HomeMy WebLinkAbout7.1 Participation in the California Statewide Communities Development Authority Middle-Income Rental Housing Program and Policy Direction on Loss of Property Tax Revenue Due to Creation of Middle-Income HousingSTAFF REPORT
CITY COUNCIL
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Agenda Item 7.1
DATE:June 1, 2021
TO:Honorable Mayor and City Councilmembers
FROM:Linda Smith, City Manager
SUBJECT:Participation in the California Statewide Communities Development
Authority Middle-Income Rental Housing Program and Policy Direction on
Loss of Property Tax Revenue Due to Creation of Middle-Income Housing
Prepared by: Kristie Wheeler, Assistant Community Development Director
EXECUTIVE SUMMARY:
The City Council will consider whether to join the Community Improvement Authority, which is an
affiliate of the California Statewide Communities Development Authority (CSCDA). The Authority
supports the issuance of bonds for the production, preservation, and protection of middle-income
rental housing. As a policy matter, the acquisition of middle-income rental housing results in the
loss of property tax revenue for a period of 30 years. Staff is requesting that the City Council
provide policy direction on the loss of property tax revenue to the City in support of creating
middle-income housing.
If the City Council decides to become an Additional Member of the Authority, CSCDA is proposing
to acquire the Waterford Place Apartments located at 4800 Tassajara Boulevard for that purpose.
As part of this decision, the City Council will consider approving the form of a Public Benefit
Agreement and approving the issuance of bonds for the acquisition of the Waterford Place
Apartments.
STAFF RECOMMENDATION:
Receive the presentation and provide direction on the loss of property tax revenue, and on joining
the Authority. If the City Council wishes to join the Authority, adopt the Resolution Approving,
Authorizing, and Directing Execution of a Joint Exercise of Powers Agreement Relating to the
CSCDA Community Improvement Authority, and the Form of a Public Benefit Agreement; and
Approving the Issuance of Revenue Bonds by the Authority for the Purpose of Financing the
Acquisition of the Waterford Place Apartments.
FINANCIAL IMPACT:
There are no financial expenditures, liabilities, or obligations created by joining the CSCDA
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Community Improvement Authority. It is a public entity separate and apart from its members,
and any debts or obligations incurred by the Authority will not constitute debts or obligations of
its member agencies. In this case, bonds issued for the Authority’s acquisition of the Waterford
Place Apartments will be indebtedness solely of the Authority, and payable only from revenues of
the project.
The Waterford Place Apartments currently provides $335,000 annual property tax revenue, which
the City would no longer receive. Eliminating the property tax burden enables the Authority to
charge lower rents and target middle-income households. To offset the loss of property tax
revenue, a Public Benefit Agreement would grant any net surplus project revenues to the City
when the property is later sold.
DESCRIPTION:
Background
On May 4, 2021, the City Council received a presentation on the California Statewide Communities
Development Authority (CSCDA) Middle-Income Rental Housing Program and discussed a request
for the City to become an additional member of the CSCDA Community Improvement Authority
(Authority). In addition, the Authority has requested approval of the form of a Public Benefit
Agreement and issuance of bonds for the acquisition of the 390-unit Waterford Place Apartments
(the Project) at 4800 Tassajara Road. The May 4, 2021 Staff Report is included as Attachment 4.
Under the Middle-Income Rental Housing Program, the Project would be owned by the Authority
and converted to income and rent restricted units for moderate/middle income households. The
Project Administrator would be BLVD Capital, who has experience owning and operating multi-
family housing rental projects, including projects with affordability restrictions. The City Council
considered the information presented at the May 4, 2021 meeting and requested additional
information, which is included in the latter part of this Staff Report.
Staff is seeking policy direction from the City Council regarding participation in the CSCDA and
other similar middle-income housing programs. Additionally, Staff is requesting the City Council to
provide direction on joining the CSCDA Community Improvement Authority and authorizing
actions related to the acquisition of the Waterford Place Apartments for this program.
Policy Direction
On September 1, 2020, the City Council authorized the City to become an additional member of the
California Community Housing Agency (CalCHA) to participate in their Middle-Income Rental
Program. Similar to the CSCDA Community Improvement Authority, the CalCHA program issues
bonds to acquire apartment complexes and converts them to rent restricted units for middle-
income households. The City forgoes property taxes which helps make it feasible to create this
affordable housing. The City Council authorized the City Manager to enter into Purchase Option
Agreements for properties acquired through the CalCHA program under limited conditions,
including no more than four properties totaling up to 1,000 units over five years. This assumed
that the City would forgo approximately $860,000 to $1 million annually in property tax revenue if
that many units were taken off the tax roll.
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The City has now been approached by CSCDA to participate in a similar program that eliminates
property tax revenue. There is at least one other similar joint powers authority that operates a
similar program and may approach the City about joining. Staff is requesting direction from the
City Council regarding the amount of property tax revenue the City Council is comfortable
forgoing.
Information Requested
The following is additional information requested by the City Council at the City Council Meeting
on May 4, 2021:
Lessons learned from California Community Housing Agency (CalCHA) acquisition of the
Aster Apartments
Current rent data for Waterford Place Apartments and how affordability would be
provided with respect to the program
Information on how rents would be amended
Information on how rent control is implemented
Financial impact to the City
Commercial component of Waterford Place
Lessons Learned from CalCHA Acquisition of Aster Apartments
As CalCHA just recently acquired the Aster Apartments, the City does not yet have a full picture of
all lessons learned from that acquisition. However, within a week of CalCHA closing on the Aster,
the City received a complaint from a tenant that garbage was not being collected and they were
unable to get ahold of property management. This highlights the importance of communication
between property management companies and the need for a transition plan. If the City Council
approves the CSCDA proposal, Staff would request a transition plan from CSCDA prior to executing
the Public Benefit Agreement to ensure a smooth conversion.
Rent Data
The average in-place rent at the Waterford Place Apartments is $2,550 per month, which is based
on actual leases signed with tenants. When the property is added to the Middle-Income Rental
Housing Program, rents for income-qualifying residents would be reduced to an average of $2,371
per month upon lease renewal. This would provide average rent relief of $178 per month, which is
a 7% reduction. Table 1 below provides the current average rent at the Waterford Place
Apartments per unit type and the proposed rent reduction.
Table 1. Waterford Place Apartments Average Rent
Type # of Units Square Feet Current
Ave. Rent
Ave.
Proposed
Rent
Proposed
Rent
Reduction
($)
Proposed
Rent
Reduction
(%)
1 Bedroom 229 738 $2,301 $2,140 $161 7%
2 Bedroom 161 1,130 $2,903 $2,700 $203 7%
Average 900 $2,550 $2,371 $178 7%
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Staff asked Keyser Marston Associates (KMA), a real estate advisory firm, to review the CSCDA
proposal and provide an overview of rent trends and future savings (Attachment 5). Over the past
10 years, market rate rents in Dublin have increased at an average annual rate of 2.7% per year
while AMI has increased at an average annual rate of 3.2% per year. As shown in the graph and
table below, the annual rate of growth of market rate rents and AMI have differed significantly
over the past 10 years. Rents increased rapidly from 2012 through 2015 and then flattened from
2016 through 2021. In comparison, the AMI was flat from 2012 through 2016 and then increased
at a relatively rapid rate from 2016 through 2021. The average annual rate of growth for both the
AMI and market rents rounds to 3%, but the actual growth rate of the AMI has exceeded the
growth rate of market area rents over the past 10 years. Market-rate rents in Dublin are now
priced at 95%of AMI (one-bedroom units) and 103% of AMI (two-bedroom units), which is
within the moderate-income range.The maximum allowed moderate income rent per the formula
(110%) of AMI is higher than current market rate rents.
Year Area Median Income Dublin Market Rate Apts.
Household of 4 Persons %Change Market Rate Apartment Rents %Change
2011 $92,300 $2,019
2012 $93,500 1%$2,093 4%
2013 $93,500 0%$2,224 6%
2014 $93,500 0%$2,311 4%
2015 $93,500 0%$2,476 7%
2016 $93,600 0%$2,486 0%
2017 $97,400 4%$2,502 1%
2018 $104,400 7%$2,522 1%
2019 $111,700 7%$2,580 2%
2020 $119,200 7%$2,497 -3%
2021 $125,600 5%$2,631 5%
Average Annual Change:3.2%2.7%
$130,000 Area Median Income and Market Rents $2,800
$120,000 $2,600
$110,000 $2,400
$100,000 $2,200
$2,000
$90,000 $1,800
$80,000 $1,600
$70,000 $1,400
$60,000 $1,200
$50,000 $1,000
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Income Rent
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Under the CSCDA rent restrictions, the difference between future market-rate rents and rents
for the Waterford Place Apartments will depend on the rate of change of AMI relative to both
market-rate rents and the 4% annual cap required by the CSCDA program. Based on KMA’s
experience, they anticipate that the delta between the proposed restricted rents at the
Waterford Place Apartments and prevailing market-rate rents would increase over time. Given
that future increases to the rental rates at Waterford Place would be tied to increases in the
AMI under the proposed program, the project would continue to be affordable to moderate
income households.
How Rents are Amended
As noted above, income-qualifying tenants would receive a rent reduction upon lease renewal.
Currently, there are no leases longer than 12 months and, thus, within one year of the property
being added to the Middle-Income Rental Housing Program, qualifying tenants would receive
lower rent rates. The rent for non-income-qualified tenants would remain at market rate.
How Rent Control is Implemented
In addition to qualifying tenants receiving a rent reduction, future rent increases would be capped
far less than market conditions would otherwise allow. The following compares market-rate rent
increases to the Middle-Income Rental Housing Program:
Market Rate Properties
o Market-rate apartment properties can increase rents annually by up to 10% (a base 5%
increase plus a cost of living adjustment of up to another 5%). Additionally, market-rate
apartment properties have no limitations on rents when a unit becomes vacant.
Middle-Income Rental Housing Program
o No rent increases are allowed unless there is an increase in area median income (AMI)
from the prior year.
o If there is an increase in AMI, the maximum annual rental increase is based on the
increase in AMI, but in no event can it be greater than 4%.
o Upon a unit becoming vacant, the new tenant cannot be charged more than the
restricted rent level.
As is being experienced in many markets throughout California, rents couldstart to increase as the
economy recovers from the COVID-19 pandemic. The above limitations on rent increases could
provide a growing benefit to Dublin residents.
Financial Impact to the City
The proposed Public Benefit Agreement provides that all future value of the property is given to
the City. This value will be given to the City when either:
All bond financing is repaid in full, which is estimated to occur within 30 years.
o When this occurs, the City can either take ownership of the property, or direct a sale. At
such time, the City has the sole discretion to maintain, amend, or remove the
affordability restrictions. All net sale proceeds would belong to the City.
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The City elects to sell the property, which it can do at any time after Year 15.
o All net sale proceeds would belong to the City.
The future value of the property, based on conservative industry standard assumptions, is
approximately $400,000,000 in year 30. As there would be no debt outstanding at that time, this
full amount would revert to the City should it desire to sell the property at that time. Over a 30-
year period, the City would forego approximately $15.6 million of property tax revenue (current
property taxes, increased 2% per year for 30 years).
Commercial Component
Waterford Place Apartments is part of a larger mixed-use development that includes the Shops at
Waterford. Approximately 14,000 square feet of retail space is incorporated into the ground floor
of the apartment complex. Separate parking is provided for the residential and retail components
of the project. A condominium map was recorded which separates the ownership of the retail
space from the apartments. The retail space is owned and operated by the same owner as the
Shops at Waterford and there will be no change in operations related to Waterford Place
Apartments entering the Middle-Income Rental Housing Program. The owner of the retail space
will continue paying its full property taxes, which are currently $93,758 per year, and the City will
continue to receive property tax revenue on the Waterford retail even though the apartments
enter the Middle-Income Rental Housing Program.
Additional Information
Assembly Bill 787
As mentioned at the May 4, 2021 City Council meeting, there is current legislation proposed that
would authorize a city or county to include in its Housing Element Annual Progress Report (APR)
the number of multifamily units that were converted to deed-restricted rental housing for very
low-, low-, and moderate-income households and reduce its share of regional housing need for the
income category of the converted units. Assembly Bill 787 (AB 787) would apply only to
converted units that meet specified requirements, including that the rent for the unit prior to
conversion was not affordable to very low-, low-, or moderate-income households and the initial
post-conversion rent for the unit is at least 10% less than the average monthly rent charged over
the 12 months prior to conversion. In addition, the bill would require a 55-year affordability
covenant.
It is unknown if the current version AB 787 will pass and, if it does, what the final requirements
would be. Staff has reviewed the bill and believes that if it passes this year, it would allow the City
to include the converted units in the Waterford Place Apartments in our APR to the State and
receive Regional Housing Need Allocation (RHNA) credit for production of units in the current
Housing Element cycle, provided that they meet the requirements of the bill. But they would not
count toward the sites inventory to accommodate our RHNA in the next Housing Element cycle,
which is for the 2023-2031 planning period.
