extremely disruptive and detrimental to CEI’s business operations. CEI has substantially relied in good faith on the City’s Council’s prior approval of the unit-capped Pilot Program and staff’s confirmation that CEI has successfully secured 930 of the eligible units under that program. Moreover, CEI has since made significant financial commitments in direct reliance on the unit-capped Pilot Program to move the 930 secured units forward, which include incurring construction financing obligations.
Additionally, any action by the City to retroactively alter the IZO and impose new requirements on CEI’s Pilot Program Projects would violate the Housing Accountability Act (Government Code Section 65589.5) by imposing new standards on multiple housing projects where (a) the project applications have already been deemed complete and (b) the projects complied with the City’s objective standards – including the Pilot Program standards – at the time the applications were deemed complete.
Consequently, if the City seeks to retroactively impose new requirements on CEI’s Pilot Program Projects, CEI will have no choice but to seek all available legal remedies, including, if necessary, litigation, to protect its right to develop the Pilot Program Projects under the terms of the unit-capped Pilot Program approved under the IZO in August 2025..
Thank you.
Sincerely,
Dave Rand
Dave Rand
Partner
of RAND PASTER & NELSON, LLP
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Report
City Council Meeting: January 13, 2026
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To: Mayor and City Council
From: Nikima Newsome, City Clerk, Records and Election Services Department Subject: Boards & Commissions Comprehensive Review
Recommended Action
Staff recommends that the City Council:
1. Adopt a finding that the recommended actions herein do not constitute a project subject to the California Environmental Quality Act (CEQA);
2. Hold a study session to review and provide direction on staff recommendations to restructure Boards, Commissions and Task Forces and update general policies and procedures as part of the City Clerk’s Office five-year review.
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Executive Summary
The City of Santa Monica values public input and recognizes the importance of boards and commissions that reflect diverse community perspectives, are inclusive and community-focused, and offer subject matter expertise. These bodies serve as the voice of the community and play a vital role in shaping city policies and programs. As the City Council continues to refine Santa Monica’s realignment, it will be essential to evaluate the structure and effectiveness of its boards and commissions. This includes ensuring they are impactful, efficient, not overly burdensome to support, aligned with available resources, and empower residents to contribute meaningfully.
Since the December 14, 2021 restructuring, some boards and commissions have operated with minimal staff support, and the following changes have been identified as options to improve efficiencies:
1. Hold the Transient Occupancy Tax Advisory Committee’s annual meeting as a joint meeting with the Council Audit Subcommittee.
2. Hold joint meetings between the Clean Beaches & Ocean Parcel Tax Citizens Oversight Committee and Commission on Sustainability, Environmental Justice, and the Environment.
3. Consolidate the Disabilities Commission, Housing Commission and Human Services Commission into a new Housing and Human Services Commission.
4. Modify the membership composition of both the Arts Commission, Landmarks Commission, and Public Safety Reform and Oversight Commissions.
5. Convert the Urban Forest Task Force into a formal commission.
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6. Implement administrative changes to the general policies and procedures governing boards, commissions and task forces.
Background
In accordance with Resolution No. 11510, the Office of the City Clerk is tasked with completing a five-year comprehensive review of boards and commissions. At the July 8, 2025, City Council meeting, Council further directed staff to explore opportunities for reorganizing and consolidating certain functions overseen by various bodies. Staff was tasked with providing recommendations that will streamline processes, with the goal of reducing duplicative efforts and associated costs. Staff conducted meetings with chairs and vice chairs, staff liaisons, department heads, and Councilmembers to gain a deeper understanding of each board's functions, assess their alignment with City goals and priorities, and identify efficiencies. Recommendations brought forward align with the five-year review of boards and commissions that ensures that bodies are highly functioning and serving public interest.
The City currently has 20 boards and commissions, one task force, three non-profit boards, and two district boards that City Council has the authority to appoint members to. For the purpose of this report, only 19 boards and commissions and one task force listed in Attachment A were reviewed as they are primarily supported by City staff. Since the first comprehensive review in 2020 – 2021, the number of boards and commissions has increased – particularly in the area of regulatory bodies. Some of these entities have overlapping missions and functions, experience persistent vacancies, lack consistent oversight, and could benefit from streamlined processes to improve efficiency. Santa Monica has experienced an increase in regulatory and oversight bodies that have been created directly by voter-approved measures, ordinances, and State law providing a unique legal foundation and specific mandate. Changes proposed by staff will alleviate some of the increased administrative support, while still allowing these bodies to fulfill their mandate to provide public oversight.
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To ensure that boards, commissions, and task forces operate effectively, the city invests resources in recruitment, onboarding, training, software licensing, meeting preparation and staff support. While the City Clerk’s Office plays a central role in managing and supporting these bodies, it relies on the collaboration and resources of multiple city departments.
Discussion
Recommendation of Consolidation of Commissions
Staff identified the following opportunities for consolidation that would streamline operations, reduce redundancy, and better align with available resources:
Staff is recommending the Transient Occupancy Tax Advisory Committee hold its annual meeting to present recommendations on Measure CS funds at an Audit Subcommittee meeting. The resolution establishing the Committee does not prohibit it from meeting with the Subcommittee. Additionally, members and attendees for both bodies can learn more about the other’s work and joint meetings would streamline meeting support for staff.
Staff is recommending the Clean Beaches & Ocean Parcel Tax Citizens Oversight Committee hold its quarterly meetings jointly with the Commission on Sustainability, Environmental Justice, and the Environment, to provide its Measure V budget and project status reports. Aligning two bodies that share environmental goals, including water quality and pollution prevention, will also allow members and attendees for both bodies to learn about the other’s work and streamline meeting support.
Staff is recommending the consolidation of the Disabilities Commission, Housing Commission, and the Human Services Commission, into a single body, the Housing and Human Services Commission.
• The new Housing and Human Services (HHS) Commission would consist of seven (7) members, to be consistent with the composition size of other City
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boards and commissions. Priority will be given to existing members of the three current commissions who wish to continue serving.
• Upon this change, new appointees would be subject to the same term limits as all other commissions, and meetings would be held monthly. • Workplans for the Disabilities Commission, Housing Commission, and the Human Services Commission would be consolidated into a single workplan aligned with the scope of the new HHS Commission. The commission may establish ad hoc or standing committees as needed.
• The composition of the Housing Authority Board would remain as is in fulfillment of all applicable U.S. Department of Housing and Urban Development (HUD) regulations.
The proposed consolidation would establish the new HHS Commission as a unified body dedicated to discussion and consideration of the diverse and intersecting issues impacting underserved Santa Monicans. The new commission would also enable more focused engagement with City staff and clarify the HHS Commission’s role as an advisor to Council on departmental matters. If Council agrees, commissions would remain intact with their current membership until July 2026. Staff would return with an amended ordinance to support the approved creation of the new HHS Commission, and the newly formed commission would adopt new bylaws accordingly.
Modification to Composition of Commissions
Staff recommends that the membership of the Arts Commission be changed from nine (9) to seven (7) members. A membership of seven (7) would allow members to meet a quorum in the event of absences or vacancies and be more manageable for staff. There are currently two (2) vacancies that can be removed, and the Commission would remain intact with its current membership until the next annual appointments in July 2026. If Council agrees, staff would return with an amended ordinance to change the composition of the body, and the Commission would update its bylaws to reflect the modified composition.
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Staff recommends removing the resident eligibility criteria for five (5) members of the Landmarks Commission, while retaining the residency criteria for two (2) members serving in the local historian and realtor seats. Changing the resident criteria will provide flexibility in recruitment, while ensuring that the seats requiring specialized knowledge of Santa Monica’s history remains filled by local residents. The commission would remain intact with its current membership until the next annual appointments in July 2026. If Council agrees, staff would return with an amendment to ordinance to change the composition of the body, and the Commission would update its bylaws to reflect the modified composition.
Staff recommends that the membership of the Public Safety Reform and Oversight Commission be changed from twelve (12) to eight (8) members (7 voting, 1 Ex-Officio); age limits to the youth seats be increased from 22 to 25 years old; and resident eligibility criteria change to live or work in Santa Monica. A membership of seven (7) would help meet quorum requirements and management. Youth seats ensure the perspectives of younger residents are represented in public safety discussions and increasing the age limit addresses challenges in retaining interested youth who otherwise age out of the eligibility during their term. Changing the resident criteria provides flexibility in recruitment. The commission would remain intact with its current membership until the next annual appointments in July 2026 when two (2) members complete their terms and their seats can be removed. In July 2027, another two (2) seats would be removed upon completion of two members’ terms. If Council agrees, staff would return with an amendment to ordinance to change the composition of the body, and the Commission would update its bylaws to reflect the modified composition.
Modifications to the Urban Forest Task Force
Originally established in 2009, the Task Force supported the drafting of the City’s Urban Forest Master Plan. Since the completion of the Master Plan in 2011, Council reconstituted the Task Force on April 10, 2012 to support the implementation of the Plan for seven years. On July 23, 2019, Council reconstituted it for another seven years adding the task of acting as an advisory body to support the development of a possible private tree ordinance. Staff recommends that the Urban Forest Task Force change to a
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formal commission. As the Task Force approaches its seventh year, Council historically reconstitutes the Task Force and staff sees a permanent place for this body. • Upon change, appointees to the commission would be subject to the same term limits as all other commissions and maintain the current meeting schedule. • Current special requirement for membership (At least three members must be current or past International Society of Arboriculture (ISA) certified arborists), will be removed to improve and broaden recruitment.
The commission would remain intact with its current membership until the next annual appointments in July 2026. If Council agrees, staff would return with a resolution to change the task force to a formal commission, and would update its bylaws to reflect the modified composition.
Amendments to the Policies for City Boards, Commissions and Task Forces Staff recommends the adoption of a new resolution to implement a few immediate changes to the general policies and procedures as follows:
• Amend the process for making appointments to include an invitation to applicants to attend the Council meeting when appointments will be made to comment on their qualifications. For annual appointments, a special meeting may be scheduled to accommodate this. It is also encouraged but not required to submit letters of recommendation from community members and/or organizations as written comments supporting an applicant.
• Shorten number of years a member must wait before serving on the same board or commission. Allowing members to serve in the same body one (1) year after the final consecutive term has expired to loosen restrictions on recruitment. • Consider revising requirements for submitting board and commission workplans, such that the annual evaluation and workplans would be submitted to Council annually as an Information Item.
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• Since 2019, the annual dinner for commissioners has been on hold due to budget cuts and limited staff capacity. The annual recognition dinner should either be formally eliminated, or funding should be allocated to allow the program to be reinstated.
