COUNCIL AGENDA REPORT
TO: Mayor and City Council
FROM: Rebecca Campbell, Director of Finance
DATE: January 20, 2026
SUBJECT: Adoption of a Resolution Approving the Issuance of a Bond under the Tax and Equity Fiscal Responsibility Act (TEFRA) Regarding Hancock Terrace Apartments
Description:
The City Council will consider adopting a Resolution at a public hearing as required by the Tax and Equity Fiscal Responsibility Act and the Internal Revenue Code of 1986, as amended.
Environmental Notice: The activity is not a “Project” as defined under Section 15378 of the California Environmental Quality Act State Guidelines; therefore, pursuant to State Guidelines Section 15060(c)(3) no environmental review is required.
RECOMMENDATION:
1. Conduct a public hearing under the requirements of the Tax and Equity Fiscal Responsibility Act (TEFRA) and the Internal Revenue Code of 1986, as amended; and
2. Adopt a Resolution approving the issuance of the California Municipal Finance Authority Qualified 501(c)(3) Bonds in an aggregate principal amount not to exceed $105,000,000 for the purpose of financing or refinancing the acquisition, rehabilitation, improvement and equipping of Hancock Terrace Apart ments and certain other matters relating thereto.
BACKGROUND:
Step Up Housing, a California nonprofit public benefit corporation and an organization described in section 501(c)(3) of the Internal Revenue Code of 1986 (the “Borrower”), has requested that the California Municipal Finance Authority (the “Authority: or “CMFA”) participate in the issuance of revenue bonds in an aggregate principal amount not to exceed $ 105,000,000 (the “Bonds”), of which will be used to finance or refinance the acquisition, r ehabilitation, improvement and equipping of a 205 unit multifamily rental housing project located at 534 East Boone Street, Santa Maria, California (the “Project”).
DISCUSSION:
In order for all or a portion of the Bonds to qualify as tax-exempt Bonds, the City of Santa Maria must conduct a public hearing providing for the 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. Prior to such TEFRA Hearing, reasonable notice must be provided to the members of the community. Following the close of the TEFRA Hearing, an “applicable 2 elected representative” of the governmental unit hosting the Project must provide its approval of the issuance of the Bonds for the financing of the Project.
California Municipal Finance Authority
The CMFA was created on January 1, 2004 , pursuant to a joint exercise of powers agreement to promote economic, cultural , and community development through the financing of economic development and charitable activities throughout California. To date, over 350 municipalities, including the City of Santa Maria, have become members of CMFA.
The CMFA was formed to assist lo cal governments, non -profit organizations , and businesses with the issuance of taxable and tax -exempt Bonds aimed at improving the standard of living in California. The CMFA’s representatives and its Board of Directors have considerable experience in bond financing.
The Bonds to be issued by the CMFA 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 Bonds of the City or the State of California but are to be paid for solely from funds provided by the Borrower.
Participation by the City in the CMFA will not impact the City’s appropriations limits and will not constitute any type of indebtedness by the City. Outside of holding the TEFRA hearing, adopting the required resolution, no other participation or activi ty of the City or the City Council with respect to the issuance of the Bonds will be required.
Fiscal Considerations
There is no direct or indirect financial impact to the City as a result of this proposed financing. The CMFA will issue tax -exempt bonds o n behalf of the Project. The tax - exempt bonds are payable solely out of the revenues derived by the Borrower from the applicable project. No financial obligations are place d on the City for project financing costs or debt repayment.
The Board of Director s of the California Foundation for Stronger Communities, a California non-profit public benefit corporation (the “Foundation”), acts as the Board of Directors for the CMFA. Through its conduit issuance activities, the CMFA shares a portion of the issuance fees it receives with its member communities and donates a portion of these issuance fees to the Foundation for the support of local charities. With respect to the City of Santa Maria, it is expected that a portion of the issuance fee attributable to the City (estimated to be approximately $ 11,000) will be granted by the CMFA to the General Fund of the City. Such grant may be used for any lawful purpose of the City.
3 Impact on the Community
Approving the issuance of the tax-exempt bonds benefits the community by creating 205 units of affordable housing for the next 30 years.
ATTACHMENT(S)
A. Resolution
B. Affidavit of Publication_TEFRA_Hancock Terrace