City of Sacramento
City Council - 5PM Report
915 I Street Sacramento, CA 95814
www.cityofsacramento.org
File ID: 2022-02071 2/7/2023 Consent Item 6.
Modification of Funding for Oak Park Housing Projects
File ID: 2022-02071
Location: District 5, Represented by Councilmember Maple Recommendation: Adopt a Resolution authorizing the City Manager or the City Manager’s designed to: 1) Close the Oak Park Revolving Loan Fund Program (I02423100) and transfer the $1.1 million from the Rancho San Miguel Market loan repayment proceeds (Fund 2029) to the Innovation and Growth Fund (Fund 2031); 2) return $1 million of the 2005 TAB Oak Park CIP Tax Exempt Bond (Fund 3817) from the FY2022/23 Affordable Housing Project (I02189050) back to fund balance; and 3) allocate $1 million from the Innovation and Growth Fund (Fund 2031) to the FY2022/23 Affordable Housing Project (I02189050).
Contact: Leslie Fritzsche, Economic Investment Manager, (916) 870-8483, [email protected], Office of Innovation and Economic Development Presenter: None
Attachments:
1-Description/Analysis
2-Resolution
Additional Description/Analysis
Issue Detail: In March 2016, the City serving as the Redevelopment Agency Successor Agency transferred the remaining redevelopment bond funds, approximating $11 million, to the City to appropriate to projects that comport with the bond requirements. These bond funds must be spent in the redevelopment area in which the tax increment was generated.
Since that time Council has appropriated these funds to various projects including environmental remediation, lighting and commercial loans. In the case of Oak Park, funds were allocated to the Sierra Health Foundation to implement a workforce initiative for the medical and health-related fields known as the “Oak Park Project.” After many years, the project did not materialize leaving approximately $ 3.7 million of 2005 Oak Park CIP bond funds including both taxable (Fund 3816) and
File ID: 2022-02071 2/7/2023 Consent Item 6.
tax-exempt (Fund 3817) encumbered but unspent.
On October 25, 2022, Council adopted Resolution No. 2022-0328, which allocated $1 million in Oak Park tax-exempt funds from the 2005 TAB to the newly formed FY2022/23 Affordable Housing Project (I02189050) for the development of 10 scattered sites and housing rehabilitation in Oak Park known as “Rock the Block.” The provisions of tax-exempt bonds deem both of these projects as private activity. Each tax-exempt governmental purpose bond issuance has a limitation on how much can be spent on activities considered private activity, most commonly 10% of the issuance amount. In situations where a non-profit entity is the recipient of some or all of the tax-exempt bond proceeds, there is the possibility of a lower threshold of permitted private activity allowed for the bond issuance.
In the case of the 2005 Oak Park CIP tax-exempt governmental purpose bonds, that limit has been exceeded. In order to fund the valuable projects included in the October 25, 2022, report (Report ID 2022-01553), staff is recommending using the loan repayment proceeds from the Oak Park Revolving Loan Fund Program (I02423100). This loan fund program was established to receive the repayment proceeds from the $1.1 million Rancho San Miguel Market loan and that loan has been paid off. These funds are to be used for eligible projects within the Oak Park area.
The use of the $1 million in funding previously allocated to the housing projects in the former Oak Park redevelopment project area will be addressed in a future staff report. This report will come to Council atter a complete analysis of the allocations made to date from the 2005 Oak Park CIP tax- exempt bonds and after factoring in private activity analysis and associated remediation actions.
Policy Considerations: The actions outlined in this report will support the City’s policy of focusing resources to key infill areas such as Oak Park and furthering the development of affordable housing and assisting existing residents with housing rehabilitation needs. These policies are reflected in the City’s 2030 General Plan, Housing Element, Transportation Priorities Plan and Vision Zero Action Plan.
Economic Impacts: None.
Environmental Considerations: The City’s establishment of a funding mechanism for local projects is a fiscal activity and not a project pursuant to CEQA Guidelines section 15378(b)(4) because it does not constitute the commitment to or approval of any particular project that could have a significant effect on the environment. CEQA Guidelines Sections 15378(b)(4); 15060(c) (3).
