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Board authorizes TEFRA financing step for Step Up Housing Orcutt project; Chair abstains
Summary
After a contested TEFRA hearing for Step Up Housing's proposed Orcutt acquisition project (estimated $45M, not-to-exceed bonds $60M), the Board approved staff's recommendation to authorize the TEFRA action; the motion passed 4-0 with Chair Nelson abstaining as he continues conversations with the applicant.
The Board of Supervisors on July 14 held a TEFRA hearing required by federal tax law before authorizing tax-exempt bond financing for Step Up Housing's proposed Orcutt acquisition.
Treasurer-Tax Collector Harry Hagen described the process and the proposed financing: a not-to-exceed tax-exempt bond authorization of $60 million to allow flexibility if project costs rise; current project costs are estimated at roughly $45 million. "The purpose for the delta so the $60,000,000 is what we call a not-to-exceed amount," said Jared Suzuki (California Municipal Finance Authority representative) during applicant remarks.
Michael Potter, chair of Step Up Housing's board, told supervisors the acquisition and rehabilitation plan will deed-restrict 33 units (about 26% of the 120-unit site) at various affordability levels (20% at 50% AMI, 55% at 80% AMI); he estimated total debt of roughly $45.7 million and said the regulatory agreement would run for 15 years.
Several supervisors, particularly Chair Nelson (who represents the area where the property sits) and Supervisor Hartman, raised concerns that converting an existing market-rate property to deed-restricted affordability could tighten local market supply in Orcutt and unintentionally push some rents higher in certain AMI bands. Chair Nelson said he had additional conversations planned with the applicant and did not feel prepared to fully support or deny the request that day.
After discussion, Supervisor Hartman moved approval of staff recommendations with Supervisor LaVagnino seconding; the roll call vote was 4 in favor, Chair Nelson abstained. County staff said the authorization lets the applicant proceed with financing steps but does not make the county legally responsible for debt repayment; the bond repayment remains the applicant's obligation.
What happens next: staff will process the TEFRA authorization so the applicant can pursue closing; Chair Nelson and applicant said they will continue discussions about local impacts and protections for the market in the coming days.
