By Joan Ling Executive director, Community Corp. of Santa Monica
This Tuesday, July 27, the City Council will consider approving the issuance of tax-exempt, private activities bonds by the California Statewide Communities Development Authority for the affordable housing project at Main and Pacific in Ocean Park. Due to the flurry of disinformation surrounding this matter, we feel compelled to state the facts: Will the City have to pay for the bonds or incur any liability for the repayments? No. The bonds are allocated by a state agency and issued by another state agency. The repayments are solely limited to the revenues derived from the project and, in the case of a public offering, additionally secured by a guarantee from a triple A-rated, private organization like the Fannie Mae Corporation.
How much is the city subsidizing this project? The city has committed $5,180,000 to assist this project, out of a total budget of approximately $12,900,000. The rest of the funds will come from a federal tax credit equity investment, a state housing program loan, and tax-exempt bond proceeds. We have in hand a commitment from the state for about $2,500,000. We expect in secure a non-competitive allocation of tax-exempt bonds and 4% tax credits in October. This financing strategy was structured well over a year ago.
Whom will this project serve? This project will serve individuals and families making roughly between $20,000 and $40,000 per year. All Santa Monica residents and full-time workers have a local preference over other applicants.
Why should the city council approve the issuance of the bonds? The approval is required under the federal Tax Equity and Fiscal Responsibility Act. Such approval will allow us to bring close to $8,000,000 of affordable housing resources to the city for the benefit of its residents and businesses, while incurring no cost and no liability to the city.
Thank you for giving us the space to clear up any confusion. Public information and discourse – when provided accurately and in good faith – serve our democracy. We thank you for being a part of the solution.
Originally published in the Santa Monica Daily Press print edition on July 26, 2004. Read the original PDF.