sr-072710-1eCity Council Meeting: July 27, 20'!0
Agenda Item: ~ ~'~
To: Mayor and City Council
From: Andy Agle, Director of Housing and Economic Development
Subject: Tax-Exempt Bonds for Lincoln Walk Affordable Housing Development
Recommended Action
Staff recommends that the City Council adopt the attached resolution approving the
issuance of tax-exempt bonds by the California Statewide Communities Development
Authority (CSCDA) to assist in the financing of Lincoln Walk, a proposed mixed-use
development that will be affordable to very low- and moderate-income households.
Executive Summary
The developer of Lincoln Walk, NMS Properties, Inc., proposes to fund the affordable
housing development with private funding and tax-exempt bonds. City Council approval
is required for the issuance of tax-exempt bonds. 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 no more than 50 percent of the
area median income. Lincoln Walk has received planning approvals including
Administrative Approval and Architectural Review Board Approval.
Background
Lincoln Walk is located adjacent to the downtown area at 1447 Lincoln Boulevard. The
developer, NMS Properties, Inc. has identified tax-exempt bonds as an appropriate
financing mechanism for the proposed development. 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.
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The developer submitted an application for the bond allocation to CDLAC in July 2009.
On August 11, 2009, the City Council adopted a resolution approving the issuance of
tax-exempt bonds by the California Statewide Communities Development Authority
(CSCDA) to assist in the financing of Lincoln Walk. The closing of the development
financing must occur within 12 months of the adoption of the resolution. Since the
closing is anticipated to occur around October 2010, which exceeds the 12-month limit
since adoption of the resolution in August 2009, a new resolution is required. The delay
was the result of negotiations between the developer and the bank lender regarding the
terms of the construction financing.
Discussion
The City of Santa Monica will not issue the bonds for the development, 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, ensuring that the proposed.
financing meets all CSCDA guidelines, certifying that 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 resolution authorizes up to $21,100,000 of tax-exempt bonds for
Lincoln Walk.
Lincoln Walk will contain 97 units including 20 studio units at 50 percent of the area
median income (AMI), 75 studio units at 100 percent of the AMI and 2one-bedroom
units at 100 percent of the AMI.
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Financial Impacts & Budget Actions
City approval of the issuance of bonds by CSCDA for this development has no financial
or budgetary impact.
Prepared by: Melissa Lindley, Senior Development Analyst
Approved:
Andy Agle, Director
Housing and Econc
ATTACHMENT:
Development
Forwarded to Council:
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Rod Gould
City Manager
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.
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Reference Resolution No.
10515 (CCS).