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HONORABLE MAYOR AND CITY COUNCIL April 16,2021 Subject:JPA-issued Bonds for Moderate-Income Housing Page 11 Pros: Issuing an RFP would enable the City to determine if it is possible to use this structure and have all of its objectives met at this time. It is a good time in the real estate market cycle to pursue use of a product that could help to reposition Class A properties suffering from high vacancies. Cons: It is quite unlikely that the City will receive positive responses to all its terms, while issuing an RFP and evaluating responses involves a considerable amount of staff work. Staff has significant concerns about this execution, and it is virtually certain that respondents will want to enter into time-consuming negotiations with staff on terms less acceptable to the City. In addition, the City Council recently deprioritized the Moderate-Income Housing Plan, it having received only one vote in the City Council's March 2021 roadmap exercise. Reason for not recommending: This alternative's drawbacks outweigh its advantages;therefore, staff does not recommend this alternative. Alternative#2:Direct staff to work with the Bay Area Housing Finance Authority to create a Bay Area JPA to issue this type of bond. Pros:The Bay Area Housing Finance Authority(BAHFA)was created through legislation in 201911 specifically to serve the affordable housing needs of the Bay Area through production, preservation, and protection strategies. It has the power to issue bonds to raise revenues for financing, and has a focus on innovation and creativity, with an objective to'`craft innovative approaches to overcome persistent challenges the region has faced, including creative financing..."12 It is governed by the Association of Bay Area Governments and Metropolitan Transportation Commission, which has local elected officials on their governing boards(including those from the City). San Jose's Director of Housing sits on the BAHFA Technical Advisory Committee. It is an appropriate and promising local organization to reflect local conditions and policy priorities, with a local office that City staff or elected officials could go to in case meetings were necessary regarding problem properties. Further, as BAHFA has not yet formed a JPA, it could be constructed from the start with different tiers of members, with some members having greater levels of control than others as desired. Cons: While BAHFA is ideally positioned for this work, its leadership first would have to agree this is an endeavor it wants to undertake, and it would need to obtain resources to do this work. It also would take time and effort for City staff to work with BAHFA to develop a JPA structure for moderate-income housing that meets the City's needs and addresses the City's concerns. An adequate level of effort unfortunately is not possible at this time while COVID response—the eviction moratorium, rent increase moratorium, the Emergency Rental Assistance Program rollout, "AB 1487(Chiu,2019),https://Ieginfo.Iegislature.ca.gov/faces/billTextClient.xhtml?bill id=20I920200AB 1487. 12"New Report Charts Course Tackling Bay Area's Chronic Housing Affordability Problems,"Feb.25,2021, https://abag.ca.gov/news/new-report-charts-course-tackling-bay-areas-chronic-housing-affordability-problems; Association of Bay Area Governments and Metropolitan Transportation Commission,Momentum for Lasting Solutions: Launching the Bay Area Housing Finance Authority and the Expanded Regional Housing Portfolio,Feb. 2021,p.9,https://abag.ca.gov/sites/default/files/documents/2021-02/Launching%20BAHFA- Regional%20Housing%20Portfolio 2-24-21 v6.pdf.