Council approves TEFRA hearings, moves forward with Palm Villas tax‑exempt bond financing

The Red Bluff City Council on June 17 held a public TEFRA hearing and approved resolutions allowing the California Statewide Communities Development Authority (CSCDA) to issue tax‑exempt multifamily housing revenue bonds to support financing for the 61‑unit Palm Villas affordable housing project at 321 South Jackson Street.

City staff attorney Tom Westberg and representatives from the borrower described the transaction as a conduit financing: CSCDA would serve as issuer and the bonds would be limited obligations payable from project revenues and loan repayments, not by the city. Westberg said the city will bear no liability for the bonds.

Developer representatives answered council questions about timing and operations. David Abrams said the project team anticipates construction beginning in early November and estimated an approximately 20‑month construction schedule. Reid Bradshaw of POM Communities, the project developer, described the bond sale process: the state allocates tax‑exempt bond authority, projects sell bonds to private purchasers (typically banks), and the project makes debt service payments from its cash flow. Bradshaw said, “the city doesn't have any obligation, or indemnity to backstop the project” and that bond purchasers — not the city’s taxpayers — would bear the risk if the project defaulted.

Bradshaw also said the developer will publicly bid construction work; Multifamily Builders is the in‑house general contractor but subcontractor work will be solicited and local bidders are welcome. He said the project expects an on‑site, single‑phase build with lease‑up beginning as buildings complete; the final months of construction typically see tenant move‑ins as units are finished.

The council conducted the required TEFRA hearing (an IRS requirement when borrowers seek tax‑exempt financing through a conduit issuer) to allow public comment on the use of tax‑exempt bonds for a project that provides an affordable‑housing public benefit. Members of the public asked whether the financing used a state program with potential state takeover and whether taxpayers would be liable; council and developer answers clarified the bonds are privately purchased and repaid from project revenues and that the project is not the same provider program earlier mentioned by a member of the public.

Council members voted to approve the resolutions to authorize CSCDA participation and issuance of bonds in an amount not to exceed $30,000,000. Recorded votes on the items were taken during the meeting as part of the item’s public hearing sequence.