SR-11-D
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HPd1L:pbh '!II'
Counpl rItg. 10/12/82
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Santa ~b~lca, Callfornla
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OCT 1 ~ 1982
TO: ~1ayor and Clty Co~ncll
FROM: Clty Staff
SUBJECT: Proposed Stl.:dy of Hcus::":iC:; F1IlCi:lCe Entl tles
Introductlon
TnlS re?ort ~ecc~ends ~hat the Clty assess the vlablIlty, o~qan~zatlo~,
and deslrable capablll~les of a tO~Elr:g =lnan~e er.tltv lnte:iCe~ to oFerate
l~ ~:he
Clty
Jf Santa MOTIlca.
S-JfflClent
b~dget2ry actcorlty
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t:ndertake thls
aC-:'l\,l tv lS cu;:-:::entl V ac;al='-able.
Background
The slgnlflcant decllne In federal and state support for houslng actlvltles
serves as the lnmedlate lmpetus behlnd tnls recommendatlon to study alternatlve
means of flnanclng the preservatlon and developme:it of affordable houslng lD
the Clty. The Clty of Los Angeles lS In the process of establlshl~g a munlClpal
flnance agency whlch wlll expand the CltY'S bond flnance prograrr.
The San
FranClSCO Foundatlon recently set up the Reglonal HouSlng Asslstance Corporatlon,
a non-proflt organlzatlon, to provlde loans, grants, nortgage l~surance anc
pre-development fundlng to non-proflt houslng development corporatlons throughout
the Bay Area.
LlkeWlse, the Southern callfornla Assoclatlon of Governments lS
currently seeklng fundlng to study the vlablllty of establlshlng a non-proflt
corporatlon to be capltallzed by donatlons fro~ NaJor Southern Callfornla
employers for the pur90se of provldlng affordable houslng for employees.
Although houslng ~nrket condltlons, In addltlon to decllnlng federal s~pport
for houslng, have lncreased l:1terest lTI al ternatlve organlzatlons to conduct
houslng flnar.ce programs, there has been a substantlal a~ount of actlvlty
II-D
ln thlS area for a number of years. Famlllar publlC agenCles lnvolved lTI
OCT 1 2 19~2
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e
Mayor and Clty Co'~cll
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Santa }ronlca, Callfornla
bo~d flnanclng lTIclude state houslng flnance agenc1es (such as the Callfornla
Hous1ng Flnance Agency WhlCh flnanced both Barnard Park Vlllas and Ocean Park
Vlllas) and redevelopnent agencles. Other publ1C agenc1es Wh1Ch have the
capaclty to flna~ce other publlC beneflt actlvltles such as the preservatlon
of open space and env1ronmentally senslt1ve lane lnclude the Cal1forn1a
Coastal Conservancy and the Santa Monlca }buntalns Conservancy. However,
the prlvate sector has also been a NaJor actor ln financlng houslng e~forts,
partlcularly 1D ~he lnstance of speclal local programs.
The Ford and Rockefeller
Founcatlons as well as a number of large corporatlons have been consplCUO~S
donors to a var1ety of nor.-proflts such as the Local Inltlatlves Support
Corporatlon and the Enterprlse Fo~~datlon WhlCh lnvest ln houslng, buslness
developrr.ent and other ventures. Very often these entltles prov1de flnanclng
lIT areas or sectors where market-rate Credlt lS 1nadequate, unava1lable, or
slmply too costly.
The number of posslble models to follow 1n creat1ng a hous1ng Ilnance entlty
to serve Santa r10nlca lS qUlte s~bstantlal. ~fu1le ~ost of the ent1tles
wlth sl~llar goals attract capltal by Vlrtue of tax advantages, these can
be ln the form of donat1ons, proceeds from syndlcatlons, or tax-exempt
mor~gage revenue bond lssues. Other lssues requlrlr.g analysls lnclude
means of accesSlng new sour~es of lnvestnent such as penSlon funds, ways of
workl~g wlthlTI tbe context of eXlstlng progra~s SJch as ?HA mortgage lnsurance,
and ~ethods to flnance cooperatlves WhlCh are not well served by the prlvate
cap1tal warket.
