Frequently Asked Questions

What is a TEFRA hearing?
A TEFRA hearing is a public hearing required by the US Internal Revenue Code prior to the issuance of tax-exempt bond financing for construction and development projects. The hearing allows members of the public in the city where a project is to be located an opportunity to comment on the issuance of the tax-exempt bonds.
Why is the City holding a TEFRA Hearing for this project?
CNU and its affiliated non-profit, the Northern California Health Services and Research Foundation (a 501(c)(3) non-profit public-benefit corporation) have asked the City to hold the TEFRA hearing so they can access tax-exempt bond funds to develop the hospital project, which is part of the larger Medical Center Campus Project. At the hearing, the City Council will receive public comment and input, and it will then consider whether to allow the issuance of tax-exempt bonds to finance the project. The bonds would be issued by the California Public Finance Authority on behalf of CNU and its affiliated non-profit, independent of the City. The City would not be responsible for issuance or repayment of the bond indebtedness. The law requires that such a hearing be held by a government jurisdiction where the project is to be located. While the law does not require the City to hold the TEFRA hearing (it could be held by the County, for example), the hearings are usually held by the city where the project is to be located. The last TEFRA hearing held by the City was in April 2017 for an affordable housing project.
Does the City’s holding of a TEFRA hearing or the City’s approval of issuing bonds indicate that the City will approve the project?
No, while the holding of a TEFRA hearing and approval of issuing tax-exempt bonds would help provide a financing mechanism for CNU, these actions do not constitute approval of the hospital project or the larger Medical Center Campus Project. The TEFRA hearing pertains solely to the project’s financing, which is separate from the City’s project review process. Even if the issuance of bonds is approved, the City retains full discretion to approve, disapprove, or modify the project, including imposing appropriate environmental mitigation measures.
Who would issue the bonds? What would the bond funds be used for? Why are they tax exempt?
CNU and its affiliated non-profit have asked the California Public Finance Authority to issue up to $900,000,000 of tax-exempt bonds to fund construction and development of the hospital project. The bonds would be repaid by the non-profit, who would own the facilities constructed with the bond proceeds. CNU is seeking to issue tax-exempt bonds because the interest rate they would pay to bond holders is much lower than with taxable bonds which would result in considerable project cost savings.
Does the involvement of a non-profit corporation in the financing of the project mean the hospital will be a non-profit hospital?
The City has been advised that the use of tax-exempt financing requires that the hospital, if it is ultimately constructed using tax-exempt bond funds, must be owned by a non-profit organization.
What will happen to the project if the tax-exempt bonds are not approved?
If the tax-exempt bonds are not approved, CNU would be unlikely to obtain tax-exempt bond financing for the hospital project. But, CNU may be able to access other types of bonds or financing to construct the project.
Does CNU have the financial resources to continue with the project without tax-exempt bonds?
Only CNU can answer this question. The City reviews any proposed project in good faith that the developer has sound construction and operating financial support, but the City cannot require a developer to submit project financing plans as a condition for consideration of the project.
Is the City financially responsible for payment of the tax-exempt bonds?
No, the City has no obligation for repayment of the bonds. The City is not a party to the bond issuance or any part of the financing of the project.
What will the Project look like? How big will it be? Where will it be built?

The City received an application in December 2018 from Fong & Chan Architects requesting approval of various Planning permits (referred to as entitlements) for the California Northstate University (CNU) Medical Center Campus. The CNU Medical Center Campus Project encompasses approximately 25 acres of property currently owned by CNU. A portion of the property is already developed with a mix of commercial and office uses. The Project also includes additions to the existing California Northstate University educational campus and demolition and redevelopment of most of the Stonelake Landing Shopping Center.

The Applicant’s proposal includes a new teaching hospital, several parking structures with ground floor commercial space, a medical office building, an outpatient clinic, and a student dormitory. The Applicant proposes the Project to be completed in three phases.

View applicant-submitted information including a project description and associated plans and graphics

Does CNU own the Stonelake Landing Shopping Center and is it part of the project?

In early 2018, CNU purchased nine of the thirteen parcels that comprise the Stonelake Landing Shopping Center. CNU does not own the four parcels in the Shopping Center where Elk Grove Church of Christ, Oz Korean BBQ, Shell/Circle K, and Carl’s Jr./Green Burrito are located. Portions of the shopping center are proposed to be demolished and rebuilt as part of the Project.

Has CNU recently purchased additional property nearby? What are their plans for this additional property?

CNU has stated, and public property records confirm, that in March of 2019 CNU purchased an approximately 9.25-acre property located at 2410 Maritime Drive (on the north side of Elk Grove Boulevard at I-5). This property is not included in the current Medical Center Campus Project application. CNU has stated that they have no immediate plans for this property; however, in the past they have indicated to City staff the possibility of developing this property as a bio-tech business park and/or as a medical office building, but no application for such a project has been received by the City, and the City is not currently working with CNU on a such a project.

