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TEFRA PUBLIC HEARING FOR THE HUNTER STREET APARTMENTS LOCATED AT 804 NORTH HUNTER STREET
recommended action
RECOMMENDATION
It is recommended that the City Council adopt a resolution:
1. Approving the issuance of multifamily housing revenue bonds by the California Statewide Communities Development Authority (CSCDA) in an amount not to exceed $30,000,000 on behalf of Visionary Home Builders of California.
Note: The bonds will not be a debt of the city, nor will they obligate the City in any way.
2. Authorizing the City Manager, or his 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 CSCDA in an aggregate principal amount not to exceed $30,000,000. The bond funds will be used by Visionary Home Builders (Visionary) to finance the adaptive reuse of an office building located at 804 North Hunter Street into 74 apartment units (Attachment A - Vicinity Map). The complex will provide housing affordable to households with incomes at or below 60 percent of the Area Median Income (AMI). The project will update the exterior of the building and result in major renovation to the interior. A daycare, playground, and energy efficiency features will also be included.
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 CSCDA.
DISCUSSION
Background
The Hunter Street Apartments project is a proposed adaptive reuse project that will convert a vacant office building into 74 housing units. Two of the units will be for on-site managers and the remaining 72 units will be for households with incomes between 50 and 60 percent of the AMI. The project will include various sized units to accommodate individuals as well as larger families. The unit mix will consist of 6 studios, 21 one-bedroom units, 21 two-bedroom units, and 24 three-bedroom units. Rents are expected to range from $516 to $919 per month. The complex will include a community room, daycare, playground, and security features. The project will also be energy efficient and will include rooftop solar panels, insulated glass windows, high efficiency water heaters, and occupancy sensors.
Visionary is partnering with Catholic Charities of San Joaquin who will provide case management services for the residents to help them access needed services, including VA assistance, health care, and transportation.
To assist with the construction, the City previously approved Neighborhood Stabilization Program (NSP) loans totaling $2 million to Visionary. The property was eligible for NSP funding because the office building was in foreclosure when it was acquired by Visionary.
To finance the project, in addition to the City loans, Visionary is proposing a combination of funding sources, including bonds, and proceeds from four percent tax credits. In addition, funds from the Affordable Housing and Sustainable Communities Program (AHSC) have been awarded to the project.
At the time the City approved the NSP loan, it was known that additional funding would be needed for the project. As is typical for projects such as this which have multiple funding sources, the City Council’s approval of the loan included authorization for the NSP loan to be in a subordinate position to the other financing.
Present Situation
To assist in obtaining the remaining financing needed for the project, CSCDA has requested authorization from the City Council to issue multifamily housing revenue bonds in an amount not to exceed an aggregate of $30,000,000 on behalf of Visionary. CSCDA is a Joint Powers Authority whose members include the City of Stockton and over 520 other California cities, counties, and special districts.
The TEFRA Act, Section 147 (f) of the Tax Code, requires that before bonds can be issued, the local jurisdiction in which a project to be financed with bonds is located 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 CSCDA in an amount not to exceed the aggregate principal amount of $30,000,000.
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 simply 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.
If issued, the bonds will not be a debt of the City, nor will they obligate the City in any way. The role of the City Council in this hearing is limited to certifying the public benefit of this project for the purpose of facilitating financing for the project by CSCDA.
In 2016 the City Council approved the issuance of bonds for several projects, including:
• $30 million of bonds to finance the construction of new student housing and other improvements for the University of Pacific;
• $30 million of multifamily housing revenue bonds to assist with the rehabilitation of the Polo Run Apartments, located at 8166 Palisades Drive;
• $16 million of multifamily housing revenue bonds to assist with the rehabilitation of the Village East Apartments, located at 2501 East Lafayette Street; and
• $15 million of multifamily housing revenue bonds for the rehabilitation of the Hampton Square Apartments, located at 819 East Hammer Lane.
Public Notice
A legal notice for the TEFRA public hearing is required to be published at least 14 days in advance. The notice for this hearing was published in The Record on January 20, 2017.
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 acknowledgement by the local jurisdiction of the project financing.
Attachment A - Vicinity Map