• Revise timeframe for submitting board and commission attendance reports from two times a year to once annually to be submitted as part of the annual appointment process.
• Revise parameters for unexcused absences. To bring consistency and accountability, staff recommends clarifying that unexcused absences be limited to two (2) within a fiscal year and the automatic vacation of a seat. • Removal of Council Liaisons. Due to concerns of having the undue influence of certain Councilmembers over boards and commissions, limiting their ability to form independent recommendation and rulings, it is recommended to remove this section.
Outreach and Training Opportunities
After consulting with staff liaisons and departments heads, staff assessed and identified opportunities to increase outreach and training primarily in the areas of the Council appointment process, conducting a meeting; establishing roles and duties of board, commission, and task force members; and department onboarding. Staff will refine established training courses within the next fiscal year.
Environmental Review
The proposed changes to boards and commission are not a “project” subject to CEQA.
Pursuant to CEQA Section 21065, the changes do not meet the definition of a “project” subject to CEQA as it will not “cause either a direct physical change in the environment, or a reasonably foreseeable indirect physical change in the
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environment”. Additionally, per Section 15378(b) of the CEQA Guidelines, a “project” does not include administrative activities of governments that will not result in direct or indirect physical changes in the environment. The changes are administrative in nature, and no action is being undertaken and therefore, are not subject to CEQA and it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment.
Financial Impacts and Budget Actions
There is no immediate financial impact or budget action necessary as a result of the recommended consolidation changes. While minimal cost savings are anticipated, the changes are expected to result in improved staff efficiency and better use of existing resources.
Prepared By: Priscilla Bouvet, Administrative Analyst
Approved Forwarded to Council
Attachments:
A. Resolution No. 11510 (CCS)
B. Attachment A- B&C Staffing Cost Snapshot
C. 2025 Boards & Commissions Annual Reports and FY 25-26 Workplans D. Written Comments
E. PowerPoint Presentation
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City Council Meeting: March 14, 2023 Santa Monica, California RESOLUTION NUMBER 11510 ( CCS)
City Council Series)
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SANTA MONICA
ESTABLISHING POLICIES FOR CITY BOARDS, COMMISSIONS, COMMITTEES,
TASK FORCES, AND REGIONAL ADVISORY BOARDS, AND REPEALING RESOLUTION NUMBER 11396 ( CCS)
WHEREAS, maximizing public participation in government effectuates fundamental principles of democracy; and
WHEREAS, the residents of Santa Monica have a strong commitment to participating in their local government; and
WHEREAS, the City of Santa Monica (“ City”) has established numerous boards, commissions, committees, and task forces to facilitate public participation in government and thereby ensure representation of diverse viewpoints and interest; and WHEREAS, setting term limits and establishing policies for boards, commissions, committees, and task forces ensures that opportunities for participation will be maximized and that boards, commissions, task forces and committees will function productively; and
WHEREAS, the City Council (“ Council”) desires to establish term limits and other policies in relation to participation in City boards, commissions, committees, and task forces and the conduct of board, commission, committee, and task force committee meetings; and
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Packet Pg. 958 Attachment: Resolution No. 11510 (CCS) (7179 : Boards & Commissions Comprehensive Review) WHEREAS, the Council intends such policies to both maximize opportunities for participation in City government and provide the flexibility to ensure that boards, commissions, committees, and task forces have the expertise and qualifications necessary to discharge their duties.
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF SANTA MONICA DOES RESOLVE AS FOLLOWS:
SECTION 1. Appointments to City Boards, Commissions, Committees, and Task Forces.
Except as otherwise provided by motion of the City Council, the procedure for making appointments to City boards, commissions, committees, and task forces shall be as follows:
A. When a vacancy occurs, as a result of the expiration of the term of an appointment, on any City board, commission, committee, or task force, the City Clerk shall publish a notice of the vacancy at least once in The Santa Monica Daily Press, or a newspaper of general circulation, and post the notice of the vacancy on the City’s website. The City Clerk shall publish the notice of vacancy and post it on the City’s website no less than thirty (30) days before the vacancy occurs. The notice shall request that any interested party submit an application to the City Clerk. The notice shall also specify the position for which a vacancy has occurred, the term of office for the position to be filled, and a reasonable day by which interested parties must submit applications for the position. The deadline for submission of applications shall not be less than fifteen ( 15) days prior to the end of the term. Where the appointment is for the DocuSign Envelope ID: 4AF74DA3- 3974-4A7F-8E30-9F06FB73E172
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Packet Pg. 959 Attachment: Resolution No. 11510 (CCS) (7179 : Boards & Commissions Comprehensive Review) purpose of filling an unscheduled vacancy, a special vacancy notice shall be posted at City Hall and Main Library not earlier than 20 days before or not later than 20 days after the vacancy occurs. Final appointment shall not be made for at least 10 working days after the posting of the notice.
B. Applications for board, commission, committee, and task force positions shall be made on the City’s website or in writing to the City Clerk on forms supplied by the City Clerk. Applications submitted after the deadline shall not be considered. The applications shall be public records except for the portion of the application which is specifically described as confidential.
C. The City Clerk shall collect all written applications which are received by the deadline date and shall thereafter cause the matter of filing the board, commission, committee, or task force vacancy to be placed upon the City Council agenda. The City Clerk shall transmit to the City Council the information contained on all written applications which have been received prior to the deadline date.
D. Boards, commissions, committees, or task forces shall not take any official action to recommend any specific appointees to the City Council, although individual members may make recommendations as individuals.
E. Following consideration of the applications received for each board, commission, committee, or task force vacancy, the City Council shall make appointments in open session at a City Council meeting to fill the vacancy.
F. In compliance with California Government Code Section 54972 et seq. the Maddy Act), the City Clerk shall prepare a Local Appointments List and make available to the public. The Local Appointments List shall consist of the following:
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Packet Pg. 960 Attachment: Resolution No. 11510 (CCS) (7179 : Boards & Commissions Comprehensive Review) 1) a list of all current City boards, commissions, committees, and task forces; 2) a current list of all vacancies on all City boards, commissions, committees, and task forces;
3) the terms of all current individuals serving on City boards, commissions, committees, and task forces; and,
4) the qualifications for serving on all City boards, commissions, committees, and task forces.
The City Clerk shall maintain a current Local Appointments List on the City’s website.
G. A person is ineligible to serve on all City boards, commissions, committees, and task forces if that person is a close family relative of a current Councilmember. The term “relative” means wife, husband, registered domestic partner, son, daughter, mother, father, brother or sister.
SECTION 2. Term Limits for Boards, Commissions, Committees, and Task Forces The following definitions and policies shall apply to City boards, commissions, committees, and task forces, including the boards of the non-profit agencies, Santa Monica Pier Corporation, Downtown Santa Monica, Inc., and Santa Monica Travel and Tourism.
A. The length of term for each City-appointed board, commission, committee, and task force is set forth in the Municipal Code, the City Charter, or the by-laws of the board, commission, committee, or task force.
B. A full term is defined as serving three-fourths or more of a term, whether it DocuSign Envelope ID: 4AF74DA3- 3974-4A7F-8E30-9F06FB73E172
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Packet Pg. 961 Attachment: Resolution No. 11510 (CCS) (7179 : Boards & Commissions Comprehensive Review) is an appointment to an annual vacancy or to an unscheduled vacancy.
C. A partial term is defined as serving less than three-fourths of a term, whether it is an appointment to an annual vacancy or to an unscheduled vacancy.
D. Term Limits for Boards, Commissions, Committees, and Task Forces
1. All members of boards, commission, and committees, except tenant members of the Housing Commission and task forces, are limited to serving two consecutive terms. However, a third consecutive term may be served if the member makes a written request to serve a third term, or a Councilmember nominates a member to a third term, and the City Council approves the third term by a two-thirds vote. Tenant members of the Housing Commission are limited to serving four consecutive, two-year terms, except that a fifth or sixth, two-year consecutive term may be served if the member makes a written request or a Councilmember nominates the member, and the City Council approves the fifth or sixth term by a two-thirds vote.
Members of task forces may serve for an indefinite number of two-year terms. Term limits for directors on the Santa Monica Pier Corporation, Santa Monica Travel and Tourism, and Downtown Santa Monica, Inc., are determined by the boards’ by-laws.
2. The total number of members that may serve a third consecutive term on a board, commission, or committee at the same time is limited to no more than one-third of the membership of that board, commission, or committee but the Council may, by two-thirds vote, make an exception in order to fill positions on boards, commissions, and committees that have specific qualifications, such as professional standing or expertise.
3. After serving the maximum number of consecutive terms allowed, a DocuSign Envelope ID: 4AF74DA3- 3974-4A7F-8E30-9F06FB73E172
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Packet Pg. 962 Attachment: Resolution No. 11510 (CCS) (7179 : Boards & Commissions Comprehensive Review) member may not serve again on the same board, commission, committee, or task force until four years after the member’ s final term has expired.
4. Members must wait at least one year after terming out of serving on a board, commission, committee, or task force before serving on a different board, commission, committee, or task force.
E. Term Limits for Regional Advisory Boards.
1. Members of the Los Angeles County West Vector Control District are limited to serving two consecutive terms. However, a third consecutive term may be served if the member makes a written request to serve a third term, or a Councilmember nominates a member to a third term, and the City Council approves the third term by a two-thirds vote. The current members of the Los Angeles County Vector Control District as of the date of adoption of Resolution No. 11396 shall serve the remainder of their term but shall be ineligible to serve any subsequent term.
2. Members of the Los Angeles County Metropolitan Water District are limited to serving two consecutive terms. However, a third consecutive term may be served if the member makes a written request to serve a third term, or a Councilmember nominates a member to a third term, and the City Council approves the third term by a two-thirds vote. The current members of the Los Angeles County Metropolitan Water District as of the date of adoption of Resolution No. 11396 shall serve the remainder of their term but shall be ineligible to serve any subsequent term.
F. Recognition of Outgoing Members.
Members of boards, commissions, committees, task forces, and regional advisory bodies who leave service for reasons including terming out; not seeking re-appointment; or not securing the votes to be re-appointed, shall be recognized for their service at the first Council meeting after annual appointments take place.
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Packet Pg. 963 Attachment: Resolution No. 11510 (CCS) (7179 : Boards & Commissions Comprehensive Review) SECTION 3. Membership on One Board, Commission, Committee, or Task Force.
