The Los Angeles County Development Authority (LACDA) issues tax-exempt and taxable multifamily housing bonds for qualified developments located in Los Angeles County. The LACDA may issue either tax-exempt or taxable bonds.  Taxable bonds would generally be issued only in combination with tax-exempt bonds.  Taxable bonds do not require an allocation of bond authority from the California Debt Limit Allocation Committee (CDLAC).

 

Multifamily Bond Financing Program
The LACDA requires a defined public benefit before it is willing to act as an issuer for tax-exempt multifamily housing bonds. These benefits must conform to all Federal and State requirements for tax-exempt multifamily housing bonds. To ensure a public benefit, developers must set aside at least 20% of the units in each project.  These units must be rented to or held available for rent to very low-income tenants (50% of median-income, adjusted for household size).  The LACDA reserves the right to impose added restrictions.
Projects must be located within Los Angeles County.  If the project is located within an incorporated city, the LACDA will require a cooperative resolution adopted by that city.  The City of Los Angeles and the City of Long Beach have their own bond programs.
Projects are considered on a priority basis.  They include projects that will be instrumental to neighborhood turn-around, provide significant public benefit, and preserve existing affordable housing.
The LACDA requires each applicant to complete its application.  Applications must be submitted for all multifamily projects seeking bond financing where the LACDA will act as issuer and where the LACDA will sponsor and hold the public hearing required under the Tax Equity and Fiscal Responsibility Act (the "TEFRA" hearing).  This includes all new money issuances requiring an allocation of bond authority from CDLAC, new 501(c)(3) issues, and refunding of existing bond issues.

Applications must be submitted at least 120 days before the relevant CDLAC application deadline to allow enough time for the LACDA review and approval.  Applications that do not need CDLAC approval must be submitted at least 90 days before the desired bond closing date.  Any information provided in the application must be considered public information by State law.

Bond Counsel
The LACDA has an approved list of bond counsel firms.

Finance Team Approval
The LACDA has an approved list of financial advisory firms.

Independent Study
The LACDA reserves the right to require an independent study of any proposed project.

Tax-Exempt Private Activity Bonds

Private activity bonds
Private activity bonds require an allocation of bond authority from CDLAC.  To get the allocation, the LACDA must submit an application to CDLAC on behalf of the developer. Submittal of the application is at the discretion of the LACDA, not the developer. The developer must pay all required CDLAC fees in advance of application submittal.

501(c)(3) private activity bonds
The LACDA may issue 501(c)(3) bonds on behalf of qualified not-for-profit organizations. 501(c)(3) bonds are tax-exempt, but do not require an allocation from CDLAC.  501(c)(3) bonds cannot be used with the Low-Income Housing Tax Credit Program (LIHTC).

Taxable bonds
The interest on taxable bonds is not exempt from either Federal or State taxation.  These bonds are not subject to Federal volume "cap" limitations, and therefore, do not require an allocation from CDLAC.  Taxable bonds can be used in combination with LIHTC.  Taxable bond issues must meet all applicable requirements of these Policies and Procedures (including rating requirements) and any such added regulations which may, from time to time, be promulgated by the LACDA.

Bond Rating and Credit Enhancement Requirements

The LACDA requires that bonds for which it acts as issuer be both credit enhanced and have a minimum rating in the “A” category by Standard and Poor’s (equivalent Moody’s or other bona fide agency rating also acceptable), except as noted below, OR the bonds be privately placed with a “sophisticated investor” as defined by the LACDA.  The LACDA reserves the right to impose these minimum requirements on bond issues for which the LACDA issues bonds or the LACDA holds a TEFRA hearing.

Credit enhancement may take any number of forms, including a letter of credit (LOC), mortgage backed security (MBS), collateral pledge, bond insurance, etc.  The form of credit enhancement must be enough for a minimum rating in the “A” category by Standard and Poor’s (or the equivalent). The bond rating must be obtained by the closing of the bond issue.

LACDA Fees
Developers must pay all costs of issuance at bond closing, including, but not limited to, bond counsel, county counsel, underwriter, trustee and financial advisor fees, as well as rating agency fees.  Any deposits will be credited toward the cost of issuance at closing. 

Only 2% of the proceeds of a tax-exempt bond issue may be used to pay costs of issuance.  Costs over 2% must be paid from other sources secured by the developer including, potentially, the proceeds of taxable bonds.

The initial issuer fee of 25 basis points (0.25%) on the bond amount and the first year of the annual administrative fee the greater of either 12.5 basis points (0.125%) of the outstanding bond amount or $6,000 are both paid at bond closing. Developers will also pay an annual administrative fee of the greater of either 12.5 basis points (0.125%) of the outstanding bond amount or $6,000 to the LACDA, for the qualified project period to cover the LACDA's ongoing administration and monitoring costs for the project.

LACDA Indemnity
Each applicant must provide the following to the LACDA as a part of bond documentation an indemnity to the LACDA, its members, officers, agents, and employees for all costs, expenses and attorney fees, as well as any judgment or settlement costs arising out of or involved in the financing, or in any of the documentation related thereto.

The LACDA reserves the right to make exceptions, at its sole discretion when deemed necessary. The LACDA guidelines and policies are subject to change.