City of Sacramento
City Council - 2PM Report
915 I Street Sacramento, CA 95814
www.cityofsacramento.org
File ID: 2023-01357 10/24/2023 Consent Item 2.
Membership in California Public Finance Authority in Furtherance of the St. Anton Ascent Affordable Housing Project
File ID: 2023-01357
Location: Citywide
Recommendation: 1) Adopt a Resolution authorizing the City to join the California Public Finance Authority; 2) adopt a Resolution authorizing the City Manager or City Manager’s designee to a) execute a memorandum of understanding with the California Public Finance Authority and Ascent Affordable, LP, related to the St. Anton Ascent affordable housing project, and b) deposit all funds received from the California Public Finance Authority under the memorandum of understanding in the Office of Innovation and Economic Development operating budget.
Contact: Michael Jasso, Assistant City Manager, (916) 808-1380, [email protected]; Leslie Fritzsche, Economic Investment Manager, (916) 808-5450, [email protected], City Manager’s Office of Innovation and Economic Development Presenter: None.
Attachments:
1-Description/Analysis
2-List of CPFA Members
3-CPFA Resolution
4-Exhibit A to CPFA Resolution- Joint Exercise of Powers Agreement 5-City Resolution
6-Exhibit A to City Resolution - Memorandum of Understanding Description/Analysis
Issue Detail: In May 2023, Ascent Affordable, LP, a California limited partnership of which St. Anton Communities, LLC is a general partner, received a $30 million tax exempt mortgage revenue bond allocation from the California Debt Limit Allocation Committee for construction of a 120-unit affordable housing project known as St. Anton Ascent to be located at 3561 Del Paso Road in Natomas (“ Project”). The proposed issuer for the bonds for the project is a joint powers authority known as the California Public Finance Authority (“CPFA”). Because the Project is within the City, CPFA cannot issue the bonds unless the City becomes a member of CPFA. Additionally, under federal law (26 U.S.C. §147(f)), CPFA may not issue the bonds, which are private-activity bonds, unless the City Council approves the issuance after holding a public hearing for which reasonable public notice is given (“TEFRA hearing”.) The TEFRA hearing is the subject of a related staff report being brought
File ID: 2023-01357 10/24/2023 Consent Item 2.
forward by SHRA. This report is seeking Council approval to join CPFA and to sign the joint exercise of powers agreement required for the City to become a member of CPFA.
Ascent Affordable, LP, and CPFA have agreed to provide more resident services at, and allow more oversight of, the Project than they originally intended. Ascent Affordable, LP, will provide 17 hours per week of resident services for the tenants, 8 of which will be designed as after-school programming for youth within the Project. CPFA will conduct annual project audits and provide copies of the audits to the City. In addition, the City will be named as a third-party beneficiary in the bond regulatory agreement. In return, the City will provide Ascent Affordable, LP, with two years of an annual community benefit fee that the City actually receives from CPFA as part of its community benefit program. These terms are included in the attached memorandum of understanding. This report is also seeking Council approval to sign the memorandum of understanding.
Policy Considerations: The Project is within the City, so CPFA is not authorized to issue the bonds unless the City becomes a member of CPFA.
The related staff report for the TEFRA hearing was prepared by SHRA in accordance with the approved Multi-family Lending Guidelines regarding projects utilizing bond issuers other than SHRA.
Economic Impacts: None.
Environmental Considerations:
California Environmental Quality Act (“CEQA”): This report does not concern a project requiring review under the California Environmental Quality Act, consistent with CEQA Guidelines sections 15060(c)(3) and 15378(b)(5), because it relates to administrative or organizational activity of the City that will not result in direct or indirect physical changes in the environment, and CEQA Guidelines section 15061(b)(3), because it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment.
Sustainability: Not applicable.
Commission/Committee Action: Not applicable.
Rationale for Recommendation: The Council has established a priority for increasing the supply of affordable housing within the City. Joining the CPFA will allow Ascent Affordable, LP, to move ahead with the CDLAC allocation that it has secured and proceed with construction of the Project. The Project does not involve any City or SHRA funding.