CSCDA indicated that it is not financially feasible for all the units in the Waterford Place
Apartments to meet the rent reduction requirements of AB 787, nor is it feasible for CSCDA to get
all bond holders to agree to a revised regulatory agreement changing rent restrictions after the
sale of the bonds if AB 787 were to pass. As previously stated, CSCDA is proposing an average rent
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reduction of 7%. Based on this, there would be 129 units that would have a rent reduction of at
least 10% while the majority would have a lesser reduction. CSCDA has agreed, if AB 787 were to
pass, that they will cooperate with the City to obtain RHNA credit for the 129 qualifying units that
were underwritten to have at least a 10% rent reduction, and to assist the City to record a 55-year
affordability covenant on those units. This agreement is reflected in the attached City Council
Resolution (Attachment 1).
STRATEGIC PLAN INITIATIVE:
Strategy 3: Create More Affordable Housing Opportunities
Objective D: Seek opportunities to preserve the stock of housing that is affordable to
moderate and middle-income households.
NOTICING REQUIREMENTS/PUBLIC OUTREACH:
The City Council Agenda was posted.
ATTACHMENTS:
1) Resolution Approving, Authorizing, and Directing Execution of a Joint Exercise of Powers
Agreement Relating to the CSCDA Community Improvement Authority, and the Form of a
Public Benefit Agreement; and Approving the Issuance of Revenue Bonds by the Authority for
the Purpose of Financing the Acquisition of the Waterford Place Apartments
2) Joint Exercise of Powers Agreement
3) Proposed Form of Public Benefit Agreement
4) May 4, 2021 City Council Staff Report
5) Keyser Marston Memo
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Attachment 1
Reso. No. XX-21, Item X.X, Adopted XX/XX/21 Page 1 of 3
RESOLUTION NO. XX-21
A RESOLUTION OF THE CITY COUNCIL
OF THE CITY OF DUBLIN
APPROVING, AUTHORIZING AND DIRECTING EXECUTION OF A JOINT
EXERCISE OF POWERS AGREEMENT RELATING TO THE CSCDA COMMUNITY
IMPROVEMENT AUTHORITY, AND THE FORM OF A PUBLIC BENEFIT
AGREEMENT; AND APPROVING THE ISSUANCE OF REVENUE BONDS BY THE
AUTHORITY FOR THE PURPOSE OF FINANCING THE ACQUISITION OF THE
WATERFORD PLACE APARTMENTS
WHEREAS, pursuant to Chapter 5 of Division 7 of Title 1 of the Government Code
of the State of California (the “Act”), certain public agencies (the “Members”) have entered
into a Joint Exercise of Powers Agreement Relating to the CSCDA Community
Improvement Authority, dated as of October 15, 2020 (the “Agreement”), a copy of which
has been filed with the City, in order to form the CSCDA Community Improvement
Authority (the “Authority”), for the purpose of promoting economic, cultural and community
development, and in order to exercise any powers common to the Members or granted
by the Act, including by the issuance of bonds, notes or other evidences of indebtedness;
and
WHEREAS, the City of Dublin (the “City”) has determined that it is in the public
interest and for the public benefit that the City become an Additional Member of the
Authority pursuant to Section 12 of the Agreement in order to facilitate the promotion of
economic, cultural and community development activities in the City, including the
financing of projects therefor by the Authority; and
WHEREAS, the Agreement has been filed with the City, and the members of the
City Council of the City (the “City Council”), with the assistance of its staff, have reviewed
said document; and
WHEREAS, the Authority is authorized to issue and sell revenue bonds for the
purpose, among others, of financing or refinancing the construction, acquisition and
rehabilitation of capital projects; and
WHEREAS, the Authority proposes to issue its governmental purpose revenue
bonds (the “Bonds”) to finance the acquisition and certain related costs of the Waterford
Place Apartments (the “Project”) located at 4800 Tassajara Road, Dublin, which contains
approximately 390 apartment units; and
WHEREAS, the Authority proposes to grant to the City in connection with the
financing of the Project the option for the City or its designee to acquire the Project,
starting upon the date fifteen (15) years from the issuance of the Bonds pursuant to a
Public Benefit Agreement (the “Public Benefit Agreement”), by and between the Authority
and the City, the form of which has been filed with the City Council, subject to such non-
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material modifications as have been approved by the City Manager and approved as to
form by the City Attorney; and
WHEREAS, it is in the public interest and for the public benefit that the City Council
approve the issuance of the Bonds by the Authority for the aforesaid purposes; and
WHEREAS, Section 3(A) of the Agreement and Section 6508.1 of the California
Government Code expressly provide that the Authority’s “Bonds, and other debts,
liabilities and obligations do not constitute debts, liabilities, or obligations of any
Members…”
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL, AS
FOLLOWS:
Section 1.The foregoing recitals are true and correct.
Section 2.The City hereby requests to become an Additional Member of the
Authority pursuant to Section 12 of the Agreement. The Agreement is hereby approved
and the Mayor or the designee thereof is hereby authorized and directed to execute said
document, and the City Clerk or such Clerk’s designee is hereby authorized and directed
to attest thereto.
Section 3.The proposed form of Public Benefit Agreement on file with the City
Council is hereby approved. In connection with the Project, the City Manager or the
designee thereof is hereby authorized and directed to execute an agreement in
substantially said form, with such non-material changes therein as such officer executing
the same may require consistent with this Resolution and its basic purpose, and subject
to approval as to form of the City Attorney, such approval to be conclusively evidenced
by the execution and delivery thereof. Any material changes to the form of Public Benefit
Agreement must be approved by the City Council.
Section 4.The City Council hereby approves the issuance of Bonds by the
Authority to finance the Project within the City, provided that such Bonds are issued within
two years from the date of this Resolution.
Section 5.The issuance of Bonds shall be subject to the approval of the
Authority of all financing documents relating thereto to which the Authority is a party. The
City shall have no responsibility or liability whatsoever with respect to the Bonds.
Section 6.The CSCDA Community Improvement Authority shall cooperate with
the City to receive credit toward its Regional Housing Needs Allocation (RHNA) for the
maximum feasible number of qualifying units, if legislation passes that provides RHNA
credit for multifamily units converted to deed restricted rental housing, and shall assist the
City to record a 55-year affordability covenant on those units.
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Section 7.The adoption of this Resolution shall not obligate the City or any
department thereof to (i) provide any financing to acquire or construct any Project or any
refinancing of any Project; (ii) approve any application or request for or take any other
action in connection with any planning approval, permit or other action necessary for the
acquisition, construction, rehabilitation or operation of any Project; (iii) make any
contribution or advance any funds whatsoever to the Authority; or (iv) except as provided
in this Resolution, take any further action with respect to the Authority or its membership
therein.
Section 8.The executing officers(s), the City Clerk and all other proper officers
and officials of the City are hereby authorized and directed to execute such other
agreements, documents and certificates, and to perform such other acts and deeds, as
may be necessary or convenient to effect the purposes of this Resolution and the
transactions herein authorized.
Section 9. The City Clerk shall forward a certified copy of this Resolution and an
originally executed Agreement to the Authority:
CSCDA Community Improvement Authority
1100 K Street, Suite 101
Sacramento, California 95814
Attention: Chair
Section 10. This Resolution shall take effect immediately upon its passage.
PASSED, APPROVED AND ADOPTED this 1st day of June 2021, by the following
vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
__________________________
Mayor
ATTEST:
_________________________________
City Clerk
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Attachment 1
[SIGNATURE PAGE FOR JPA AGREEMENT]
IN WITNESS WHEREOF, the CITY OF DUBLIN has caused this
Agreement to be executed and attested by its duly authorized representatives as of the
___ day of _____________, 2021.
Additional Member:
CITY OF DUBLIN
By
Name:
Title:
ATTEST:
__________________________________
City Clerk
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Attachment 2
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Attachment 3
4123-2472-0938.4
RECORDING REQUESTED BY
CSCDA Community Improvement Authority
WHEN RECORDED RETURN TO:
Orrick, Herrington & Sutcliffe LLP
405 Howard Street
San Francisco, CA 94105
Attention: Steffi Chan
THIS DOCUMENT IS EXEMPT FROM RECORDING FEES PURSUANT TO SECTION 27383 OF THE
CALIFORNIA GOVERNMENT CODE
PUBLIC BENEFIT AGREEMENT
By and Between
CSCDA COMMUNITY IMPROVEMENT AUTHORITY
and
CITY OF DUBLIN
_________________________
Dated as of ___________
_________________________
Relating to
CSCDA COMMUNITY IMPROVEMENT AUTHORITY
ESSENTIAL HOUSING REVENUE BONDS, SERIES _____A
(WATERFORD PLACE APARTMENTS) (SOCIAL BONDS)
and
CSCDA COMMUNITY IMPROVEMENT AUTHORITY
SUBORDINATE ESSENTIAL HOUSING REVENUE BONDS, SERIES _____B
(WATERFORD PLACE APARTMENTS)
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PUBLIC BENEFIT AGREEMENT
This PUBLIC BENEFIT AGREEMENT (“Agreement ”) is dated as of ______________by
and between the CSCDA COMMUNITY IMPROVEMENT AUTHORITY, a joint exercise of
powers agency organized and existing under the laws of the State of California (including its
successors and assigns, “Owner”), and the CITY OF DUBLIN, a California municipal corporation
(“Host”).
BACKGROUND
WHEREAS, the Owner proposes to issue Bonds (as hereinafter defined) to finance Owner’s
acquisition of the certain multifamily rental housing project (the “Project”) located at 4800
Tassajara Road, , Dublin, California, located on the real property site described in Exhibit A hereto;
and
WHEREAS, the Owner has executed a Regulatory Agreement and Declaration of
Restrictive Covenants between Owner and Wilmington Trust, National Association, dated
concurrently and recorded in the official records of Alameda County, California, which imposes
requirements upon the Project with respect to maximum income levels of tenants, maximum rents
payable by tenants, maintenance of the Project in accordance with industry standards, and certain
other matters, and Host is entering into this Agreement in reliance on Owner’s compliance with
such requirements; and
WHEREAS, the Owner intends to sell the Project at the instigation of the Host or upon the
retirement of all Project Debt (as defined herein) pursuant to this Agreement.
AGREEMENT
In consideration of the mutual covenants herein contained, and such other good and valuable
consideration the receipt and sufficiency of which is hereby acknowledged, Owner and Host
mutually agree as follows:
Section 1.Right to Cause Sale.Host shall have the right to cause (“Sale Right”) the
Owner to sell the Property (as herein defined) to Host or Host’s designee upon payment by the
purchaser thereof (the “Purchaser”) of the Sale Price (as herein provided) within the Sale Right
Term (as herein defined) and in compliance with and observance of all of the terms and conditions
of this Agreement.
Section 2.Definitions.Capitalized terms used in this Agreement shall have the
meanings assigned to them in this Section 2; capitalized terms used in this Agreement and not
defined in this Section 2 or elsewhere herein shall have the meanings assigned to them in the
Indenture (herein defined).
(a)“Bonds” – collectively, (i) the CSCDA Community Improvement Authority
Essential Housing Revenue Bonds, Series _____A (Waterford Place Apartments) (Social Bonds)
(the “Series A Bonds”) and (ii) the CSCDA Community Improvement Authority Subordinate
Essential Housing Revenue Bonds, Series _____B (Waterford Place Apartments) (the “Series B
Bonds”), with such other series and sub-series designations as may be set forth in the Indenture,
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originally issued to finance Owner’s acquisition of the Project and related transaction costs. The
original principal amount of the Series B Bonds shall not exceed $____________, provided the
original principal amount of the Series B Bonds may be up to $___________upon approval of the
City Manager of Host.
(b)“Bond Trustee” – Wilmington Trust, National Association, or any successor
trustee under the Indenture.
(c)“Closing” – shall have the meaning set forth in Section 8 hereof.
(d)“Conveyance” – that transaction or series of transactions by which Owner shall
transfer, bargain, sell and convey any and all right, title or interest in and to the Property.
(e)“Extraordinary Costs and Expenses” – shall have the meaning set forth in the
Indenture.
(f)“Host Indemnified Person” – the Host and each of its officers, governing
members, directors, officials, employees, attorneys, agents and members.
(g)“Indenture” – the Indenture of Trust between Owner, as issuer, and the Bond
Trustee, as trustee, pursuant to which the Bonds were issued.
(h)“Minimum Sale Price” – means the lowest price at which the Property may be
sold, as described in Section 4(c) hereof.
(i)“Outstanding” – with respect to Bonds, as of any given date, all Bonds which
have been authenticated and delivered by the Trustee under the Indenture, except: (i) Bonds
cancelled at or prior to such date or delivered to or acquired by the Trustee at or prior to such date
for cancellation; (ii) Bonds deemed to be paid in accordance with Article VIII of the Indenture;
and (iii) Bonds in lieu of which other Bonds have been authenticated under the Indenture.
