City of Sacramento
City Council - 2PM Report
915 I Street Sacramento, CA 95814
www.cityofsacramento.org
File ID: 2024-02072 3/11/2025 Public Hearing Item 2.
(City Council/Housing Authority) Tax Equity and Fiscal Responsibility Act Hearing and Approval of Issuance of Tax-Exempt Bonds Obligations for Sakura [Noticed on 02/28/2025] File ID: 2024-02072
Location: 2000 16th Street, District 4
Recommendation: Conduct a public hearing, and upon conclusion: 1) adopt a City Council Resolution that: a) indicates the City has conducted a Tax Equity and Fiscal Responsibility Act (TEFRA) public hearing related to the proposed development of Sakura; and b) approves the issuance of Tax-Exempt Bonds by California Public Finance Authority; and 2) adopt a Housing Authority Resolution which authorizes the Housing Authority to accept an Underwriting TEFRA Fee for the Project.
Contact: Christine Weichert, Director of Development Finance, (916) 440-1353, [email protected], Sacramento Housing and Redevelopment Agency
Presenter: Whitney Hinton, Program Manager of Development Finance, (916) 440-1325, [email protected], Sacramento Housing and Redevelopment Agency Attachments:
1-Description/Analysis
2-City Council Resolution
3-Housing Authority Resolution
4-Vicinity Map
5-Project Rending
6-Site Plan
7-Residential Project Summary
8-Cash Flow Proforma
9-Maximum Income and Rent Limits
Description/Analysis
Issue Detail: This report will serve as the required public Tax Equity and Fiscal Responsibility Act (TEFRA) hearing for Sakura (Project) to approve the issuance of tax-exempt bonds by the California Public Finance Authority (CalPFA) not to exceed $45 million and approval for the Housing Authority of the City of Sacramento to receive an Underwriting TEFRA Fee. The Project received approval from
File ID: 2024-02072 3/11/2025 Public Hearing Item 2.
the California Debt Limit Allocation Committee (CDLAC) for Mortgage Revenue Bonds on December 11, 2024.
The Sacramento Housing and Redevelopment Agency’s (SHRA), acting as the Housing Authority, is the primary issuer of the Mortgage Revenue Bonds (Bonds) for affordable housing developments within the City of Sacramento. In limited situations, SHRA’s Multifamily Lending and Mortgage Revenue Bond Policies (adopted by the City Council and City Housing Authority) permit alternative issuers. The Bonds provide below-market-rate financing for qualified rental projects and preserve the supply of affordable rental housing.
Since CalPFA, not SHRA, is the Bond issuer for this project, there is no local oversite ensuring necessary project due diligence or financial feasibility. SHRA will not be able to enforce the delivery of quality property management or resident services; nor will SHRA perform annual onsite inspections of units, common areas, and amenities. In short, SHRA will not have the obligation or authority to monitor the Project. This will eliminate SHRA’s ability to conduct compliance visits, investigate resident concerns, or replace the property management company if needed.
Regardless of the issuer, the TEFRA states the issuance of bonds must be approved by representatives of the government unit with jurisdiction over the area in which the project is located.
The purpose of the public hearing is to provide an opportunity for interested people to express their views on the proposed bond issuance and the nature and location of the project.
Development: Sakura is a 134-unit affordable housing development proposed on 0.8 acres located at 2000 16
th Street in the City of Sacramento. This site is close to amenities such as a grocery store, park, pharmacy, school, and a light rail station. A vicinity map, project rendering, and site plan are included in Attachments 4, 5, and 6.
The Project will comprise a five-story building with 2,000 square feet of ground floor commercial space and 134 units, consisting of 68 studios and 65 one-bedroom units and one onsite manager unit. Amenities on site will include 20 parking spaces, a dog run, storage for up to 70 bikes, laundry rooms on all five floors, multipurpose community room, ground floor courtyard, and free project-wide Wi-Fi made possible through partnership with the Sacramento Employment and Training Agency (SETA).
