SR-407-003-20 (2)
Council Meeting: October 11, 2005 Santa Monica, California
TO: Mayor and City Council Members
FROM: City Staff
SUBJECT: Public Hearing and Adoption of Resolution Approving the Issuance of Tax-
Exempt Bonds for the Tahiti, a Multifamily Affordable Housing
Development to be Located at 2411-2423 Centinela Avenue
INTRODUCTION
This report recommends that the City Council conduct a public hearing on the issuance
of tax-exempt bonds by the California Statewide Communities Development Authority
(CSCDA) to assist in the financing of the Tahiti, an affordable housing development
containing thirty-six large family units to be located at 2411-2423 Centinela Avenue.
This report also recommends that the City Council adopt the attached resolution
(Attachment A) approving the issuance of the bonds by the CSCDA.
BACKGROUND
In conjunction with the Tahiti developer, Community Corporation of Santa Monica
(CCSM), staff has identified tax-exempt bonds as an appropriate financing mechanism
for the Tahiti. Tax-exempt bond financing requires an allocation of bond authority from
the State of California's Debt Limit Allocation Committee (CDLAC). Such allocations of
authority are obtained through a competitive application process. Additionally, the
federal Tax Equity and Fiscal Responsibility Act (TEFRA) requires that a public hearing
be held in connection with the issuance of tax exempt bonds, and that the local
legislative body (City Council) approve the issuance of the bonds for a development
located in its jurisdiction. The City of Santa Monica will not issue the bonds for the
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Tahiti, and neither the City of Santa Monica nor its residents will be responsible for
repayment of the bonds. Instead, with City Council approval, CSCDA will issue the
bonds.
DISCUSSION
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 charges
prospective borrowers (in this case, CCSM) a fee to: 1) review proposed bond
financing; 2) ensure that the proposed financing meets all CSCDA guidelines; 3) ensure
the development satisfies the public benefit requirements for tax-exempt bonds; and 4)
recommend the development for approval for bond allocation by CDLAC.
This “conduit” financing relationship with CSCDA offers two important advantages.
First, the City bears no financial or legal responsibility for repayment of these bonds nor
do the bonds pose any risk to the City's credit rating. Second, the City can rely upon
CSCDA's authority and expertise in issuing tax-exempt bonds.
Again, neither the City of Santa Monica nor its residents are responsible for repayment
of the bonds. The repayment of the bonds will be the sole obligation of the Tahiti
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
Tahiti.
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The Tahiti will contain thirty-six units and will be constructed on 35,830 square feet of
land located on Centinela Avenue just south of Pico Boulevard. The Community
Corporation of Santa Monica, the current owner of the property, will develop it. The
Tahiti will consist of six buildings with the following unit mix and income affordability:
Number of Affordability
Bedroom Size
Units Level
= 35% of Median
18 Two-bedroom
Income
= 60% of Median
18 Three-bedroom
Income
CCSM held several neighborhood meetings prior to submitting the development design
for the Tahiti to the City for approval. During 2005, the Tahiti received its Rent Control
Removal permit and architectural Review Board (design review) approval. Issuance of
a building permit is anticipated by mid-2006.
The total development cost for the Tahiti is projected to be approximately $12,000,000.
The permanent funding for this development is projected as follows:
Tax Exempt Bond (permanent portion) $ 834,791
Tax Credit Equity $3,799,384
Multifamily Housing Program (State) $2,162,906
City of Santa Monica Housing Trust Funds $5,090,545
Developer Equity $59,875
TOTAL: $ 11,947,501
CCSM anticipates submitting an application to CDLAC in January 2006 for the Tahiti
seeking tax-exempt bond financing authority not to exceed $10,000,000 (approximately
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$9 million as short-term construction financing and approximately $1 million as a 30-
year loan). This financing structure also facilitates an award of federal Low Income
Housing Tax Credits (tax credits) conditioned upon issuance of the tax-exempt bonds.
These tax credits will be sold to a professional investor (that is, a partnership involved in
the business of tax credits), 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.
BUDGET/FINANCIAL IMPACT
City approval of the issuance of bonds by CSCDA for this development has no financial
or budgetary impact.
RECOMMENDATION
It is recommended that the City Council conduct a public hearing and adopt the
attached resolution (Attachment A) approving the issuance of tax exempt bonds for the
purpose of providing financing for the proposed multifamily affordable housing
development, known as the Tahiti, to be located at 2411-2433 Centinela Avenue.