(j)“Owner Indemnified Person” – the Owner and each of its officers, governing
members, directors, officials, employees, attorneys, agents and members.
(k)“Project Administrator” – ___________________________and its successors
and assigns.
(l)“Project Debt” – any debt secured by the Project and incurred to finance or
refinance Owner’s acquisition of the Project and related transaction costs, including any portion
of the Bonds and any bonds, notes or other indebtedness issued by Owner to improve the Project
or to refund the Bonds in whole or in part.
(m) “Property” – means all of Owner’s right, title and interest (which includes fee
simple title to the real property) in and to all property and assets used in or otherwise related to the
operation of the Project including, without limitation, all real property and interests in real
property, all tangible and intangible personal property including furniture, fixtures, equipment,
supplies, intellectual property, licenses, permits, approvals, and contractual rights of any kind or
nature together with the right to own and carry on the business and operations of the Project.
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(n)“Regulatory Agreement” – means the Regulatory Agreement and Declaration of
Restrictive Covenants by and between the Owner and the Bond Trustee, relating to the Bonds.
(o)“Sale Price” – purchase price of the Property to be paid by the Purchaser upon
sale of the Property by the Owner pursuant to Host’s Sale Right in compliance with Section 4
hereof or sale by the Owner pursuant to Section 5 hereof.
(p)“Sale Right” – means the right of the Host to cause the Owner to sell the Property
pursuant to Section 1 hereof.
(q)“Sale Right Exercise Date” – the date fifteen (15) years from the issuance of the
Bonds.
(r)“Sale Right Term” – shall commence on the Sale Right Exercise Date and, if not
exercised, shall terminate at 11:59 p.m. local time on the date that is the earlier of fourteen (14)
years from the Sale Right Exercise Date or the date on which no Project Debt remains Outstanding.
(s)“Transaction Costs” – to the extent not otherwise described herein, any costs or
expenses of any kind or nature associated with or incurred by Owner and Bond Trustee in
connection with the consummation of the Conveyance, including but not limited to taxes,
recording fees and other impositions, Owner’s and Bond Trustee’s legal and other professional
fees,fees for verification agents, bidding agents, escrow agents, custodians or trustees, assumption
fees, prepayment fees, the cost of the appraisal, brokers’ fees and expenses, surveys, inspections,
title commitments, title insurance premiums and other title-related fees, and all amounts required
for indemnification of Authority, Trustee and Project Administrator.
Section 3.Effectiveness; Term and Termination.The Sale Right shall become
effective on the Sale Right Exercise Dateand may be exercised during the Sale Right Term. Owner
agrees that it will not enter into any agreement to sell all or any part of the Property during the Sale
Right Term other than as may be required by the Indenture (e.g., in the event of default), without
the specific written request of the Host and delivery of an Opinion of Bond Counsel to the Owner
substantially to the effect that such sale will not, in and of itself, adversely affect the exclusion of
interest on the Bonds from gross income for purposes of federal income taxation.
Section 4.Manner of Exercise.
(a)Host’s Notice. To exercise the Sale Right, Host shall provide a notice (an
“Exercise Notice”) to Owner (with a copy to the Project Administrator) at any time during the Sale
Right Term.
(b)Owner’s Best Efforts to Sell. Unless Host notifies Owner in writing that it is
withdrawing its Exercise Notice within fifteen (15) business daysof delivering the Exercise Notice
under Section 4(a) hereof, Owner shall exercise its best efforts to enter into a purchase agreement
for the sale of the Property in accordance with Section 7(d) and to sell and convey good and
marketable title to the Property to Host or its designee within ninety (90) days following receipt
of the Exercise Notice, or as soon as possible thereafter, in accordance with the purchase
agreement, but only if it can sell at or above the Minimum Sale Price. The obligation of the Owner
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to enter into the purchase agreement for the sale and conveyance of the Property to Host or its
designee shall be on a best efforts basis. The Owner shall endeavor to sell the Property at a
commercially reasonable price, subject to subsection (c) of this Section, by such means as the
parties to the purchase agreement shall determine to be suitable for such purpose; provided that
Owner shall incur no liability to any party as a result of or otherwise in connection with the sale
or failure to sell. Subject to subsection (c), nothing herein shall require or prevent Owner selling
the Property subject to the restrictions set forth in the Regulatory Agreement. The Owner shall
direct the Bond Trustee in the foregoing as and to the extent necessary or appropriate.
(c)Sale Price. The Sale Price shall be at least equal to the sum of the amounts set
forth below (net of any adjustments or prorations of the type described in Section 8(b)) (the
“Minimum Sale Price”):
i.an amount sufficient to either prepay, redeem in whole or fully defease for
redemption on the earliest call date all Project Debt; plus
ii.any fees or other amounts not identified in clause (i) that may be necessary
to effect the complete release from and discharge of any lien, mortgage or
other encumbrance on the Property; plus
iii.any amounts due to Owner (including the Owner Indemnified Persons, as
provided in the Indenture), the Bond Trustee or any predecessor or
successor, or any other Person under any indenture, loan agreement, bond,
note or other instrument relating to any Project Debt (including, without
limitation, indemnification amounts, Owner’s Extraordinary Costs and
Expenses, recurrent and extraordinary fees and expenses, and reimbursable
costs and expenses of any kind or nature); plus
iv.Transaction Costs; minus
v.Any funds held by or for Owner under the Indenture applied to the
retirement of Project Debt. Owner may retain such portion of moneys in the
Extraordinary Expense Fund or similar fund under the Indenture it deems
reasonable as a reserve against future expected costs and expenses of the
type described in subparagraph (iii) provided such action is reasonable and
in accordance with the Indenture.
Section 5.Mandatory Conveyance.Upon the retirement of all Project Debt, the Owner
shall use its best efforts to effect a Conveyance within ninety (90) days thereafter, subject to
Section 4(c) hereof. Owner shall give notice to Host of its intent to convey the Property, and Host
(or its designee) shall have the first right to acquire the Property by delivery of an Exercise Notice
to Owner within thirty (30) days after receipt of Owner’s notice. Nothing herein shall require or
prevent Owner selling the Property subject to the restrictions set forth in the Regulatory
Agreement.
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Section 6.Surplus Cash; Surplus Conveyance Proceeds. Upon a Conveyance of the
Property, the Owner shall apply the proceeds of such Conveyance (i) to redeem the Bonds then
Outstanding, (ii) to prepay, redeem in whole or fully defease any other Project Debt, and (iii) to
pay any fees or other amounts listed in Section 4(c)(ii) – (iv). Any proceeds remaining following
the foregoing payments (such remaining amounts hereinafter referred to as “Surplus Conveyance
Proceeds”) shall be transferred to the Host, which funds may be applied by Host in its sole
discretion.
Section 7.Terms of Conveyance.
(a)The Conveyance shall be in the nature of a grant deed to Purchaser in which
Owner shall deliver one or more deeds, bills of sale, or other instruments of transfer without
recourse or warranty of any kind or nature.
(b)The Property will be conveyed to Purchaser in AS IS CONDITION, WITH ALL
FAULTS, and without representations or warranties of any kind or nature as to the condition of
the Property, except as may otherwise be set forth in the purchase agreement.
(c)There shall be no partial transfer and that, upon consummation of the
Conveyance, Owner shall be fully divested of any and all right, title or interest in and to the
Property.
(d)Upon Purchaser’s delivery of the Exercise Notice, Owner shall deliver to
Purchaser a purchase agreement for the Property, and the parties shall negotiate in good faith
towards a mutually satisfactory purchase agreement in form and substance satisfactory to Owner
and Purchaser and their counsel subject to the terms and conditions of this Agreement. The
purchase agreement shall permit Purchaser to conduct physical inspections of the Property and
conduct due diligence related to the purchase of the Property, including without limitation its value
and physical and environmental condition, and shall provide Purchaser a due diligence approval
period of not less than sixty (60) days after the date of the purchase agreement. The purchase
agreement shall provide for Owner to deliver to Purchaser copies of all plans, studies, records,
reports, governmental notices and approvals, and other written materials related to the use,
occupancy or condition of the Property that Owner has in its possession, including without
limitation environmental, structural, mechanical, engineering and land surveys. Purchaser shall
provide Owner with comments to the form of purchase agreement within fifteen (15) business days
of its receipt thereof, and Owner and Purchaser shall use good faith efforts to negotiate, draft and
execute a mutually acceptable purchase agreement as soon as practicable thereafter. The purchase
agreement shall provide for closing for the conveyance to Purchaser of good and marketable title
to the Property at the Sales Price within the time set forth in Section 8(a) hereof.
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Section 8.Closing.
(a)The closing of the Conveyance (“Closing”) shall take place, in the case of a
Conveyancepursuant to Section 4 hereof,not later than the ninetieth (90th) calendar day following
the Owner’s receipt of the Exercise Notice, or as soon as possible thereafter, and in the case of a
mandatory conveyance pursuant to Section 5 hereof, not later than the ninetieth (90th) calendar
day following the retirement of all Project Debt, or as soon as possible thereafter.
(b)All general and special real property taxes and assessments, and rents shall be
prorated as of the Closing, with Purchaser responsible for all such items to the extent arising or
due at any time following the closing. General real property taxes shall be prorated at the time of
Closing based on the net general real property taxes for the year of Closing.
Section 9.Recording.This Agreement, and any amendment thereto, shall be recorded
with the recorder’s office of the County; provided, that upon termination of the term of this
Agreement, Host shall cooperate with Owner to remove any such recorded Agreement or
amendment thereto from title to the Propertyupon Owner’s reasonable request therefor and, in any
event, by no later than thirty (30) days after the expiration of the original term of this Agreement.
Section 10.Subordination. This Agreement shall be subordinate to any claim, pledge or
interest in the Property securing the Bonds or any Project Debt.
Section 11.Maintenance of Membership. In order to preserve the Property’s exemption
from property tax, Host agrees to remain a member of the Owner joint powers authority so long
as any Bonds remain outstanding.
Section 12.Assignment. Neither party to this Agreement shall assign its interests,
obligations, rights and/or responsibilities under this Agreement without the prior written consent
of the other party, except as provided herein.
Section 13.Limitation on Liability.
(a)The Owner and Host shall not be directly, indirectly, contingently or
otherwise liable for any costs, expenses, losses, damages, claims or actions, of any conceivable
kind on any conceivable theory, under or by reason of or in connection with this Agreement or any
sale or Conveyance or failure or price thereof or application of proceeds thereof, except only as to
moneys available therefor under and in accordance with the Indenture or this Agreement.
(b)No Owner Indemnified Person or Host Indemnified Person shall be
individually or personally liable for the payment of any sum hereunder or be subject to any
personal liability or accountability by reason of the execution and delivery of this Agreement, or
by any proceedings for the sale or Conveyance or failure or price thereof, or Host’s exercise or
waiver of same, or otherwise except in the case of such Owner Indemnified Person’s or Host
Indemnified Person’s own willful misconduct.
(c)The Bonds will not be a debt, liabilityor obligation of Host but rather, solely
indebtedness of the Owner, limited to the Trust Estate pledged and available therefor under the
Indenture. Under no circumstances shall Host be obligated to (i) provide any financing to acquire
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or construct the Project or any refinancing of the Project; (ii) approve any application or request
for or take any other action in connection with any planning approval, permit or other action
necessary for the acquisition, construction, rehabilitation or operation of the Project; or (iii) make
any contribution or advance any funds whatsoever to the Owner.
Section 14.Notices, Governing Law, Binding Effect and Other Miscellaneous
Provisions.
(a)Notices. All notices provided for in this Agreement shall be in writing and
shall be given to Owner or Host at the address set forth below or at such other address as they
individually may specify thereafter by written notice in accordance herewith:
If to Owner or:CSCDA Community Improvement Authority
Designated Agent 1700 North Broadway, Suite 405
Walnut Creek, California 94596
Attention: Jon Penkower
Email: jpenkower@cscda.org
With a copy to:___________________________
___________________________
___________________________
___________________________
If to Host: City of Dublin
100 Civic Plaza
Dublin, California 94568
Attention: City Manager
Such notices shall be deemed effective upon actual delivery or upon the date that any such delivery
was attempted and acceptance thereof was refused, or if mailed, certified return receipt requested,
postage prepaid, properly addressed, three (3) days after posting.
(b)Consents and Approvals. All consents and approvals and waivers required
or asserted hereunder shall be in writing, signed by the party from whom such consent, approval,
waiver or notice is requested.
(c)Non-liability of Host Officers and Employees. No officer or employee of
Host shall be personally liable to the Owner, or any successorin interest, in the event of any default
or breach by Host of any obligation of the terms of this Agreement.
(d)Pronouns. Where appropriate to the context, words of one gender include
all genders, and the singular includes the plural and vice versa.