No person shall serve simultaneously on more than one Santa Monica City Council appointed board, commission, committee, or task force, including the Santa Monica Pier Corporation, Downtown Santa Monica, Inc., Santa Monica Travel and Tourism, and the regional advisory boards. This section shall not apply to advisory boards reporting to City staff or boards, commissions, or task forces.
SECTION 4. Reimbursement of Expenses.
Members of boards, commissions, committees, and task forces shall be reimbursed for expenses in the amount of up to $25.00 per meeting, not to exceed the amount of $50.00 per month pursuant to the forms and administrative procedures established by the City.
SECTION 5. Use of City Funds.
Allocated funds are restricted to the following: Participation or sponsorship fees for local events; dues/memberships to other organizations that align with board, commission, committee, or task force goals; conferences/ trainings that align with board, commission, committee, or task force goals, costs related to board, commission, committee, and task force materials, including printing of materials, postage, giveaways for events, supplies for City-sponsored events, food for City retreats, and accommodation services such as signing and closed captioning.
SECTION 6. Biennial Review of Agendas and Minutes and Five-Year Comprehensive Review.
The City Clerk is hereby directed to conduct biennial reviews of board, DocuSign Envelope ID: 4AF74DA3- 3974-4A7F-8E30-9F06FB73E172
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Packet Pg. 964 Attachment: Resolution No. 11510 (CCS) (7179 : Boards & Commissions Comprehensive Review) commission, committee, and task force agendas and minutes, including the agendas and minutes of the Santa Monica Pier Corporation, Downtown Santa Monica, Inc., and Santa Monica Travel and Tourism, and to act, as needed, to ensure that they comply with legal requirements, including the Ralph M. Brown Act, and maintain uniform content and format with the City Council’ s agendas and minutes. The City Clerk is also hereby directed to conduct a comprehensive review of all advisory bodies every five years, except that no such review shall occur in an election year.
SECTION 7. Annual Dinner and Presentation of Annual Reports.
The City Clerk is directed to organize and hold an Annual Dinner which shall serve as the annual report to Council by the City-appointed boards, commissions, committees and task forces, and the appointees to the regional advisory boards. If the Annual Dinner is unable to be held in a given year, annual reports shall be presented during the Council meetings scheduled in the first quarter of the fiscal year. The schedule shall be at the discretion of the City Clerk.
SECTION 8. Written Communications.
No City-appointed board, commission, committee, or task force shall send any official resolution or other correspondence of the board, commission, committee, or task force on any matter to City policy to any non-City agency, board, commission, committee, or task force unless the board, commission, committee, or task force voted to do so and obtains prior approval of the City Council.
All City-appointed board, commission, committee, and task force members are issued City emails addresses, which must be utilized for all City business.
SECTION 9. Secretaries
In compliance with the Brown Act and Section 1004 of the Santa Monica City DocuSign Envelope ID: 4AF74DA3- 3974-4A7F-8E30-9F06FB73E172
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Packet Pg. 965 Attachment: Resolution No. 11510 (CCS) (7179 : Boards & Commissions Comprehensive Review) Charter, the City Manager shall designate a City employee to act as secretary for each of the boards, commissions, and task forces, including their subcommittees, which are subject to the Brown Act, for the purpose of keeping a record of their proceedings and transactions. Ad hoc committees, or committees established for a period of no more than one year, are not required to have appointed secretaries.
SECTION 10. Conduct of Meetings and Drafting of Agendas and Minutes.
The Rules of Order and the Procedures for the Conduct of the City Council meetings, as may be amended from time to time, shall serve as a general guideline for the conduct of meetings of the City-appointed boards, commissions, committees, and task forces which have not adopted their own rules or bylaws. All City-appointed boards, commissions, committees, and task forces shall adopt their own rules or bylaws in accordance with the template prescribed by the City Clerk. All boards, commissions, committees, and task forces shall use the agenda and minutes templates prescribed by the City Clerk. Agendas for posting must be submitted to the City Clerk’s Office no later than 4:30 p.m. in advance of the 72 hours (for Regular meetings) or 24 hours (for Special meetings) notification deadlines under the Brown Act. Failure to do so may result in the cancellation of a meeting.
SECTION 11. Attendance at Meetings.
The following attendance policies apply to all members of City boards, commissions, committees, and task forces, including the Santa Monica Pier Corporation, Downtown Santa Monica, Inc., Santa Monica Travel and Tourism, and the regional advisory boards.
A. An absence is defined as a failure to attend at least two-thirds of a regular or special meeting.
B. An absence is considered excused when a member communicates the DocuSign Envelope ID: 4AF74DA3- 3974-4A7F-8E30-9F06FB73E172
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Packet Pg. 966 Attachment: Resolution No. 11510 (CCS) (7179 : Boards & Commissions Comprehensive Review) member’ s absence to the Chair or staff liaison prior to the start of a regular or special meeting.
C. An absence is considered unexcused when a member does not communicate that member’ s absence to the Chair or staff liaison prior to the start of a regular or special meeting, or, in the event of an emergency, as soon as practicable after the emergency but in no event later than two calendar days after the start time of the meeting.
D. In special circumstances, prolonged absences may be excused upon approval of the board, commission, committee, or task force, which shall then be reported by the City staff liaison to the City Clerk.
E. Except for the regional advisory board appointments, City staff liaison to all boards, commissions, committees, and task forces shall report all absences to the City Clerk.
F. The City Clerk shall provide the City Council with a summary of attendance for all board, commission, committee, and task force members in June and December of each year.
G. For boards, commissions, committees, or task forces that meet monthly, upon the accumulation of two unexcused absences from regular meetings occurring over the course of six consecutive regular meetings, a member of a board, commission, committee, or task force automatically vacates membership on the board, commission, committee, or task force.
H. Additionally, the Chair shall warn any member who has more than two excused absences from any six consecutive meetings. If another two meetings are missed, whether as the result of excused or unexcused absences, the Staff Liaison shall inform the City Clerk, who will then inform the City Council.
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Packet Pg. 967 Attachment: Resolution No. 11510 (CCS) (7179 : Boards & Commissions Comprehensive Review) SECTION 12. All boards, commissions, committees, and task forces must produce an annual workplan setting priorities for the upcoming year. Each workplan shall align with that board, commission, committee, or task force’s corresponding City department’ s goals and objectives. In addition, all boards, commissions, committees, and task forces shall produce an annual one-page evaluation of their work over the preceding year.
SECTION 13. Attendance at Ethics Training - Government Code Section 53235 AB 1234).
Government Code Section 53235 ( AB 1234) mandates two hours of ethics training for local officials every two years. The City Clerk shall provide the City Council with a summary of attendance by City Council- appointed board, commission, committee, and task force members, including members of the Santa Monic Pier Corporation, Downtown Santa Monica, Inc., Santa Monica Travel and Tourism, and the regional advisory boards after the biennial training and before making annual appointments. All newly appointed members are required to take the mandated ethics training as soon as practicable, but no later than within 30 days of being appointed.
SECTION 14. Other Trainings
The City Clerk in conjunction with the City Attorney shall develop and implement onboarding training for new members and annual training for members, chairs, and vicechairs of boards, commissions, and task forces, and shall provide City staff liaisons with training guidelines. All members are required to complete the onboarding or annual training as soon as practicable.
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Packet Pg. 968 Attachment: Resolution No. 11510 (CCS) (7179 : Boards & Commissions Comprehensive Review) SECTION 15. Council Liaisons
Each Council member may serve as a liaison to no more than two boards or commissions each year. Council liaisons serve as connections between the City Council and boards and commissions, but Council liaisons are neither required to attend board and commission meetings or maintain any voting power on boards and commissions. Council members cannot serve as Council liaisons to any board or commission with quasi-judicial authority ( i.e. Planning Commission, Landmarks Commission, Architectural Review Board).
SECTION 16. The City Clerk will provide an annual report to inform the City Council on the aggregate demographic profile of the City’s boards, commissions, and task forces.
SECTION 17. Resolution Number 11396 ( CCS) is repealed in its entirety.
SECTION 18. The City Clerk shall certify to the adoption of this Resolution, and thenceforth and thereafter the same shall be in full force and effect.
APPROVED AS TO FORM:
DOUGLAS T. SLOAN
City Attorney
DocuSign Envelope ID: 4AF74DA3- 3974-4A7F-8E30-9F06FB73E172
7.A.a
Packet Pg. 969 Attachment: Resolution No. 11510 (CCS) (7179 : Boards & Commissions Comprehensive Review) Adopted and approved this 14th day of March 2023.
