$8 Million Bond To Fund 41 Santa Monica Affordable Apartments
Posted Jun. 17, 2013, 9:26 am
Parimal M. Rohit / Staff Writer
Affordable housing and the Santa Monica Civic Auditorium – two issues impacted by the loss of redevelopment – were both on the City Council’s last Tuesday night agenda.
Both City Hall and members of the community have made no secret their respective desire to preserve affordable housing programs in Santa Monica and prevent the Civic Auditorium from being nothing more than a memory.
Thanks to a consent calendar item, county officials will be issuing bonds worth as much as $8 million to finance 41 affordable apartments in Santa Monica.
The bonds would be issued by the Housing Authority of the County of Los Angeles (HACLA) and would specifically fund affordable apartments at 1855 Ninth Street, 1450 Fourteenth Street, and 2006 Twentieth Street.
Through a resolution unanimously adopted by Council members June 11, City Hall would consent to HACLA issuing the bonds and issue or acquire a mortgage loan to finance the 41 affordable units.
Since HACLA would issue the bonds, that responsibility is off the City’s hands. Accordingly, so, too, is any obligation for Santa Monica to pay back the bonds.
According to City staff, subsidies currently offered by the State of California are expected to dry up by 2015.
“In an effort to preserve 41 affordable apartments, HACLA intends to restructure the financing of the (three properties), City staff stated. “HACLA proposes issuance of tax-exempt, multi-family mortgage revenue bonds as a potential subsidy source.”
Each of the units to be funded by this bond is owned by the County of Los Angeles as part of a single 99-year ground lease for all three properties. That lease was entered into in 1982.
All three properties are “subsidized by the State of California Housing and Community Development Department (HCD) through its Rental Housing Construction Program (RHCP), which provides financing to HACLA to construct, maintain, and operate affordable housing” there.
When it was determined by state officials that the RHCP and the HCD would no longer be able to subsidize the three properties at a financially sustainable level beyond 2015, the County of Los Angeles was approached to find alternate sources of funding.
“Without the continued HCD subsidy, continued operation of the Properties as affordable housing is not financially viable because rental income from the very low-income residents is insufficient to fund operating expenses,” City staff stated. “In order to preserve the 41 affordable apartments, HACLA has identified federal tax credits, tax-exempt multi-family revenue bonds, and Section 8 project-based vouchers as appropriate financial restructuring mechanisms for the Properties.”
The HACLA plans to seek low-income housing tax credits from the California Tax Credit Allocation Committee (CTCAC).
Should they be issued, the bonds would be tax-exempt and assist both the County and City to financially restructure each of the three properties to maintain 41 affordable housing units.
The council’s decision to go along with the bond follows an ordinance modification earlier this year that allowed developers to potentially fast track their respective projects if it provided as many affordable units as possible.
When the current council met in December 2012, it had directed staff to search for ways to bolster revenues to City Hall in an attempt to infuse cash into Santa Monica’s affordable housing programs.
Until 2012, City Hall regularly funded affordable housing programs with redevelopment funds. However, after Gov. Jerry Brown successfully campaigned to shut down redevelopment agencies across the state, funding for affordable housing programs in Santa Monica was almost immediately jeopardized.
Mayor Pro Tem Terry O’Day was not present at the June 11 council meeting.