(e)Amendments. This Agreement may not be modified except in a written
instrument signed by Host and Owner.
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(f)Complete Agreement; Benefits. This Agreement together with all
schedules and exhibits attached hereto and made part thereof supersedes all previous agreements,
understandings and representations made by or between the parties hereto. This Agreement shall
inure solely and exclusively to the benefit of the Owner and Host, and no other party shall have
any right, remedy or claim under or by reason of this Agreement.
(g)Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California, without regard to conflicts of law principles.
All claims of whatever character arising out of this Agreement, or under any statute or common
law relating in any way, directly or indirectly, to the subject matter hereof or to the dealings
between Owner and any other party hereto, if and to the extent that such claim potentially could
or actually does involve Owner, shall be filed and maintained in the Superior Court of California,
County of Alameda, California. By executing and delivering this Agreement, each party hereto
irrevocably: (i) accepts generally and unconditionally the exclusive jurisdiction and venue of such
court; (ii) waives any defense of forum non-conveniens; and (iii) agrees not to seek removal of
such proceedings to any court or forum other than as specified above. The foregoing shall not be
deemed or construed to constitute a waiver by Owner of any prior notice or procedural
requirements applicable to actions or claims against or involving governmental units and/or
political subdivisions of the State of California that may exist at the time of and in connection with
such matter.
(h)Legal Construction. In case any one or more of the provisions contained in
this Agreement shall for any reason be held by a court of competent jurisdiction to be invalid,
illegal or unenforceable in any respect, such invalid provision shall be deemed severable, and shall
not affect the validity or enforceability of any other provisions of this Agreement, all of which
shall remain fully enforceable.
(i)Term. This Agreement shall terminate upon the Conveyance.
(j)Captions. The captions used in this Agreement are solely for convenience,
and shall not be deemed to constitute a part of the substance of the Agreement for purpose of its
construction.
(k)Counterparts. This Agreement may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to be an original; and
all such counterparts shall together constitute but one and the same Agreement.
(l)Regulatory Agreement. The Regulatory Agreement shall establish
maximum income levels of tenants and maximum rents of the Affordable Units at levels
reasonably acceptable to Host and shall permit existing tenants to remain in the Project upon
acquisition by Owner. Owner shall not amend the Regulatory Agreement to increase the maximum
income levels or maximum rents of the Affordable Units, or to revise the percentages of units to
be rented as Low Income Units, Median Income Units and Moderate Income Units, without the
prior written approval of Host, which approval shall not unreasonably be withheld. Owner shall
annually provide Host a copy of its Certificate of Continuing Program Compliance for the Project.
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(m)For the term of the Regulatory Agreement, the Owner hereby represents,
covenants, warrants and agrees as follows: The Project will be owned and operated for the purpose
of providing multifamily residential rental property. The Owner will own, and cause the Project
to be managed and operated, as a project to provide multifamily residential rental property
comprised of a building or structure or several interrelated buildings or structures, together with
any functionally related and subordinate facilities.
(n)Property Management. During the term of this Agreement, Host shall have
the authority to review the selection of the original and any replacement property management
company and the management agreement with that company for the Project. If Host determines
that the management of the Project during the term of this Option Agreement is deficient in any
manner, Host may provide notice of the deficiency to Owner, and Host and Owner shall meet and
confer in good faith to discuss the alleged management deficiency and attempt to reach agreement
upon one or more appropriate remedies to address the alleged management deficiency. Upon
Host’s acquisition of the Project, Host shall not be obligated to continue the contracts with any
property management company for the Project.
(o)Preferences for New Residents. Selection criteria for new tenants for vacant
units in the Authority’s project(s) shall include the preference point system in Section 8.68.050 D
of the Dublin Municipal Code.
[SIGNATURE PAGE TO FOLLOW]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date set forth
above.
CSCDA COMMUNITY IMPROVEMENT
AUTHORITY
By:
Jon Penkower
Authorized Signatory
CITY OF DUBLIN
By:
Linda Smith, City Manager
Approved as to Form:
By:___________________________
John D. Bakker, City Attorney
Signature Page to Public Benefit Agreement
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A Notary Public or other officer completing this certificate verifies only the identity of the
individual who signed the document to which this certificate is attached, and not the truthfulness,
accuracy, or validity of that document.
State of California )
County of ______________________)
On _________________________, before me, ,
(insert name and title of the officer)
Notary Public, personally appeared ,
who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are
subscribed to the within instrument and acknowledged to me that he/she/they executed the same
in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument
the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that
the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature (Seal)
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EXHIBIT A
LEGAL DESCRIPTION OF REAL PROPERTY
The Land referred to herein is situated in the State of California, County of Alameda, City of
Dublin, and described as follows:
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STAFF REPORT
CITY COUNCIL
Page 1 of 4
Agenda Item 8.1
DATE:May 4, 2021
TO:Honorable Mayor and City Councilmembers
FROM:Linda Smith, City Manager
SUBJECT:California Statewide Communities Development Authority Middle-Income
Rental Housing Program
Prepared by: Jim Bergdoll, Senior Planner and Kristie Wheeler, Assistant
Community Development Director
EXECUTIVE SUMMARY:
The City Council will consider whether to join the Community Improvement Authority, which is an
affiliate of the California Statewide Communities Development Authority (CSCDA). The Authority
supports the issuance of bonds for the production, preservation, and protection of middle-income
rental housing. The Authority proposes to acquire the Waterford Place Apartments located at
4800 Tassajara Boulevard for that purpose. More specifically, the City Council will consider
authorizing the City to become an Additional Member of the Authority, approving the form of a
Public Benefit Agreement, and approving the issuance of bonds for the acquisition of the
Waterford Place Apartments.
STAFF RECOMMENDATION:
Receive the presentation and provide direction on joining the Authority. If the City Council wishes
to join the Authority, adopt the Resolution Approving, Authorizing, and Directing Execution of a
Joint Exercise of Powers Agreement Relating to the CSCDA Community Improvement Authority,
and the Form of a Public Benefit Agreement; and Approving the Issuance of Revenue Bonds by the
Authority for the Purpose of Financing the Acquisition of the Waterford Place Apartments.
FINANCIAL IMPACT:
There are no financial expenditures, liabilities, or obligations created by joining the CSCDA
Community Improvement Authority. It is a public entity separate and apart from its members,
and any debts or obligations incurred by the Authority will not constitute debts or obligations of
its member agencies. In this case, bonds issued for the Authority’s acquisition of the Waterford
Place Apartments will be indebtedness solely of the Authority, and payable only from revenues of
the project.
Attachment 4
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The Waterford Place Apartments currently provides close to $385,000 annual property tax
revenue, which the City would no longer receive. Eliminating property tax burden enables the
Authority to charge lower rents and target middle-income households. To offset the loss of
property tax revenue, a Public Benefit Agreement would grant any net surplus project revenues to
the City when the property is later sold.
DESCRIPTION:
Background
The California Statewide Communities Development Authority (CSCDA) is a joint powers
authority founded and sponsored by the League of California Cities and the California State
Association of Counties. The CSCDA was created in 1988 to enable local government and eligible
private entities access to low-cost, tax-exempt financing for projects that provide a tangible public
benefit, contribute to social and economic growth and improve the overall quality of life in local
communities throughout California. CSCDA comprises more than 530 cities, counties, and special
districts, and has issued more than $65 billion through approximately 1,700 transactions across
its public benefit financing programs.
The City of Dublin has been a member of the CSCDA since 2003, but the affiliate CSCDA
Community Improvement Authority (the Authority) was created more recently specifically to
focus on middle income housing preservation and development. The Authority enables CSCDA to
acquire public-benefit-oriented capital projects through the issuance of tax-exempt governmental
purpose bonds. Through the Authority’s Workforce Housing Program, it issues government bonds
to acquire market-rate apartment buildings. These properties are then converted to income and
rent-restricted units for moderate/middle income households, which are typically households
earning 60% to 120% of area median income (AMI).
The Authority owns the projects it acquires and retains a Project Administrator (also known as a
Project Sponsor) who manages the ownership and operation of projects on behalf of the Authority,
including qualifying prospective tenants to ensure their total household income complies with the
program parameters.
The Workforce Housing Program is similar to the California Community Housing Agency (CalCHA)
joint powers authority that the City Council authorized joining in September 2020. Both programs
support the issuance of bonds for the production, preservation, and protection of middle-income
rental housing. Most state, federal, and local affordable housing funding sources are targeted to
households below 60% AMI. The CSCDA financing model, similar to that of CalCHA, would reduce
project financing costs and eliminate the property tax burden for the Authority. This enables
CSCDA to charge lower rents and target middle-income households.
A key difference between the CSCDA and CalCHA programs is CSCDA proposes to bring each
project that it is negotiating to acquire to the City Council to approve the issuance of bonds,
whereas CalCHA received approval to acquire up to four properties with a total of up to 1,000
units over five years under certain conditions to be verified by Staff.
For the Authority to use the proposed financing model in Dublin, the City would need to:
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Become an Additional Member of the Authority for the limited purpose of financing or
refinancing specific projects in Dublin by the Authority’s issuance of tax-exempt bonds; and
Enter into a Public Benefit Agreement with the Authority for any project to be acquired or
developed.
When a property is acquired by the Authority, the City would execute a Public Benefit Agreement,
which is like the Purchase Option Agreement for CalCHA properties and would incorporate the
same key terms and conditions negotiated with CalCHA. Among other things, this agreement
ensures that the selection criteria for new tenants for vacant units in the Authority’s project(s)
include the preference point system in the City’s Inclusionary Zoning Regulations (DMC Section
8.68.050.D). The City Council is being asked to approve the Agreement (Attachment 3) as to form.
CSCDA would then prepare such Agreement for each project that they propose to acquire in the
future, after the City Council approves the sale of bonds to acquire a property.
Under the Public Benefit Agreement, the City, at its sole discretion, may purchase or force a sale of
the property between Year 15 and Year 30 (the end of the life) of the bonds. If the property is sold
during this 15-year period, the net proceeds of the sale (after paying off debt), could either be
received by the City or transferred to a new non-profit owner to maintain affordability. Public
benefit is achieved through the execution of a regulatory agreement between the Authority and
the bond issuing company that restricts the use of the property, and by granting all net surplus
project revenues to the City.
The regulatory agreement that restricts use of the property would:
Restrict occupancy to low-income, median-income, and moderate-income households;
Limit annual rent increases to a maximum of four percent of a tenant’s rent; and
Prevent displacement of existing residents that do not meet the income eligibility
requirements.
Because the Authority would request approval of the issuance of bonds from the City Council for
each property, the City can limit the number of total acquisitions and consider geographic
proximity to other income restricted properties with each individual approval. This would
achieve the same conditions imposed on CalCHA.
Proposed Project
In addition to requesting that the City become an additional member of the CSCDA Community
Improvement Authority, the Authority has requested approval of the issuance of bonds for the
acquisition of the 390-unit Waterford Place Apartments (the Project) at 4800 Tassajara Road. As
mentioned above, the Project would be owned by the Authority and converted to income and rent-
restricted units for moderate/middle income households, which are generally households earning
60% to 120% of AMI. The Project Sponsor would be BLVD Capital, who has experience owning
and operating multi-family housing rental projects, including projects with affordability
restrictions.
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If the City Council approves the acquisition, CSCDA would submit a specific Public Benefit
Agreement that would be reviewed for consistency with the form of the Public Benefit Agreement
approved by City Council. As noted above, the form of the Public Benefit Agreement includes the
same key terms and conditions negotiated with CalCHA, including the following:
The City shall have ongoing input on property management issues starting immediately and is
allowed to exercise due diligence and inspection rights prior to City acquisition of each
property.
CSCDA shall provide annual reports to the City regarding the status of the Authority’s
acquisition, financing and operation of properties.
In addition, as previously mentioned, the selection criteria for new tenants for vacant units in the
project shall include the preference for existing Dublin residents.
Staff is recommending that the City Council receive the information, discuss, and provide direction
on the Resolution (Attachment 1) authorizing the execution of a Joint Exercise of Powers
Agreement (Attachment 2) relating to the CSCDA Community Improvement Authority, and the
Form of a Public Benefit Agreement (Attachment 3); and approving the issuance of bonds for the
acquisition of the Waterford Place Apartments located at 4800 Tassajara Road.
STRATEGIC PLAN INITIATIVE:
Strategy 3: Create More Affordable Housing Opportunities
Objective D: Seek opportunities to preserve the stock of housing that is affordable to
moderate and middle-income households.
NOTICING REQUIREMENTS/PUBLIC OUTREACH:
The City Council Agenda was posted.
