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TEFRA PUBLIC HEARING FOR THE LA PASSEGGIATA APARTMENTS AFFORDABLE HOUSING PROJECT LOCATED AT 622 EAST LINDSAY STREET, STOCKTON, CA
recommended action
RECOMMENDATION
It is recommended that the City Council adopt a resolution to:
1. Approve the issuance of multifamily housing revenue bonds by the California Municipal Finance Authority for the benefit of La Passeggiata LLC, a California limited liability company (the “General Partner”), an affiliate of Visionary Home Builders of California Inc., a California nonprofit public benefit corporation (the “Sponsor”), on behalf of La Passeggiata LP, a California limited partnership, or another ownership entity created by the General Partner or by another affiliate of the Sponsor (such limited partnership or other ownership entity, the “Borrower”) to provide for the financing of the La Passeggiata Apartments project in an amount not to exceed $50,000,000, for the acquisition, construction, improvement and equipping of 94-unit rental housing facility for low-income households, to be located in Stockton at 622 East Lindsay Street.
Note: The bonds will not be a debt of the City, nor will they obligate the City in any way. The adoption is solely for the purposes of satisfying the requirements of the Tax and Equity Fiscal Responsibility Act (TEFRA).
2. Authorize the City Manager, or designee, to take actions that are necessary and appropriate to carry out the purpose and intent of the resolution.
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Summary
The purpose of this hearing is to satisfy the public approval requirement of the Tax and Equity Fiscal Responsibility Act (TEFRA), Section 147(f) of the Internal Revenue Code of 1986 (Tax Code). The City Council is being asked to adopt a resolution that would approve the issuance of multifamily housing revenue bonds by California Municipal Finance Authority (CMFA) in an aggregate principal amount not to exceed $50,000,000 of Bond funds, along with four percent low-income housing tax credits, which will be used by La Passeggiata LP to finance the acquisition, construction, improvement and equipping of a 94-unit rental housing development for low-income households, to be located in Stockton at 622 East Lindsay Street, Stockton CA (the "Project"). The complex will provide housing affordable to households with incomes at or below 80 percent of the Area Median Income (AMI).
The proposed bonds will not be a debt of the City, nor will they obligate the City in any way. The role of the City Council is limited to conducting the public hearing to certify the public benefit of this project for the purpose of facilitating financing for the project by CMFA.
DISCUSSION
Background
The La Passeggiata Apartments project is a proposed 94-unit new construction rental housing development for low-income households; the project site is located at 622 East Lindsay Street, Stockton, CA. The development is part of the initiative to build on Surplus Land owned by the State of California. Following the issuance of Executive Order N-06-19 (EO) issued on January 15, 2019, by Governor Gavin Newsom, Visionary Home Builders of California Inc (VHB) responded to the State's Request for Proposals (RFP) released in September 2019 to build on the State Surplus Land in the City of Stockton and was nominated in January 2020. An exclusive negotiation agreement was signed on July 29, 2020, between VHB and the State’s Department of General Services. The agreement was to build on the approximate .84 acre of vacant land in Downtown Stockton.
Bond funds will be used to finance the construction and improvements. The project will consist of 94 modular energy-efficient units with LEED Certification and will be Stockton’s first modular apartment complex. The development will consist of two buildings, 5 and 6 stories high, with a breezeway connecting both buildings. The 5-story building will provide 44 apartment units of 1 and 2 bedrooms ranging from 550 square feet to 800 square feet. The 6-story building will be designed to provide 50 apartment units of 2 and 3 bedrooms ranging from 800 square feet to 1,050 square feet. The 5 and 6-story buildings will have one laundry room and one elevator in each building for residents to use. The roof of the buildings will provide a common area where the community can come together for relaxation and enjoy the view of Downtown Stockton. The project is intended to serve individuals and large families with incomes between 30 percent to 50 percent of the AMI. There will be 93 restricted affordable units for future residents and one property manager’s unit.
To assist with the acquisition and development of La Passeggiata Apartments, the City has approved and allocated a total of $600,000 in project funding from HOME Investment Partnerships Program (HOME) funds. La Passeggiata LP will leverage City financing to secure bond funds (CMFA) and proceeds from four percent tax credits, as well as funds from the State’s Infill Infrastructure Grant Program (IIG), Local Government Matching Grants Program (LGMG), and the Multifamily Housing Program (MHP).
Present Situation
The TEFRA Act, Section 147 (f) of the Tax Code, requires that before bonds can be issued, the local jurisdiction in which a project is to be financed with bonds must: 1) conduct a public hearing; and, 2) approve the issuance of the bonds. The City Council is being asked to hold such a public hearing and adopt a resolution that would authorize the issuance of the bonds by CFMA in an amount not to exceed the aggregate principal amount of $50,000,000.
A TEFRA hearing is mandated by the IRS to provide a reasonable opportunity for interested individuals to express their views on the issuance of bonds and the nature of the improvements and projects for which the bond funds will be allocated. This hearing is an opportunity for all interested persons to speak to or submit written comments on the proposal to issue the debt and the public benefit of the project, but the City Council has no obligation to respond to any specific comments made or submitted during the hearing.
The CMFA assists 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 was created in 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.
Outside of holding the TEFRA hearing and adopting the required resolution, no other participation or activity of the City or the City Council concerning the issuance of the Bonds will be required. The proposed bonds will not be a debt of the City, nor will they obligate the City in any way. The role of the City Council is limited to conducting the public hearing to certify the public benefit of this project for the purpose of facilitating financing for the project by CMFA.
City Council has previously approved the issuance of similar bonds for several projects, including:
• $23 million of multifamily housing revenue bonds to assist with the development of the Grand View Village Apartments, located at 240 E. Miner Ave and 240 N Hunter Street, was approved on June 18, 2024.
• $20 million of multifamily housing revenue bonds to assist with the adaptive reuse of Liberty Square (formerly Hunter Street Apartments), located at 804 North Hunter Street, was approved on April 2, 2019.
• $38 million of bonds to finance the construction of new student housing and other improvements for the University of Pacific was approved on September 27, 2016.
• $30 million of multifamily housing revenue bonds to assist with the rehabilitation of the Polo Run Apartments, located at 8166 Palisades Drive, was approved on August 9, 2016.
Public Notice
Legal notice for the TEFRA public hearing is required to be published at least 7 days in advance. The notice for this hearing was published in The Record on November 8, 2024.
FINANCIAL SUMMARY
The City will incur no financial liability as a result of approving the issuance of the bonds. This action only serves as a public acknowledgment by the local jurisdiction of the project financing.
Attachment A - Vicinity Map