City of Sacramento
City Council - 2PM Report
915 I Street Sacramento, CA 95814
www.cityofsacramento.org
File ID: 2023-01474 11/14/2023 Discussion Item 5.
Approval of Tax-Exempt Bonds For 1212 Village Apartments File ID: 2023-01474
Location: 1212 Del Paso, District 2, Represented by Councilmember Loloee Recommendation: Adopt a Housing Authority Resolution a) indicating the intention of the Housing Authority of the City to issue up to $40,000,000 in tax-exempt mortgage revenue bonds to provide acquisition, construction, and permanent financing for the Project and b) authorizing the Housing Authority to apply to the California Deby Limit Allocation Committee (CDLAC) for allocation authority to issue bonds.
Contact: Christine Weichert, Director, Development Finance, (916) 440-1353, [email protected]; Whitney Hinton, Program Manager, Development Finance (916) 440-1325, [email protected], Sacramento Housing and Redevelopment Agency
Presenter: Ryan Un, Housing Finance Analyst, (916) 449-1258, [email protected], Sacramento Housing and Redevelopment Agency
Attachments:
1-Description/Analysis
2-Housing Authority Resolution
3-Vicinity Map
4-Project Rendering
Description/Analysis
Issue Detail: 1212 Village Apartments is a new construction affordable housing development located on one-acre of vacant land at 1212 Del Paso Boulevard. The site was purchased by Volunteers of America National Services (VOANS) from Sacramento Redevelopment Successor Agency in March 2018. A vicinity map is included as Attachment 3.
Volunteers of America National Services (VOANS) have applied to Sacramento Housing and Redevelopment Agency (SHRA) for the issuance of up to $40 million in tax-exempt mortgage revenue bonds. The California Debt Allocation Committee requires that an “inducement” resolution be adopted by the entity proposing to issue the bonds. Inducement at this time will allow the Developer to maintain the current Difficult to Develop Area (DDA) / Qualified Census Tracts (QCTs)
File ID: 2023-01474 11/14/2023 Discussion Item 5.
designation which is scheduled to change January 1, 2024. Staff recommends that the Housing Authority adopt a resolution to indicate its intent to issue bonds to finance the construction and permanent financing of the Project. Adoption of the resolution will not bind the Housing Authority to issue bonds until and unless all other necessary actions are taken in accordance with all applicable laws.
Project Description: 1212 Village Apartments is a 75-unit family affordable housing development proposed on an approximately 1-acre lot at 1212 Del Paso Boulevard in the Uptown District of North Sacramento. The property is currently a vacant lot located less than a quarter mile from the Sacramento Regional Transit light rail stops on Del Paso Boulevard. 1212 Village will consist of a 4- story building, including 9 studios, 25 one bedroom, 21 two bedroom, and 20 three-bedroom units.
Laundry rooms will be located on the second, third, and fourth floors. The ground floor of the Project will include a retail space facing Del Paso Boulevard, three living units, managerial offices, a conference room, a computer room, a dog wash, and a community lounge with a commercial kitchen.
The Project also features a large open courtyard with a playground and bike parking. A project rendering is included as attachment 4.
Project Developer: Volunteers of America National Services (VOANS) established 1212 Village Sacramento LLC that will develop and own 1212 Village Apartments. VOANS is a nonprofit organization that develops affordable housing across the nation, including managing several projects in the Sacramento region.
Property Management: The Project will be managed by Volunteers of America - Northern California and Northern Nevada (VOA-NCNN) that services over 10 properties with over 800 units in California and Nevada. Pending review by SHRA staff.
Resident Services: Resident Services will be provided by Volunteers of America-Northern California/Northern Nevada (VOA-NCNN) that has over 17 years providing supportive services at various affordable housing programs. VOA-NCNN will provide a minimum of 20 hours per week of onsite resident services.
Case Management: Services will include case management, housing retention services and supportive services, including but not limited to referral services, crisis intervention, transportation assistance for appointments, and personal financial management/budgeting assistance. Further on- site health and wellness services will be provided through Elica Health and nursing interns via Sacramento State University. These services will total 432 hours annually. Pending review by SHRA staff.
Project Based Vouchers: In April 2023, the Developer of 1212 Village Apartments was awarded 19 Project Based Vouchers (PBV) by SHRA to benefit homeless households.
Project Based Vouchers are awarded in accordance with the SHRA’s administration of the Housing
File ID: 2023-01474 11/14/2023 Discussion Item 5.
Choice Voucher Program as authorized by section 8(o)(13) of the U.S. Housing Act of 1937 (42 U.S.C. 1437f(o)(13)) and is based on the Public Housing Authority’s Annual Plan. The Plan is approved annually by the federal Department of Housing and Urban Development (HUD).