ATTACHMENTS:
1) Resolution Approving, Authorizing, and Directing Execution of a Joint Exercise of Powers
Agreement Relating to the CSCDA Community Improvement Authority, and the Form of a
Public Benefit Agreement; and Approving the Issuance of Revenue Bonds by the Authority for
the Purpose of Financing the Acquisition of the Waterford Place Apartments
2) Joint Exercise of Powers Agreement
3) Proposed Form of Public Benefit Agreement
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Attachment 1
Reso. No. XX-21, Item X.X, Adopted XX/XX/21 Page 1 of 3
RESOLUTION NO. XX-21
A RESOLUTION OF THE CITY COUNCIL
OF THE CITY OF DUBLIN
APPROVING, AUTHORIZING, AND DIRECTING EXECUTION OF A JOINT
EXERCISE OF POWERS AGREEMENT RELATING TO THE CSCDA COMMUNITY
IMPROVEMENT AUTHORITY, AND THE FORM OF A PUBLIC BENEFIT
AGREEMENT; AND APPROVING THE ISSUANCE OF REVENUE BONDS BY THE
AUTHORITY FOR THE PURPOSE OF FINANCING THE ACQUISITION OF THE
WATERFORD PLACE APARTMENTS
WHEREAS, pursuant to Chapter 5 of Division 7 of Title 1 of the Government Code
of the State of California (the Act), certain public agencies (the Members) have entered
into a Joint Exercise of Powers Agreement Relating to the CSCDA Community
Improvement Authority, dated as of October 15, 2020 (the Agreement), a copy of which
has been filed with the City, in order to form the CSCDA Community Improvement
Authority (the Authority), for the purpose of promoting economic, cultural and community
development, and in order to exercise any powers common to the Members or granted
by the Act, including by the issuance of bonds, notes or other evidences of indebtedness;
and
WHEREAS, the City of Dublin has determined that it is in the public interest and
for the public benefit that the City become an Additional Member of the Authority pursuant
to Section 12 of the Agreement in order to facilitate the promotion of economic, cultural
and community development activities in the City, including the financing of projects
therefor by the Authority; and
WHEREAS, the Agreement has been filed with the City, and the members of the
City Council of the City, with the assistance of its staff, have reviewed said document;
and
WHEREAS, the Authority is authorized to issue and sell revenue bonds for the
purpose, among others, of financing or refinancing the construction, acquisition and
rehabilitation of capital projects; and
WHEREAS, the Authority proposes to issue its governmental purpose revenue
bonds (the Bonds) to finance the acquisition and certain related costs of the Waterford
Place Apartments (the Project) located at 4800 Tassajara Road, Dublin, which contains
approximately 390 apartment units; and
WHEREAS, the Authority proposes to grant to the City in connection with the
financing of the Project the option for the City or its designee to acquire the Project,
starting upon the date 15 years from the issuance of the Bonds pursuant to a Public
Benefit Agreement, by and between the Authority and the City, the form of which has
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Reso. No. XX-21, Item X.X, Adopted XX/XX/21 Page 2 of 3
been filed with the City Council, subject to such non-material modifications as have been
approved by the City Manager and approved as to form by the City Attorney; and
WHEREAS, it is in the public interest and for the public benefit that the City Council
approve the issuance of the Bonds by the Authority for the aforesaid purposes; and
WHEREAS, Section 3(A) of the Agreement and Section 6508.1 of the California
Government Code expressly provide that the Authority’s “Bonds, and other debts,
liabilities and obligations do not constitute debts, liabilities, or obligations of any
Members…”
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL, AS
FOLLOWS:
Section 1.The foregoing recitals are true and correct.
Section 2.The City hereby requests to become an Additional Member of the
Authority pursuant to Section 12 of the Agreement. The Agreement is hereby approved
and the Mayor or the designee thereof is hereby authorized and directed to execute said
document, and the City Clerk or such Clerk’s designee is hereby authorized and directed
to attest thereto.
Section 3.The proposed form of Public Benefit Agreement on file with the City
Council is hereby approved. In connection with the Project, the City Manager or the
designee thereof is hereby authorized and directed to execute an agreement in
substantially said form, with the addition of a requirement for the City to be adequately
protected from liability arising from the Project as an additionally insured party on
insurance policies covering the Project, and with such other non-material changes therein
as such officer executing the same may require consistent with this Resolution and its
basic purpose, and subject to approval as to form of the City Attorney, such approval to
be conclusively evidenced by the execution and delivery thereof. Any material changes
to the form of Public Benefit Agreement must be approved by the City Council.
Section 4.The City Council hereby approves the issuance of Bonds by the
Authority to finance the Project within the City, provided that such Bonds are issued within
two years from the date of this Resolution.
Section 5.The issuance of Bonds shall be subject to the approval of the
Authority of all financing documents relating thereto to which the Authority is a party. The
City shall have no responsibility or liability whatsoever with respect to the Bonds.
Section 6.The adoption of this Resolution shall not obligate the City or any
department thereof to (i) provide any financing to acquire or construct any Project or any
refinancing of any Project; (ii) approve any application or request for or take any other
action in connection with any planning approval, permit or other action necessary for the
acquisition, construction, rehabilitation or operation of any Project; (iii) make any
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Reso. No. XX-21, Item X.X, Adopted XX/XX/21 Page 3 of 3
contribution or advance any funds whatsoever to the Authority; or (iv) except as provided
in this Resolution, take any further action with respect to the Authority or its membership
therein.
Section 7.The executing officers(s), the City Clerk and all other proper officers
and officials of the City are hereby authorized and directed to execute such other
agreements, documents and certificates, and to perform such other acts and deeds, as
may be necessary or convenient to effect the purposes of this Resolution and the
transactions herein authorized.
Section 8.The City Clerk shall forward a certified copy of this Resolution and
an originally executed Agreement to the Authority:
CSCDA Community Improvement Authority
1100 K Street, Suite 101
Sacramento, California 95814
Attention: Chair
Section 9.This Resolution shall take effect immediately upon its passage.
PASSED, APPROVED AND ADOPTED this 4th day of May 2021, by the following
vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
__________________________
Mayor
ATTEST:
_________________________________
City Clerk
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Attachment 1
[SIGNATURE PAGE FOR JPA AGREEMENT]
IN WITNESS WHEREOF, the CITY OF DUBLIN has caused this
Agreement to be executed and attested by its duly authorized representatives as of the
___ day of _____________, 2021.
Additional Member:
CITY OF DUBLIN
By
Name:
Title:
ATTEST:
__________________________________
City Clerk
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Attachment 2
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Attachment 3
4123-2472-0938.4
RECORDING REQUESTED BY
CSCDA Community Improvement Authority
WHEN RECORDED RETURN TO:
Orrick, Herrington & Sutcliffe LLP
405 Howard Street
San Francisco, CA 94105
Attention: Steffi Chan
THIS DOCUMENT IS EXEMPT FROM RECORDING FEES PURSUANT TO SECTION 27383 OF THE
CALIFORNIA GOVERNMENT CODE
PUBLIC BENEFIT AGREEMENT
By and Between
CSCDA COMMUNITY IMPROVEMENT AUTHORITY
and
CITY OF DUBLIN
_________________________
Dated as of ___________
_________________________
Relating to
CSCDA COMMUNITY IMPROVEMENT AUTHORITY
ESSENTIAL HOUSING REVENUE BONDS, SERIES _____A
(WATERFORD PLACE APARTMENTS) (SOCIAL BONDS)
and
CSCDA COMMUNITY IMPROVEMENT AUTHORITY
SUBORDINATE ESSENTIAL HOUSING REVENUE BONDS, SERIES _____B
(WATERFORD PLACE APARTMENTS)
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PUBLIC BENEFIT AGREEMENT
This PUBLIC BENEFIT AGREEMENT (“Agreement ”) is dated as of ______________by
and between the CSCDA COMMUNITY IMPROVEMENT AUTHORITY, a joint exercise of
powers agency organized and existing under the laws of the State of California (including its
successors and assigns, “Owner”), and the CITY OF DUBLIN, a California municipal corporation
(“Host”).
BACKGROUND
WHEREAS, the Owner proposes to issue Bonds (as hereinafter defined) to finance Owner’s
acquisition of the certain multifamily rental housing project (the “Project”) located at 4800
Tassajara Road, , Dublin, California, located on the real property site described in Exhibit A hereto;
and
WHEREAS, the Owner has executed a Regulatory Agreement and Declaration of
Restrictive Covenants between Owner and Wilmington Trust, National Association, dated
concurrently and recorded in the official records of Alameda County, California, which imposes
requirements upon the Project with respect to maximum income levels of tenants, maximum rents
payable by tenants, maintenance of the Project in accordance with industry standards, and certain
other matters, and Host is entering into this Agreement in reliance on Owner’s compliance with
such requirements; and
WHEREAS, the Owner intends to sell the Project at the instigation of the Host or upon the
retirement of all Project Debt (as defined herein) pursuant to this Agreement.
AGREEMENT
In consideration of the mutual covenants herein contained, and such other good and valuable
consideration the receipt and sufficiency of which is hereby acknowledged, Owner and Host
mutually agree as follows:
Section 1.Right to Cause Sale.Host shall have the right to cause (“Sale Right”) the
Owner to sell the Property (as herein defined) to Host or Host’s designee upon payment by the
purchaser thereof (the “Purchaser”) of the Sale Price (as herein provided) within the Sale Right
Term (as herein defined) and in compliance with and observance of all of the terms and conditions
of this Agreement.
Section 2.Definitions.Capitalized terms used in this Agreement shall have the
meanings assigned to them in this Section 2; capitalized terms used in this Agreement and not
defined in this Section 2 or elsewhere herein shall have the meanings assigned to them in the
Indenture (herein defined).
(a)“Bonds” – collectively, (i) the CSCDA Community Improvement Authority
Essential Housing Revenue Bonds, Series _____A (Waterford Place Apartments) (Social Bonds)
(the “Series A Bonds”) and (ii) the CSCDA Community Improvement Authority Subordinate
Essential Housing Revenue Bonds, Series _____B (Waterford Place Apartments) (the “Series B
Bonds”), with such other series and sub-series designations as may be set forth in the Indenture,
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originally issued to finance Owner’s acquisition of the Project and related transaction costs. The
original principal amount of the Series B Bonds shall not exceed $____________, provided the
original principal amount of the Series B Bonds may be up to $___________upon approval of the
City Manager of Host.
(b)“Bond Trustee” – Wilmington Trust, National Association, or any successor
trustee under the Indenture.
(c)“Closing” – shall have the meaning set forth in Section 8 hereof.
(d)“Conveyance” – that transaction or series of transactions by which Owner shall
transfer, bargain, sell and convey any and all right, title or interest in and to the Property.
(e)“Extraordinary Costs and Expenses” – shall have the meaning set forth in the
Indenture.
(f)“Host Indemnified Person” – the Host and each of its officers, governing
members, directors, officials, employees, attorneys, agents and members.
(g)“Indenture” – the Indenture of Trust between Owner, as issuer, and the Bond
Trustee, as trustee, pursuant to which the Bonds were issued.
(h)“Minimum Sale Price” – means the lowest price at which the Property may be
sold, as described in Section 4(c) hereof.
(i)“Outstanding” – with respect to Bonds, as of any given date, all Bonds which
have been authenticated and delivered by the Trustee under the Indenture, except: (i) Bonds
cancelled at or prior to such date or delivered to or acquired by the Trustee at or prior to such date
for cancellation; (ii) Bonds deemed to be paid in accordance with Article VIII of the Indenture;
and (iii) Bonds in lieu of which other Bonds have been authenticated under the Indenture.
(j)“Owner Indemnified Person” – the Owner and each of its officers, governing
members, directors, officials, employees, attorneys, agents and members.
(k)“Project Administrator” – ___________________________and its successors
and assigns.
(l)“Project Debt” – any debt secured by the Project and incurred to finance or
refinance Owner’s acquisition of the Project and related transaction costs, including any portion
of the Bonds and any bonds, notes or other indebtedness issued by Owner to improve the Project
or to refund the Bonds in whole or in part.
(m) “Property” – means all of Owner’s right, title and interest (which includes fee
simple title to the real property) in and to all property and assets used in or otherwise related to the
operation of the Project including, without limitation, all real property and interests in real
property, all tangible and intangible personal property including furniture, fixtures, equipment,
supplies, intellectual property, licenses, permits, approvals, and contractual rights of any kind or
nature together with the right to own and carry on the business and operations of the Project.
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(n)“Regulatory Agreement” – means the Regulatory Agreement and Declaration of
Restrictive Covenants by and between the Owner and the Bond Trustee, relating to the Bonds.
(o)“Sale Price” – purchase price of the Property to be paid by the Purchaser upon
sale of the Property by the Owner pursuant to Host’s Sale Right in compliance with Section 4
hereof or sale by the Owner pursuant to Section 5 hereof.
(p)“Sale Right” – means the right of the Host to cause the Owner to sell the Property
pursuant to Section 1 hereof.
(q)“Sale Right Exercise Date” – the date fifteen (15) years from the issuance of the
Bonds.