In general, the project meets the minimum construction standards in SHRA’s Multifamily Lending and Mortgage Revenue Bond Policies adopted by the City Council and Housing Authority. The Developer’s (Capital Area Community Development Corporation and Mutual Housing California) scope of work does not include the following: web-based security camera, durable materials for cabinets and drawers, high quality flooring, and window coverings; however, the Developer has stated that these items will be addressed during construction.
File ID: 2024-02072 3/11/2025 Public Hearing Item 2.
The Project will be restricted to the following income levels:
Sakura Affordability (55 years) Total % of Units
Extremely Low Income (30% AMI) 34 25%
Very-Low Income (50% AMI) 31 24%
Low Income (60% AMI) 68 50%
Manager Unit (Exempt) 1 1%
TOTAL 134 100%
Developer: The Project will be jointly developed by a collaboration with Capitol Area Community Development Corporation (CACDC) and Mutual Housing California (MHC).
CACDC is the nonprofit affiliate of Capitol Area Development Authority (CADA). Established in 1978, CADA is a joint powers authority formed through a partnership between the State of California and the City of Sacramento. CADA manages 779 rental housing units with approximately 25% designated as affordable for low- and very low-income households.
MHC is a nonprofit public benefit corporation dedicated to developing affordable housing. They own and operate 1,463 affordable housing units in the Sacramento area.
Property Management: Mutual Housing Management (MHM) will manage the Project. MHM manages 19 properties in California. SHRA staff have reviewed MHM’s qualifications and management plan and have found that they meet SHRA requirements.
Resident Services: Mutual Housing is committed to offering services at Sakura for at least 20 years.
There will be a full time Resident Services Coordinator.
Project Financing: The financing structure of the Project includes Low Income Federal Tax Credits, Tax Exempt Bonds, Affordable Housing and Sustainable Communities (AHSC) Program funds, a CADA loan, CADA Seller Carryback loan for the land, and Deferred Developer Fee. A Project Summary and Cash Flow Proforma are included as attachments 7 and 8.
Bond Issuer: CalPFA was created by Kings County and The Kings County Housing Authority in May 2015. CalPFA’s governing board is comprised of the members of the Board of Supervisors of Kings County. CalPFA promotes economic, cultural, and community development opportunities through the issuance of tax-exempt and taxable bonds throughout California.
Policy Considerations: The recommended actions are consistent with priority 2(iii) - New Construction Workforce, as set forth in SHRA’s Multifamily Lending and Mortgage Revenue Bond Policies. The actions are also consistent with the 2021-2029 Housing Element, Policy H-1.4,
File ID: 2024-02072 3/11/2025 Public Hearing Item 2.
“Facilitate Infill Housing Development,” Policy H-8.3, “Encourage Accessible Housing Near Transit and Amenities,” and Policy H-2.3 “Assist in the Development of Affordable Housing.” Economic Impacts: This multifamily residential project is expected to create 400.24 total jobs (226.80 direct jobs, and 173.44 jobs through indirect and induced activities) and create $33,353,000 in total economic output ($20,330,731 of direct output and another $13,022,268 of output through indirect 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): The proposed project is exempt from the CEQA pursuant to the Public Resources Code (PRC) Section 21155.4. National Environmental Policy Act (NEPA): Not applicable as there is an absence of federal funds.
Sustainability: The proposed Project has been reviewed for consistency with the goals, policies and targets of the Sustainability Master Plan and the 2030 General Plan. If approved, these projects will advance the following goal, policy and target of goal number one - Energy Independence, specifically by reducing the use of fossil fuels and providing long-term affordable and reliable energy.
Commission/Committee Action: At its March 05, 2025, meeting, it is anticipated that the Sacramento Housing and Redevelopment Commission will recommend approval of the attached resolutions. In the event it fails to do so, Staff will advise the Council at the meeting.
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 SHRA’s approved Multifamily Lending and Mortgage Revenue Bond Policies, and the City of Sacramento’s 2013-2021 Housing Element as part of Sacramento’s 2035 General Plan.
