sr-032211-3dCity Councii Meeting: March 22, 2019
Agenda Item:
To: Mayor and City Council
From: .Andy Agle, Director of Housing and Economic Development
Subject: Tax-Exempt Bonds for FAME Santa Monica Senior Apartments
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 49 total scattered-site affordable senior
apartments at 1924 & 1934 Euclid Street, 1753 18th Street, and 1754 19th Street.
Executive Summary
FAME Santa Monica Senior.Apartments has received all of its entitlements for the
development of 49 affordable residences with public and private financing. One of the
sources of funding,. tax-exempt bonds, requires City Council approval of the issuance,
although 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, thus
providing cost savings and increased leveraging of City housing trust funds.
Background
FAME Santa Monica Senior Apartments is proposing to provide 49 apartments
affordable to low-income senior households. FAME Santa Monica Senior Apartments is
a scattered-site project on three sites within a few blocks of each other.
FAME Santa Monica Senior Apartments LP, the developer, arid staff have identified tax-
exempt bonds as an appropriate financing mechanism for FAME Santa Monica Senior
Apartments. 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 the public be
afforded an opportunity to comment on the issuance of tax-exempt bonds, and that the
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local legislative body (City Council) approve the issuance of bonds for a development ,
located in its jurisdiction.
Discussion
The City of Santa Monica will not issue the bonds for FAME Santa Monioa.Senior
Apartments, 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, ensuring the development satisfies the public
benefit requirements for tax-exempt bonds, and recommending the development for
bond allocation by CDLAC.
The repayment of bonds will be the sole obligation of FAME Santa. Monica Senior
Apartments LP. The sources of repayment are private investor equity from the sale of
federal low-income housing tax credits, and a .housing trust fund loan from the
Redevelopment Agency of the City of Santa Monica.
The total development cost for FAME Santa Monica Senior Apartments is projected to
be approximately $16.9 million. -The attached resolution .authorizes up to $9 million of
tax-exempt bonds. FAME Santa Monica Senior Apartments LP anticipates submitting
an application to CDLAC in March 2011 seeking tax-exempt bond financing authority for
the project. Most of the bond financing would serve as short-term construction
financing, with approximately $1.0 million serving as permanent financing. This
financing structure also facilitates an award of federal low-income housing tax credits
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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.
Financial Impacts & Budget Actions
City approval of the issuance of bonds by CSCDA for the proposed development has no
financial or budgetary impact.
Prepared by: Ava Lee, Senior Development Analyst
Forwarded to Council:
Rod Gould,
City Manager
Attachment A: Resolution Approving the Issuance of Bonds by CSCDA for the
Purpose of Financing a Multifamily Affordable Housing Development
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Housing and Economic Development
City Council Meeting 03-22-2011 Santa Monica, California
RESOLUTION NUMBER (CCS)
(City Council Series)
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, FAME Santa Monica Senior Apartments LP, or related entities, 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 (the "Bonds") in one or more
series from time to time, and at no time to exceed $9,500,000 in outstanding aggregate.
principal amount, to finance the construction and development of a 49-unit multifamily
rental housing project, located at 1924 & 1930 Euclid Street, 1753 18th Street, and 1754
19th. Street, Santa Monica, California, and generally known as FAME Santa Monica
Senior Apartments (the "Project"); and
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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 a date specified in such notice; and
WHEREAS, such public hearing was conducted on such date, at which time an
opportunity was provided to interested parties to present arguments both far 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, THE CITY COUNCIL OF THE CITY OF SANTA MONICA
DOES RESOLVE AS FOLLOWS:
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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 constitutes
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 thaf 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:
Thomas Downey
Orrick, Herrington & Sutcliffe LLP
405 Howard Street
San Francisco, California 94105
Section 5. This resolution shall take effect immediately upon its passage.
APPROVED AS TO FORM:
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