(r)“Sale Right Term” – shall commence on the Sale Right Exercise Date and, if not
exercised, shall terminate at 11:59 p.m. local time on the date that is the earlier of fourteen (14)
years from the Sale Right Exercise Date or the date on which no Project Debt remains Outstanding.
(s)“Transaction Costs” – to the extent not otherwise described herein, any costs or
expenses of any kind or nature associated with or incurred by Owner and Bond Trustee in
connection with the consummation of the Conveyance, including but not limited to taxes,
recording fees and other impositions, Owner’s and Bond Trustee’s legal and other professional
fees,fees for verification agents, bidding agents, escrow agents, custodians or trustees, assumption
fees, prepayment fees, the cost of the appraisal, brokers’ fees and expenses, surveys, inspections,
title commitments, title insurance premiums and other title-related fees, and all amounts required
for indemnification of Authority, Trustee and Project Administrator.
Section 3.Effectiveness; Term and Termination.The Sale Right shall become
effective on the Sale Right Exercise Dateand may be exercised during the Sale Right Term. Owner
agrees that it will not enter into any agreement to sell all or any part of the Property during the Sale
Right Term other than as may be required by the Indenture (e.g., in the event of default), without
the specific written request of the Host and delivery of an Opinion of Bond Counsel to the Owner
substantially to the effect that such sale will not, in and of itself, adversely affect the exclusion of
interest on the Bonds from gross income for purposes of federal income taxation.
Section 4.Manner of Exercise.
(a)Host’s Notice. To exercise the Sale Right, Host shall provide a notice (an
“Exercise Notice”) to Owner (with a copy to the Project Administrator) at any time during the Sale
Right Term.
(b)Owner’s Best Efforts to Sell. Unless Host notifies Owner in writing that it is
withdrawing its Exercise Notice within fifteen (15) business daysof delivering the Exercise Notice
under Section 4(a) hereof, Owner shall exercise its best efforts to enter into a purchase agreement
for the sale of the Property in accordance with Section 7(d) and to sell and convey good and
marketable title to the Property to Host or its designee within ninety (90) days following receipt
of the Exercise Notice, or as soon as possible thereafter, in accordance with the purchase
agreement, but only if it can sell at or above the Minimum Sale Price. The obligation of the Owner
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to enter into the purchase agreement for the sale and conveyance of the Property to Host or its
designee shall be on a best efforts basis. The Owner shall endeavor to sell the Property at a
commercially reasonable price, subject to subsection (c) of this Section, by such means as the
parties to the purchase agreement shall determine to be suitable for such purpose; provided that
Owner shall incur no liability to any party as a result of or otherwise in connection with the sale
or failure to sell. Subject to subsection (c), nothing herein shall require or prevent Owner selling
the Property subject to the restrictions set forth in the Regulatory Agreement. The Owner shall
direct the Bond Trustee in the foregoing as and to the extent necessary or appropriate.
(c)Sale Price. The Sale Price shall be at least equal to the sum of the amounts set
forth below (net of any adjustments or prorations of the type described in Section 8(b)) (the
“Minimum Sale Price”):
i.an amount sufficient to either prepay, redeem in whole or fully defease for
redemption on the earliest call date all Project Debt; plus
ii.any fees or other amounts not identified in clause (i) that may be necessary
to effect the complete release from and discharge of any lien, mortgage or
other encumbrance on the Property; plus
iii.any amounts due to Owner (including the Owner Indemnified Persons, as
provided in the Indenture), the Bond Trustee or any predecessor or
successor, or any other Person under any indenture, loan agreement, bond,
note or other instrument relating to any Project Debt (including, without
limitation, indemnification amounts, Owner’s Extraordinary Costs and
Expenses, recurrent and extraordinary fees and expenses, and reimbursable
costs and expenses of any kind or nature); plus
iv.Transaction Costs; minus
v.Any funds held by or for Owner under the Indenture applied to the
retirement of Project Debt. Owner may retain such portion of moneys in the
Extraordinary Expense Fund or similar fund under the Indenture it deems
reasonable as a reserve against future expected costs and expenses of the
type described in subparagraph (iii) provided such action is reasonable and
in accordance with the Indenture.
Section 5.Mandatory Conveyance.Upon the retirement of all Project Debt, the Owner
shall use its best efforts to effect a Conveyance within ninety (90) days thereafter, subject to
Section 4(c) hereof. Owner shall give notice to Host of its intent to convey the Property, and Host
(or its designee) shall have the first right to acquire the Property by delivery of an Exercise Notice
to Owner within thirty (30) days after receipt of Owner’s notice. Nothing herein shall require or
prevent Owner selling the Property subject to the restrictions set forth in the Regulatory
Agreement.
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Section 6.Surplus Cash; Surplus Conveyance Proceeds. Upon a Conveyance of the
Property, the Owner shall apply the proceeds of such Conveyance (i) to redeem the Bonds then
Outstanding, (ii) to prepay, redeem in whole or fully defease any other Project Debt, and (iii) to
pay any fees or other amounts listed in Section 4(c)(ii) – (iv). Any proceeds remaining following
the foregoing payments (such remaining amounts hereinafter referred to as “Surplus Conveyance
Proceeds”) shall be transferred to the Host, which funds may be applied by Host in its sole
discretion.
Section 7.Terms of Conveyance.
(a)The Conveyance shall be in the nature of a grant deed to Purchaser in which
Owner shall deliver one or more deeds, bills of sale, or other instruments of transfer without
recourse or warranty of any kind or nature.
(b)The Property will be conveyed to Purchaser in AS IS CONDITION, WITH ALL
FAULTS, and without representations or warranties of any kind or nature as to the condition of
the Property, except as may otherwise be set forth in the purchase agreement.
(c)There shall be no partial transfer and that, upon consummation of the
Conveyance, Owner shall be fully divested of any and all right, title or interest in and to the
Property.
(d)Upon Purchaser’s delivery of the Exercise Notice, Owner shall deliver to
Purchaser a purchase agreement for the Property, and the parties shall negotiate in good faith
towards a mutually satisfactory purchase agreement in form and substance satisfactory to Owner
and Purchaser and their counsel subject to the terms and conditions of this Agreement. The
purchase agreement shall permit Purchaser to conduct physical inspections of the Property and
conduct due diligence related to the purchase of the Property, including without limitation its value
and physical and environmental condition, and shall provide Purchaser a due diligence approval
period of not less than sixty (60) days after the date of the purchase agreement. The purchase
agreement shall provide for Owner to deliver to Purchaser copies of all plans, studies, records,
reports, governmental notices and approvals, and other written materials related to the use,
occupancy or condition of the Property that Owner has in its possession, including without
limitation environmental, structural, mechanical, engineering and land surveys. Purchaser shall
provide Owner with comments to the form of purchase agreement within fifteen (15) business days
of its receipt thereof, and Owner and Purchaser shall use good faith efforts to negotiate, draft and
execute a mutually acceptable purchase agreement as soon as practicable thereafter. The purchase
agreement shall provide for closing for the conveyance to Purchaser of good and marketable title
to the Property at the Sales Price within the time set forth in Section 8(a) hereof.
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Section 8.Closing.
(a)The closing of the Conveyance (“Closing”) shall take place, in the case of a
Conveyancepursuant to Section 4 hereof,not later than the ninetieth (90th) calendar day following
the Owner’s receipt of the Exercise Notice, or as soon as possible thereafter, and in the case of a
mandatory conveyance pursuant to Section 5 hereof, not later than the ninetieth (90th) calendar
day following the retirement of all Project Debt, or as soon as possible thereafter.
(b)All general and special real property taxes and assessments, and rents shall be
prorated as of the Closing, with Purchaser responsible for all such items to the extent arising or
due at any time following the closing. General real property taxes shall be prorated at the time of
Closing based on the net general real property taxes for the year of Closing.
Section 9.Recording.This Agreement, and any amendment thereto, shall be recorded
with the recorder’s office of the County; provided, that upon termination of the term of this
Agreement, Host shall cooperate with Owner to remove any such recorded Agreement or
amendment thereto from title to the Propertyupon Owner’s reasonable request therefor and, in any
event, by no later than thirty (30) days after the expiration of the original term of this Agreement.
Section 10.Subordination. This Agreement shall be subordinate to any claim, pledge or
interest in the Property securing the Bonds or any Project Debt.
Section 11.Maintenance of Membership. In order to preserve the Property’s exemption
from property tax, Host agrees to remain a member of the Owner joint powers authority so long
as any Bonds remain outstanding.
Section 12.Assignment. Neither party to this Agreement shall assign its interests,
obligations, rights and/or responsibilities under this Agreement without the prior written consent
of the other party, except as provided herein.
Section 13.Limitation on Liability.
(a)The Owner and Host shall not be directly, indirectly, contingently or
otherwise liable for any costs, expenses, losses, damages, claims or actions, of any conceivable
kind on any conceivable theory, under or by reason of or in connection with this Agreement or any
sale or Conveyance or failure or price thereof or application of proceeds thereof, except only as to
moneys available therefor under and in accordance with the Indenture or this Agreement.
(b)No Owner Indemnified Person or Host Indemnified Person shall be
individually or personally liable for the payment of any sum hereunder or be subject to any
personal liability or accountability by reason of the execution and delivery of this Agreement, or
by any proceedings for the sale or Conveyance or failure or price thereof, or Host’s exercise or
waiver of same, or otherwise except in the case of such Owner Indemnified Person’s or Host
Indemnified Person’s own willful misconduct.
(c)The Bonds will not be a debt, liabilityor obligation of Host but rather, solely
indebtedness of the Owner, limited to the Trust Estate pledged and available therefor under the
Indenture. Under no circumstances shall Host be obligated to (i) provide any financing to acquire
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or construct the Project or any refinancing of the Project; (ii) approve any application or request
for or take any other action in connection with any planning approval, permit or other action
necessary for the acquisition, construction, rehabilitation or operation of the Project; or (iii) make
any contribution or advance any funds whatsoever to the Owner.
Section 14.Notices, Governing Law, Binding Effect and Other Miscellaneous
Provisions.
(a)Notices. All notices provided for in this Agreement shall be in writing and
shall be given to Owner or Host at the address set forth below or at such other address as they
individually may specify thereafter by written notice in accordance herewith:
If to Owner or:CSCDA Community Improvement Authority
Designated Agent 1700 North Broadway, Suite 405
Walnut Creek, California 94596
Attention: Jon Penkower
Email: jpenkower@cscda.org
With a copy to:___________________________
___________________________
___________________________
___________________________
If to Host: City of Dublin
100 Civic Plaza
Dublin, California 94568
Attention: City Manager
Such notices shall be deemed effective upon actual delivery or upon the date that any such delivery
was attempted and acceptance thereof was refused, or if mailed, certified return receipt requested,
postage prepaid, properly addressed, three (3) days after posting.
(b)Consents and Approvals. All consents and approvals and waivers required
or asserted hereunder shall be in writing, signed by the party from whom such consent, approval,
waiver or notice is requested.
(c)Non-liability of Host Officers and Employees. No officer or employee of
Host shall be personally liable to the Owner, or any successorin interest, in the event of any default
or breach by Host of any obligation of the terms of this Agreement.
(d)Pronouns. Where appropriate to the context, words of one gender include
all genders, and the singular includes the plural and vice versa.
(e)Amendments. This Agreement may not be modified except in a written
instrument signed by Host and Owner.
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(f)Complete Agreement; Benefits. This Agreement together with all
schedules and exhibits attached hereto and made part thereof supersedes all previous agreements,
understandings and representations made by or between the parties hereto. This Agreement shall
inure solely and exclusively to the benefit of the Owner and Host, and no other party shall have
any right, remedy or claim under or by reason of this Agreement.
(g)Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California, without regard to conflicts of law principles.
All claims of whatever character arising out of this Agreement, or under any statute or common
law relating in any way, directly or indirectly, to the subject matter hereof or to the dealings
between Owner and any other party hereto, if and to the extent that such claim potentially could
or actually does involve Owner, shall be filed and maintained in the Superior Court of California,
County of Alameda, California. By executing and delivering this Agreement, each party hereto
irrevocably: (i) accepts generally and unconditionally the exclusive jurisdiction and venue of such
court; (ii) waives any defense of forum non-conveniens; and (iii) agrees not to seek removal of
such proceedings to any court or forum other than as specified above. The foregoing shall not be
deemed or construed to constitute a waiver by Owner of any prior notice or procedural
requirements applicable to actions or claims against or involving governmental units and/or
political subdivisions of the State of California that may exist at the time of and in connection with
such matter.
(h)Legal Construction. In case any one or more of the provisions contained in
this Agreement shall for any reason be held by a court of competent jurisdiction to be invalid,
illegal or unenforceable in any respect, such invalid provision shall be deemed severable, and shall
not affect the validity or enforceability of any other provisions of this Agreement, all of which
shall remain fully enforceable.
(i)Term. This Agreement shall terminate upon the Conveyance.
