TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM: David Chantarangsu, AICP, Development Services Director
PREPARED BY: Carl Stiehl, City Planner
SUBJECT:
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Financing for Oak View Ranch, Murrieta Apartments Phase II Senior Units, Adams Avenue Affordable Housing Project
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RECOMMENDATION
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Conduct a Public Hearing under the requirements of the Tax and Equity Fiscal Responsibility Act (TEFRA) and the Internal Revenue Code of 1986, (IRS Code) as amended; and
Adopt Resolution No. 25-4804 entitled: A Resolution of the City Council of the City of Murrieta Approving the Issuance by the California Statewide Communities Development Authority of Exempt Facility Bonds for the Construction and Improvement of Certain Facilities for Phase Two of Oak View Ranch Senior Apartments.
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PRIOR ACTION/VOTE
On June 6, 2022, the City Council approved the Adams Avenue Affordable Project, now known as Oak View Ranch, which included various land use entitlements (Development Plan 2021-2311, Tentative Parcel Map 2021-2326, and Disposition and Development Agreement 2022-2491) to develop a multi-family affordable residential project between the Murrieta Housing Authority and National Community Renaissance of California at 24960 Adams Avenue (Vote: 4-0-1).
On April 4, 2023, the City Council approved the financing for Oak View Ranch Phase I by National CORE, including the issuance of bonds in an amount not to exceed $40,000,000 (Vote: 4-0-1).
CITY COUNCIL GOAL
Plan, program and create infrastructure development.
BACKGROUND
The Murrieta Housing Authority (MHA), as the successor housing entity to the former Murrieta Redevelopment Agency, has long planned for the development of the City-owned property at 24960 Adams Avenue for affordable housing. After a multi-year property disposition and development process, the MHA directed staff to work with National CORE on the property. In April 2021, National CORE submitted an application for a project of 200 units of multi-family affordable apartments (Project) to move forward to obtain the project entitlements, which staff processed and brought forward for public hearings. On January 12, 2022, the Planning Commission recommended that the City Council approve the Project. On June 6, 2022, the City Council approved the Project, including a Disposition and Development Agreement (DDA) that was fully executed in August 2022. The project vicinity map and site plan are included for reference in Attachment No. 1.
The property, located near the northeast corner of Ivy Street and Adams Avenue, is designated in the City’s Housing Element as an affordable housing site intended to meet a portion of the City’s Regional Housing Needs Allocation (RHNA) for lower-income households. The property consists of one parcel totaling approximately 6.2 acres at 24960 Adams Avenue, Assessor’s Parcel No. 906-080-018, that is zoned Residential Multi-Family in the Downtown Murrieta Specific Plan requiring a minimum of 30 dwelling units per acre of multi-family residential development (Property).
Following approval of the project in 2022, the project applicant, National CORE, which is also the borrower for the proposed bond issuance (Borrower) submitted an application to the California Statewide Communities Development Authority (CSCDA), a State-wide joint powers authority (JPA) whose members are numerous public entities in the State to request financing for the initial portion of the project. That application for $40,000,000 was approved and the City Council adopted a resolution approving the issuance of bonds for the first phase of the project in April 2023.
The Borrower has submitted an additional application for the financing for the second phase of the project and has requested that the CSCDA serve as the municipal issuer of additional bonds in an aggregate principal amount not to exceed $25,000,000 (Bonds). For all or a portion of the Bonds to qualify as tax-exempt bonds, the City must conduct a public hearing (the TEFRA Hearing), providing the members of the community with an opportunity to speak for or against the use of tax-exempt bonds for the financing of the Project. Prior to the TEFRA Hearing, reasonable notice must be provided to the members of the community. Public notice was published as required ten days prior to the hearing in the Riverside Press-Enterprise. Following the close of the TEFRA Hearing, an “applicable elected representative” of the governmental unit hosting the Project must provide its approval of the issuance of the Bonds to finance the Project.
California Statewide Communities Development Authority
The CSCDA was created in 1988 under California’s Joint Exercise of Powers Act to provide California’s local governments with an effective tool for the timely financing of community-based public benefit projects. Although municipalities are able to issue their own debt obligations or serve as a conduit issuer of private activity bonds that promote economic development and provide critical community services, many local agencies find stand-alone financing too costly or may lack the necessary resources or experience to facilitate bond issuance and perform post-issuance activities for the life of the bonds. In response, CSCDA was created by and for local governments in California and is sponsored by the California State Association of Counties and the League of California Cities.
Currently, more than 530 municipalities are members of the CSCDA - which serves as their conduit issuer and provides access to an efficient mechanism to finance locally approved projects. The City of Murrieta is a program participant, having joined in 2003. CSCDA has issued more than $70 billion in tax-exempt bonds to help local governments build community infrastructure, provide affordable housing, create jobs, make access available to quality healthcare and education, and more, providing an important resource to local governments.
Bond Financing and City Obligations
The Bonds to be issued by the CSCDA for the Project will be the sole responsibility of the Borrower, and the City will have no financial, legal, or 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 obligations of the City or the State of California but are to be paid for solely from funds provided by the Borrower.
There are no costs associated with membership in the CSCDA and the City will in no way become exposed to any financial liability by reason of its membership. In addition, participation by the City in the CSCDA does not impact the City’s appropriations limits or debt capacity and will not constitute any type of indebtedness by the City. Except for conducting the TEFRA hearing and approving the issuance of the Bonds, no other participation or activity of the City or the City Council will be required.
Project Analysis
The Project, with the first phase of 120 units already under construction and nearing completion, is an important low-income affordable multi-family residential project for the City and Southwest Riverside County. Whereas this part of the region in the County has seen extensive residential growth in the past twenty years, the supply of affordable housing has not grown in the same manner. The Bond financing for the second phase will provide housing needed to serve low-income seniors who typically live on fixed incomes and are at risk of becoming homeless as market-rate housing costs rise. Further, the City did not see any of these types of units constructed during the 5th (2013-2021) Housing Element cycle. The proposed Project is a core part of the City’s housing strategy and the development of the Downtown, which will help to meet the City’s RHNA in the current 6th (2021-2029) Housing Element cycle.
Considering the foregoing, and in order to support the funding of affordable housing consistent with the City’s Housing Element, staff recommends that the City conduct the TEFRA Hearing and adopt Resolution No. 25-4804 (Attachment No. 2) in favor of the issuance of the Bonds by the CSCDA in an amount not to exceed $25,000,000.
CEQA Determination
Pursuant to the California Environmental Quality Act (CEQA), an Initial Study was prepared for the Project in 2021 in accordance with Section 15070 of the CEQA, and a Mitigated Negative Declaration was adopted. No potentially significant environmental effects that could not be mitigated to a less-than-significant level were identified. Mitigation measures included within the MND were required for the Project and were included within the Project Mitigation Monitoring & Reporting Program. Mitigation measures were required to reduce the impacts of aesthetics, biological resources, cultural resources, geology and soils, noise, and tribal cultural resources. No further analysis is required under CEQA to issue the Bonds by the CSCDA since no changes to the approved Project are proposed.
FISCAL IMPACT
There is no fiscal impact to the City in assisting with the issuance of the bonds for CSCDA.
ATTACHMENTS
1. Vicinity Map and Project Site Plan
2. Resolution No. 25-4804