The Creek at 2645, a 368-unit apartment complex at 2645 Stonecreek Drive in South Natomas, is on track to change hands and shift to income-restricted housing. City notices and local reporting indicate a nonprofit borrower and the Housing Authority are lining up tax-exempt financing to buy and rehabilitate the property. The Sacramento City Council is slated to take up the proposal at its regular meeting on Tuesday.
According to the Sacramento Business Journal, the pending deal would move the complex into nonprofit ownership with the aim of converting most of its apartments to income-restricted units. Current listings and property data put the campus at roughly 368 units at 2645 Stonecreek Drive, underscoring the size of the planned conversion. Apartments.com details the property’s floor plans, unit mix and advertised rents.
A legal notice in The Daily Recorder shows the Housing Authority of the City of Sacramento is proposing to issue up to $100,000,000 in qualified 501(c)(3) bonds to support acquisition, rehabilitation and development of the project. The notice identifies Affordable Housing Alliance II, Inc. as the future owner-operator. It also states that the Section 147(f) TEFRA hearing is scheduled for Tuesday at 2:00 p.m. at City Hall, and that written comments may be submitted through the city’s eComment portal or by email to [email protected].
The property has been a longtime favorite of investors. Market data show The Creek at 2645 last sold in 2019 for about $72 million, during a run-up in investor interest in Natomas apartment assets. That history helps explain why a nonprofit acquisition, instead of another market-rate trade, would mark a notable shift for the surrounding neighborhood. Market sale records trace the site’s recent ownership changes and pricing.
How the financing would work
Under the proposal, the Housing Authority would issue tax-exempt 501(c)(3) bonds so a nonprofit borrower can purchase and renovate the complex, a structure frequently used to convert market-rate apartments into income-restricted housing. The public notice cites Section 147(f) of the Internal Revenue Code as the basis for the TEFRA review. According to The Daily Recorder, “The Obligations shall be limited obligations of the Authority, payable solely from the revenues of the Project,” which means the bonds are not backed by the city’s general fund.
What residents might expect
Conversions like this typically come with new affordability levels, a rehabilitation plan and tenant protections written into long-term regulatory agreements. The precise details depend on how the financing and any subsidies are structured. For comparison, the The Business Journal recently highlighted another Natomas property moving to rent restrictions for households at roughly 60% to 120% of area median income, an example of the income bands such deals can create. Public TEFRA notices from other jurisdictions show Affordable Housing Alliance II, sometimes filing under the name Integrity Housing, serving as the nonprofit borrower in similar preservation transactions, which helps outline the path this project is following. Those The Business Journal reports and local TEFRA filings document comparable deals.
Public comment and next steps
Tuesday’s council hearing serves as the formal TEFRA review. If the council signs off, the borrower and its lenders would still need to complete underwriting, issue the tax-exempt bonds and close on the transaction, a process that can stretch over several months. Neighbors, current tenants and housing advocates who want to weigh in are encouraged to track the City Council agenda and Housing Authority notices for any updates or conditions attached to the conversion. Local reporters are expected to follow the vote and financing documents for specifics on affordability targets, tenant protections and the rehabilitation timeline.
