Council explores housing partnership with Northstar
After a lively debate at last Thursday’s meeting, Town Council voted 5-0 to “approve the concept” of a potential partnership with Placer County and local developers for construction of an employee housing project at Northstar-at-Tahoe.
“I believe it’s in our interest to embrace the concept and move forward,” said Mayor Don McCormack.
Under terms of a proposal brought forward by Northstar and developers East West Partners, the town would sponsor tax-exempt bonds issued by an independent, nonprofit housing corporation. The housing corporation would assume responsibility of retiring the bonds.
Revenue from the sale of those bonds would be used to finance the project.
Once the rooms are occupied, the rents would be used to pay down the bonds.
When the bonds are paid off, estimated to be in 30 to 40 years, the town would own the complex.
In order for a private interest to use the financing method, also known as 63-20 financing, a municipality must sponsor the project.
The project would be located in Placer County at Northstar and would consist of 96 residential units in three four-story buildings containing 380 beds. The terms of the financing would allow Northstar to reserve up to 50 percent of the units for its seasonal employees. East West would also use the space to accommodate contractors working on the village expansion.
Jim Porter, legal counsel for Northstar and East West, said the town’s sponsorship would not include any out-of-pocket expenses or associated credit risks. Town Attorney J. Dennis Crabb agreed with Porter, telling the Council it would be possible to structure an agreement with little or no risk to the town.
Those assurances, combined with a dire need for more affordable housing in the area, moved Council to authorize staff to further explore the financing option.
A letter sent from town officials earlier this week to Placer County officials, who have indicated a willingness to contribute $300,000 to $400,000 to the project, states that the town “support[s] the concept in general.”
The town may also hire a consultant, at Northstar’s expense, to review the proposal.
Still, the Council’s decision to move forward was a cautious one.
“I have some real concerns about why Placer County wouldn’t sponsor the project,” said Councilman Josh Susman.
Porter said a lack of familiarity with the financing and the reluctance of Placer County officials to alter their policy of not owning any type of housing were the major reasons for not sponsoring the bonds.
Under 63-20 financing, once a municipality owns the property, it has the option of retaining ownership, transferring it to a nonprofit agency or selling the complex to a private interest.
The discussion over the proposed sponsorship of the housing project also gave the Council a chance to vent some of its frustration regarding Placer County’s hesitance to build affordable housing in the eastern part of the county.
“Why is Placer County not coming to the table to deal with their own issues?” Susman asking rhetorically.
Those sentiments were echoed by Mayor McCormack.
“Placer County seems to be stiffing us again if we don’t sponsor the project, there is no project,” McCormack said.
Several groups are opposing the project, including Mountain Area Preservation Foundation and Sierra Watch.
“We are very supportive of employee and affordable housing,” said MAPF spokeswoman Stefanie Olivieri. “But the proposal brought forward by East West and Northstar is fraught with problems Better planning would put affordable housing in Truckee, and transport the employees to work.”
Terrell Watt, a land planning consultant for the groups opposing the project, also expressed concern over the conversion of forest land to high density residential zoning and the construction of an access road for the employee housing facility.
“The precedent this sets is a concern,” she said.
Those groups are asking for an environmental impact report, which Porter said he found “very discouraging,” before adding “some of the Northstar homeowners hear ‘affordable [housing]’ and think ‘slum,’ even though the people who would qualify are [Northstar employees].”
Despite their reluctance to sponsor the project, Porter said Placer County has been very supportive of the project and expects the planning commission to approve the necessary land use changes, including a general plan amendment and a rezoning of the property where the project would be located, at today’s meeting in Auburn.
Town Attorney J. Dennis Crabb recommended those approvals be in place and “litigation free” before the town sponsors the bonds.
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