Project Financing: This project is anticipated to be financed with tax-exempt bond financing, state tax credits, SHRA gap financing, Affordable Housing Program (AHP) loan from the Federal Home Loan Bank of San Francisco, deferred developer fee, and a conventional loan.
Bond Financing: As a public entity, the Housing Authority can issue tax-exempt bonds, the proceeds of which can provide acquisition, construction, and permanent financing for multi-family housing projects. Interest paid on the bonds is exempt from federal and state income tax, so bondholders will accept a below-market yield from the bonds. These savings are, in turn, passed on to the project owner in the form of a below-market rate loan, with interest rates approximately one to two percent below prevailing market rates.
The bonds for the project are intended to be privately placed. The Agency will report back to the Housing Authority on the placement and the actual bond amounts with the request for final approval of the bond documents. The law firm of Orrick, Herrington, and Sutcliffe LLP will serve as bond counsel to the Housing Authority.
Project Inducement:
Low-Income Set-Aside Requirements: As a condition of receiving LIHTC and the benefits of tax- exempt bond financing, federal law requires that units be set aside for targeted income groups.
Income restrictions from LIHTC financing require that 20 percent of the units have rents that are affordable to households with income up to 50 percent of Area Median Income (AMI). SHRA further requires at least 15 percent of the units have rents that are affordable to households with income up to 50 percent AMI and at least 5 percent of the units have rents that are affordable to households with income up to 30 percent AMI, based on financial feasibility. 1212 Village Apartments
Affordability Restrictions (55 years) Units % of Units
Extremely Low Income (30% AMI) 19 26%
Very-Low Income (40% AMI) 16 21%
Very-Low Income (50% AMI) 22 30%
Low Income (60% AMI) 17 22%
Manager Unit (1Bedroom) 1 1%
Total 75 100%
*The tenant rent will not exceed 30% of the household adjusted gross income with Project Based
File ID: 2023-01474 11/14/2023 Discussion Item 5.
Vouchers
Policy Considerations: The recommended actions for the 1212 Village development are consistent with a) SHRA’s approved Multifamily Lending and Mortgage Revenue Bond Policies, priority 2; b) the 2021-2029 Housing Element, which encourages the provision of a variety of quality housing types to encourage neighborhood stability, including options for extremely low-income households; and c) the Sacramento Promise Zone Plans and Goals, Sustainably Built Community sub-goal to increase housing types and transit growth to promote livability and connectivity within the Promise Zone.
Economic Impacts: This multifamily residential project is expected to create 530.13 total jobs (297.62 direct jobs and 232.51 through indirect and induced activities) and create $46,502,449 in total economic output ($28,578,453 of direct output and $17,923,996 indirect output and induced activities).
The indicated economic impacts are estimates calculated using a calculation tool developed by the Center for Strategic Economic Research (CSER). CSER utilized the IMPLAN input-output model (2009 coefficients) to quantify the economic impacts of a hypothetical $1 million of spending in various construction categories within the City of Sacramento in an average one-year period. Actual impacts could differ significantly from the estimates and neither the City of Sacramento nor CSER shall be held responsible for consequences resulting from such differences.
Environmental Considerations:
California Environmental Quality Act (CEQA): CEQA review is underway for the proposed project, and it is anticipated it will not result in any significant impacts of noise, air quality or water quality.
National Environmental Policy Act (NEPA): NEPA review is underway for the proposed project, and it is anticipated that the review will result in a Finding of No Significant Impact. No choice limiting action will be taken prior to completing NEPA review.
Sustainability: The proposed Project has been reviewed for consistency with the goals, policies, and targets of the 2030 General Plan. If approved, this project will advance the following goal, policy, and target of Goal H-1.1.1 Sustainable Housing Practices specifically by developing housing and neighborhoods to be environmentally sustainable.
Commission/Committee Action: Not applicable.
Rationale for Recommendation: The actions recommended in this report support the Agency’s ability to continue to fulfill its mission of providing a range of affordable housing opportunities in the City and are consistent with the Agency’s approved Multifamily Lending and Mortgage Revenue Bond
File ID: 2023-01474 11/14/2023 Discussion Item 5.
Policies, and the City of Sacramento 2021-2029 Housing Element as part of General Plan Sacramento’s 2035 General Plan.
Financial Considerations: SHRA will receive a one-time issuance fee of 0.25 percent of the bond amount, which is payable at bond closing, and annual payment for monitoring the regulatory restrictions and administration of the bonds in the amount of 0.125 percent of the bond amount. The Developer will be responsible for payment of all costs and fees relating to the bonds. Mortgage revenue bonds do not represent a financial obligation of SHRA, Housing Authority, or City of Sacramento.