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Sustainability: The allocations outlined in this report will provide funding to assist with the redevelopment of Oak Park and further sustainability goals for promoting infill development.
Commission/Committee Action: Not applicable.
File ID: 2022-02071 2/7/2023 Consent Item 6.
Rationale for Recommendation: The recommendations included in this report will assist in the development of 10 new residential units and assist with rehabilitation of older housing stock in Oak Park through Habitat for Humanity’s Rock the Block program. The change in funding source is recommended to ensure the tax-exempt bond funds are spent in a legally appropriate way that comports with the IRS regulations.
Financial Considerations: On October 25, 2022, Council adopted Resolution 2022-0328, approving allocations of funds to Affordable Housing Projects and Programs. $1 million of the 2005 Oak Park CIP tax-exempt bonds was allocated to the FY2022/23 Affordable Housing Project (I02189050), which was later deemed ineligible.
In order to fund the Affordable Housing Projects and Programs, staff is recommending closing the Oak Park Revolving Loan Fund Program (I02423100) and transferring the $1.1 million from the Rancho San Miguel Market loan repayment proceeds (Fund 2029) to the Innovation and Growth Fund (Fund 2031), returning $1 million of the 2005 TAB Oak Park CIP Tax-Exempt Bond (Fund 3817) from the FY2022/23 Affording Housing Project (I02189050) back to fund balance and allocating $1 million from the Innovation and Growth Fund (Fund 2031) to the FY2022/23 Affordable Housing Project (I02189050).
Local Business Enterprise (LBE): Not applicable.
RESOLUTION NO.
Adopted by the Sacramento City Council
MODIFICATION OF FUNDING FOR OAK PARK HOUSING PROJECTS
BACKGROUND
A. In March 2016, the City serving as the Redevelopment Agency Successor Agency transferred the remaining redevelopment bond funds, approximating $11 million, to the City to appropriate to projects that comport with the bond requirements.
B. Since that time, allocations have been made utilizing these funds, particularly in Oak Park where Oak Park redevelopment bond funds have been allocated to projects resulting in the acquisition of a building on Alhambra Boulevard, development of the San Miguel Market and assisting in funding for the Eden Housing senior residential project on Stockton Boulevard.
C. In October 2022, $1 million in 2005 Oak Park Tax-Exempt Tax Allocation Bond Funds (Fund 3817) was allocated to the FY 2022/23 Affordable Housing Project Fund (I02189050) for two Oak Park housing projects with Habitat for Humanity (“Habitat”) for construction of new affordable housing on 10 scattered sites and assisting in the home repair “Rock the Block” program.
D. This allocation needs to be modified to comply with the tax regulations for the use of the 2005 Oak Park Tax-Exempt Tax Allocation Bond Funds.
E. The City established the Oak Park Revolving Loan Fund Program (I02423100) to receive the repayment proceeds from the $1.1 million Rancho San Miguel Market loan. That loan has been paid off, and there is a now a $1.1 million balance that can be used for eligible projects within the Oak Park area, including Habitat’s Rock the Block program.
BASED ON THE FACTS SET FORTH IN THE BACKGROUND, THE CITY COUNCIL RESOLVES AS FOLLOWS:
Section 1. The City Manager or the City Manager’s designee is authorized to close the Oak Park Revolving Fund Loan Program (I02423100) and transfer $1.1 million from the Rancho San Miguel Market loan repayments proceeds (Fund 2029) to the Innovation and Growth Fund (Fund 2031).
Section 2. The City Manager or the City Manager’s designee is authorized to return $1 million of the 2005 Oak Park Tax Exempt Bond (Fund 3817) from the FY 2022/23 Affordable Housing Project (I02189050) back to fund balance.
Section 3. The City Manager or the City Manager’s designee is authorized to allocate $1 million from the Innovation and Growth Fund (Fund 2301) to the FY 2022/23 Affordable Housing Project(I02189050).