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c;cror City Council Report
Santa Monicsi
City Council Meeting: August 11, 2009
Agenda Item: ~ ®~
To: Mayor and City Council
From: Andy Agle, Director of Housing and Economic Development
Subject: Tax-Exempt Bonds for Three Affordable Housing Developments
Recommended Action
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 three mixed-use developments that will be
affordable to low- and moderate-income households.
Executive Summary
The developer, NMS Properties, Inc. proposes to fund three affordable housing
developments with private funding and tax-exempt bonds. Tax-exempt bonds require
City Council approval of the issuance. However, the City will neither issue the bonds nor
be responsible for their repayment. Tax-exempt bonds offer lower interest rates
compared to regular bank loans and require a minimum of 20 percent of the units to be
restricted to very low income households earning up to 50 percent of the area median
income. All three developments have received their planning and zoning approvals.
Background
The three affordable housing developments are all located in or near the downtown
area: 1) the Modena, Spoleto, Tuscany development is proposed for scattered sites at
711 Colorado Avenue, 1514 7th Street, and 1437 5th Street; 2) the Quonset Court
development is proposed at 819 Broadway; and 3) the Lincoln Walk development is
proposed for 1447 Lincoln Boulevard.
The developer, NMS Properties, Inc. and its affiliates have identified tax-exempt bonds
as an appropriate financing mechanism for the three proposed developments. Tax-
exempt bond financing requires an allocation of bond authority from the State of
California's Debt Limit Allocation Committee (CDLAC). Such allocations of authorityare
obtained through a competitive application process. Additionally, the federal Tax Equity
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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.
Discussion
The City of Santa Monica will not issue the bonds for the developments, 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.
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, ensurirg 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 NMS Properties, Inc. and its
affiliates. The attached resolutions authorize up to $100,000,000 of tax-exempt bohds
for the three developments. The developer submitted applications for the bond
allocations to CDLAC in July 2009.
The three developments will contain 272 units on five sites in or near downtown Santa
Monica with the unit mix and affordability shown on the following page:
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Developments
50%AMI 100%AMI Total Units
Modena 7 Studios & 4 Studios 26
711 Colorado Avenue 15Two-Bedrooms
Spoleto 20 Two-Bedrooms 5 Studios & 26
1437 5th Street 1One-Bedrooms
Tuscany 20 Two-Bedrooms 6 Studios 26
1514 7th Street
Quonset Court 20 Studios 75 Studios & 97
819 Broadway 2 One-
Bedrooms
Lincoln Walk 20 Studios 75 Studios & 97
1447 Lincoln 2 One-
Boulevard Bedrooms
Total 92 180 272
Financial Impacts & Budget Actions
City approval of the issuance of bonds by CSCDA for this developmeht has no financial
or budgetary impact.
Prepared by: Melissa Lindley, Senior Administrative Analyst
Forwarded to Council:
Andy Agle, DirectoF°~ Pont Ewell
Housing and Economic Development Ci Manager
ATTACHMENTS:
A. A resolution of the City Council of the City of Santa Monica approving the issuance
by the California Statewide Communities Development Authority of Multifamily
Housing Revenue Bonds for Lincoln Walk apartments, Quonset Court apartments;
and Modena, Tuscany and Spoleto apartments.
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Reference Resolution No.
10420 (CCS).