Gleam Davis, Mayor
I, Nikima Newsome, Assistant City Clerk of the City of Santa Monica, do hereby certify that Resolution No. 11510 ( CCS) was duly adopted at a meeting of the Santa Monica City Council held on the 14th day of March 2023, by the following vote:
AYES: Councilmembers Brock, de la Torre, Parra Torosis, Zwick Mayor Pro Tem Negrete, Mayor Davis
NOES: None
ABSENT: None
ATTEST:
Nikima Newsome, Assistant City Clerk
DocuSign Envelope ID: 4AF74DA3- 3974-4A7F-8E30-9F06FB73E172
7.A.a
Packet Pg. 970 Attachment: Resolution No. 11510 (CCS) (7179 : Boards & Commissions Comprehensive Review) Attachment A
Page | 1
City of Santa Monica Boards, Commissions and Task Forces Snapshot:
Staff time and Estimated Costs
Boards and Commissions: Advisory
Board/Commission Department Staffing/Attend Meetings % Staff Time
Meetings/
Year
Avg Hours/
Meeting
Total Staff
Hours/Year
Total Staff
Cost/Year
Airport Commission Public Works - Staff Assist. III 7.3% 11 2 650 $67,270 - Facilities Asset & Airport Mgr 15.5%
- COO/Airport Director 3.5%
- Public Works Director 1.5%
- Deputy City Attorney IV 3.5%
Total staff time equivalent: 0.31 FTE
Arts Commission Recreation and Arts - Staff Assist. III 3.2% 12 3 284 $22,295 - Cultural Affairs Manager 4.1%
- Allison Ostrovsky 3.2%
- Cultural Affairs Supervisor 3.2%
Total staff time equivalent: 0.14 FTE
Audit Subcommittee Finance - Secretary/Dir of Rec & Elect 1.2% 4 3 82 $8,897 - Executive Admin Asst 0.7%
- Pr Admin Analyst 0.7%
- Deputy City Attorney IV 1.3%
Total staff time equivalent: 0.04 FTE
Clean Beaches &
Ocean
Public Works - Asst Dir Rec & Elect 0.8% 4 2 124 $12,997 - Pr Engineer 5.2%
Total staff time equivalent: 0.6 FTE
Commission on
Sustainability,
Environmental Justice,
and the Environment
City Manager’s
Office
- Project Support Asst 2.7% 10 3 160 $13,863
- Chief Sustainability Officer 5%
Total staff time equivalent: 0.8 FTE
7.A.b
Packet Pg. 971 Attachment: Attachment A- B&C Staffing Cost Snapshot (7179 : Boards & Commissions Comprehensive Attachment A
Page | 2
Boards and Commissions: Advisory
Board/Commission Department Staffing/Attend Meetings % Staff Time
Meetings/
Year
Avg Hours/
Meeting
Total Staff
Hours/Year
Total Staff
Cost/Year
Disabilities
Commission
Housing & Human
Services
- Staff Assistant III 9.2% 12 3 202 $10,227
- Sr. Homelessness Prev
Analyst
0.3%
- Human Serv Manager 0.3%
Total staff time equivalent: 0.10 FTE
Housing Commission Housing & Human
Services
- Staff Assistant III 9.8% 12 3 264 $16,367
- Housing Manager 2.9%
Total staff time equivalent: 0.13 FTE
Human Services
Commission
Housing & Human
Services
- Staff Assistant III 4% 5 2 119 $7,521
- Human Services Manager 0.6%
- Sr Analyst 0.6%
- Homeless & Intervention Mgr 0.6%
Total staff time equivalent: 0.6 FTE
Measure GS
Resident Oversight
Committee
Housing & Human
Services
- Staff Assistant III 10% 12 3 312 $20,888
- Housing Manager 5%
Total staff time equivalent: 0.15 FTE
Public Safety Reform
and Oversight
Commission
City Manager’s Office - Equity & Inclusion Manager 17% 20 3 520 $64,512 - Asst City Attorney 8%
Total staff time equivalent: 0.25 FTE
Recreation and
Parks Commission
Recreation & Arts - Staff Assistant III 4% 12 3 258 $24,140 - Community Rec Manager 4%
- Recreation & Arts Director 4%
Total staff time equivalent: 0.12 FTE
7.A.b
Packet Pg. 972 Attachment: Attachment A- B&C Staffing Cost Snapshot (7179 : Boards & Commissions Comprehensive Attachment A
Page | 3
Boards and Commissions: Advisory
Board/Commission Department Staffing/Attend Meetings % Staff Time
Meetings/
Year
Avg Hours/
Meeting
Total Staff
Hours/Year
Total Staff
Cost/Year
Santa Monica Library
Board
Library - Executive Admin Asst 10% 12 2 357 $29,197
- Library Director 7%
- Pr Admin Analyst 0.2%
Total staff time equivalent: 0.17 FTE
Transient Occupancy
Tax Advisory
Finance - Secretary/Deputy City Clerk 0.8% 2 3 69 $7,085 - Executive Admin Asst 0.8%
- Pr Admin Analyst 0.4%
- Finance Director 0.8%
- Deputy City Attorney IV 0.9%
Total staff time equivalent: 0.03 FTE
Transit Security
Advisory Committee
Transportation - Staff Assistant III 1.4% 4 2 76 $6,190 - Transit Safety and Training
Mgr
2.3%
Total staff time equivalent: 0.04 FTE
Task Forces: Advisory
Task Force Department Staffing/Attend Meetings % Staff
Time
Meetings/
Year
Avg Hours/
Meeting
Total Staff
Hours/Year
Total Staff
Cost/Year
Urban Forest
Task Force
Public Works - Staff Assistant III 3% 6 2 173 $11,519
- Public Landscape Manager 1.8%
- Urban Forest Coordinator 1.8%
- Urban Forest Supervisor 1.8%
Total staff time equivalent: 0.08 FTE
7.A.b
Packet Pg. 973 Attachment: Attachment A- B&C Staffing Cost Snapshot (7179 : Boards & Commissions Comprehensive Attachment A
Page | 4
Boards and Commissions: Regulatory/Quasi-Judicial
Board/Commission Department Staffing/Attend Meetings % Staff Time
Meetings/
Year
Avg Hours/
Meeting
Total Staff
Hours/Year
Total Staff
Cost/Year
Architectural Review
Board
Community
Development
- Staff Assist. III 5% 12 2 376 $30,481
- Sr Planner 2%
- Design/Historic Preservation Planner 11%
Total staff time equivalent: 0.18 FTE
Building and Fire-Life
Safety Commission
Community
Development
- Staff Assist. III 4.6% 4 2 202 $17,302
- Sr Admin Analyst 0.2%
- Fire Marshall 1%
- Building/Safety Build Officer 1.4%
- Deputy City Attorney IV 1.3%
- Asst Building Official 0.4%
- Inspection Supervisor 0.4%
Total staff time equivalent: 0.1 FTE
Landmarks
Commission
Community
Development
- Staff Assistant III 40% 12 3 2,880 $255,089
- Design/Historic Prsv Planner 50%
- Sr Planner 23%
- Planning Manager 11%
- Deputy City Attorney IV 14%
Total staff time equivalent: 1.38 FTE
Personnel Board Human
Resources
- Executive Admin. Asst 6.4% 12 1 268 $10,909
- HR Director 1.2%
- Deputy Attorney IV 5.4%
Total staff time equivalent: 0.13 FTE
Planning
Commission*
Community
Development
- Staff Assistant III 35% 24 4 824
----------------
$51,431 - Planning Manager -----
- City Attorney -----
*Due to the nature of the work of the Planning Commission, and it being deeply integrated and overlapping into the day-to-day responsibilities of staff in the Planning Department, it was difficult to provide a more accurate estimated time.
7.A.b
Packet Pg. 974 Attachment: Attachment A- B&C Staffing Cost Snapshot (7179 : Boards & Commissions Comprehensive Item 7-A
January 13, 2026
Item 7-A
January 13, 2026
7.A.d
Packet Pg. 975 Attachment: Written Comments [Revision 2] (7179 : Boards & Commissions Comprehensive Review) Item 7-A
January 13, 2026
Item 7-A
January 13, 2026
7.A.d
Packet Pg. 976 Attachment: Written Comments [Revision 2] (7179 : Boards & Commissions Comprehensive Review) Item 7-A
January 13, 2026
Item 7-A
January 13, 2026
7.A.d
Packet Pg. 977 Attachment: Written Comments [Revision 2] (7179 : Boards & Commissions Comprehensive Review) 1 David Yakobson
From: Ruthann Lehrer <[email protected]>
Sent: Tuesday, January 13, 2026 12:00 PM
To: councilmtgitems
Subject: Item 7
EXTERNAL
City Council Meeting January 13, 2026
Item 7. Boards and Commissions Comprehensive Review
Dear City Councilmembers,
These comments are submitted on my own behalf as a former Landmarks Commissioner.
First: The recommendation to eliminate the residency requirement for five Landmarks Commission appointments is not constructive and should not be approved. In its 50 years since adoption, recruitment has not been a problem and there have not been long vacancies. While many issues in the landmarks ordinance have been identified as problematic, such as the Structure of Merit, the residency requirement is not one of them. This recommendation is a solution to a problem that doesn’t exist.
Residency requirements for appointments to a historic preservation board or commission are standard throughout California, and for good reason. Residents have an in-depth knowledge and commitment to their community through their lived experiences. They are stakeholders in the history and future prosperity of the community that is theirs. They have deep connections to many aspects of the community and will strive to improve their environment because that’s in their personal interest.
The review and update of the landmarks ordinance is badly needed and hopefully the City will be in a position to address that in a comprehensive way, with professional guidance, in the near future. A piecemeal approach is ill-advised, and this recommendation should be rejected.
Secondly: The financial costs of staffing the Landmarks Commission.
The numbers provided for the Landmarks Commission reflect activity for the entire historic preservation program, and do not reflect the actual workload of staffing the Commission itself as a stand-alone activity. Over the last few years, the Landmarks Commission’s role and responsibilities have shrunk so that meetings are sometimes cancelled or lack a robust agenda. This is due to some legal decisions from the City Attorney, but mostly derive from the steep financial barriers to file designation applications. The filing fee is around $7,000, far in excess of any other California city, most of which charge no fee or a minimal fee to encourage public participation in its historic preservation program. Clearly Santa Monica is an outlier from an equity standpoint. Currently applications come in as a response to a demolition permit (a rare event), where the cost burden is on the demolition applicant, or from rich people. The fee problem is a major impediment to public participation in recognizing and protecting our diverse cultural heritage.
Thank you for your consideration.
Ruthann Lehrer
Item 7-A
January 13, 2026
Item 7-A
January 13, 2026
7.A.d
Packet Pg. 978 Attachment: Written Comments [Revision 2] (7179 : Boards & Commissions Comprehensive Review) 1 David Yakobson
From: Eve Lopez <[email protected]>
Sent: Tuesday, January 13, 2026 9:48 AM
To: Lana Negrete; Caroline Torosis; Jesse Zwick; Dan Hall; Ellis Raskin; Natalya Zernitskaya; Barry Snell; Oliver Chi; councilmtgitems
Subject: Agenda Item 7a - Boards and Commissions - Failure to Evaluate Airport Commission
EXTERNAL
Re: Failure to Evaluate Airport Commission as Required by Resolution No. 11510 Dear Mayor and Councilmembers,
The Airport Commission Was Improperly Excluded From the Staff Report I am writing to express concern regarding the exclusion of the Airport Commission from the recent staff report reviewing the City’s boards and commissions. This omission is inconsistent with Resolution No. 11510 (CCS), which expressly requires a comprehensive review of all advisory bodies every five years to evaluate effectiveness, accountability, scope, and alignment with City needs. The Airport Commission appears only in Attachment A (Staff Cost Snapshot), which confirms that it is the second most costly commission and includes its workplan, yet the report contains no substantive staff analysis or evaluation of the Airport Commission itself. In effect, during a period of financial crisis, one of the City’s most expensive commissions was identified, but not reviewed, contrary to the Council’s adopted governance requirements.
The Airport Commission is the Second Highest Cost Commission This omission is particularly troubling given that the Airport Commission is the second highest cost commission in the City.
Despite its significant cost, which may reasonably be attributable to the absence of a single commissioner with aeronautical knowledge or experience, the report contains no assessment of the Commission’s composition, qualifications, performance, or continued fitness to serve in its advisory role.