Local Business Enterprise (LBE): Minority and Women’s Business Enterprise requirements and Section 3 considerations will be applied to all activities to the extent required by the federal funding and in accordance with SHRA’s Section 3 Economic Opportunity Plan.
RESOLUTION NO. 2023-____
Adopted by the Housing Authority of the City of Sacramento
on the date of
1212 VILLAGE: A RESOLUTION OF THE HOUSING AUTHORITY OF THE CITY OF
SACRAMENTO DECLARING INTENTION TO REIMBURSE EXPENDITURES FROM
THE PROCEEDS OF TAX-EXEMPT OBLIGATIONS AND DIRECTING CERTAIN
ACTIONS
BACKGROUND
A. The Housing Authority of the C ity of Sacramento (the "Authority") intends to issue tax-exempt obligations (the "Obligations") for the purpose, among other things, of making a loan to 1212 Village Sacramento LP, or a limited partnership or a limited liability company related to or formed by Volunteers of America National Services (the "Developer"), the proceeds of which shall be used by the Developer to finance the acquisition, construction and development of a 75-unit multifamily housing residential facility to be located at 1212 Del Paso Boulevard, Sacramento, California (the “Project”).
B. United States Income Tax Regulations section 1. 150-2 provides generally that proceeds of tax -exempt debt are not deemed to be expended when such proceeds are used for reimbursement of expenditures made prior to the date of issuance of such debt unless certain procedures are followed, among which is a requirement that (with certain exceptions), prior to the payment o f any such expenditure, the issuer must declare an intention to reimburse such expenditure.
C. It is in the public interest and for the public benefit that the Authority declare its official intent to reimburse the expenditures referenced herein.
BASED ON THE FACTS SET FORTH IN THE BACKGROUND, THE HOUSING AUTHORITY OF THE CITY OF SACRAMENTO RESOLVES AS FOLLOWS:
Section 1. The Authority intends to issue the Obligations for the purpose of paying the costs of financing the acquisition, construction, and de velopment of the Project.
Section 2. The Authority hereby declares that it reasonably expects that a portion of the proceeds of the Obligations will be used for reimbursement of expenditures for the acquisition, construction and development of the
Project that are paid before the date of initial execution and delivery of the Obligations.
Section 3. The maximum amount of proceeds of the Obligations to be used for reimbursement of expenditures for the acquisition, construction and development of the Project that are paid before the date of initial execution and delivery of the Obligations is not to exceed $40,000,000.
Section 4. The foregoing declaration is consistent with the budgetary and financial circumstances of the Authority in that there are no fund s (other than proceeds of the Obligations) that are reasonably expected to be (i) reserved, (ii) allocated or (iii) otherwise set aside, on a long -term basis, by or on behalf of the Authority, or any public entity controlled by the Authority, for th e expen ditures for the acquisition, construction and development of the Project that are expected to be reimbursed from the proceeds of the Obligations.
Section 5. The Developer shall be responsible for the payment of all present and future costs in connection with the issuance of the Obligations, including, but not limited to, any fees and expenses incurred by the Authority in anticipation of the iss uance of the Obligations, any fees required by the California Debt Limit Allocation Committee (“CDLAC”) the cost of printing any official statement, rating agency costs, bond counsel fees and expenses, underwriting discount and costs, trustee fees and expense, and the costs of printing the Obligations. The payment of the principal, redemption premium, if any, and pu rchase price of and interest on the Obligations shall be solely the responsibility of the Developer. The Obligations shall not constitute a debt or obligation of the Authority.
Section 6. The appropriate officers or the staff of the Authority are hereby authorized, for and in the name of and on behalf of the Authority, to make an application to CDLAC for an allocation of private activity bonds for the financing of the Project.
Section 7. The adoption of this Resolution shall not obligate (i) the Autho rity to provide financing to the Developer for the acquisition, construction and development of the Project or to issue the Obligations for purposes of such financing; or (ii) the Authority, of or any departm ent of the Authority or the Ci ty of Sacra mento t o approve any application or request for, or take any other action in connection with, any environmental, General Plan, zoning or any other permit or other action necessary for the acquisition, construction, development or operation of the Project.
Section 8. This resolution shall take effect immediately upon its adoption.
CHANGING LIVES
1212 Village
Arden Way
- 1212 Village (1212 Del Paso Blvd.) 0
Feet
150
Johnston Rd
300
Attachment 3
SHRAGIS
October 24, 2023