(j)Captions. The captions used in this Agreement are solely for convenience,
and shall not be deemed to constitute a part of the substance of the Agreement for purpose of its
construction.
(k)Counterparts. This Agreement may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to be an original; and
all such counterparts shall together constitute but one and the same Agreement.
(l)Regulatory Agreement. The Regulatory Agreement shall establish
maximum income levels of tenants and maximum rents of the Affordable Units at levels
reasonably acceptable to Host and shall permit existing tenants to remain in the Project upon
acquisition by Owner. Owner shall not amend the Regulatory Agreement to increase the maximum
income levels or maximum rents of the Affordable Units, or to revise the percentages of units to
be rented as Low Income Units, Median Income Units and Moderate Income Units, without the
prior written approval of Host, which approval shall not unreasonably be withheld. Owner shall
annually provide Host a copy of its Certificate of Continuing Program Compliance for the Project.
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(m)For the term of the Regulatory Agreement, the Owner hereby represents,
covenants, warrants and agrees as follows: The Project will be owned and operated for the purpose
of providing multifamily residential rental property. The Owner will own, and cause the Project
to be managed and operated, as a project to provide multifamily residential rental property
comprised of a building or structure or several interrelated buildings or structures, together with
any functionally related and subordinate facilities.
(n)Property Management. During the term of this Agreement, Host shall have
the authority to review the selection of the original and any replacement property management
company and the management agreement with that company for the Project. If Host determines
that the management of the Project during the term of this Option Agreement is deficient in any
manner, Host may provide notice of the deficiency to Owner, and Host and Owner shall meet and
confer in good faith to discuss the alleged management deficiency and attempt to reach agreement
upon one or more appropriate remedies to address the alleged management deficiency. Upon
Host’s acquisition of the Project, Host shall not be obligated to continue the contracts with any
property management company for the Project.
(o)Preferences for New Residents. Selection criteria for new tenants for vacant
units in the Authority’s project(s) shall include the preference point system in Section 8.68.050 D
of the Dublin Municipal Code.
[SIGNATURE PAGE TO FOLLOW]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date set forth
above.
CSCDA COMMUNITY IMPROVEMENT
AUTHORITY
By:
Jon Penkower
Authorized Signatory
CITY OF DUBLIN
By:
Linda Smith, City Manager
Approved as to Form:
By:___________________________
John D. Bakker, City Attorney
Signature Page to Public Benefit Agreement
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A Notary Public or other officer completing this certificate verifies only the identity of the
individual who signed the document to which this certificate is attached, and not the truthfulness,
accuracy, or validity of that document.
State of California )
County of ______________________)
On _________________________, before me, ,
(insert name and title of the officer)
Notary Public, personally appeared ,
who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are
subscribed to the within instrument and acknowledged to me that he/she/they executed the same
in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument
the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that
the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature (Seal)
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EXHIBIT A
LEGAL DESCRIPTION OF REAL PROPERTY
The Land referred to herein is situated in the State of California, County of Alameda, City of
Dublin, and described as follows:
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2040 BANCROFT WAY, SUITE 302 BERKELEY, CALIFORNIA 94704 PHONE: 415 398 3050 FAX: 415 397 5065
001-002.docx; jf
WWW.KEYSERMARSTON.COM 11982.012
ADVISORS IN:
REAL ESTATE
AFFORDABLE HOUSING
ECONOMIC DEVELOPMENT
BERKELEY
A.JERRY KEYSER
TIMOTHY C. KELLY
DEBBIE M. KERN
DAVID DOEZEMA
KEVIN FEENEY
LOS ANGELES
KATHLEEN H. HEAD
JAMES A. RABE
GREGORY D. SOO-HOO
KEVIN E. ENGSTROM
JULIE L. ROMEY
TIM BRETZ
SAN DIEGO
PAUL C. MARRA
MEMORANDUM
To: Kristie Wheeler, Assistant Community Development Director
City of Dublin
From: Debbie Kern
Date: May 14, 2021
Subject: Review of Affordability of Waterford Place Apartments If Subject to
Proposed Terms of California Statewide Communities Development
Authority (CSCDA) Middle-Income Rental Housing Program
Background and Purpose of Review
It is our understanding that the City of Dublin is considering joining the CSCDA and
supporting the CSCDA’s purchase of the Waterford Place Apartments at 4800 Tassajara
Boulevard. As proposed, CSCDA would issue bonds and use bond proceeds to
purchase the project. Income and rent restrictions would then be recorded on the
property that would restrict the units to Moderate income households for a minimum
period of 30 years. Each taxing agency that serves the project would be required to
dedicate its portion of the base 1% property tax levy that the residential project pays for
the purpose of decreasing the monthly rental rates charged to tenants. The property tax
dedication would extend for the 30-year regulatory term.
As proposed, the blended average rental rate at Waterford Place would decrease by $178
per month, from a current blended average rate of $2,550 per month to $2,371 per month.
Under the terms of the program, rent increases over the 30-year term would be limited by
the annual increase in the Area Median Income (AMI) and would not exceed 4% in any
given year.
In accordance with your request, Keyser Marston Associates, Inc. (KMA) has reviewed
the rental rates of the Waterford Place Apartment units. The purpose of the review is to
understand:
The level of affordability of all market rate rental units in the City of Dublin;
The level of affordability of the project’s current rental rates;
Attachment 5
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To: Kristie Wheeler, Assistant Community Development Director May 14, 2021
Page 2
001-002.docx; jf
11982.012
The level of affordability of the project’s proposed reduced rental rates under the
CSCDA program; and
The likely rent savings over time if the project participates in the CSCDA
program.
Summary of Findings
1. As detailed in Table 1, the current rental rates at Waterford Place are
consistent with the average rental rates of market rate apartments in Dublin.
One Bedroom Units Two Bedroom Units
Waterford
Place
Market
Rate Units
in Dublin
Difference Waterford
Place
Market
Rate Units
in Dublin
Difference
Current Monthly
Average Rental
Rate
$2,303 $2,310 ($7.00) $2,904 $2,810
$94
Proposed
Monthly Average
Rental Rate
$2,140 $2,310 ($170.00) $2,700 $2,810 ($110)
Difference ($163) $0 ($204) $0
The $94 difference in the current rental rate for two-bedroom units at Waterford Place
versus the average rate for all two-bedroom units in Dublin is attributable to a difference
in unit size. Waterford Place’s two-bedroom units are larger than the average size of
two-bedroom units in Dublin.
2. The proposed reductions in Waterford Place Rents would result in one-
bedroom rents that are approximately $170 per month below market and two-
bedroom rents that are $110 less than the prevailing market rate.
3. Current and Proposed Rents are Affordable to Moderate-Income Households
As presented in Table 2, Waterford Place’s current average rental rates for one-bedroom
units and two-bedroom units are affordable to households earning 95% and 107% of the
Area Median Income (AMI), respectively. These affordability levels are within the
Moderate-Income range of 80% to 120% of the AMI. With the proposed rent reductions,
the affordability levels will deepen to approximately 89% of AMI for one-bedroom units
and 99% of AMI for two-bedroom units.
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4. Over the past ten years, market rate rents in Dublin have increased at an
average annual rate of 2.7% per year while the AMI has increased at an average
annual rate of 3.2% per year
As shown in the following graphs and data chart, the annual rate of growth of market
rate rents and the AMI have differed significantly over the past ten years. Rents
increased rapidly from 2012 through 2015 and then flattened from 2016 through 2021. In
comparison, the AMI was flat from 2012 through 2016 and then increased at a relatively
rapid rate from 2016 through 2021. The average annual rate of growth for both the AMI
and market rents rounds to 3%, but the actual growth rate of the AMI has exceeded the
growth rate of market area rents over the past ten years.
Year Area Median Income Dublin Market Rate Apts.
Household of 4 Persons % Change Market Rate Apartment Rents % Change
2011 $92,300 $2,019
2012 $93,500 1% $2,093 4%
2013 $93,500 0% $2,224 6%
2014 $93,500 0% $2,311 4%
2015 $93,500 0% $2,476 7%
2016 $93,600 0% $2,486 0%
2017 $97,400 4% $2,502 1%
2018 $104,400 7% $2,522 1%
2019 $111,700 7% $2,580 2%
2020 $119,200 7% $2,497 -3%
2021 $125,600 5% $2,631 5%
Average Annual Change: 3.2% 2.7%
$1,000
$1,200
$1,400
$1,600
$1,800
$2,000
$2,200
$2,400
$2,600
$2,800
$50,000
$60,000
$70,000
$80,000
$90,000
$100,000
$110,000
$120,000
$130,000
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Area Median Income and Market Rents
Income Rent
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5. Under the CSCDA rent restrictions, the difference between future market rental
rates and Waterford Place rents will depend on the rate of change of the AMI
relative to both market rental rates and the 4% annual cap required by the
CSCDA program.
Scenario A in the following chart represents the changes in rents if the rate of change of
market rate rents and the AMI over the next ten years mirrors the trends of the past ten
years. Under these assumptions and the 4% annual cap on increases, market rate rents
will increase at an average rate of 2.7% per year, but restricted Waterford Place rents
will increase at a rate of 2.1% per year. Under this scenario, the delta between blended
Waterford Place rents and market rents will grow from $180 per month to $399 per
month. The gap widens because of the combined effect of the 4% cap limiting growth
during the four years in which the AMI is assumed to grow faster than 4% and the 6
years in which it is assumed that market rents will increase faster than the AMI.
Scenario B represents the changes in rents if market rents grow at a constant rate of
2.7% per year and the AMI grows at a constant rate of 3.2% per year, which reflect the
average annual growth rates over the past ten year. Under Scenario B, the delta
between Waterford Place restricted rents and market rents will decline from $180 per
month to $98 per month. This is due to the combined effect of assuming a constant
growth rate over the period in which the AMI increases faster than market rents and the
growth rate of Waterford rents not being limited by the 4% cap because the assumed
rate of growth is a constant 3.2%, which is less than the 4% cap.
Scenario C represents a set of assumptions that are not based on the historic trend in
Dublin but reflect the “conventional wisdom” assumption that market rents typically grow
faster than the AMI. For purposes of this scenario, we have assumed that market rents
increase at a constant average annual rate of 3% and the AMI increases at a constant
average annual rate of 2%. Under Scenario C, the delta between Waterford Place
restricted rents and market rents will increase from $180 per month to $539 per month.
This is due to the assumption that market rate rents will increase faster than the AMI.
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Comparison of Growth in Waterford Rents over Next Ten Years – Three Scenarios
Scenario A –
Annual growth
rates over next 10
years mirror rates
over past 10 years
Scenario B – Annual
Growth Rates are
constant and equal to
average annual rates
over past 10 years
Scenario C – Market
rents grow at a faster
rate than the AMI over
the 10-year period
(3.0% versus 2%)
Waterford Place
Blended Rent in 2021
(with CSCDA Discount)
$2,371 $2,371 $2,371
Dublin Blended Market
Rent in 2021 $2,551 $2,551 $2,551
Difference ($180) ($180) ($180)
Waterford Place
Blended Rent in 2031 $2,926 $3,241 $2,890
Dublin Blended Market
Rent in 203 $3,325 $3,339 $3,429
Difference ($399) ($98) ($539)
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031
Waterford Place Average Rent Projection
Scenario A:Annual Growth Rates Equal to Growth Rates of Prior 10
Years
Market Growth Waterford Agreement - Capped AMI Growth
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$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031
Waterford Place Average Rent Projection
Scenario B: Growth based on historical average annual rate
Market Growth Waterford Agreement - Capped AMI Growth
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
$4,000
2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031
Waterford Place Average Rent Projection
Scenario C:"Conventional Wisdom" Assumption of Market Rents
increasing annually at 3% and AMI at 2%
Market Growth Waterford Agreement - Capped AMI Growth
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6. Based on our experience, we would anticipate that the delta between the
restricted rents at Waterford Place and prevailing market rate rents would
increase over time and would be more consistent with Scenarios A and C than
Scenario B. Given that future increases to the rental rates at Waterford Place
will be tied to increases in the AMI, it is anticipated that the project would
continue to be affordable to Moderate income households.
