HomeMy WebLinkAbout8.1 Proposal to Acquire Sofi Apartments - California Statewide Communities Development AuthoritySTAFF REPORT
CITY COUNCIL
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Agenda Item 8.1
DATE:November 16, 2021
TO:Honorable Mayor and City Councilmembers
FROM:Linda Smith, City Manager
SUBJECT:Proposal to Acquire Sofi Apartments -California Statewide Communities Development Authority Prepared by: Linda Smith, City Manager
EXECUTIVE SUMMARY:The City Council will receive a presentation from California Statewide Communities Development Authority (CSCDA) and Opportunity Housing Group regarding a proposal to convert the Sofi Apartments (176 market-rate units at 7100 San Ramon Road) to low-, middle-, and moderate-income rental housing under the CSCDA Workforce Housing Program. The Community Improvement Authority, which is an affiliate of CSCDA, supports the issuance of bonds for the production, preservation, and protection of middle-income rental housing. In addition, the City Manager is seeking clarity on the two-tier process in handling requests from CalCHA and CSCDA.
STAFF RECOMMENDATION:Receive the presentation and provide direction on the acquisition and the process.
FINANCIAL IMPACT:Bonds issued for the CSCDA Community Improvement Authority’s (CSCDA CIA) acquisition of the Sofi Apartments will be indebtedness solely of the CSCDA CIA, and payable only from revenues ofthe project. The Sofi Apartments currently provides $151,998 in annual property tax revenue, which the City would no longer receive. Eliminating the property tax burden enables the CSCDA CIA to charge lower rents and target middle-income households.
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DESCRIPTION:BackgroundThe 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. 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.On June 2, 2021, the City Council authorized the City to become an additional member of theCSCDA Community Improvement Authority (CSCDA CIA). In addition, the City Council approved the form of a Public Benefit Agreement and issuance of bonds for the acquisition of the Waterford Place Apartments at 48 Tassajara Road. Proposal PresentationCSCDA and Opportunity Housing Group have approached the City Council with a proposal to convert 176 market-rate rental units at the Sofi Apartments to low-, middle-, and moderate-income rental housing under the CSCDA CIA’s Workforce Housing Program. The City Council will receive a presentation from CSCDA and Opportunity Housing Group regarding this proposal.Discussion of Two-Tier ProcessThe City joined CSCDA on June 1, 2021 and joined CalCHA on September 1, 2020. Policy differences exist in the consideration of middle-income projects, leading to complications in the presentation of potential projects.With CalCHA, the ability to consider and approve projects lies with the City Manager. Under the approved City Council policy, the City Manager can approve no more than four projects in a five-year period and cannot approve a total number of units exceeding 1,000. To date, the City Manager authorized two transactions, Aster Apartments and Fountains Apartments.In joining the CSCDA CIA, the City was asked that each transaction be presented directly to the City Council for consideration, which was amenable to the City Council. Additionally, the City Manager requested that further guidance be set relating to the overall amount of property tax revenue that the City would be willing to forego.The City Council discussed a maximum of between $800,000 -$1,000,000 in City property tax revenues and authorized the purchase of Waterford Apartments. All totaled, 1,028 units have been purchased through the two joint powers authorities – CalCHA and CSCDA – with a current impact of $830,641 to the City’s General Fund. With the addition of the proposed acquisition of Sofi, the total amount of foregone property tax revenue would be $982,639 in the current fiscal year.While presumably this is the last project that this City Council is willing to consider, Staff is seeking City Council direction on whether they wish to consider additional transactions in the
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five-year period, and if so, specific direction to the City Manager on how to handle future requests. This policy guidance would not preclude future City Councils from changing policy direction.
STRATEGIC PLAN INITIATIVE:Strategy 3: Create More Affordable Housing OpportunitiesObjective D: Seek opportunities to preserve the stock of housing that is affordable tomoderate and middle-income households.
NOTICING REQUIREMENTS/PUBLIC OUTREACH:The City Council Agenda was posted.
ATTACHMENTS:
None.
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