Title
Creek at 2645 Apartments Project: Conduct a Tax Equity and Fiscal Responsibility Act (TEFRA) Hearing for Bonds Issued by the Housing Authority of the City of Sacramento [Published 04/14/2026]
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FileID
File ID: 2026-00678
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Location
Location: 2645 Stonecreek Drive, District 3
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Recommendation
Recommendation: Conduct a public hearing and upon conclusion, adopt a City Council Resolution acknowledging that the Tax Equity and Fiscal Responsibility (TEFRA) public hearing has been conducted related to the acquisition and rehabilitation of the Creek at 2645 Apartments Project (Project).
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Contact
Contact: Christine Weichert, Director, (916) 440-1353, cweichert@shra.org; Kecia Boulware, Deputy Executive Director, (916) 440-1324, kboulware@shra.org; Sacramento Housing and Redevelopment Agency
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Presenter
Presenter: Christine Weichert, Director, (916) 440-1353, cweichert@shra.org, Sacramento Housing and Redevelopment Agency
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Attachments
Attachments:
1-Description/Analysis
2-City Council Resolution
3-Vincity Map
4-Project Photo
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Description/Analysis
IssueDetail
Issue Detail: The actions recommended in this report serve as the required TEFRA hearing for proposed 501(c)(3) tax-exempt bonds to be issued by the Housing Authority of the City of Sacramento in an amount not to exceed $100 million for the acquisition of the Creek at 2645 Apartments Project (Project).
Background: In January 2026, ArtHaus Partners (Project Administrator) approached the Sacramento Housing and Redevelopment Agency (SHRA) to discuss the issuance 501(c)(3) bond in an amount not to exceed $100 million to fund the acquisition of the Project, a 368-unit multifamily development.
SHRA has historically brought forth transactions involving the issuance of Tax-Exempt Mortgage Revenue Bonds that are subject to the State’s volume cap, administered by the California Debt Limit Allocation Committee (CDLAC). Under that typical scenario, the City Council holds the TEFRA hearing and the City, acting as the Housing Authority of the City of Sacramento approves the bond inducement and bond documents simultaneously. This practice is not required but is typical due to the i) highly competitive nature of the CDLAC approval process and ii) the associated 18 month plus lead times needed to bring forward these types of affordable housing developments.
The City Council and Housing Authority adopted SHRA’s Multifamily Lending and Mortgage Revenue Bond Policies (Policies) in 2019. These policies provide for the issuance of both Mortgage Revenue and Tax-Exempt 501(c)(3) bonds. Both varieties of bonds are subject to the same Policies, excepting variations related specifically to the relevant bond program. SHRA has not issued 501(c)(3) bonds in several decades, but as the competition for Mortgage Revenue Bonds and paired low-income housing tax credits has become more difficult, affordable housing developers are turning to other financing mechanisms.
The table below includes a comparison of Mortgage Revenue and 501(c)(3) bonds.
|
|
Mortgage Revenue Bonds |
501 (c) (3) Bonds |
|
Borrower Type |
Individuals or Developers |
Nonprofit entities only |
|
Subject to Volume Cap? |
Yes |
No |
|
Bond authority from the California Debt Limit Allocation Committee (CDLAC) |
Required |
Not required |
|
Tax Exempt and Fiscal Responsibility (TEFRA) public hearing |
Required |
Required |
|
Housing Authority approval of Bonds |
Required |
Required |
|
Income Limits |
Minimum 20% at 50% AMI or 40% at 60% AMI |
Minimum 20% at 50% AMI or 40% at 60% AMI |
|
Rehabilitation Project Requirements |
Minimum $15,000 in hard construction per unit |
“Substantial Rehabilitation” ~$5,000 in hard construction per unit |
In this case, the Project Administrator is requesting the issuance of 501(c)(3) bonds because the structure does not require an allocation of the State’s limited volume cap. By utilizing this structure, the Project preserves scarce volume cap for other affordable housing developments that cannot proceed without it. 501(c)(3) bonds cannot be used with the Low-Income Housing Tax Credit Program, but a TEFRA public hearing is still required. SHRA agreed to fast track this report as an accommodation to the Project Administrator due to the upfront requirement in the purchase and sale agreement to meet certain deadlines and to provide a substantial deposit.