Financial Considerations: 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 SHRA’s approved Multifamily Lending and Mortgage Revenue Bond Policies, and the City of Sacramento’s 2013-2021 Housing Element as part of Sacramento’s 2035 General Plan.
File ID: 2024-02072 3/11/2025 Public Hearing Item 2.
LBE - M/WBE and Section 3 requirements: The items discussed in this report have no M/WBE or Section 3 impact; therefore, M/WBE and Section 3 considerations do not apply.
RESOLUTION 2025-
Adopted by the Sacramento City Council
March 11, 2025
Approving the Issuance by the California Public Finance Authority of Exempt Facility Bonds for the Qualified Residential Rental Project in an Aggregate Principal Amount not to Exceed $45 Million for the Purpose of Financing the Acquisition and Construction of Sakura and Certain Other Matters Relating Thereto
BACKGROUND
A. 2000 16th St Associates, L.P., a California limited partnership or a partnership of which 2000 16th St CACDC Housing Association, LLC (Developer) or a related person to the Developer is the general partner, has requested that the California Public Finance Authority (Authority) adopt a plan of financing providing for the issuance of exempt facility bonds for a qualified residential rental project pursuant to Section 142(a)(7) of the Internal Revenue Code of 1986 (the Code) in one or more series issued from time to time, including bonds issued to refund such exempt facility bonds in one or more series from time to time, and at no time to exceed $45 million in outstanding aggregate principal amount (Bonds), to finance or refinance the acquisition, construction, improvement and equipping of a multifamily rental housing project located at 2000 16 th St, Sacramento, California (Project).
B. The Project is located within the City of Sacramento (City).
C. The City Council of the City (City Council) is the elected legislative body of the City and is the applicable elected representative under Section 147(f) of the Code.
D. Pursuant to Section 147(f) of the Code, the City Council has, following notice duly given, held a public hearing regarding the issuance of the Bonds, and now desires to approve the issuance of the Bonds by the Authority.
E. The City Council understands that its actions in holding this public hearing and in approving this Resolution do not obligate the City in any manner for payment of the principal, interest, fees, or any other co sts associated with the issuance of the Bonds and said City Council expressly conditions its approval of this Resolution on that understanding.
BASED ON THE FACTS SET FORTH IN THE BACKGROUND, THE CITY COUNCIL RESOLVES AS FOLLOWS:
SECTION 1.
All evidence presented having been duly considered, the findings, including environmental findings regarding this action, as stated above, are found to be true and accurate and are hereby approved adopted.
SECTION 2.
The City Council of the City of Sacramento hereby finds, determines, and declares that issuance not to exceed $45 million by the Authority of the Bonds for the purposes described above is hereby approved.
RESOLUTION 2025-
Adopted by the Housing Authority of the City of Sacramento
March 11, 2025
Acceptance of an Underwriting Tax Equity and Fiscal Responsibility Act (TEFRA) Fee
BACKGROUND
A. 2000 16th St Associates, L.P., a California limited partnership or a partnership of which 2000 16th St CACDC Housing Association, LLC (Developer) or a related person to the Developer is the general partner, has requested that the California Pub lic Finance Authority (Authority) adopt a plan of financing providing for the issuance of exempt facility bonds for a qualified residential rental project pursuant to Section 142(a)(7) of the Internal Revenue Code of 1986 (the Code) in one or more series i ssued from time to time, including bonds issued to refund such exempt facility bonds in one or more series from time to time, and at no time to exceed $45 million in outstanding aggregate principal amount (Bonds), to finance the acquisition, construction, improvement and equipping of a multifamily rental housing project located at 2000 16 th St, Sacramento, California (Project).
B. Housing Authority of the City of Sacramento (HACS) adopted the Sacramento Housing and Redevelopment Agency (SHRA) Multifamily Lending and Mortgage Revenue Bond (Policies) on December 3, 2019. Section 9.4.8 of the Policies state HACS will be reimbursed for their review of the project and preparation of TEFRA hearing and notice, not exceeding 0.25% of the bond issuance amount.