None of the Airport Commissioners Are Pilots or Have Aeronautical Expertise The need for evaluation is critical. The Airport Commission is charged with advising the Council during a period of unprecedented operational, regulatory, and environmental complexity, including the introduction of public charter operations and the City’s first aviation business to complete the environmental review process for a COP. These matters implicate FAA regulation, aviation safety, airfield operations, and technical compliance. Yet none of the current Airport Commissioners are pilots, aeronautical users, or individuals with aviation expertise. A commission tasked with advising on aviation matters but lacking aviation expertise cannot meet the standards contemplated by Resolution 11510 or serve the Council or residents effectively.
Three of the Five Airport Commissioners Live Less Than 1,000 Feet from the Runway in Violation of FPPC Regulation 187202.2(a)(7)
Equally concerning are unaddressed transparency and conflict-of-interest issues. As illustrated below, three of the five Airport Commissioners appear to reside within 1,000 feet of the airport. Under FPPC Regulation 18702.2(a)(7), this proximity constitutes a presumptively material financial interest, raising serious concerns regarding conflicts of interest and the Commission’s ability to provide neutral, unbiased advisory input.
Item 7-A
January 13, 2026
Item 7-A
January 13, 2026
7.A.d
Packet Pg. 979 Attachment: Written Comments [Revision 2] (7179 : Boards & Commissions Comprehensive Review) 2 The Council has recently recognized the importance of avoiding even the appearance of conflicts of interest, including Councilmember Dan Hall’s recusals due to residential proximity as defined by FPPC Regulation 18702.2(a)(7). That same standard must apply to appointed commissioners. The Airport Commission routinely advises on noise policies, operational changes, and development matters that directly affect the commissioners’ own homes and neighborhoods. Concentrating all commissioners within the airport’s immediate impact area undermines objectivity and public trust.
These issues mirror those that led the Council to restructure the Downtown Santa Monica Board in July, 2025 due to concerns about transparency, accountability, and balanced representation. Yet the Airport Commission, despite comparable and arguably greater concerns, was not evaluated at all.
Updating and rebalancing the Airport Commission is required by Resolution 11510 and essential to ensuring informed decision making, regulatory compliance, and public confidence. A proper evaluation should address commission composition, subject-matter expertise, geographic balance, independence, and compliance with conflict-of-interest standards.
The failure to evaluate the Airport Commission is not a minor oversight. It represents a departure from the Council’s own governance requirements at a time of fiscal constraint and significant operational change at the airport. To remedy this, I respectfully urge the Council to take the following corrective actions:
1. Direct staff to immediately conduct and present a full evaluation of the Airport Commission, consistent with Resolution No. 11510 (CCS), including an assessment of the Commission’s effectiveness, scope, staffing Item 7-A
January 13, 2026
Item 7-A
January 13, 2026
7.A.d
Packet Pg. 980 Attachment: Written Comments [Revision 2] (7179 : Boards & Commissions Comprehensive Review) 3 demands, qualifications, and continued necessity. That evaluation should expressly address whether the absence of commissioners with aeronautical knowledge has contributed to increased staff and time of the City Attorney's Office, reliance on outside consultants, and higher overall costs including staff resources.
2. Require staff to analyze potential cost savings and efficiency gains that could result from appointing commissioners with aviation expertise who are capable of independently evaluating FAA guidance, operational data, and technical claims, thereby reducing avoidable demands on City staff and the City Attorney’s Office.
3. Schedule a Council study session focused on the structure and composition of the Airport Commission, including whether the current configuration complies with best practices for transparency, balance, and independence, and whether changes are necessary to address conflicts of interest arising from residential proximity under FPPC Regulation 18702.2(a)(7).
4. Direct the City Clerk and appointing authorities to develop recommendations for rebalancing the Commission, including criteria to ensure subject-matter expertise, geographic diversity, and independence from concentrated proximity impacts, consistent with the standards the Council applied when restructuring other city Boards.
These actions are corrective, fiscally responsible, and required by the Council’s own resolution. Taking them now will strengthen public trust, improve the quality of advisory input, and ensure that decisions affecting Santa Monica Airport are informed by expertise, balance, and compliance with conflict-of-interest standards.
Respectfully submitted,
Eve Lopez
Sunset Park
Item 7-A
January 13, 2026
Item 7-A
January 13, 2026
7.A.d
Packet Pg. 981 Attachment: Written Comments [Revision 2] (7179 : Boards & Commissions Comprehensive Review) 4 David Yakobson
From: Gail Gordon
Sent: Tuesday, January 13, 2026 10:28 AM
To: councilmtgitems; Dan Hall; Natalya Zernitskaya; Jesse Zwick; Barry Snell; Ellis Raskin; Caroline Torosis; Lana Negrete
Subject: Housing Commission - opposed to consolidation
To All:
I am writing as an individual who happens to be Chair of Housing Commission. Because we did not have suƯicient time to discuss among the other Commissioners, I will speak for myself.
I am presenting concepts which support why I believe combining Housing Commission and Disabilities Commission is not in the best interest of the people of Santa Monica.
Here are my reasons:
1. Section 8 renters under CCSM and People’s Choice management of their buildings.
We present a nonbiased front where these issues can be voiced and heard without fear of threat or reprisal to the tenants. Particularly if the typical route becomes non satisfactory to the tenants.
2. Consulting regarding continued adjustments to the BMH list in favor of those with immediate needs who are residents of Santa Monica. Tier 1 being of the most vulnerable. a. Tier 2 seems to be taken over by the Union Local 11 to Hotel works by the lobbyists, not even our staƯ can get housing in the city they work for and support.
3. We oƯer the City Council extended research on potential builds that may or may not benefit the residents of the city. Ex: too many Studio units vs 2-3 bedroom units that would promote families in Santa Monica.
a. The City is being built not for families and their progeny, but single transient workers who may or may not give back to the city in a meaningful way.
Basically we believe our voice oƯers a very important Advisory body to City Council to “strengthening the social, economic and cultural vitality and diversity of Santa Monica through Habitable, fair and equitable housing for all.
Gail Gordon
Item 7-A
January 13, 2026
Item 7-A
January 13, 2026
7.A.d
Packet Pg. 982 Attachment: Written Comments [Revision 2] (7179 : Boards & Commissions Comprehensive Review) 1 David Yakobson
From: Info <[email protected]>
Sent: Monday, January 12, 2026 4:59 PM
To: Lana Negrete; Caroline Torosis; Dan Hall; Ellis Raskin; Barry Snell; Natalya Zernitskaya; Jesse Zwick; councilmtgitems
Subject: Item 7A: Boards and Commissions Report
Attachments: 2026-0113-Item&A-BoardsAndCommissionReview-SMC - Letterhead.pdf
EXTERNAL
Please find a letter attached from the Santa Monica Conservancy regarding issues related to the Landmarks Commission, which appear on the January 13, 2026 agenda, Item 7A.
Thank you!
Santa Monica Conservancy
Preservation Resource Center
at the Shotgun House
2520 Second Street
Santa Monica, CA 90405
(310) 399-3599
Item 7-A
January 13, 2026
Item 7-A
January 13, 2026
7.A.d
Packet Pg. 983 Attachment: Written Comments [Revision 2] (7179 : Boards & Commissions Comprehensive Review) P.O. BOX 653
SANTA MONICA, CA 90406
310-496-3146
www.smconservancy.org
January 13, 2026
Dear City Council,
Landmarks Commission Residency Requirements
The Santa Monica Conservancy understands the need to look at the Boards and Commissions structure in the city as whole. But the recommendation made in your staff report for the Landmarks Commission to eliminate the city-residency requirement for five of seven commissioners is substantive not structural and is out of sync with the purpose of the review, to ensure commissions “are impactful, efficient, not overly burdensome to support, aligned with available resources, and empower residents to contribute meaningfully.”
A change to the Landmarks Commission residency requirement cuts to the foundation of nationwide best practices for local heritage conservation programs which are designed to tap into the deeply embedded familiarity with the context of a city found only in its residents. Of all our boards, the Landmarks Commission relies the most on this kind of familiarity with the city, yet it is the only one for which this change has been proposed. Furthermore, as there has never been a longstanding vacancy on the Landmarks Commission, we don’t see the reason or the need to broaden the field for applicants at this juncture.
Please do not change the local residency requirement for Landmarks Commissioners.
Boards and Commission Staffing Cost Snapshot
Equally, if not more pressing is the need to understand the disproportionately high figures for time spent by staff on Landmarks Commission meetings in Attachment 7Ab, which is almost four times higher than the time and money spent on the second most costly commission on the list.
Perhaps these numbers refer to the time staff spends on all work related to the Landmarks Ordinance, not just on the Landmarks Commission itself. If that is the case, we hope the numbers will nonetheless be probed. Considering that the heavy lifting of study and analysis of Landmark designation applications is sent to outside consultants whose fees are paid by the applicants and not the city, the numbers are very high.
Please help get more information about the reported staffing costs before taking any action.
The Future of the City’s Heritage Conservation Program
Ultimately, today’s proposed tweaks to the program amount to what we refer to in the historic preservation world as incremental degradation. It happens to historic structures when they change Item 7-A
January 13, 2026
Item 7-A
January 13, 2026
7.A.d
Packet Pg. 984 Attachment: Written Comments [Revision 2] (7179 : Boards & Commissions Comprehensive Review) 2 the windows, and then the doors, and then the roofing without ever considering the impact on the integrity of the building as a whole. In Santa Monica, it is happening to our Landmarks Program.
Recently, City Council has discussed Structures of Merit, Mills Act Contracts, and now the requirements and staffing of the Landmarks Commission itself. In recent years there have been changes to the demolition review process, extreme hikes in the cost of filing an application by the public and by non-profits, and the removal of the ability of the landmarks commission to file a nomination for designation on its own behalf. All these things are chipping away at the integrity of the program. This is evident in the significant drop in applications filed. We should cease to piecemeal adjustments to the city’s historic preservation program. Instead, we should spend our time and money to look at it holistically.
In 2020, the City of Santa Monica was in the process of hiring a specialized preservation planner with the training and experience in historic preservation principles and practice to manage the program. This single change has the potential to reduce city costs, and to create significant efficiencies. As a reminder, historic preservation is a core principle of our LUCE, and we have adopted a Historic Preservation Element.
The Santa Monica Conservancy has always been and remains a willing partner in the modernization of our historic preservation program, and we urge the city to be cautious about making any further piecemeal changes to it. Please consider an investment in proper consultation and public process that will realign historic preservation here holistically so Santa Monica’s heritage can continue to be celebrated.