Public property records also show that in April of 2019, CNU acquired additional property at 2400 Maritime Drive, just to the west of 2410 Maritime Drive. This property consists of two parcels totaling approximately 2.65 acres, and contains an existing approximately 14,750 square foot, two story Class B office building. The City is not aware of CNU’s plans for its use of this property.

Has the City approved the Medical Center Campus Project?

No. The Medical Center Campus Project has not been approved by the City. The initial project application was submitted to the City in December 2018 and subsequently deemed incomplete. The City received a revised submittal on April 16, 2019. The application is currently under review. The approval of the Medical Center Campus Project, if at all, would be subject to further review and public hearings prior to approval.

What is the public process for commenting on the Project?

The City currently estimates that the review process for the Project, including environmental review, will take approximately 12 to 18 months from April 2019 until the Project is brought to the City Council for a decision. There will be multiple opportunities for public input and comment throughout the project review period. Throughout its review process, the City will encourage CNU to conduct public outreach to nearby neighborhoods.

Will the City be hosting public outreach meetings for the Project?

The City is committed to gathering as much input as possible from residents and business owners throughout the review process. While the City encourages CNU to conduct their own community outreach meetings, the City will conduct public hearings and solicit public comment at several stages of the review process. The Project Review Timeline highlights those milestones over the course of the Project’s review when the City will be soliciting public comment. Public hearing or agenda notices will be published in advance of these meetings. Signup to receive Project updates and alerts when new information is available.

What City and other governmental approvals are required?

CNU has applied to the City for approval of a District Development Plan (DDP), Major Design Review for the first phase of the Project, and a Conditional Use Permit (CUP) to allow a hospital, heliport, and expansion of the existing medical school. The Applicant is also requesting a General Plan Amendment and Rezone for a portion of the site to the General Plan land use designation of Employment Center and the MP zoning district. Text amendments to the General Plan and the Zoning Ordinance which relate to development in the 200-year flood plain are also being requested by CNU. The scope of required entitlements may change as the City proceeds with the review of the Project.

If these approvals are granted by the City, the City would also then issue building and other permits for all non-hospital building components of the teaching hospital (such as demolition, grading, parking, and landscaping). Building permits for the hospital building itself would be issued by the California Office of Statewide Health Planning and Development (OSHPD), who is the legal authority for permitting and inspecting all hospital projects in the State of California. While the hospital is being designed to meet Level II Trauma Center standards, the trauma center level designation must be issued by the Sacramento County Emergency Medical Services Agency. The heliport may require Federal Aviation Administration (FAA) approval.

The DDP includes other non-hospital buildings such as new and redesigned campus facilities, a dormitory building, three parking structures (two with ground floor commercial uses), a medical office building, an outpatient clinic building, and a central plant building. These components of the DDP would be evaluated under the DDP as to location and use, but each would require its own subsequent design approvals and building permits as development of those components is ready to proceed.

When will construction on the hospital begin?

Start of construction is dependent on a number of factors, including the approval of entitlements by the City, issuance of building permits by both the City and OSHPD, and Project financing. If the Project is approved by the City Council, CNU anticipates that construction could begin as early as fall of 2020, although this timeframe is subject to change.

When will the hospital open?

Should the Project be approved, CNU has indicated that they are targeting a late 2022 opening of the hospital.

What will happen to the businesses that are in the Stonelake Landing Shopping Center?

The City has been advised by CNU that approximately six or seven existing businesses are located in buildings that would be demolished to make way for the hospital. Of these, the City was advised by CNU that approximately three to four businesses have lease rights that go beyond the anticipated start of hospital construction. Those businesses are tenants of CNU, and CNU and the business will need to come to an agreement for their relocation, lease termination, or other arrangements prior to construction commencing. This is a private matter between CNU and its tenants, to which the City is not a party; however, the City may be able to assist a business in need of relocation through economic development services in order to retain that business in the City of Elk Grove.

Why can’t CNU build their Project in another location?

CNU is a private company that has made a business decision to make an application to create a Medical Center Campus Project (i.e., the District Development Plan) on property it owns near its existing campus location. Other than land use, design, and building permit authority, the City cannot require the Project to be built at another location, whether on public or private property. The City has discussed alternative locations with CNU, but CNU has advised the City it intends to proceed with the Project, including the hospital, on the land it owns at and near its existing campus. Given the Project’s location, the City is encouraging public input, especially from residential and business neighbors, throughout the application process.

What effect will the Project have on traffic, public safety, the environment, and parking?

City review of the Project will include an analysis of consistency with the design and development standards of the Elk Grove Municipal Code. This review includes, but is not limited to, building heights and setbacks; site circulation and parking; architectural design; landscaping; and roadway improvements. Project review will involve several City departments, including Development Services, Public Works, Police, and Economic Development, along with outside agencies such as the Consumes Community Services District (Fire), County of Sacramento (water and sewer), Caltrans, and the Sacramento Metropolitan Air Quality District.

