DATE:
September 8, 2026
CATEGORY:
Consent
DEPT.:
Housing
TITLE: Multi-family Housing Tax-Exempt Bond
Financing for 96 West El Camino Real
RECOMMENDATION
Adopt a Resolution of the City Council of the City of Mountain View Approving the Issuance of the California Municipal Finance Authority Exempt Facility Bonds in an Aggregate Principal Amount Not to Exceed Fifty Million Dollars ($50,000,000) for the Purpose of Financing or Refinancing the Acquisition, Construction, Improvement and Equipping of a Rental Housing Project Located at 96 West El Camino Real and Certain Other Matters Relating Thereto , to be read in title only, further reading waived (Attachment 1 to the Council report).
BACKGROUND
Danco Communities will develop a fully affordable rental project at 96 West El Camino Real (Camino Commons ), comprising 78 affordable units and one manager’s unit. The project is funded with multiple sources, including $8 million in City funding, $7.9 million in County funding under the City- County Measure A M emorandum of Understanding, and State low -income housing tax credits and tax -exempt bond financing as described below . The City’s funding commitment of $ 8 million is comp osed of $1.2 6 million in State Permanent Local Housing Allocation (PLHA) funding and $6.74 million from the City’s Housing Impact Fees. A separate item on this meeting’s consent calendar recommends acceptance and appropriation of additional PLHA funds for the project as part of the City’s overall funding commitment, which brings the total PLHA funding to $1.2 6 million. This funding commitment would be part of the Construction/Permanent loan agreement, with a standard interest rate for the entire loan amount at three percent simple accrued interest; however, no payments are due during the construction period.
The State has awarded the project $46,354,095 in Low -Income Housing Tax Credits and $23,650,730 in tax-exempt bond allocation. This report seeks Council authorization of a not-to- exceed principal amount of $50,000,000, which establishes the federal ceiling required under Tax Equity and Fiscal Responsibility Act (TEFRA) . While the borrower currently anticipates an allocation and issuance of approximately $24,000,000, the higher authorization accommodates potential construction-phase financing needs, interest rate fluctuations, and cost contingencies
Multi-family Housing Tax-Exempt Bond Financing for 96 West El Camino Real September 8, 2026
without additional administrative requirements. Both funding sources are critical for the financial viability of the project. The tax -exempt designation of the bonds is not automatic; it requires completion of the federal TEFRA process, including a public hearing and City Council adoption of a resolution approving the California Municipal Finance Authority’s (CMFA) issuance of bonds. It also requires a bond allocation and a legal opinion from bond counsel confirming that all requirements under the Internal Revenue Code have been met.
California Municipal Finance Authority Housing Bond Program
CMFA was created on January 1, 2004, pursuant to a Joint Exercise of Powers Agreement (JPA) to assist local governments, nonprofit organizations, and businesses with the issuance of taxable and tax-exempt bonds to fund a wide range of activities – including affordable housing projects – to improve the standard of living in California. Membership is a prerequisite for CMFA to issue bonds for projects within a given jurisdiction. The City of Mountain View joined the JPA on February 12, 2013. To date, more than 300 municipalities, including the City of Mountain View, have joined CMFA.
The Board of Directors of the California Foundation for Stronger Communities, a California nonprofit public benefit corporation (the “Foundation”), acts as the Board of Directors (Board) for the CMFA. The CMFA representatives and its Board have considerable experience in bond financings. The CMFA noncompetitively issues bond financing based on a project’s eligibility, funding criteria, and compliance with procedural requirements, such as the City’s bond hearing and resolution adoption process.
The bonds may be used to finance the construction of a new project or refinance the acquisition and rehabilitation of an existing project, provided the developer agrees to set aside all, or a portion, of the units in a project for very low- and low- income households. A developer can finance a project at a lower interest rate than available through conventional financing because the interest paid to bondholders is exempt from Federal (and, in some cases, State) income taxes.
Obtaining financing through the bond program also allows a project to be eligible for low-income housing tax credits.
Tax and Equity Fiscal Responsibility Act Hearing Overview
In order for CMFA to issue the bonds on a tax-exempt basis, the TEFRA requires a public hearing to provide the public an opportunity to speak for or against financing the project with the bonds.
