Title
Adopt a Resolution to Approve the Issuance of the California Municipal Finance Authority Qualified 501(c)(3) Bonds in an Aggregate Principal Amount Not to Exceed $80,000,000 for the Purpose of Financing or Refinancing the Acquisition, Rehabilitation, Improvement and Equipping of Woodchase Apartment Homes Located at 2795 San Leandro Boulevard (for Conversion by a Nonprofit, Step Up Housing, to Primarily Affordable Rental Housing)
Staffreport
COUNCIL PRIORITY
• Housing and Homelessness
SUMMARY
Step Up Housing(the “Borrower”) recently requested the City conduct a public hearing under the Tax and Equity Fiscal Responsibility Act (“TEFRA”) in connection with the proposed issuance of revenue bonds by the California Municipal Finance Authority (the “CMFA”), a joint exercise of powers authority and public entity of the State of California, in an amount not to exceed $80,000,000, (the “Bonds”), to assist in financing or refinancing the acquisition, rehabilitation, improvement and equipping of a multifamily rental housing project (known as Woodchase Apartment Homes) located at 2795 San Leandro Boulevard (the "Project"). The Borrower is not requesting any City funding assistance for this Project. The City will have no financial or legal liability for the bonds or the Project.
Woodchase Apartment Homes (“Woodchase”) currently contain 186 total rental housing units that are all market rate. The bond financing will enable the Borrower to acquire the Project and convert 75%, or 140 units, to long term affordable rental housing for low and very low income households. The remaining 25% of the units will remain market rate.
RECOMMENDATIONS
Staff recommend that the City Council:
1) Conduct the public hearing under the requirements of TEFRA and the Internal Revenue Code of 1986, as amended (the “Code”).
2) Adopt the Resolution approving the issuance of the Bonds by the CMFA for the benefit of the Borrower, to provide for the financing of the Project, such adoption is solely for the purposes of satisfying the requirements of TEFRA, the Code and California Government Code Section 6500 et seq.
BACKGROUND
The Borrower requested that the CMFA serve as the municipal issuer of the Bonds in an aggregate principal amount not to exceed $80,000,000 of tax-exempt revenue bonds. The proceeds of the Bonds will be used to finance or refinance the acquisition, rehabilitation, improvement and equipping of Woodchase, which was built in 1976 and contains the existing unit mix:
32 - studios (476 square feet or SF)
32 - 1 bed/1 bath - Loft (648 SF)
61 - 1 bed/1 bath (676 SF)
61 - 2 bed/1 bath - Loft (851 SF)
186 total units
Existing property amenities at Woodchase include:
o Fitness center with strength and cardio equipment
o Heated swimming pool and spa
o Furnished sundeck with barbecues
o Two 24-hour laundry facilities
o Leasing office
o Garage parking
o Secured and gated community
o Open courtyards
In order for all or a portion of the Bonds to qualify as tax-exempt bonds, the City of San Leandro must conduct a public hearing (the “TEFRA 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 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.
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 San Leandro, are members of CMFA. The City joined the CMFA in 2004. CMFA most recently issued bonds for two existing affordable rental housing projects in San Leandro: Fargo Senior Center in 2012 and Las Palmas Apartments in 2015.
The CMFA was formed to assist local 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 financings.
Analysis
The Borrower, Step Up Housing, is a California nonprofit public benefit corporation formed in 2021. Step Up Housing was formed to acquire and provide housing for low and moderate income persons and households in response to the critical shortage of affordable housing in our communities. Step Up Housing focuses on acquiring market rate apartment projects and converting all or a portion of the project to affordable housing to provide residents with a safe and affordable place to live. Step Up Housing currently owns and operates 758 units of affordable housing across four properties valued at more than $150 million.
