Council opens TEFRA hearing for tax-exempt bonds for senior-living project; hearing continued to Feb. 18

The Huntington Beach City Council opened a Tax Equity and Fiscal Responsibility Act (TEFRA) public hearing to consider authorizing the California Public Financing Authority (Cal PFA) to issue tax-exempt bonds for a nonprofit senior-living development on property at or near 21091 Pacific Coast Highway.

David Kane, Interim Chief Financial Officer, told the council the TEFRA hearing is required under the Internal Revenue Code before a joint powers authority can issue tax-exempt bonds for a privately developed project. Kane said the council’s approval would not create a city liability: “We have no liability, we have no obligation related to the facility and or the bonds,” he said, summarizing bond counsel opinions provided to staff.

The developer representative said the applicant expects the actual issuance to be considerably below the statutory “not to exceed” ceiling — the staff report set a $325 million authorization ceiling typical of bond practice and said the likely issuance would be nearer $260 million. The developer also said their nonprofit status could make project financing feasible now and that the team sought to “be a good neighbor” and proposed a payment-in-lieu-of-taxes (PILOT) agreement so the city would receive dollar-for-dollar tax-equivalent payments.

Mayor Pat Burns and other councilmembers asked detailed questions about exposure and guarantees. Councilmember Williams asked whether developers would personally guarantee PILOT payments if a tax-exempt status failed in a given year; the developer said a personal guarantee would likely be declined, and staff reiterated the city’s counsel had advised that the membership in the joint powers authority carries no obligation for city taxpayers.

After public comment from one resident who asked why the project did not go to a public vote, the council voted to continue the TEFRA public hearing to a date certain, February 18, 2025, to receive any additional public input and to consider adoption of the joint-powers membership resolution and the PILOT agreement at that later meeting. Staff said the resolutions and the PILOT language would return for council consideration; the staff report states the city would not assume debt, own the property, or have revenue-sharing obligations as part of the JPA membership.

No final bond authorization or PILOT agreement was approved at the session; council directed staff to return with the formal JPA and PILOT documents and to reopen the public hearing on Feb. 18.