IS5~es =or Analysl~
T~~ Clty Manager ~lll c~rec~ t~lS e==o~t lTIc~~dlng staff, con~~nlty reso~rces fron
the 9cbllc arc prlvate sectors, a~~ 90ss~ble use of a cons~:tant to ana~yze and
cevelop alter~atlve recorrenda~~ons as to ~~e s~rJctGre, organlzat~on, a~d act1"ltles of
a houslng ~lnance entlty operatlng 1n Santa ~ronlca. Speclflc areas of analys~s lnclude:
II
e
Hayor and Clty Councll ~
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sant~onlca, Callfornla
1. S~~ccture a~d Perrorrance of ~oGal Flnance Entltles
T~llS seetloD '.'lll pro\llde a orlef :::-eVlev. of success=~l
Doaels lncl~dlng types of prOJects undertaken, area served,
flnan'=lng :nechaTI'tsms, caEatallza~lon and leverage achleved,
types of households served, developer cllentele, etc.
2. Analysls of Houslng Flnance Needs ln Santa Monlca
Workl~g fro:n POllCY documents from the Clty, s~eh as the
Houslng ~lement, thlS seetlon wlll analyze the types of flnanclal
lnterventlons necessary to effect deslred programs and
reconrtend means of adcresslng then.
3. Legal and Flnanclal Parameters
Federal and state leglslatlon governlng mortgage revenue bonds and
actlvltles of non-proflt organlzatlons and local authorltles
wlll be analyzed partlcularly as they affect flnanclng capaClty.
4. Relatlonshlp to the Clty
ThlS sectlon wlll be concerned wlth identlfYlng the most approprlate
relatlonshlp of a flnance entlty to the Clty In terms of llablllty
and rlsk, recommendea powers and capabllltles, etc.
5. Structure of Recommended Entlty
Alternatlve structures wlll be assessed as to capaclty to
advance local POllCY, mlnlmlze rlsk, and 1ncrease ca91tal
resocrces for houslng In Santa !bnlca.
6. Costs of AdTIlnlstratlon and Cap1tallzatlon
ThlS sectlon wlll elaborate the adm1n1stratlve and capltal costs
of dlfferent approaches based on varYlng estlTIates of the number
of unlts to be flnanced.
7. Technlcal Appendlces
The proposed st~dy wocld also provlde ror the ~~eparatlon of
tech~lcal appendlces lDcludlnq leg~slatlon and regulatlons for tax
exe~D~ bone lss~es.
Concluslon
It 15 staff's bellef that the C1ty wlll not be able to lrnplernent the pollcles
and goals expressed by Co~ncll, the varlOUS Clty COIT~lSS10ns, and by COMmUnlty
organlzatlons solely ,"lth1n the corcteKt of c'.:.rrent:. r:rcgraI'lS such as COI1J!lUnl ty
Development Block Grant, Sectlon 8, or publlc houslng.
The S~UGY o~t~l~ed
e
Mayor and Clty Councll -
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4Itnta Monlca, Callfornla
here would permlt the Clty to evaluate new opportunltles, to assess costs,
rlsks and probable perfor~ance, and would glve staff the technlcal basls
to l~ple~ent any optlons as deSlred by Counell. A flnance agency wlll aSslst
In lmplementlng Counell POllCY wlth regard to asslstlng ln constructlon and/or
acqulsltlon of slngle famlly hones, cooperatlves, condomlnlUffis and multl-faMlly
rental structures.
RecoIT~endatlon
Staff recoTImends that Counell:
1. Authorlze the Clty ~Mnager to dlrect staff to proceed wlthbe above
descrlbed analysls.
Prepared by: Mlndy Lelterman
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