The Project Administrator desires to fast track the project and has requested that the TEFRA hearing be held prior to due diligence being completed. SHRA has begun its preliminary review including a site visit, review of third-party reports (Physical Condition Report, Environmental Site Assessment, Seismic Risk Assessment, Preliminary Title Report, etc.) and review of draft property management and resident services plan. However, due to the request to expedite, full due diligence review outlined in the Policies could not be completed in advance of the City’s deadline for delivery of the staff report for the TEFRA hearing. SHRA anticipates receipt of all required due diligence information and the completion of our review by the end of April 2026. SHRA staff are comfortable moving forward with the TEFRA public hearing at this time based on the documents received and the initial due diligence performed.
The City Council action recommended in this report fulfills the required TEFRA hearing for the 501(c)(3) bonds. A second report to City Council will be scheduled for May 2026 which will incorporate SHRA’s full due diligence review and request the Housing Authority’s approval of the bond documents. A vicinity map and project photo are included as Attachments 3 and 4.
Project Description
The Project Administrator is proposing to utilize the 501(c)(3) bond funds to acquire and rehabilitate the Creek at 2645 Apartments and restrict 314 of the units as affordable to households’ earning 60-80 percent of Area Median Income (AMI). The remaining 54 units will continue to be rented at market rate.
The Creek at 2645 Development, located at 2645 Stonecreek Drive in Sacramento, was originally constructed in 1986, and includes 368 units on combined 17.4 acre parcels. The development consists of 72 one-bedroom, 224 two-bedroom, and 72 three-bedroom apartments. The proposed rents at the Project are all less than the maximum regulated 80 percent AMI rents (One-bedroom: $2,058, Two-bedroom: $2,326, Three Bedroom $2,572).
|
Unit Size |
Number of units |
Area Media Income (AMI) Target |
Proposed Monthly Rent Amount |
|
1-Bedroom/1-Bath |
28 |
60% AMI |
$1544 |
|
2-Bedroom/2-Bath |
89 |
60% AMI |
$1737 |
|
3 Bedroom/2-Bath |
31 |
60% AMI |
$1929 |
|
1-Bedroom/1-Bath |
35 |
80% AMI |
$1657 |
|
2-Bedroom/2-Bath |
98 |
80% AMI |
$1890 |
|
3 Bedroom/2-Bath |
33 |
80% AMI |
$2198 |
|
1-Bedroom/1-Bath |
9 |
Market Rate |
$1669 |
|
2-Bedroom/2-Bath |
37 |
Market Rate |
$1923 |
|
3 Bedroom/2-Bath |
8 |
Market Rate |
$2241 |
|
Total |
368 |
|
|
Property Rehabilitation Plan
The Project Administrator anticipates completion of the exterior and common area capital improvements within the first 12 months of ownership. For interior unit renovations, units will be renovated as they turn over, minimizing tenant disruption. Consistent with the bond financing structure, all bond-funded capital improvements will be completed within the 36-month period following bond issuance. A portion of the interior renovation scope is being funded upfront with bond proceeds, with the balance expected to be completed over time through property operations and reinvestment of cash flow.
Project Administrator
ArtHaus Partners is a Bay Area-based multifamily developer, owner, and operator that focuses on addressing the changing housing needs of the California workforce. ArtHaus has 4,000 units under management and development across 60 buildings, with $800 million in total real estate assets. ArtHaus has experience with public-private partnerships and a range of middle-income executions. ArtHaus Partners’ ongoing role in the project will be as Project Administrator/Asset Manager, with responsibility for organizing and executing the acquisition financing and the long-term operational oversight of the property. In that role, ArtHaus will remain actively involved for the first ten years of operations of the Project, including capital planning, rehabilitation, asset management, and operational performance. As part of the financing structure, ArtHaus and its investors will provide funding for the most subordinate bond tranche ($7 million of capital invested), which is repaid only after all senior and subordinate bonds have been satisfied. This will be ArtHaus’ first participation in a 501(c)(3) bond transaction.
Non-Profit Partner/ Owner
Integrity Housing (Integrity) is a 501(c)(3) non-profit affordable housing development company established in 2010. Integrity's current portfolio consists of 71 properties and 8,308 units, created using Low-Income Housing Tax Credits, 501(c)(3) bonds and conventional financing. To date, Integrity has completed 10 projects using a 501(c)(3) bond financing structure similar to the proposed financing for Creek at 2645. Integrity will serve as the borrower and property ownership entity for the Project. Integrity has offices in both Texas and in Irvine, California. Integrity has one affordable project in Sacramento, Creekside Village Senior Apartments.
Property Management
The Project Administrator is currently interviewing qualified affordable housing property management firms and plans to engage a property management firm that meets SHRA’s guidelines.