Sincerely,
Mario Fonda-Bonardi
Board President
Santa Monica Conservancy
Item 7-A
January 13, 2026
Item 7-A
January 13, 2026
7.A.d
Packet Pg. 985 Attachment: Written Comments [Revision 2] (7179 : Boards & Commissions Comprehensive Review) 1 David Yakobson
From: Council Mailbox
Sent: Monday, January 12, 2026 8:43 PM
To: councilmtgitems
Subject: FW: item 7
From: Bonnie Johnstone <[email protected]>
Sent: Monday, January 12, 2026 7:09 PM
To: Council Mailbox <[email protected]>
Subject: Re: item 7
EXTERNAL
p.s. The same for Boards and Task Forces too. .Thanks.
Bonnie Johnstone
On Mon, Jan 12, 2026 at 7:07 PM Bonnie Johnstone <[email protected]> wrote:
Before mandating Commission reductions and/or mergings, I strongly suggest that all of you meet with the various members and get their take.
Bonnie Johnstone
Item 7-A
January 13, 2026
Item 7-A
January 13, 2026
7.A.d
Packet Pg. 986 Attachment: Written Comments [Revision 2] (7179 : Boards & Commissions Comprehensive Review) 1 David Yakobson
From: Brian Stedge-Stroud <[email protected]>
Sent: Monday, January 12, 2026 1:23 PM
To: councilmtgitems
Subject: 7.A. Boards & Commissions Comprehensive Review
EXTERNAL
Hi Mayor and City Councilmembers,
I support the staff recommendations.
Thank you!
Brian Stedge-Stroud
Item 7-A
January 13, 2026
Item 7-A
January 13, 2026
7.A.d
Packet Pg. 987 Attachment: Written Comments [Revision 2] (7179 : Boards & Commissions Comprehensive Review) 1 David Yakobson
From: Alex Elliott
Sent: Sunday, January 11, 2026 11:02 PM
To: councilmtgitems
Subject: 7A Boards and Commissions Comprehensive Review My name is Alex Elliott, I am the Chair for the Santa Monica Disabilities Commission, and I urge you not to eliminate the Santa Monica Disabilities Commission.
Consolidating the Disabilities Commission, Housing Commission, and Human Services Commission into a single “Housing and Human Services Commission” would quietly erase something profound: six guaranteed seats for people with disabilities. Six lived-experience voices that exist today by design.
Those seats are not symbolic. They are how Santa Monica ensures that programs and policies are shaped by people with disabilities. In other words: nothing about us without us.
In a consolidated body with only seven seats total, it will be impossible, by design, to preserve the representation of people with disabilities. This is not streamlining. It is silencing by dilution.
The consolidation is also rooted in a flawed assumption: that disability is merely a housing and human services issue. It is not. Disability is a civil rights, infrastructure, and design issue that touches every system that Santa Monica operates. The proposed consolidation reduces the advisory scope of people with disabilities to a fraction of what is required by the Americans with Disabilities Act.
Eliminating the Disabilities Commission does not eliminate the need for accessibility. It eliminates early warning. It shifts the burden onto individuals to advocate alone, navigate bureaucracy, or pursue legal remedies that could have been avoided through planning and community input from people with disabilities.
When a city removes its disability advisory body, it sends a harmful message that disabled residents are optional stakeholders. Do not move Santa Monica backward. Keep the Disabilities Commission.
Please do not consolidate us out of the room.
Item 7-A
January 13, 2026
Item 7-A
January 13, 2026
7.A.d
Packet Pg. 988 Attachment: Written Comments [Revision 2] (7179 : Boards & Commissions Comprehensive Review) 1 David Yakobson
From: Kevin McKeown <[email protected]>
Sent: Sunday, January 11, 2026 12:27 PM
To: councilmtgitems
Cc: Caroline Torosis; Jesse Zwick; Dan Hall; Ellis Raskin; Barry Snell; Natalya Zernitskaya; Lana Negrete
Subject: Item 7 -- Boards and Commissions Comprehensive Review
EXTERNAL
Santa Monica’s board and commission system came about over multiple decades as a triumph of progressive inclusionism, a quite deliberate attempt to engage more people in local governance and give the Council the benefit of broader expertise.
Please weigh carefully whether that is a luxury we can no longer afford, or continues to be a worthwhile investment in community. If some boards and commissions have become dysfunctional or redundant, prune minimally and with great care.
Keep in mind that running our boards and commissions requires a truly tiny percentage of the City budget.
Six years of COVID and financial constraints have left us with much rebuilding to do. Rather than discard boards and commissions because of quorum challenges, the Council could choose to redouble recruitment efforts and bring on a whole new generation of energetic, informed contributors.
One reason the boards and commissions used to be more relevant was ongoing Council involvement, with a Councilmember assigned as liaison to each one. Yes, that meant more work for Councilmembers.
The liaison policy did not end because of undue influence, but because some Councilmembers at the time did not want the additional commitment and resented the recognition other Councilmembers got for continuing to work as liaison for multiple commissions. There was never, to my knowledge, an actual problem with “undue influence” — and both the commissions and the Council benefited from ongoing communication.
This study session is a welcome opportunity to ask probing questions and give thoughtful direction to staff. The bathwater may be brackish, but let’s keep the baby, OK? Thanks,
Kevin McKeown
Retired former Mayor
————————————
K e v i n M c K e o w n
https://urldefense.com/v3/__http://www.mckeown.net__;!!OfuUnHCITYtmmjM!ob5Uw3sOuVbGiZpuKzPQo_VyB RbuHMSH4ZFs7kI3WaVk9bC-3MYJ1KxK8rEwXxNLl638nK3dX8l9hhJCW9QTTWhWEkM$ Choose to be conscious
————————————
Item 7-A
January 13, 2026
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January 13, 2026
7.A.d
Packet Pg. 989 Attachment: Written Comments [Revision 2] (7179 : Boards & Commissions Comprehensive Review) Boards, Commissions &
Task Force
Review
January 2026
Item 7-A
January 13, 2026
Item 7-A
January 13, 2026
7.A.e
Packet Pg. 990 Attachment: PowerPoint Presentation (7179 : Boards & Commissions Comprehensive Review) Overview of Comprehensive Review
• Last comprehensive review was conducted in 2020-2021
• Tasked the City Clerk’s Office with conducting a comprehensive five-year review of boards and commission (not in election years).
• The review explores opportunities to reorganize and consolidate functions across various bodies that streamline and reduce duplication.
• Over the last few months, Clerk staff have met with: Chairs & Vice Chairs, Staff Liaisons, Department Heads, and Councilmembers to gather feedback and develop the following recommendations to Council.
• Many opportunities were identified for internal processes from onboarding, clarification of roles and responsibilities to increasing Supporting Department oversight.
Item 7-A
January 13, 2026
Item 7-A
January 13, 2026
7.A.e
Packet Pg. 991 Attachment: PowerPoint Presentation (7179 : Boards & Commissions Comprehensive Review) Overview of Appointed Bodies
Boards & Commissions (14) • Airport Commission
• Architectural Review Board
• Arts Commission
• Building and Fire-Life Safety Commission
• Commission on Sustainability, Environmental
Justice, and the Environment • Disabilities Commission
• Housing Commission
• Human Services Commission
• Landmarks Commission
• Library Board
• Personnel Board
• Planning Commission
• Public Safety Reform and Oversight Commission New
• Recreation and Parks Commission
Task Forces (1) • Urban Forest Task Force
Special City Boards (6) • Audit Subcommittee
• Clean Beaches & Ocean Parcel Tax Citizens
Oversight Committee
• Housing Authority Board New
• Measure GS Resident Oversight Committee New
• Transient Occupancy Tax Advisory Committee New
• Transit Security Advisory Committee New
Boards of Non-Profit Agencies (3) • Downtown Santa Monica, Inc. • Santa Monica Travel and Tourism, Inc. • Santa Monica Pier Corporation District Boards (2) • L.A. County West Vector
Control District • Metropolitan Water
District
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7.A.e
Packet Pg. 992 Attachment: PowerPoint Presentation (7179 : Boards & Commissions Comprehensive Review) Overview of Appointed Bodies
Boards & Commissions (14) • Airport Commission
• Architectural Review Board
• Arts Commission
• Building and Fire-Life Safety Commission
• Commission on Sustainability, Environmental
Justice, and the Environment • Disabilities Commission
• Housing Commission
• Human Services Commission
• Landmarks Commission
• Library Board
• Personnel Board
• Planning Commission
• Public Safety Reform and Oversight Commission New
• Recreation and Parks Commission
Task Forces (1) • Urban Forest Task Force
Special City Boards (6) • Audit Subcommittee
• Clean Beaches & Ocean Parcel Tax Citizens
Oversight Committee
• Housing Authority Board New
• Measure GS Resident Oversight Committee New
• Transient Occupancy Tax Advisory Committee New
• Transit Security Advisory Committee New
Boards of Non-Profit Agencies (3) • Downtown Santa Monica, Inc. • Santa Monica Travel and Tourism, Inc. • Santa Monica Pier Corporation District Boards (2) • L.A. County West Vector
Control District • Metropolitan Water
District
Item 7-A
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Packet Pg. 993 Attachment: PowerPoint Presentation (7179 : Boards & Commissions Comprehensive Review) Overview of Appointed Bodies
Boards & Commissions (14) • Airport Commission
• Architectural Review Board
• Arts Commission
• Building and Fire-Life Safety Commission
• Commission on Sustainability, Environmental
Justice, and the Environment • Disabilities Commission
• Housing Commission
• Human Services Commission
• Landmarks Commission
• Library Board
• Personnel Board
• Planning Commission
• Public Safety Reform and Oversight Commission New
• Recreation and Parks Commission
Task Forces (1) • Urban Forest Task Force
Special City Boards (5) • Audit Subcommittee
• Clean Beaches & Ocean Parcel Tax Citizens
Oversight Committee
• Measure GS Resident Oversight Committee New
• Transient Occupancy Tax Advisory Committee New
• Transit Security Advisory Committee New
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Packet Pg. 994 Attachment: PowerPoint Presentation (7179 : Boards & Commissions Comprehensive Review) Consolidations
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Packet Pg. 995 Attachment: PowerPoint Presentation (7179 : Boards & Commissions Comprehensive Review) Council Audit Subcommittee
• Advisory Subcommittee to City Council, supported by Finance Department. • Invite the Transient Occupancy Tax Advisory Committee for a joint annual meeting to present recommendations on Measure CS funds. • Meeting Schedule: Quarterly (Feb, May, Aug, Nov).