The Project is subject to the California Environmental Quality Act (CEQA). Pursuant to CEQA Guidelines, the City anticipates the preparation of an Environmental Impact Report (EIR). Anticipated areas of study for potential impacts include traffic and transportation, public services (police, fire, and emergency services), noise, water supply, air quality, biological resources, aesthetics, and light and glare. The EIR will be circulated for public review and comments. The EIR process will identify significant adverse environmental impacts and, to the extent feasible, identify mitigation measures to reduce or eliminate such impacts as much as possible.

What are the Project’s economic impacts?

Although CNU has made statements about the potential favorable economic impact of the Project, the City has not yet validated or confirmed this economic analysis. City staff estimates that the hospital could employ approximately 2,000 people at full buildout based on the current proposed facility size and number of beds (about 700,000 square feet and 400 beds), but this estimate may change.

Is the City providing CNU any economic development incentives or subsidies?

The City is not currently considering an incentive request. However, the Project’s potential favorable economic impacts in terms of new jobs, capital investment, and tax revenue generation, may qualify the Project for financial incentives under the City’s Economic Development Incentive Program. If an incentive were to be considered, City staff would conduct its own economic impact analysis as part of that process, would formulate a recommendation, and would make a recommendation to City Council. Consideration of a financial incentive for this Project would require a public hearing under State law. Opportunities for the public to provide comment on any potential financial incentives considered for this Project would be part of the public hearing process.

Is the City financing the hospital or any other portions of the Project?

No, the City is not financing any portion of the Project. The City was approached by CNU as it planned the Project in 2017 and 2018 to ascertain the City’s willingness to participate in hospital financing. Ultimately, CNU requested the City to provide financing assistance in the form of a credit enhancement by the City of privately issued bonds. The City carefully evaluated this request and determined it was not in the best of interests of the City or its residents and taxpayers to do so.

How long has the City known about the Project, and why wasn’t the public notified about it before CNU’s announcement in December of 2018?

The City’s Economic Development Department is frequently the first point of contact with developers, and the City’s Economic Development Department first learned about the Project in concept in mid-2017. Staff regularly meets with CNU (as it does with other businesses), and in the course of these regular meetings, CNU advised staff in 2017 that it was planning to acquire the Stonelake Landing Shopping Center and pursue a major medical/educational campus project.

The Economic Development Department’s chief function is to facilitate economic development projects, and the City Council has adopted the medical industry as a target industry. Thus, the Economic Development Department has provided guidance and assistance to CNU as they developed their Project plans; this included guidance on city entitlement requirements and review processes. These services are provided to any business seeking to locate or expand in Elk Grove, and the City Manager, Finance Director, Development Services staff, and the City Attorney’s Office are also often involved in these conversations as appropriate.

Staff in the Economic Development Department engage with any business interested in locating or expanding in the City. Some projects ultimately come to fruition and some do not. As a project moves from concept to a potential development application, it is the Economic Development Department’s policy to defer to the applicant regarding public statements about a project. Typically, the City does not announce a project publicly until the applicant asks the City to do so, or until an application is actually made to the City. Not all projects necessitate a public announcement. However, in this case, City staff encouraged CNU to conduct business and community outreach meetings about the Project prior to announcing its Project. CNU made a business decision not to do so.

Is the City “Fast Tracking” approvals for the Project? What does that mean? Has the Project already been approved?

The city is not “Fast Tracking” approvals for the Project. “Fast Tracking” is a term sometimes used in municipal economic development to ensure that the decision to approve or deny a project with significant economic development benefits is made as quickly as possible by the City. The City Council has adopted a program called the Economic Development Project Review Team that facilitates rapid project review and decision-making. “Fast Tracking” does not pre-determine the outcome of review and decision making; it merely accelerates those processes. In this case, however, given the complexity, scope, and scale of the Project, and concerns raised by neighbors, the City has decided not to use its Fast Tracking program for the Project.

Is the City working with CNU to develop a bio-tech district as part of the Project?

The City has had discussions with CNU about leveraging the presence of the medical and pharmacy school, and the potential development of the Medical Center Campus Project, to attract small and early-stage life science and bio-tech companies to Elk Grove. Such companies could be drawn here by a desire to be located near the Project because they may have synergy with the activities taking place and would want access to university research, educational and medical facilities, as well as faculty and staff. It is common for private companies like these to locate near university medical center campuses in a bio-tech district or park, either on-campus or nearby. Today, there are no specific plans to develop a bio-tech district, either on-campus or nearby. With CNU’s recent purchase of 2400 and 2410 Maritime Drive, and CNU’s past stated interest in developing a bio-tech park, it is possible that CNU will approach the City with such a proposal. In the meantime, City Economic Development staff continue to actively engage a handful of bio-tech companies in discussions about locating in Elk Grove at locations throughout the community because the medical industry in general, and bio-tech and life sciences in particular, are target industries of the City.

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