City Council Meeting: October 14, 2008
Agenda Item: 1-F
To: Mayor and City Council
From: Andy Agle, Director of Housing and Economic Development
Subject: Tax-Exempt Bonds for Civic Center Affordable Housing
Staff recommends that the City Council adopt a resolution
approving the issuance of tax-exempt bonds by the California Statewide
Communities Development Authority (CSCDA) to assist in the financing of 160
affordable housing units in the
The City Council and
Redevelopment Agency have recently approved the project design and business
terms for the development of the
In conjunction with the Village developer, Related/Santa Monica
Village LLC (Related), staff has identified tax-exempt bonds as an appropriate
financing mechanism for the affordable housing component of the Village (160
units). Tax-exempt bond financing
requires an allocation of bond authority from the State of
The City of
Established in 1987 as a California Joint Powers Authority, CSCDA is a public agency jointly sponsored by the League of California Cities and the California State Association of Counties. It offers a broad range of tax-exempt financing programs to assist local agencies in achieving economic, financial and social goals. CSCDA takes responsibility for reviewing proposed bond financing, ensuring that the proposed financing meets all CSCDA guidelines, ensuring the development satisfies the public benefit requirements for tax-exempt bonds, and recommending the development for bond allocation by CDLAC.
The repayment of the bonds will be the sole obligation of the Village affordable housing development. The sources of repayment are private investor equity from the sale of federal low-income housing tax credits, and rental revenue from the Village. The total development cost for the Village affordable housing is projected to be approximately $62.5 million. The attached resolution authorizes up to $36 million of tax-exempt bonds. Related anticipates submitting an application to CDLAC in early 2009 seeking tax-exempt bond financing authority for the Village. Most of the bond financing would serve as short-term construction financing, with approximately $5.2 million serving as permanent financing. This financing structure also facilitates an award of federal Low Income Housing Tax Credits (tax credits) conditioned upon issuance of the tax-exempt bonds. The tax credits are sold to a professional investor and the proceeds of the sale of the credits will be used to provide funding to construct the development and to repay the construction portion of the tax-exempt bond.
City approval of the issuance of bonds by CSCDA for this development has no financial or budgetary impact.