• Provides an opportunity for both bodies to learn about each other's work and would streamline meeting support for Finance staff.
Transient Occupancy Tax Advisory Committee
• Advisory body supported by Finance Department.
• Meeting Schedule: Annually between February – May
• Propose committee remains as is.
The joint annual meeting will be scheduled within the regular quarterly meeting cycle, in the month of February or May.
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7.A.e
Packet Pg. 996 Attachment: PowerPoint Presentation (7179 : Boards & Commissions Comprehensive Review) Clean Beaches & Ocean Parcel Tax Citizens Oversight Committee • Advisory body supported by the Public Works – Engineering & Steets Division. • Hold joint quarterly meetings (2nd Wednesdays in Feb, May, Aug, Nov) with the Commission on Sustainability to provide its Measure V budget and project status reports.
• Provides an opportunities for two bodies that share environmental goals, including water quality and pollution prevention, streamlining meeting support for staff. • Propose committee remains as is.
Commission on Sustainability, Environmental Justice, and the Environment • Advisory body supported by the Office of Sustainability & Environment now in the City Manager’s Office.
• Meeting Schedule: Monthly on 3rd Mondays.
• Propose commission remains as is.
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Packet Pg. 997 Attachment: PowerPoint Presentation (7179 : Boards & Commissions Comprehensive Review) Disabilities Commission, Housing Commission and Human Services Commission
• Advisory bodies supported by Housing and Human Services Department. • Proposal to consolidate all three (3) Commissions into a single advisory body, creating a new unified Housing and Human Services Commission dedicated to discussing and considering the diverse and intersecting issues impacting underserved Santa Monicans.
• Membership will consist of seven (7) members, existing members of the three commissions who wish to continue serving are encouraged to apply. • Meetings will follow a monthly meeting schedule.
• Workplans will be consolidated to align with Department’s work.
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Packet Pg. 998 Attachment: PowerPoint Presentation (7179 : Boards & Commissions Comprehensive Review) Modification to
Composition of
Commissions
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Packet Pg. 999 Attachment: PowerPoint Presentation (7179 : Boards & Commissions Comprehensive Review) • Advisory body supported by the Office of Equity and Inclusion. • Modify membership seats from 12 to (7) seven (plus 1 ex-officio member). • Increase age limit to its youth seats from 22 to 25 years old. - Changes will address challenges in retaining interested youth that otherwise age out of eligibility and provide flexibility in recruitment. • Modify resident criteria to live or work in Santa Monica.
Public Safety Reform and Oversight Commission
Proposed modifications in membership seats will align with the structure of other boards and commissions, ensure quorum and supermajority voting requirements, and enable the Staff Liaison to dedicate more time to each member.
Arts Commission
• Advisory body to the Recreation and Arts Department.
• Change of membership from (9) nine to (7) seven.
• There are currently two vacancies, both seats will be dissolved.
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Packet Pg. 1000 Attachment: PowerPoint Presentation (7179 : Boards & Commissions Comprehensive Review) Landmarks Commission
• Quasi-judicial body to the Community Development Department. • Remove resident eligibility criteria for five (5) members; retain the residency criteria for one (1) member serving in the local historian and real estate seat. • Changing the resident criteria will provide flexibility in recruitment, while ensuring that seats requiring specialized knowledge of Santa Monica’s history remains filled by a local resident.
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Packet Pg. 1001 Attachment: PowerPoint Presentation (7179 : Boards & Commissions Comprehensive Review) Task Force
Conversion
Item 7-A
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Packet Pg. 1002 Attachment: PowerPoint Presentation (7179 : Boards & Commissions Comprehensive Review) Urban Forest Task Force
• Advisory body supported by the Public Works Department. • Change from a task force to a formal commission.
• Adopt same term and terms limits as other commissions. • No changes to current meeting schedule (bi-monthly).
• Remove special certifications for membership to improve and broaden recruitment.
• Staff feel the UFTF is a valuable community partner and members are engaged; provides support by reviewing and making recommendations to the Public Works Department regarding public tree removal appeals by developers.
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Packet Pg. 1003 Attachment: PowerPoint Presentation (7179 : Boards & Commissions Comprehensive Review) Item 7-A
January 13, 2026
Item 7-A
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Packet Pg. 1004 Attachment: PowerPoint Presentation (7179 : Boards & Commissions Comprehensive Review) Updates to
Policies and
Procedures
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7.A.e
Packet Pg. 1005 Attachment: PowerPoint Presentation (7179 : Boards & Commissions Comprehensive Review) Policy and Procedure Recommendations
• Amend process for making appointments. • Extend invitation to applicants to speak about their qualifications (public comment) at a Council meeting.
• Reduce number of years a member must wait before serving in the same body from four (4) years to one (1) year.
• Formally remove the annual Boards and Commissions Dinner and continue the submittal of annual Evaluation and Workplans to Council by Information Item. • Clarify parameters for unexcused absences and streamline removal process. • Align timeframe for submitting attendance reports with Annual Appointments. • Formally remove Council Liaisons.
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Packet Pg. 1006 Attachment: PowerPoint Presentation (7179 : Boards & Commissions Comprehensive Review) Snapshot: Staff time and Cost
Total Staff
Cost/Year
Total Staff
Hours/Year
Avg Hours/
Meeting
Meetings
/ Year Board/Commission Department Staffing/Attend Meetings 11 2 650 $67,270
Staff Assist. III
Facilities Asset & Airport Mgr
COO/Airport Director
Public Works Director
Deputy City Attorney IV
Airport Commission Public Works
12 3 284 $22,295
Staff Assist. III
Cultural Affairs Manager
Allison Ostrovsky
Cultural Affairs Supervisor
Arts Commission Recreation and Arts
4 3 82 $8,267
Secretary/Asst Dir of Rec & Elect
Executive Admin Asst
Pr Admin Analyst
Deputy City Attorney IV
Audit Subcommittee Finance
4 2 124 $12,260
Administrative Analyst
Pr Engineer
Clean Beaches & Ocean Public Works
10 3 160 $13,863
Project Support Asst
Chief Sustainability Officer
Commission on Sustainability, City Manager’s Office
Environmental Justice, and the
Environment
12 3 202 $10,227
Housing & Human Staff Assistant III
Services
Disabilities Commission
12 3 264 $16,367
Staff Assistant III
Housing Manager
Housing & Human
Services
Housing Commission
Boards, Commissions & Task Force: Advisory
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Packet Pg. 1007 Attachment: PowerPoint Presentation (7179 : Boards & Commissions Comprehensive Review) Snapshot: Staff time and Cost
Total Staff
Cost/Year
Total Staff
Hours/Year
Avg Hours/
Meeting
Meetings/
Year
Board/Commission Department Staffing/Attend Meetings
5 2 119 $7,521
Staff Assistant III
Human Services Manager
Sr Analyst
Homeless & Intervention Mgr
Housing & Human
Services
Human Services Commission
12 3 312 $20,888
Staff Assistant III
Housing Manager
Housing & Human
Services
Measure GS Resident Oversight
Committee
20 3 520 $64,512
Equity & Inclusion Manager
Assistant City Attorney City Manager’s Office Public Safety Reform and Oversight Commission
12 3 258 $24,140
Staff Assistant III
Community Rec Manager
Recreation & Arts Director
Recreation & Arts Recreation and Parks Commission
12 2 357 $29,197
Executive Admin Asst
Library Director
Library Santa Monica Library Board
2 3 69 $7,085
Secretary/Deputy City Clerk
Executive Admin Asst
Pr Admin Analyst
Finance Director
Deputy City Attorney IV
Finance Transient Occupancy Tax Advisory
4 2 76 $6,190
Staff Assistant III
Transit Safety and Training Mgr Transportation Transit Security Advisory Committee 6 2 173 $11,519
Staff Assistant III
Public Landscape Manager
Urban Forest Coordinator
Urban Forest Supervisor
Urban Forest Task Force Public Works
Boards, Commissions & Task Force: Advisory
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Packet Pg. 1008 Attachment: PowerPoint Presentation (7179 : Boards & Commissions Comprehensive Review) Snapshot: Staff time and Cost
Total Staff
Cost/Year
Total Staff
Hours/Year
Avg Hours/
Meeting
Meetings/
Year
Staffing/Attend
Meetings
Board/Commission Department
12 2 376 $30,481
Staff Assist. III
Sr Planner
Design/Historic Preservation
Planner
Community Development Architectural Review Board
4 2 202 $17,302
Staff Assist. III
Sr Admin Analyst
Fire Marshall
Building/Safety Build Officer
Deputy City Attorney IV
Asst Building Official
Inspection Supervisor
Community Development Building and Fire-Life Safety
Commission
12 3 2880 $255,089
Staff Assistant III
Design/Historic Prsv Planner
Sr Planner
Planning Manager
Deputy City Attorney IV
Community Development
Landmarks Commission
12 1 268 $10,909
Executive Admin. Asst
HR Director
Deputy Attorney IV
Human Resources Personnel Board
24 4 824 $51,431
Staff Assistant III
Planning Manager
City Attorney
Planning Commission* Community Development
*Due to the nature of the work of the Planning Commission, and it being deeply integrated and overlapping into the day-to-day responsibilities of staff in the Planning Department, it was difficult to provide a more accurate estimated time.
Boards and Commissions: Regulatory/Quasi-Judicial
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Packet Pg. 1009 Attachment: PowerPoint Presentation (7179 : Boards & Commissions Comprehensive Review) City Council
Report
City Council Meeting: January 13, 2026
Agenda Item: 10.A
1 of 8
To: Mayor and City Council
From: Jing Yeo, Director, Administration
Subject: Introduction of an Ordinance to Extend the Off-Site Affordable Housing Pilot Program, Allowing Additional Applicants of Qualified Market Rate Multi-family Residential Projects to Satisfy the City’s Affordable Housing Requirements through Alternative Options
Recommended Action
Staff recommends that the City Council:
1. Adopt a finding that the actions below have been previously analyzed in the certified 6th Cycle Housing Element Environmental Impact Report and are statutorily exempt from the California Environmental Quality Act pursuant to Section 21080.085(a) of the California Public Resources Code;
2. Introduce for first reading an ordinance to add Section 9.64.065 to the Santa Monica Municipal Code to establish the Off-site Affordable Housing Pilot Program for 1000 units and add Section 9.64.075 to the Santa Monica Municipal Code to extend and expand the Off-site Affordable Housing Pilot Program.