The benefit to the City will be that the Borrower will be able to acquire Woodchase and convert 75% , or 140 units, of the total 186 units to affordable rental housing: 40 units will be set-aside for very low income renters (at or below 50% area median income) and 100 units will be targeted to low income renters (at or below 80% area median income). The remaining 46 units will remain market rate. As required by the bond’s requirements, the affordable units must remain affordable for 15 years. In addition, the City may count the 140 units being converted from market rate to affordable rental units towards its current 2015-2023 Regional Housing Needs Goals for very low and low-income housing unit production.
Below is a breakout by unit type and income level for the proposed Project:
Unit Type No. of Units 50% AMI 80% AMI Market
Studio 32 7 17 8
1 Bed/1 Bath-Loft 32 7 17 8
1 Bed/1 Bath 61 13 33 15
1 Bed/1 Bath-Loft 61 13 33 15
Total 186 40 100 46
The proposed repair and rehabilitation work include the following:
• Deferred Maintenance: painting exterior buildings, roof replacement, plumbing repairs and replacement, electrical repairs, wood repair and subpanel replacement.
• Common Areas: rehab fitness center and leasing office. Replace pool furniture, fixtures and equipment.
• Unit Interiors: refurbish units as the units turnover and replace flooring on the second floor units.
The Borrower does not plan on displacing any of the existing tenants in the units converted to affordable housing. The Borrower plans to meet the tenant AMI income levels through normal attrition and turnover (Step Up Housing will have 3 years to achieve the required tenant income base). The Borrower projects achieving the rent level requirements in the first 12 months by reducing existing tenants' rent and/or leasing vacant units to qualified tenants at the required rent levels. Rent levels are established and adjusted by HUD.
The budgeted repair and rehab work will be completed with tenants in place. No tenant temporary relocation is required. Most of the repair rehab work is scheduled to be completed within the first 36 months after bond closing in December 2025.
Applicable General Plan Policies
Goal 2: Assist the Development of Housing Affordable to Extremely Low-, Very Low-, Low-, and Moderate-Income Levels and populations with Special Needs
P.2.1 Promote Housing Development Affordable to Residents at All Economic Levels. The City shall support the production of rental and for-sale housing for people of all income levels
Goal 3: Promote Conservation and Preservation of Existing Housing Stock
P.3.2 Safe and Livable Housing. The City shall enforce building, safety, and housing codes to ensure safe and sanitary housing conditions.
P.3.3 Maximize Existing Housing Stock for Area Residents. The City shall promote the use of housing for San Leandro residents and workers, in compliance with Fair Housing Law, and seek to limit short-term rentals, and prolonged vacancies.
Environmental Review
The proposal is exempt from the requirements of the California Environmental Quality Act (CEQA) per CEQA Guidelines Section 15061(b)(3) in that it can be seen with certainty that there is no possibility that the action may have a significant effect on the environment. The approval does not involve any physical development or activity that would have the potential for causing a significant effect on the environment.
Summary of Public Outreach Efforts
Prior to a TEFRA hearing, reasonable notice must be provided to the community for an opportunity to speak in favor of or against the use of tax-exempt bonds. Legal requirements for notification of this meeting included notice in The Daily Review on Friday, November 7, 2025.
Legal Analysis
The City Attorney’s Office has reviewed and approved this staff report, resolution and related documents.
Financial Impacts
There is no fiscal impact to the City of San Leandro, and therefore no impact on the General Fund. The Borrower is not requesting any City funding for this project. 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 obligations of the City or the State of California but are to be paid for solely from funds provided by the Borrower.
The Board of Directors 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 San Leandro, it is expected that a portion of the issuance fee attributable to the City (estimated at approximately $20,000) 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.
ATTACHMENTS
A: Resolution of the City Council of the City of San Leandro Approving the Issuance of the California Municipal Finance Authority Qualified 501(c)(3) Bonds in an Aggregate Principal Amount Not to Exceed $80,000,000 for the Purpose of Financing or Refinancing the Acquisition, Rehabilitation, Improvement and Equipping of Woodchase Apartment Homes
B: Presentation: Woodchase Apartment Homes Acquisition and Rehabilitation Project
PREPARED BY: Tom Liao, Director, Community Development Department