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May 19, 2026
ITEM TITLE
TEFRA Hearing: Conduct Hearing to Approve the Issuance of Tax -Exempt Multifamily Housing Revenue Bonds for the Otay Ranch II Affordable Housing Project
Report Number: 26-0090
Location: Northwest Corner of State Route 125 and Rock Mountain Road Department: Housing and Homeless Services
G.C. § 84308 Regulations Apply: No
Environmental Notice : The proposed Project is adequately covered in the previously certified Final Environmental Impact Report (“FEIR”) for the Otay Ranch University Villages Sectional Planning Area (“SPA”) Plan (FEIR 13-01; SCH #2013071077; and incorporated by reference in City Council Resolution No. 2014-232 on December 2, 2014).
Recommended Action
Conduct the public hearing and adopt a resolution authorizing the issuance of tax -exempt bonds in an amount not to exceed $80 million for the Otay Ranch II affordable housing project.
SUMMARY
The City of Chula Vista (“City”) has received a request for the approval of issuance by the California Municipal Finance Authority of up to $80 million in tax-exempt multifamily housing revenue bonds for the purpose of financing the acquisition, construction, improvement, and equipping o f the Otay Ranch II affordable multifamily rental housing development.
ENVIRONMENTAL REVIEW
The Project has been reviewed for compliance with the California Environmental Quality Act (“CEQA”), and it has been determined that the Project was adequately cov ered and addressed in the previously certified Environmental Impact Report (“FEIR”) for the Otay Ranch University Villages Sectional Planning Area Plan (FEIR 13-01; SCH #2013071077; and incorporated by reference in City Council Resolution No. 2014-232 on December 2, 2014). Therefore, no further environmental review is required.
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BOARD/COMMISSION/COMMITTEE RECOMMENDATION
Not applicable. The Housing and Homeless Advisory Commission was provided with a summary of this project at their March 25, 2026, meeting.
DISCUSSION
Project Background
The subject of this hearing is a proposed 270-unit affordable housing development to be built in Village 8 East, a Specific Plan Area (“SPA”) located in the Southeast portion of Chula Vista (the “Project”). The Project sponsor is Meta Housing, an affordable developer who works throughout California, and the Borrower of the bonds is Otay Affordable II V8, LP , an affiliated single purpose entity . HomeFed Corporation is the master developer of the SPA. The Project will fulfill all or a portion of the inclusionary housing obligation for Otay Ranch Village Eight East, as set forth in the Affordable Housing Agreement by and between the City and Village 8E, LLC.
When completed, 267 units will be reserved for low - and very low income families, with three unrestricted units set aside for onsite property management staff. The units will be a mix of one-, two-, and three-bedroom units in a four -story building served by elevators. The units are proposed to be restricted by income as detailed in Table 1.
Table 1: Proposed Affordability of Unit Mix
Percentage of Area
Median Income (AMI) Units
30% 34
50% 20
60% 91
70% 122
Total 267
Planned amenities include a leasing office, bike storage, mail room, community room, fitness center, laundry room, and two landscaped courtyards featuring a tot -lot, barbecue areas, and social gathering spaces. The Project aims to support Chula Vista’s long -term vision to create a thriving and resilient community by advancing high -quality affordable housing, str engthening community infrastructure, and providing comprehensive resident services. On -site programming, including health and wellness classes, financial education, and art-based activities, will be available free of charge to all residents.
The Project is scheduled to begin construction in summer 2026. A rendering of the Project is shown in Figure 1, below.