Resident Services
The Project Administrator has committed to providing 20 hours of resident services weekly as required by SHRA’s Policies. The current service provider at the site is Project Access and the development team plans to execute a contract with them for a continuation of these services at the Project. Project Access is headquartered in Orange California and partners with owners of affordable housing communities to provide services that help create strong communities, positive changes, and hopeful futures for our families and seniors. Project Access has been providing resident services to communities throughout California for over 20 years. The Project Administrator is also open to working with a local provider in the future.
Affordability Restrictions
The 501(c)(3) Bonds require at least 20 percent of the units are rented to households earning 50 percent of AMI or below or 40 percent of units are for households with incomes 
60 percent of AMI or below. Proposed affordability restrictions on the property are outlined below.
|
Affordability Restrictions (55 years) |
Units |
% of Units |
|
Low-Income (60% AMI) |
148 |
40 |
|
Low-Income (80% AMI) |
166 |
45 |
|
Market Rate |
52 |
15 |
|
Manager’s Unit |
2 |
|
|
Total |
368 |
|
Project Financing
The table below outlines the proposed sources and uses of the bond funds.
|
Tax Exempt Bond Project Uses |
Budgeted Amount |
|
Acquisition |
$76,500,000 |
|
Capital Expense Fund |
$ 2,246,425 |
|
Cost of Issuance |
$ 2,691,333 |
|
Subordinate Class A Bonds DSRF |
$ 917,720 |
|
Working Capital |
$ 250,000 |
|
Project Administrator Bond Allocation |
$ 4,000,000 |
|
Project Administrator Upfront Fee |
$ 1,750,000 |
|
Operating Reserve |
$ 889,688 |
|
Property Tax Reserve |
$ 1,272,140 |
|
Insurance Escrow |
$ 629,296 |
|
Total Uses |
$91,137,602 |
|
Tax Exempt Bond Project Sources |
Budgeted Amount |
|
Senior Tax-Exempt - Class IB |
$61,200,000 |
|
Senior Taxable Class IA |
$1,250,000 |
|
Subordinate Class IIA |
$17,356,415 |
|
Subordinate Class IIB |
$11,331,188 |
|
Total Sources |
$91,137,602 |
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PolicyConsiderations
Policy Considerations: The actions are consistent with the 2021-2029 City of Sacramento Housing Element Policy H-2.3 “Assist in the Development of Affordable Housing.” The Project will require waivers of specific sections of the City Council/Housing Authority adopted SHRA Multifamily Loan and Mortgage Revenue Bond policies. These sections include:
• Section 9.1.10 related to fees
• Section 4.12 related to minimum construction standards
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EconomicImpacts
Economic Impacts: None.
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EnvironmentalConsiderations
Environmental Considerations:
California Environmental Quality Act (CEQA): Pursuant to Cal. Code Regs., tit. 14., section 15061(b)(3), the recommended action is exempt as it does not have the potential to have a significant effect on the environment. National Environmental Policy Act (NEPA): There is no federal funding involved in this action and NEPA does not apply.
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Sustainability
Sustainability: Not applicable.
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Commission/Committee Action
Commission/Committee Action:
Sacramento Housing and Redevelopment Commission: At its April 15, 2026, meeting, the Sacramento Housing and Redevelopment Commission reviewed the item and recommended approval of the actions described in this report. The votes were as follows:
AYES: Ramos, Janzen, Burgos, Duncan, Jefferson, Nunley, Ross, Wong, Woo
NOES: None
ABSENT: None
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RationaleforRecommendation
Rationale for Recommendation: The actions recommended in this report support SHRA’s ability to fulfill its mission of providing a range of affordable housing opportunities in the City of Sacramento.
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FinancialConsiderations
Financial Considerations: SHRA will receive a one-time issuance fee which will be a deviation from the adopted Multifamily Guideline standard of 25 basis points on the bond issuance amount. The Fee is 18.75 basis points on the first $20 million, or $37,500, plus 5 basis points on amounts over $20 million. In addition, per the Policies, SHRA will receive an annual administrative fee equal to 5 basis points (0.05%) of the outstanding bond amount as compensation for the monitoring of regulatory restrictions and the administration of outstanding bonds. The annual amount shall not be less than $15,000.
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LocalBusinessEnterprise
Local Business Enterprise (LBE): The items discussed in this report have no M/WBE or Section 3 impact; therefore, M/WBE and Section 3 considerations do not apply.
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