City Council
Staff Report
From: City Manager
Report Type: CONSENT CALENDAR
Lead Department: Administrative Services
Meeting Date: December 15, 2025
Report #:2511-5487
TITLE
Adoption of a Resolution Approving Conduit Financing for Charities Housing Development Corporation, on behalf of El Camino PA, L.P., for the 130-Unit Affordable Multifamily Housing Rental Project Located at 3001 El Camino Real, and Approving the Issuance of Revenue Bonds not to exceed $80 Million by the California Municipal Finance Authority (CMFA) for the Purpose of Financing and Refinancing the Acquisition, Development, Construction and Equipping of Project; CEQA Status: Not a Project
RECOMMENDATION
Staff recommend that City Council adopt a Resolution (Attachment A) approving the issuance of the Bonds by the CMFA for the benefit of El Camino PA, L.P. (the “Borrower”), to provide for the financing of the Project, such adoption is solely for the purposes of satisfying the requirements of TEFRA, and California Government Code Section 6500 (and following).
BACKGROUND
Charities Housing Development Corporation (the “Sponsor”), on behalf of El Camino PA, L.P. (the “Borrower”), has requested that the California Municipal Finance Authority (the “Authority”) issue one or more series of revenue bonds in an aggregate principal amount not to exceed $80 million (the “Bonds”), for the acquisition, development, construction, and equipping of a 130-unit multifamily rental housing development for low-income households (the “Project”), to be located in the City of Palo Alto, California (the “City”), at 3001 El Camino Real.
There is no financial impact to the City from its approval of the issuance of the Bonds. The Authority will act as issuer and perform all necessary legal and administrative responsibilities associated with the financing. The Bonds are special, limited, obligations of the Authority payable solely through the repayment of the loan by the Borrower, which will be used to pay the principal of, and interest on, the bonds. The bonds issued by the Authority are not an obligation of the City or any member of the Authority.
ANALYSIS
In order for all or a portion of the bonds to qualify as tax-exempt bonds, the Federal Tax Equity and Fiscal Responsibility Act of 1982 (“TEFRA”) requires (a) a public hearing commonly referred to as a “TEFRA Hearing”, to be conducted, providing 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 and (b) adoption of a Resolution by the City Council approving the issuance of the Bonds by the Authority for the benefit of the Borrower’s Project.
According to TEFRA requirements, prior to the 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 deemed issuance of the bonds for the financing of the Project.
The public hearing requirement under TEFRA was satisfied by the Authority, which conducted a toll-free telephonic TEFRA hearing on November 20, 2025 at 10:30 A.M., in compliance with Section 147(f) of the Internal Revenue Code of 1986. As cited in the published notice on November 12, 2025 in the Daily Post, the public hearing is an opportunity for all interested persons to speak or to submit written comments concerning the proposals to issue the debt and the nature or location of the facility to be financed.
The next step, because the Project is located within the jurisdiction of the City of Palo Alto, is for City Council to adopt the resolution (Attachment A), approving the issuance of bonds by the Authority for the benefit of the Borrower.
The Bonds are intended to finance the acquisition, development, construction and equipping of the Project, to be located in the City at 3001 El Camino Real. TEFRA approval is a precondition to the use of tax-exempt obligations for the Project, without which financing of the Project as affordable housing would have to be abandoned.
The Authority is a joint powers authority that the City became a member of on April 14, 2008.
The Authority is a public entity, separate and apart from each member executing such agreement. The debts, liabilities and obligations of the Authority do not constitute debts, liabilities or obligations of the members executing such agreement. The Bonds to be issued by the Authority 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.
Outside of adopting the required resolution approving issuance of the bonds, no other participation or activity of the City or the City Council with respect to the issuance of the Bonds will be required. Based on the benefits of the Project to the Palo Alto community and the lack of any financial obligations on the part of the City, staff recommend that Council adopt the attached resolution.
POLICY IMPLICATIONS
Actions recommended in this report are consistent with Council’s prior actions in supporting non-profit financings under the TEFRA (e.g., approving tax-exempt financing through the California Municipal Finance Authority for Wilton Court in 2020 (CMR: 10976).)
FISCAL/RESOURCE IMPACT
The City will incur no financial obligation from approval of the recommendations.
STAKEHOLDER ENGAGEMENT
City staff coordinated with representatives of the Charities Housing Development Corporation and the California Municipal Finance Authority to prepare for this action. A telephonic public hearing was conducted on November 20, 2025 at 10:30 A.M., nothing to report out of the hearing.
ENVIRONMENTAL REVIEW
Action on this item does not constitute a project as defined by the California Environmental Quality Act (CEQA) because adoption of the resolution is a government funding mechanism or fiscal activity which does not involve any commitment to any specific project which may result in a potentially significant physical impact on the environment. CEQA Guidelines section 15378(b)(4).
The 3001 El Camino Real Project itself was evaluated in Initial Study/Mitigated Declaration (MND), which was circulated for public review between February 13, 2023 and March 15, 2023 and approved on June 6, 2023.
ATTACHMENTS
Attachment A: Resolution of the City Council of the City of Palo Alto Approving a Plan of Finance of the California Municipal Finance Authority to Issue and Reissue Revenue Bonds for a Qualified Residential Rental Project for the Benefit of El Camino PA, L.P.
APPROVED BY:
Lauren Lai, Administrative Services Director