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Figure 1: Otay Ranch II Rendering
Tax-Exempt Bonds
The total amount of tax-exempt bonds available for purchase by investors is limited by federal statute. The California Debt Limit Allocation Committee ( “CDLAC”) selects affordable housing projects for bond awards through a highly competitive process. Bonds are paired with an award of federal four percent ( 4%) low- income housing tax credits, which together comprise a majority of a project’s financing. The Chula Vista Housing Authority is eligible to serve as the municipal issuer of tax-exempt revenue bonds. However, in order to submit a competitive application to CDLAC, projects must have “leveraged soft resources” as a portion of its financing. Leveraged soft resources typically include public funds or donations of public lands . For developments such as the Project that do not have a local public funding source, a f inancing instrument known as recycled bonds can serve as an alternative leveraged soft resource . The Chula Vista Housing Authority does not have an allocation of recycled bonds to deploy to the Project, whereas larger statewide bond issuers such as the California Municipal Finance Authority (“CMFA”) and the California Housing Finance Agency do have such an allocation.
The Borrower requested that the CMFA serve as the governmental issuer of the recycled tax-exempt revenue bonds (the “Bonds”) in an aggregate principal amount not to exceed $80 million. The proceeds of the Bonds will be used to: (1) finance or refinance the acquisition, construction, improvement and equipping of the Project; and (2) pay certain expenses incurred in connection with the issuance of the Bonds.
In order for the Bonds to qualify as tax-exempt bonds, the City must conduct a public hearing pursuant to the Tax Equity and Fiscal Responsibility Act of 1982 (“TEFRA”) providing for the members of the community an opportunity to speak in favor of or against the use of tax-exempt bonds for the financing of the Project. Prior to the TEFRA hearing, reasonable notice must be provided to the members of the community. Following the close of the TEFRA hearing, an applicable elected representative of the governmental unit hosting the Project must provide its approval of the issuance of the Bonds for the financing of the Project.
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California Municipal Finance Authority
The CMFA wa s created on January 1, 2004 , pursuant to a joint exercise of powers agreement to promote economic, cultural and community development, through the financing of economic development and charitable activities throughout California. To date, over 350 municipalities have become members of CMFA.
The CMFA was formed to assist local governments, non -profit organizations and businesses with the issuance of taxable and tax-exempt bonds aimed at improving the standard of living in California. The CMFA’s representatives and its Board of Directors have considerable experience in bond financing.
DECISION-MAKER CONFLICT
Staff have reviewed the property holdings of the City Council members and have found no property holdings within 1,000 feet of the boundaries of the pro perty, which is the subject of this action. Consequently, this item does not present a disqualifying real property-related financial conflict of interest under California Code of Regulations Title 2, section 18702.2(a)(7) or (8), for purposes of the Political Reform Act (Cal. Gov’t Code §87100, et seq.).
Staff are not independently aware and have not been informed by any City Council members of any other fact that may constitute a basis for a decision-maker conflict of interest in this matter.
CURRENT-YEAR FISCAL IMPACT
The Bonds to be issued by the CMFA for the Project will be the sole responsibility of the Borrower, and the City will have no financial, legal, moral obligation, liability or responsibility for the Project or the repayment of the Bonds for the financing of the Project. All financing documents with respect to the issuance of the Bonds will contain clear disclaimers that the Bonds are not obligations of the City or the State of California but are to be paid for solely from funds provided by the Borrower.
The Board of Directors of the California Foundation for Stronger Communities, a California non-profit public benefit corporation (the “Foundation”), acts as the Board of Directors for the CMFA. Through its conduit issuance activities, the CMFA shares a portion of the issuance fees it receives with its member communities and donates a portion of these issuance fees to the Foundation for the support of local charities. With respect to the City, it is expected that a portion of the issuance fee attributable to the City will be granted by the CMFA to the general fund of the City. Such grant may be used for any lawful purpose of the City.
ONGOING FISCAL IMPACT
There will be no ongoing fiscal impact as this is a one -time action, with CMFA responsible for all ongoing activities associated with monitoring compliance of the regulatory restrictions and administration of the outstanding Bonds.
ATTACHMENTS
1. Project Location Map
2. Notice of Public Hearing
Staff Contact: Brian Warwick, Housing Manager
Stacey Kurz, Director of Housing and Homeless Services