Prepared by: Jeff Mathieu, Director, Resource Management Department
Ron Barefield, Acting Housing and Redevelopment Manager
Jim Kemper, Acting Housing Administrator
Ellen Alderman Comis, Senior Administrative Analyst
Attachment A: Resolution Approving the Issuance of Bonds by CSCDA for the
Purpose of Financing a Multifamily Affordable Housing Development
See Adopted Resolution No. 10072 (CCS).
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Attachment A
RESOLUTION NO. ____________
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SANTA
MONICA APPROVING THE ISSUANCE OF MULTIFAMILY HOUSING
REVENUE BONDS BY THE CALIFORNIA STATEWIDE COMMUNITIES
DEVELOPMENT AUTHORITY
WHEREAS, the California Statewide Communities Development Authority
(the “Authority”) is authorized pursuant to the provisions of California Government Code
Section 6500 et seq. and the terms of an Amended and Restated Joint Exercise of Powers
Agreement, dated as of June 1, 1988 (the “Agreement”), among certain local agencies
throughout the State of California, including the City of Santa Monica (the “City”), to issue
revenue bonds in accordance with Chapter 7 of Part 5 of Division 31 of the California
Health and Safety Code for the purpose of financing multifamily rental housing projects;
and
WHEREAS, Community Corporation of Santa Monica, a California nonprofit
corporation, or a related entity, has requested that the Authority adopt a plan of financing
providing for the issuance of multifamily housing revenue bonds in one or more series
issued from time to time, including bonds issued to refund such revenue bonds in one or
more series from time to time, and at no time to exceed $10,000,000 in outstanding
aggregate principal amount, to finance the construction and development of a 36-unit
multifamily rental housing project, located at the 2411–2423 Centinela Ave., Santa
Monica, California, and generally known as the Tahiti Apartments (the “Project”); and
WHEREAS, the Bonds or a portion thereof will be “private activity bonds” for
purposes of the Internal Revenue Code of 1986 (the “Code”); and
WHEREAS, pursuant to Section 147(f) of the Code, prior to their issuance,
private activity bonds are required to be approved by the “applicable elected
representative” of the governmental units on whose behalf such bonds are expected to be
issued and by a governmental unit having jurisdiction over the entire area in which any
facility financed by such bonds is to be located, after a public hearing held following
reasonable public notice; and
WHEREAS, the members of this City Council (this “Council”) are the
applicable elected representatives of the City; and
WHEREAS, there has been published, at least 14 days prior to the date
hereof, in a newspaper of general circulation within the City, a notice that a public hearing
regarding the Bonds would be held on the date hereof; and
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WHEREAS, such public hearing was conducted on said date by the City
Council, at which time an opportunity was provided to interested parties to present
arguments both for and against the issuance of the Bonds; and
WHEREAS, it is intended that this resolution shall constitute the approval of
the issuance of the Bonds required by Section 147(f) of the Code and Section 9 of the
Agreement;
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE
CITY OF SANTA MONICA AS FOLLOWS:
Section 1. The above recitals are true and correct.
Section 2. The Council hereby approves the issuance of the Bonds by
the Authority. It is the purpose and intent of the Council that this resolution constitute
approval of the Bonds for the purposes of (a) Section 147(f) of the Code and (b) Section 9
of the Agreement.
Section 3. The officers of the City are hereby authorized and directed,
jointly and severally, to do any and all things and to execute and deliver any and all
documents that they deem necessary or advisable in order to carry out, give effect to and
comply with the terms and intent of this resolution and the financing approved hereby.
Section 4. The City Clerk of the City shall forward a certified copy of this
Resolution and a copy of the affidavit of publication of the hearing notice to:
Justin Cooper, Esq.
Orrick, Herrington & Sutcliffe
LLP
405 Howard Street
San Francisco, California 94105
Section 5. The City Clerk shall certify to the adoption of this Resolution,
and thenceforth and thereafter the same shall be in full force and effect.
APPROVED AS TO FORM:
_______________________
MARSHA JONES MOUTRIE
City Attorney
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ADOPTED by the City Council of the City of Santa Monica at a regular
meeting of said Council held on the _____ day of _____ 2005, by the following vote:
AYES:
NOES:
ABSENT:
ATTEST:
___________________________ ________________________
MARIA STEWART PAM O’CONNOR
City Clerk Mayor
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