The hearing may be held in person or via teleconference. The entity holding the public hearing must be located within Mountain View. Notice of the hearing must be published in a newspaper of general circulation at least seven days prior to the date of the public hearing. Following the public hearing, the local elected body is asked to adopt a resolution approving CMFA’s issuance of the bonds.
Multi-family Housing Tax-Exempt Bond Financing for 96 West El Camino Real September 8, 2026
TEFRA hearings are routinely held for affordable housing projects, as tax-exempt bond financing and low -income housing tax credits are key funding sources for nearly all affordable housing projects. The City last conducted a TEFRA hearing via teleconferenc e on March 4, 2026, for the La Bella affordable housing project at 1020 Terra Bella being developed by Alta Housing, which allowed CMFA to issue tax-exempt bonds for the project.
ANALYSIS
TEFRA Hearing
On August 20 , 2026, CMFA conducted a public hearing via teleconference, with City staff in attendance consistent with the City’s past practice for TEFRA hearings, to provide an opportunity for the public to speak for or against the bond financing for the 96 West El Camino Real project.
Notice of the hearing was published in the Palo Alto Daily Post in accordance with public noticing requirements. There were no members of the public in attendance, and no comments were received. The meeting minutes are included as Attachment 2 to this report.
To satisfy federal requirements under the TEFRA, the City Council is now being asked to adopt a resolution (see Attachment 1) approving the issuance of tax-exempt bond financing by CMFA. As is typical with tax -credit projects, Danco Communities has formed a limited partnership , Mountain View El Camino Real LP , a California limited partnership, to apply for the bonds and tax-credit financing and oversee construction of the project. A s noted above, a tax credit reservation for the project was made in May 2026 by the Tax Credit Allocation Committee (TCAC); however, the tax credit will not be formally issued until this tax -exempt bond financing is approved. The City Council’s adoption of the TEFRA resolution authorizes CMFA to issue these bonds, triggering the release of the tax credits. Together, the bond proceeds and tax credit equity complete the project financing, enabling construction to begin by March 2027.
FISCAL IMPACT
Adoption of the resolution is necessary for the developer to proceed with securing necessary tax- exempt bond financing from CMFA as well as tax credits for the project. The bonds are the sole financial obligation of the developer and do not create any financial obligation for the City. All financing documents with respect to the issuance of the bonds will contain clear language that the bonds are not obligations of the City and are to be paid solely with funds provided by the borrower (developer).
The CMFA shares a portion of its bond issuance fees with its member agencies. It is anticipated that the City will receive approximately $17,000 from the CMFA related to this issuance. The final amount is dependent on the final bond amounts that are issued. The proceeds are unrestricted revenue that may be used for any lawful purpose. Consistent with past practice, staff will deposit the fee into the Housing Fund to support the City’s housing programs and activities.
Multi-family Housing Tax-Exempt Bond Financing for 96 West El Camino Real September 8, 2026
LEVINE ACT
California Government Code Section 84308 (also known as the Levine Act) prohibits city officials from participating in any proceeding involving a “license, permit, or other entitlement for use” if the official has received a campaign contribution exceeding $500 from a party, participant, or agent of a party or participant within the last 12 months. The Levine Act is intended to prevent financial influence on decisions that affect specific, identifiable persons or participants. For more information see the Fair Political Practices Commission website: www.fppc.ca.gov/learn/pay-to- play-limits-and-prohibitions.html
Please see below for information about whether the recommended action for this agenda item is subject to or exempt from the Levine Act.
EXEMPT FROM THE LEVINE ACT
☒ General policy and legislative actions
ALTERNATIVES
1. Do not approve the resolution allowing CMFA to issue the multi -family tax-exempt bonds to finance the affordable housing development at 96 West El Camino Real.
2. Provide other direction.
PUBLIC NOTICING
Agenda posting. The City Council’s agenda is advertised on Channel 26, and the agenda and this report appear on the City’s website. TEFRA Hearing was noticed through a notice in the Palo Alto Daily Post published on August 7, 2026.
Prepared by:
Julie Barnard
Affordable Housing Manager
Approved by:
Wayne Chen
Housing Director
Audrey D. Seymour
Assistant City Manager
Attachments: 1. Resolution Authorizing Issuance of Multi-Family Housing Tax Exempt Bond Financing
2. TEFRA Meeting Minutes