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Board provisionally approves TEFRA hearing for Step Up Housing after questioning about local market effects
Summary
Treasurer and the applicant described a not‑to‑exceed $60M tax‑exempt bond for Step Up Housing’s Orcutt acquisition/rehab project (projected ~$45.7M). Supervisors probed whether deed restrictions create a public benefit or could raise rents in the local market; the board moved forward on the TEFRA matter with one abstention while the chair seeks further local meetings.
The Board received a TEFRA (Tax Equity and Fiscal Responsibility Act) hearing presentation for Step Up Housing’s proposed Orcutt acquisition and rehabilitation project.
Treasurer/Tax Collector Harry Hagen explained TEFRA procedure under Section 147(f) of the Internal Revenue Code and summarized the request: a not‑to‑exceed bond authorization of $60,000,000 while project cost projections sit around $45–48M. Michael Potter, chair of Step Up Housing, explained the financing breakdown (acquisition ~$33.2M; rehabilitation and reserves ~$4.9M; debt issuance costs in addition) and said the actual bond amount is expected in the ~$48M range.
Several supervisors raised concerns about local public benefit and market impact. Chair Nelson, representing the Orcutt area, said converting an existing market‑rate project into deed‑restricted units could increase rents in some affordability bands and decrease market‑rate stock in a small submarket; that concern prompted him to talk privately with the applicant. The applicant said the regulatory agreement would deed‑restrict 33 of the 128 units (about 26%) initially, capping rents by HUD‑linked formulas and leaving market forces to influence actual rents over time; the applicant also noted a tight acquisition schedule and an August 6 closing date.
After discussion the Board acted on the staff recommendations related to the TEFRA hearing; Chair Nelson explained he would abstain while he continues discussions with the applicant to protect local market interests. The TEFRA authorization moved forward with one abstention recorded.
What happens next: Project proponents said they would continue conversations with the Chair’s office; Treasurer’s office clarified that the County bears no legal repayment obligation for the bonds.