C. The Project is located within the City of Sacramento (City).
D. California Environmental Quality Act (CEQA): The proposed action is not considered a project subject to CEQA Guidelines Section 15183 as the project is consistent with a Community Plan. General Plan, or Zoning.
E. The National Environmental Policy Act is not applicable as there is an absence of federal funds.
BASED ON THE FACTS SET FORTH IN THE BACKGROUND, THE HOUSING AUTHORITY OF THE CITY OF SACRAMENTO RESOLVES AS FOLLOWS:
SECTION 1.
All evidence presented having been duly considered, the findings, including environmental findings regarding this action, as stated above, are found to be true and accurate and are hereby approved adopted.
SECTION 2.
Subject to the adoption of the Tax Equity and Fiscal Responsibility Act (TEFRA) resolution by the City Council of the City of Sacramento, which approved the issuance of the Bonds by California Public Finance Authority, subject to an Underwriting TEFRA Fee of $12,500 to be paid to the Housing Authority of the City of Sacramento, upon approval of this resolution. The appropriate officers or the staff of the Housing Authority of the City of Sacramento is hereby authorized to receive and accept the fee upon approval of this resolution.
SECTION 3.
This resolution shall take effect immediately upon its adoption.
Attachment 5
Rendering – Sakura
Attachment 6
Site Plan – Sakura
Addresses
Number of Units
Project Type
Acreage
Unit Mix and Rents 30% AMI 50% AMI 60% AMI
Exempt
Management Unit
Studios 19 15 34
1BD 15 16 34
Manager Unit 1
Total Units 34 31 68 1
Square Footage Unit Size (sq.ft.) Total (sq. ft.)
Studios 370 25,160
1BR/ 1BA 570 37,050
Manager Unit 750 750
Common Areas 2,210 2,210
Commercial space 2,499 2,499
Total Gross 67,669
Resident Facilities
Permanent Sources Total Per Unit Per Square Foot
Permanent Loan 2,398,000$ 17,896$ 35.44$ Federal Tax Credit 17,053,429$ 127,264$ 252.01$ HCD AHSC 25,300,000$ 188,806$ 373.88$ CADA Loan 4,000,000$ 29,851$ 59.11$ CADA Seller Carryback Loan3,280,000$ 24,478$ 48.47$ Deferred Developer Fee3,961,592$ 29,564$ 58.54$ TOTAL SOURCES 55,993,021$ 417,858 $ 827.45$ Permanent Uses Total Per Unit Per Square Foot
Acquisition 3,280,000$ 24,478$ 48.47$ Construction Costs 33,353,000$ 248,903$ 492.88$ Architecture & Engineering1,194,180$ 8,912$ 17.65$ Permits/Fees 1,728,427$ 12,899$ 25.54$ Hard Cost Contingency1,667,650$ 12,445$ 24.64$ TOTAL HARD COSTS41,223,257$ 307,636$ 609.19$ Soft Cost Contingency 401,342$ 2,995$ 5.93$ Financing Cost 5,247,886$ 39,163$ 77.55$ Operating Reserves 333,944$ 2,492$ 4.93$ Legal Fees 175,000$ 1,306$ 2.59$ Developer Fee 6,461,592$ 48,221$ 95.49$ Third Party Fees, Marketing, Other2,150,000$ 16,045$ 31.77$ TOTAL SOFT COSTS14,769,764$ 110,222$ 218.26$ TOTAL USES 55,993,021$ 417,858 $ 827.45$ Management / Expenses
Proposed Developer
Property Management Company
Operating Expenses 736,254$ 5,494$ per unit Property Management Fee 149,707$ 1,117$ per unit Resident Services 85,120$ 635$ per unit Taxes and Insurance 73,297$ 547$ per unit Replacement Reserves 67,000$ 500$ per unit Capitol Area Community Development Corporation (CACDC) / Mutual Housing California Attachment 7
Sakura
Residential Project Summary
2000 16th Street
1 134
65 68
Total
Mutual Housing Management
Amenities on site will include a comman lounge area, computer room, community room with kitchen, laundry facilities, dog park, bike storage and laundry rooms on all floors.