The CPFA is a public agency established under the Joint Exercise of Powers Act (Gov. Code., §6500 et seq.) CPFA was formed to promote economic, cultural and community development opportunities throughout the state through the issuance of taxable and tax-exempt bonds. CPFA was created by Kings County and the Kings County Housing Authority by entering into a joint exercise of powers agreement in 2015 (the “JPA Agreement”). CPFA currently has 55 members across the state including the cities of Folsom, Roseville, and Rancho Cordova. A list of members is included as Attachment 3. Since forming, CalPFA has issued $2.9 billion for 66 projects including financing 46 multifamily housing properties for low-income seniors and families.
File ID: 2023-01357 10/24/2023 Consent Item 2.
The JPA Agreement expressly provides that CalPFA is a public entity, separate and apart from the members, and the debts, liabilities, and obligations of CalPFA do not constitute debts, liabilities, or obligations of the member. The JPA Agreement also expressly provides that any member may withdraw from the agreement upon written notice to the Board of Directors of CalPFA.
All bond issues conducted by CPFA are conduit debt obligations solely of CPFA, not a City debt so the City will incur no financial obligation by becoming a member of the CFPA.
Financial Considerations: The Project does not include any City funding and there is no cost associated with joining CPFA. Participation by the City in the CalPFA will not impact the City’s appropriations limits and will not constitute any type of indebtedness by the City.
Under the terms of the memorandum of understanding, CPFA will provide 10% of its annual administrative fee derived from the Project to the City for the term of the bonds. These funds will be deposited into the Office of Innovation and Economic Development operating budget and will be used in part to satisfy the City’s obligation under the memorandum of understanding.
Local Business Enterprise (LBE): Not applicable.
CalPFA Non-Charter Member Agency Type
Kings County
Kings County Housing Authority
County of Marin County
Town of Los Altos Hills City
City of Inglewood City
City of Compton City
City of Santa Ana City
City of Stockton City
City of Norco City
Contra Costa County County
City of Antioch City
City of Garden Grove City
City of Cathedral City City
City of Camarillo City
City of Los Angeles City
City of Vallejo City
City of Livermore City
City of Redwood City City
City of Santa Clarita City
County of Riverside County
City of Claremont City
City of Rocklin City
County of San Diego County
City of San Bernardino City
City of Rohnert Park City
City of Hesperia City
City of Folsom City
City of Santa Cruz City
City of Fresno City
City of Woodland City
City of Sunnyvale City
City of Coronado City
City of Roseville City
City of Santa Rosa City
City of San Jacinto City
County of Sonoma County
City of Montebello City
City of Hayward City
City of Hercules City
City of Santa Clara City
City of Colton City
City of Napa City
City of Elk Grove City
City of Irvine City
County of San Bernardino County
City of Palmdale City
City of Gilroy City
City of Berkeley City
City of Corona City
City of Perris City
City of Glendale City
County of Kern County
City of Rancho Cordova City
City of Riverside City
City Simi Valley City
RESOLUTION NO. 2023-####
Adopted by the Sacramento City Council
October 24, 2023
APPROVING, AUTHORIZING, AND DIRECTING EXECUTION OF A JOINT EXERCISE
OF POWERS AGREEMENT RELATING TO THE CALIFORNIA PUBLIC FINANCE
AUTHORITY
BACKGROUND
A. Under the Joint Exercise of Powers Act, codified as section 6500 and following of the Government Code, certain public agencies (the “Members”) have entered into a Joint Exercise of Powers Agreement dated as of May 12, 2015 (the “Agreement”), to create the California Public Finance Authority (the “Authority”). The purpose of the Authority is to exercise powers common to the Members, including the power to issue bonds, notes, or other evidences of indebtedness, for the purpose of promoting economic, cultural, and community development.
