Two tax-exempt housing revenue bonds totaling $67 million have been completed by the city of Los Angeles and will provide financing for the construction of 1,588 new rental housing units in 23 developments across the city.
Mayor Tom Bradley said the tax-exempt financing is now the primary housing production effort for the city, particularly for generating low-income housing. These bonds provide for the construction of new rental housing, with 20% of the units in each development reserved for low-income households.
The financing structures involved in the two bond issues are both very innovative, according to Craig Avery, director of housing for the city. "They utilize 'low floaters' or short-term bonds which are continually renewed and, therefore, provide longer term financing at a short term, but at variable interest rates," he said.
He said that in the first bond issue, the developer, Forrest City Dillion, took the risk of any future changes in the interest rate, set initially at 7 1/2%. The second bond issue had the lender, Golden State Sanwa Bank, take the risk of a variable interest rate risk and the developers received a fixed-interest mortgage loan of 10%.