134
New Construction
0.8 Sakura Area Median Square Total Gross Utility Net Net Rent per Total Monthly Current Unit Type Income % (AMI)Number Feet Sq Feet Rent¹ Allowance Rent Sq Foot Net Rent Annual Rent Studio 30% 19 370 7,030 618.75 $ 51.09$ 568$ 1.53$ 10,786$ 129,426$ Studio 50% 15 370 5,550 1,032.50 $ 51.09$ 981$ 2.65$ 14,721$ 176,654$ Studio 60% 34 370 12,580 1,239.00 $ 51.09$ 1,188$ 3.21$ 40,389$ 484,667$ 1BR 30% 15 570 8,550 707.50 $ 57.93$ 650$ 1.14$ 9,744$ 116,923$ 1BR 50% 16 570 9,120 1,414.50 $ 57.93$ 1,357$ 2.38$ 21,705$ 260,461$ 1BR 60% 34 570 19,380 1,651.25 $ 57.93$ 1,593$ 2.80$ 54,173$ 650,075$ 2BR/2BA (Exempt Manager) 1 750 750 - $ -$ -$ -$ Totals 134 62,960 151,517 $ 1,818,206$
Annual 2027 2028 2029 2030 2031 2032 2033 2036 2041 2046 Income Increase Per Unit Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 10 Year 15 Year 20 Gross Potential Rent 2.50% 1,910,253 1,958,009 2,006,959 2,057,133 2,108,562 2,161,276 2,215,308 2,385,644 2,699,137 3,053,826 Other Income 2.50% 26,232 26,888 27,560 28,249 28,955 29,679 30,421 32,760 37,065 41,936 Rental Subsidy 2.50% 0 0 0 0 0 0 0 0 0 0
Less Vacancy 5.00% -96,824 -99,245 -101,726 -104,269 -106,876 -109,548 -112,286 -120,920 -136,810 -154,788 Effective Gross Income $1,839,661 $1,885,652 $1,932,793 $1,981,113 $2,030,641 $2,081,407 $2,133,442 $2,297,484 $2,599,392 $2,940,974 Expenses
Operating Expenses 3.50% 5,886 788,694 816,298 844,868 874,439 905,044 936,721 969,506 1,074,909 1,276,654 1,516,265 Property Management 3.50% 1,197 160,370 165,983 171,792 177,805 184,028 190,469 197,136 218,568 259,590 308,311 Resident Services 3.50% 680 91,183 94,374 97,677 101,096 104,634 108,296 112,087 124,273 147,597 175,299 Taxes and Insurance 2.00% 569 76,258 77,783 79,339 80,926 82,544 84,195 85,879 91,136 100,621 111,094 Replacement Reserves 0.00% 500 67,000 67,000 67,000 67,000 67,000 67,000 67,000 67,000 67,000 67,000 Total Expenses 8,832 $1,183,504 $1,221,438 $1,260,677 $1,301,265 $1,343,251 $1,386,681 $1,431,607 $1,575,884 $1,851,462 $2,177,969 Net Operating Income $656,156 $664,214 $672,117 $679,848 $687,390 $694,726 $701,835 $721,600 $747,930 $763,005 Debt Service amount rate amort
Senior Loan $2,398,000 6.900% 20 224,598 224,598 224,598 224,598 224,598 224,598 224,598 224,598 224,598 224,598 AHSC Monitoring Fee $25,300,000 0.420% 106,260 106,260 106,260 106,260 106,260 106,260 106,260 106,260 106,260 106,260 Annual Issuer Fee 0 0 0 0 0 0 0 0 0 0
Debt Service Subtotal $330,858 $330,858 $330,858 $330,858 $330,858 $330,858 $330,858 $330,858 $330,858 $330,858 Cash Available after Debt Service $325,298 $333,356 $341,259 $348,990 $356,532 $363,868 $370,977 $390,742 $417,072 $432,147 Priority Distributions