B. The City Council has determined that it is in the public interest and for the public benefit that the City become a Member of the Authority in order to facilitate the promotion of economic, cultural, and community development activities within the City, including the financing of projects by the Authority.
C. The Agreement has been filed with the City Clerk, and the City Council of the City, with the assistance of its staff, has reviewed it.
BASED ON THE FACTS SET FORTH IN THE BACKGROUND, THE CITY COUNCIL RESOLVES AS FOLLOWS:
Section 1. The Agreement is hereby approved, and the City Manager or the City Manager’s designee is hereby authorized and directed to execute the Agreement, with such changes as the City Manager or the City Manager’s designee may approve, and the City Clerk or the City Clerk’s designee is hereby authorized and directed to attest thereto; the Agreement is attached as Exhibit A and is part of this resolution.
Section 2. The City Manager or the City Manager’s designee, the City Clerk or the City Clerk’s designee, and all other proper officers and officials of the City are hereby authorized and directed to execute such other agreements, documents and certificates, and to perform such other acts and deeds, as may be necessary or convenient to affect the purposes of this Resolution and the transactions herein authorized.
Section 3. The City Clerk shall forward a certified copy of this resolution and an originally executed copy of the Agreement to:
Kathleen Jacobe
Orrick, Herrington & Sutcliffe LLP
400 Capital Mall, Suite 3000
Sacramento, California 95814
Section 4. This resolution takes effect immediately upon its passage.
Table of Contents:
Exhibit A -- Agreement
RESOLUTION NO. 2023 –####
Adopted by the Sacramento City Council
October 24, 2023
ST. ANTON ASCENT AFFORDABLE HOUSING PROJECT: APPROVAL OF
MEMORANDUM OF UNDERSTANDING AND ESTABLISHMENT OF CPFA
COMMUNITY BENEFIT PROJECT
BACKGROUND
A. In May 2023, Ascent Affordable, LP, received a $30 million tax exempt mortgage revenue bond allocation from the California Debt Limit Allocation Committee for construction of a 120-unit affordable housing project known as St. Anton Ascent to be located at 3561 Del Paso Road in Natomas (the “Project”).
B. The proposed issuer for the bonds for the Project is a joint-powers authority known as the California Public Finance Authority (“CPFA”).
C. Because the Project is within the City, CPFA cannot issue the bonds unless the City becomes a member of CPFA. Additionally, under federal law (26 U.S.C. §147(f)), CPFA may not issue the bonds, which are private-activity bonds, unless the City Council approves the issuance after holding a public hearing for which reasonable public notice is given (“TEFRA hearing”.)
D. Ascent Affordable, LP, and CPFA have agreed to provide more resident services at, and allow more oversight of, the Project than they had originally intended; these terms are included in the proposed memorandum of understanding between the City, Ascent Affordable, LP, and CPFA.
E. CPFA has an established community benefit program through which it allocates 10% of its annual administrative fee collected during the term of the bonds issued by CPFA to the public agency that conducts a TEFRA hearing for a CPFA affordable housing project; the purpose of the payment is to offset the cost of conducting the TEFRA hearing and the cost of public services to the CPFA project over the life of the financing.
F. Under the terms of the proposed memorandum of understanding, CPFA will provide the City with 10% of the annual administrative fee that it actually collects, and the City will provide two years of the annual administrative fee that it actually receives from CPFA to Ascent Affordable, LP.
BASED ON THE FACTS SET FORTH IN THE BACKGROUND, THE CITY COUNCIL RESOLVES AS FOLLOWS:
Section 1. The City Manager or the City’s Manager’s designee is authorized to execute the memorandum of understanding between the City, Ascent Affordable, LP, and CPFA; the memorandum is attached as Exhibit A and is part of this resolution.
Section 2. The City Manager or the City Manager’s designee is authorized to deposit all funds received from CPFA under the memorandum of understanding into the Office of Innovation and Economic Development operating budget.
Table of Contents:
Exhibit A: Memorandum of Understanding