1349
Table 1
Comparison of Waterford Place Rental Rates to Rents of Other Market Rate Rental Units in Dublin
City of Dublin, CA
Building Name Year Built
Total
Units3
# of
Units SF/ Unit Rent Rent/SF
# of
Units SF/ Unit Rent Rent/SF
Subject Property - Waterford
Place - Avg. Current Rents1 2003 390 229 738 $2,303 $3.12 161 1,130 $2,904 $2.57
Subject Property-Waterford
Place - Proposed Avg. Rents 2003 390 229 738 $2,140 $2.90 161 1,130 $2,700 $2.39
Proposed Change in Monthly
Rental Rates -$163 -7%-$204 -7%
Market Rate Units in Dublin2
Aster 2017 313 172 745 $2,393 $3.21 121 1,027 $2,971 $2.89
Avalon Dublin Station 2014 505 155 822 $2,408 $2.93 225 1,238 $3,274 $2.65
Avana Dublin Station 2002 177 89 770 $2,396 $3.11 76 1,050 $2,743 $2.61
Tralee Village Apartments 2008 130 97 839 $2,163 $2.58 27 1,255 $3,199 $2.55
Connolly Station 2014 309 200 764 $2,317 $3.03 88 1,305 $3,115 $2.39
Emerald Park 2000 368 202 700 $2,343 $3.35 146 1,056 $2,775 $2.63
Fountains at Emerald Park 2000 324 132 796 $2,430 $3.05 144 1,085 $2,884 $2.66
Park Wood Luxury 1991 224 128 745 $2,297 $3.08 68 967 $2,620 $2.71
Eaves Dublin 1989 204 88 622 $2,105 $3.39 80 920 $2,646 $2.88
Cotton Wood Apartments 1988 248 96 748 $2,513 $3.36 152 938 $2,747 $2.93
Amador Lakes Luxury 1985 555 160 733 $2,275 $3.10 395 937 $2,615 $2.79
Sofi Dublin 1984 176 88 671 $2,131 $3.17 88 920 $2,519 $2.74
Amador Valley Apartments 1970 80 44 700 $1,753 $2.48 34 1,020 $2,079 $2.02
Dublin Average Rents 3,613 1,651 747 $2,310 $3.09 1,644 1,040 $2,810 $2.70
-$7 $0.03 $94 -$0.13
-$170 -$0.19 -$110 -$0.31
1 Source: Confidential Rent Roll.
2 Source : CoStar
3 Total of all units in project. Some projects include studios and/or three-bedrooms.
Two Bedrooms
Difference between Current Waterford
Rents and Market Rents
Difference between Proposed Waterford
Rents and Market Rents
One Bedrooms
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Table 2
Affordability of Waterford Place and Market Rate Rental Apartments in Dublin
City of Dublin, CA
One Bedroom Two Bedroom One Bedroom Two Bedroom One Bedroom Two Bedroom
Average Monthly Effective Rent1 $2,310 $2,810 $2,303 $2,904 $2,140 $2,700
Annual Rent $27,720 $33,723 $27,636 $34,852 $25,680 $32,400
Annual Utility Expenses2 $1,044 $1,320 $1,044 $1,320 $1,044 $1,320
Total Annual Housing Expenses $28,764 $35,043 $28,680 $36,172 $26,724 $33,720
Est. Renter's Gross Household Income
assuming 30% of income is spent on
housing costs $95,878 $116,809 $95,599 $120,574 $89,080 $112,400
Area Median Household Income 20213
Hhld of Two People $100,500 $100,500 $100,500
Hhld of Three People $113,050 $113,050 $113,050
Affordability Level of Rent as a % of AMI Moderate Moderate Moderate Moderate Moderate Moderate
Hhld of Two People 95%95%89%
Hhld of Three People 103%107%99%
1 See Table 1.
2 Source: Alameda County Housing Authority. Reflects monthly charges for gas heating, cooking and water heating and other electric use.
Market Rate Rentals in Dublin Current Waterford Place Proposed Waterford Place
3 Source: HCD. Per the California Government code, affordable rents are commonly calculated based on an assumed household size equal to the number of bedrooms
plus 1.
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Table 3
Comparison of Historic Growth in Market Rate Rents Relative to Growth in Area Median Income
City of Dublin, CA
Year
Household of 4
Persons % Change
Market Rate
Apartment Rents % Change
2011 $92,300 $2,019
2012 $93,500 1%$2,093 4%
2013 $93,500 0%$2,224 6%
2014 $93,500 0%$2,311 4%
2015 $93,500 0%$2,476 7%
2016 $93,600 0%$2,486 0%
2017 $97,400 4%$2,502 1%
2018 $104,400 7%$2,522 1%
2019 $111,700 7%$2,580 2%
2020 $119,200 7%$2,497 -3%
2021 $125,600 5%$2,631 5%
Average Annual Change:3.2%2.7%
Dublin Market Rate Apts.Area Median Income
Source: Income limits from HCD. Market Rate rents from CoStar; rents includes all units, not just one- and two-bedroom
units.
$1,000
$1,200
$1,400
$1,600
$1,800
$2,000
$2,200
$2,400
$2,600
$2,800
$50,000
$60,000
$70,000
$80,000
$90,000
$100,000
$110,000
$120,000
$130,000
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Area Median Income and Market Rents
Income Rent
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Table 4
City of Dublin, CA
Year Market Growth
Est. Percent
Change, based on
historic trend
Waterford
Agreement -
Capped AMI Growth
Percent
Change based
on historic
trend
AMI Growth
(historic
trend)
2021 $2,551 $2,371
2022 $2,645 4%$2,402 1%1%
2023 $2,810 6%$2,402 0%0%
2024 $2,920 4%$2,402 0%0%
2025 $3,129 7%$2,402 0%0%
2026 $3,141 0%$2,405 0%0%
2027 $3,162 1%$2,501 4%4%
2028 $3,187 1%$2,601 4%7%
2029 $3,260 2%$2,705 4%7%
2030 $3,155 -3%$2,813 4%7%
2031 $3,325 5%$2,926 4%6%
Average Annual:2.70%Average Annual:2.1%3.2%
Hypothetical Future Average Rental Rate of Waterford Place Compared with Growth of AMI and
Market Rates if Future Growth Rates Mirror Growth Rates of Past 10 Years
Repeat of prior 10 years
Annual Future Growth Based On 10-Year Trend
Waterford Agreement: Lesser of AMI Growth or 4%
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031
Waterford Place Average Rent Forecast
Scenario A: Growth Based on Prior 10 Years
Market Growth Waterford Agreement - Capped AMI Growth
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Table 5
City of Dublin, CA
Year Market Growth
Est. Percent
Change, based on
historic average
Waterford
Agreement -
Capped AMI
Growth
Est. Percent
Change, based on
historic average
2021 $2,551 $2,371
2022 $2,621 2.7%$2,446 3.2%
2023 $2,692 2.7%$2,524 3.2%
2024 $2,766 2.7%$2,604 3.2%
2025 $2,841 2.7%$2,687 3.2%
2026 $2,919 2.7%$2,772 3.2%
2027 $2,998 2.7%$2,860 3.2%
2028 $3,080 2.7%$2,951 3.2%
2029 $3,164 2.7%$3,044 3.2%
2030 $3,250 2.7%$3,141 3.2%
2031 $3,339 2.7%$3,241 3.2%
Hypothetical Future Average Rental Rate of Waterford Place if Future Growth Rates Mirror Average
Growth Rates of Past 10 Years
Average Growth, Market Rate Rents
Average Growth, Area Median
Income
Annual Future Growth Based On 10-Year Historical Averages
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031
Waterford Place Average Rent Forecast
Scenario B: Growth based on historical averages
Market Growth Waterford Agreement - Capped AMI Growth
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Table 6
City of Dublin, CA
Year Market Growth Est. Percent
Change
Waterford
Agreement -
Capped AMI
Growth
Est. Percent
Change
2021 $2,551 $2,371
2022 $2,628 3.0%$2,419 2.0%
2023 $2,707 3.0%$2,467 2.0%
2024 $2,788 3.0%$2,516 2.0%
2025 $2,871 3.0%$2,567 2.0%
2026 $2,958 3.0%$2,618 2.0%
2027 $3,046 3.0%$2,670 2.0%
2028 $3,138 3.0%$2,724 2.0%
2029 $3,232 3.0%$2,778 2.0%
2030 $3,329 3.0%$2,834 2.0%
2031 $3,429 3.0%$2,890 2.0%
Hypothetical Future Average Rental Rate of Waterford Place With Fixed Future Growth Rates
Fixed Annual Future Growth
Market Rate Rents Waterford Rents
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
$4,000
2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031
Waterford Place Average Rent Forecast
Scenario C: "Conventional Wisdom" Assumption of Market
Rents increasing annually at 3% and AMI at 2%
Market Growth Waterford Agreement - Capped AMI Growth
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Item 7.1: California Statewide
Communities Development Authority
Middle-Income Rental Housing
Program
June 1, 2021
1356
Background
•On May 4, 2021, City Council received
presentation on CSCDA Middle-Income Rental
Housing Program and discussed:
–Request for City to become an additional member of
CSCDA Community Improvement Authority
–Request for approval of the form of a Public
Benefit Agreement and issuance of bonds for the
acquisition of the 390-unit Waterford Place
Apartments
1357
Background
•Under Middle-Income Rental Housing Program,
Waterford Place Apartments would be owned by
the Authority and converted to rent restricted
units for moderate/middle-income households
•BLVD Capital would be the Project
Administrator
•City Council considered the information
presented at the May 4, 2021 meeting and
requested additional information
1358
Policy Direction
•Staff is requesting policy direction regarding
participation in CSCDA and other similar programs
and amount of property tax revenue the City
Council is comfortable forgoing
•On September 1, 2020, City Council authorized the
City to become an additional member of CalCHA
•Similar to CSCDA, CalCHA issues bonds to acquire
apartment complexes and converts them to rent
restricted units
1359
Policy Direction
•To make it feasible to create this affordable
housing, the City forgoes property tax revenue
•City Manager authorized to enter into Purchase
Option Agreements for properties acquired
through CalCHA under limited conditions:
–No more than four properties totaling up to 1,000
units over five years
–This assumed the City would forgo approximately
$860,000 to $1 million annually in property tax
revenue
1360
Information Requested
•Lessons learned from CalCHA acquisition of the
Aster Apartments
•Current rent data for Waterford Place Apartments
•Information on how rents would be amended
•Information on how rent control is implemented
•Financial impact to the City
•Commercial component of Waterford Place
1361
Lessons Learned
•CalCHA recently closed on Aster Apartments
•Within a week, City received complaint from a
tenant that garbage was not being collected and
they were unable to get ahold of property
management
•Highlights importance of communication
between property management companies and
need for a transition plan
1362
Waterford Place Apartments Rent Data
•Average in-place rent is $2,550 per month
•Income-qualifying tenant’s rent would be
reduced to average $2,371 per month
•Average rent reduction would be $178 per
month, or average 7% rent reduction
1363
Rent Trends
•KMA reviewed CSCDA proposal and provided
overview of rent trends and future savings
•Over past 10 years, Dublin rents have increased
2.7% per year while AMI has increased 3.2% per
year
•Maximum moderate-income rent (110% of AMI) is
higher than current market rate rents
•Given future rent increases would be tied to
increases in AMI, project would continue to be
affordable to moderate-income households
1364
How Are Rents Amended
•Income-qualifying tenants would receive a rent
reduction upon lease renewal
•Currently, there are no leases longer than 12
months
1365
How Is Rent Control Implemented
•Market -Rate Rents
–Increase annually up to 10% (a base 5% increase
plus a cos-o-living adjustment of up to another
5%)
•Middle-Income Rental Housing Program
–Increase annually maximum of 4%, if there is an
increase in AMI
1366
Financial Impact to City
•Waterford Place Apartments currently provides
$335,000 annual property tax revenue
•Over a 30-year period, City would forego
approximately $15.6 million of property tax
revenue (current property taxes, increased 2%
per year for 30 years)
•Future value of property is approximately $400
million in year 30
1367
Commercial Component
•Approximately 14,000 square feet of retail space
on ground floor of apartment building
•Owned and operated by same owner as the
Shops at Waterford
•City will continue to receive property taxes from
owner of retail space, which are currently
$93,758 per year
1368
Assembly Bill 787
•Current legislation proposed that would allow
RHNA credit for multifamily units converted to
deed-restricted rental housing
•Initial post-conversion rent reduction of 10%
•55-year affordability covenant
1369
Assembly Bill 787
•Not feasible for all units at Waterford Place to
meet rent reduction requirement and revise
regulatory agreement
•Of 390 units, 129 units that would have a rent
reduction of at least 10%
•CSCDA would assist City to record a 55-year
affordability covenant on those units
1370
Recommendation
•Provide direction on the loss of property tax
revenue, and on joining the Authority
•If City Council wishes to join the Authority:
–Adopt the Resolution Approving, Authorizing, and
Directing Execution of a Joint Exercise of Powers
Agreement Relating to the CSCDA Community
Improvement Authority, and the Form of a Public
Benefit Agreement; and Approving the Issuance of
Revenue Bonds by the Authority for the Purpose of
Financing the Acquisition of the Waterford Place
Apartments
1371
June 1, 2021
SB 343
Senate Bill 343 mandates supplemental materials
that have been received by the City Clerk’s office that
relate to an agenda item after the agenda packets
have been distributed to the City Council be available
to the public.
The attached documents were received in the City
Clerk’s office after distribution of the June 1, 2021,
Regular City Council meeting agenda packet.
Item 7.1
1372
1373