Limited Partner Management Fee $7,500 3.00% 7,500 7,725 7,957 8,195 8,441 8,695 8,955 9,786 11,344 13,151 Managing General Partner Management Fee $17,500 3.00% 17,500 18,025 18,566 19,123 19,696 20,287 20,896 22,834 26,470 30,686 Administrative General Partner Fee 3.00% 0 0 0 0 0 0 0 0 0 0 Priority Distributions Subtotal 25,000 25,750 26,523 27,318 28,138 28,982 29,851 32,619 37,815 43,838 Net Cash after Priority Distributions $300,298 $307,606 $314,736 $321,672 $328,395 $334,886 $341,126 $358,122 $379,258 $388,310 Deferred Developer Fee
Principal Balance $3,961,592 0.00% 3,961,592 3,661,294 3,353,688 3,038,952 2,717,280 2,388,885 2,054,000 1,013,014 0 0 Interest for Period 0 0 0 0 0 0 0 0 0 0
Accumulated Interest 0 0 0 0 0 0 0 0 0 0
Payment 300,298 307,606 314,736 321,672 328,395 334,886 341,126 358,122 0 0 Balance $3,661,294 $3,353,688 $3,038,952 $2,717,280 $2,388,885 $2,054,000 $1,712,874 $654,892 $0 $0 Net Cash after Deferred Developer Fee $0 $0 $0 $0 $0 $0 $0 $0 $379,258 $388,310 HCD Loans
Principal Balance $25,300,000 3.00% 25,300,000 25,300,000 25,300,000 25,300,000 25,300,000 25,300,000 25,300,000 25,300,000 25,300,000 25,300,000 Interest for Period 759,000 759,000 759,000 759,000 759,000 759,000 759,000 759,000 759,000 759,000 Accumulated Interest 759,000 1,518,000 2,277,000 3,036,000 3,795,000 4,554,000 5,313,000 7,590,000 11,385,000 14,581,756 Payment 0 0 0 0 0 0 0 0 0 150,771
Balance $26,059,000 $26,818,000 $27,577,000 $28,336,000 $29,095,000 $29,854,000 $30,613,000 $32,890,000 $36,685,000 $39,730,985 CADA Loan
Principal Balance $4,000,000 3.00% 4,000,000 4,000,000 4,000,000 4,000,000 4,000,000 4,000,000 4,000,000 4,000,000 4,000,000 4,000,000 Interest for Period 120,000 120,000 120,000 120,000 120,000 120,000 120,000 120,000 120,000 120,000 Accumulated Interest 120,000 240,000 360,000 480,000 600,000 720,000 840,000 1,200,000 1,800,000 2,227,857 Payment 0 0 0 0 0 0 0 0 0 43,384
Balance $4,120,000 $4,240,000 $4,360,000 $4,480,000 $4,600,000 $4,720,000 $4,840,000 $5,200,000 $5,800,000 $6,184,473 CADA Land Loan
Principal Balance $3,280,000 3.00% 3,280,000 3,280,000 3,280,000 3,280,000 3,280,000 3,280,000 3,280,000 3,280,000 3,280,000 3,280,000 Interest for Period 98,400 98,400 98,400 98,400 98,400 98,400 98,400 98,400 98,400 98,400 Accumulated Interest 98,400 196,800 295,200 393,600 492,000 590,400 688,800 984,000 1,476,000 1,968,000 Payment 0 0 0 0 0 0 0 0 0 0
Balance $3,378,400 $3,476,800 $3,575,200 $3,673,600 $3,772,000 $3,870,400 $3,968,800 $4,264,000 $4,756,000 $5,248,000 SakuraAttachment 8
Attachment 9
Sakura Apartment
Maximum Income and Rent Limits 2025
Limits at 30%, 50% and 60% of Area Median
Income (AMI) Bonds.
Maximum Gross Income Limits
Family Size 30% AMI 50% AMI 60% AMI
1 $24,750 $41,300 $49,560
2 $$28,300 $47,150 $56,580
Maximum Gross Rent Limits*
Unit Size 30% AMI 50% AMI 60% AMI
Studio $618.75 $1,032.50 $1,239
1 Bedroom $707.50 $1,178.75 $1,414.50