the City or the City Council with respect to the issuance of the bonds will be required.
Conducting the TEFRA hearing is a procedural action the City is required to take that will allow implementation of the Project, advancing the City’s goals and objectives related to the production of affordable housing and consistent with the City’s General Plan.
ENVIRONMENTAL REVIEW
The action being considered does not constitute a “project” within the meaning of the California Environmental Quality Act (“CEQA”) pursuant to CEQA Guidelines section 15378(b)(5) in that it is a governmental organizational or administrative activity that will not result in direct or indirect changes in the environment.
FISCAL IMPACT
There is no cost to the City other than administrative staff time and expense.
COORDINATION
This report has been coordinated with the Finance Department and City Attorney’s Office.
PUBLIC CONTACT
Public contact was made by posting the Council agenda on the City’s official-notice bulletin board outside City Hall Council Chambers. A complete agenda packet is available on the City’s website and in the City Clerk’s Office at least 72 hours prior to a Regular Meeting and 24 hours prior to a Special Meeting. A hard copy of any agenda report may be requested by contacting the City Clerk’s Office at (408) 615-2220, email clerk@santaclaraca.gov <mailto:clerk@santaclaraca.gov>.
As required by TEFRA regulations, a seven-day notice was published on August 23, 2023 in the Santa Clara Weekly. Proof of publication is included as Attachment 2.
ALTERNATIVES
1. Conduct the public hearing under the requirements of TEFRA and the Internal Revenue Code of 1986, as amended (the “Code”).
2. Adopt the resolution approving the issuance of up to $95,000,000 in tax-exempt private-activity bonds by California Municipal Finance Authority (CMFA) for the benefit of a 200-unit Multifamily Rental Housing Project to be Located in the City of Santa Clara, California at 80 Saratoga Avenue.
3. No action by City Council.
RECOMMENDATION
Recommendation
Hold a Tax Equity and Fiscal Responsibility Act public hearing and adopt a resolution approving the issuance of up to $95,000,000 in tax-exempt private-activity bonds by California Municipal Finance Authority (CMFA) for the benefit of a 200-unit Multifamily Rental Housing Project to be Located in the City of Santa Clara, California at 80 Saratoga Avenue.
Staff
Reviewed by: Andrew Crabtree, Director, Community Development Department
Approved by: Jovan Grogan, City Manager
ATTACHMENT
1. TEFRA Resolution for 80 Saratoga
2. TEFRA Proof of Publication 80 Saratoga