Summary
On June 10, 2025, Council gave direction to staff to “establish a pilot program allowing market-rate housing projects more flexibility in how they provide affordable housing units off-site, while also allowing these housing projects to be eligible for density bonus, incentives/concessions, and modifications.” The purpose of this program is to incentivize market-rate housing projects that were entitled but not proceeding with building permits due to financial challenges in the development market.
On August 12, 2025, City Council approved an emergency ordinance to establish the Off-Site Affordable Housing Pilot Program. This program allows approved market-rate housing projects more options for fulfilling the City’s affordable housing requirements of the City’s Affordable Housing Production Program (AHPP) while simultaneously
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proceeding with construction of the market rate portion of the housing development.
Participating projects would also be eligible for a local density bonus (which is not currently an option for new applications that choose to build affordable housing off-site) in an effort to expedite housing production in Santa Monica.
Under the AHPP pilot program, developers of sites with already approved entitlements have three alternative options if they opt out of constructing on-site affordable units:
• Option 1 – Build market rate units first, deposit a gap financing amount of $150,000 per unit into an escrow account, and develop the required affordable units off-site within four years.
• Option 2 – Rehabilitate existing units off-site that are deemed uninhabitable and, if they’re not already, deed-restrict these rehabilitated units as affordable. • Option 3 – Pay an in-lieu fee that will go to the city’s Housing Trust Fund for future affordable housing developments.
Council directed that the pilot program be established for up to 1,000 units based on applications received prior to September 30, 2025. Council also directed that staff return to Council with an update on the pilot program after public outreach with affordable housing providers and further consideration of the program’s terms.
On September 30, 2025, Council held a study session to receive an update on the results of the AHPP pilot program to date, and a summary of outreach efforts including feedback received. Council provided direction to staff to extend the off-site pilot program and allow for additional eligible projects with approved entitlements, subject to certain conditions.
In June 2025, before applying for employment with the Housing Action Coalition (HAC), Mayor Pro Tem Zwick consulted with the City Attorney’s Office to determine whether accepting such a position would create a conflict of interest with his role on the City Council. Relying on that legal advice, Mayor Pro Tem Zwick applied for the position in July 2025 and later accepted an offer on August 18, 2025, after additional consultation with City legal staff.
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Before beginning employment, Mayor Pro Tem Zwick took further steps to avoid any actual or perceived conflict, including making clear that he would perform no work related to Santa Monica, ensuring that Santa Monica was excluded from his professional portfolio, and confirming that HAC would cease advocacy activities in Santa Monica, which it did prior to his start date. Mayor Pro Tem Zwick began his employment with HAC on September 8, 2025.
In October 2025, following continued public questions and concerns, the City Attorney’s Office sought opinions from multiple outside law firms regarding the application of the Political Reform Act to Mayor Pro Tem Zwick’s employment.
On October 28, 2025, he publicly announced that he would voluntarily recuse himself from all housing-production-related matters while seeking formal guidance from the California Fair Political Practices Commission (FPPC). Working in conjunction with the City Attorney’s Office, he then submitted a formal advice request to the FPPC on November 10, 2025.
On December 8, 2025, the FPPC issued a formal advice letter concluding that, prospectively, Mayor Pro Tem Zwick is disqualified from participating in certain City Council decisions related to housing production under the FPPC’s interpretation of the Political Reform Act and its “nexus test.” Specifically, while neither Zwick nor HAC's financial interest in housing production decisions made in Santa Monica met traditional criteria that would cause it to rise to the standard of being material, it was possible that under a separate “nexus test” that the FPPC might apply, “any reasonably foreseeable financial effect on a source of income to a public official or the official’s spouse is material if the decision will achieve, defeat, aid, or hinder a purpose or goal of the source.”
Under that standard, the FPPC advised City housing production decisions could benefit HAC, despite safeguards put in place to ensure no direct benefit to either Mayor Pro Tem Zwick or HAC from such decisions.
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The FPPC’s advice is forward-looking only. By statute, the FPPC does not issue opinions on past actions, and the FPPC did not find that Mayor Pro Tem Zwick acted improperly, violated the law, or failed to disclose his employment.
Therefore, staff is bringing forward two actions for Council consideration on January 13, 2026, related to the AHPP.
The first action is to consider for introduction and first reading a regular ordinance to codify the AHPP pilot program (Section 9.64.065 of the Santa Monica Municipal Code) for the applications for 1000 units, filed and pending prior to September 30, 2025, with the same terms and conditions as the emergency ordinance presented to Council on August 12, 2025. This action is recommended out of an abundance of caution in light of the advice from the FPPC and the timing of the employment.
The second is to consider for introduction and first reading a regular ordinance to codify the expansion of the AHPP pilot program (Section 9.64.075 of the Santa Monica Municipal Code) beyond the 1000 units approved by the emergency ordinance and in the ordinance codifying Section 9.64.065, but with different conditions and requirements, as outlined in this report.
If approved, these actions will: 1) allow the applications filed before September 30, 2025, which are currently pending and arguably vested under the Housing Accountability Act (California Government Code 65589.5) and other state housing laws, to proceed under the same terms and conditions as the August 12, 2025 emergency ordinance; and 2) extend the pilot program beyond the pending applications for 1000 units with additional terms and conditions for future applications.
Discussion
Program Status
Subsequent to adoption of the Emergency Ordinance on August 12, 2025, establishing the initial AHPP pilot program, the City received six applications for the pilot program within the first week. These applications total 1,088 units, consisting of 916 market rate units and 102 affordable units as indicated in the table:
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Project
Address (ENT)
Total
Units
# of
Previously
Approved
Market
Rate Units
# of
Previously
Approved
On-Site
Affordable
Units
# of
Revised
Market
Rate Units
Pilot
Program
Option
Chosen2
Option 1 OffSite PropertyOption 1 #
of Off-Site
Affordable
Units
Option 3
Project
SF
Option 3
Estimated InLieu Fee
1902 Wilshire
(23ENT-0156)
140 126 14 140 1 1333 7th St* 14 N/A -
1527 Lincoln
(23ENT-0161)
210 189 21 210 1 1143-1145 25th
St
21 N/A -
2501 Wilshire
(23ENT-0173)
170 153 17 170 1 1333 7th St* 17 N/A -
2025-2037
Wilshire
(23ENT-0178)
150 135 15 150 1 1333 7th St* 15 N/A -
1931 Wilshire
(24ENT-0183)
260 234 26 260 1 1143-1145 25th
St
26 N/A -
2906 Santa
Monica
(20ENT-0311)
88 79 9 88 3 N/A - 51,189 sf $2,247,708.99
Total 1,018 916 102 1,018 93
With the 6 applications, the total 1,000 unit cap was reached with the submittal of the six applications and the initial round of the AHPP is closed to additional applicants.
On September 30, 2025, Council held a study session on the program, taking into consideration the comments received from affordable housing providers. Council recommended that staff return with an ordinance to extend the AHPP pilot program to additional multiple unit projects, but with modifications to the program that would apply to new applicants. Pursuant to Council direction, these following modifications have been included in the Ordinance and would only apply to new applicants of the pilot program:
• New Program Option for At-Risk Units: Section 9.64.075(G) of the program includes an option for the applicant to purchase covenants for at-risk units (i.e., affordable-deed restricted units with covenants at risk of expiring). Applicants using this option must record an extension of the covenant for a term of 75 years. • Community Benefit Payment: Section 9.64.075(H)(1) requires that in the event the sale of the multiple unit project is not subject to the Measure GS Transfer tax for whatever reason, the program requires the owner or applicant to pay a Community Benefit Payment to the City. The payment applies to the first transfer of a multiple-unit project (or its property) and is equal to 4.6% of the amount of consideration or value of that transfer, unless the transaction is subject to the City’s Measure GS Third Tier Tax, in which case payment of the GS tax satisfies
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this requirement. The payment is to be secured by a performance deed of trust recorded against the market rate property.
• Option 1 Gap Financing: To address the concern that the estimated gap financing amount is too low, the gap financing amount for new program applicants is increased to $160,000 per unit. This amount would be reviewed and updated annually based on the construction cost index.
• Strong Enforceable Milestones for Option 1 for Construction of Off-Site Units: To ensure that milestones are met for the construction of the off-site affordable housing, an applicant must satisfy a series of binding, enforceable milestones:
o Prior to issuance of a building permit for the first market rate project, the applicant must submit a complete entitlement application for the off-site affordable housing project.
o Prior to receiving a certificate of occupancy for the first market rate project, applicant must submit construction plans for the off-site affordable housing project.
o Off-site affordable housing construction must commence within 48 months of issuance of the first building permit for any market-rate project (or 18 months for Coastal Zone projects), unless the City grants a 12-month extension for good cause.
o If construction does not commence on time, the City may exercise its option to acquire the off-site property and may retain the Gap Financing Amount.
• Long Term Affordability Protections: To protect long-term protections of affordable housing tenants, the Ordinance requires that, when an applicant chooses to utilize the off-site affordable housing option, the applicant must record a Right of First Refusal Agreement on that off-site property. This agreement ensures that the City has the first opportunity to purchase the off-site property before it can be sold to any third party. If the property owner receives a purchase offer, the City may choose to match that offer and acquire the property, or allow the sale to proceed.
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Council also gave direction to staff to conduct the following future work efforts related to the AHPP:
• Financing Competitive Analysis – Prepare an analysis, such as timeline data, to ensure the pilot projects don’t compete or undermine financial funding of Cityfunded affordable housing projects • Nexus Study for In-Lieu Fee – Pursuant to Council direction, staff is currently working on a Request for Proposal to review and update, if necessary, the City’s affordable housing in-lieu fee. Staff anticipates completion of the study in 2026 and will return to Council with the results of the study.
In addition to the Council directed items, the expanded AHPP pilot program would allow for purchase of affordability covenants on pre-existing market rate units.
Environmental Review
The ordinance for the AHPP pilot program has been analyzed as part of the 2021-2029 6th Cycle Housing Element Environmental Impact Report (EIR) [SCH No. 20212269242021] that was certified by Council on October 12, 2021, with an Addendum to the EIR approved on October 11, 2022. These amendments implement Program 2.C that was described and analyzed in the 6th Cycle Housing Element EIR.
Additionally, pursuant to Section 21080.085(a) of the California Public Resources Code, the ordinance is statutorily exempt from CEQA. Under PRC Section 21080.085(a), CEQA does not apply to zoning actions contained in an approved housing element pursuant to subdivision (c) of Section 65583 of the Government Code. The ordinance implements the certified 6th Cycle Housing Element. Therefore, the ordinance is statutorily exempt and no further environmental review under CEQA is required.
Past Council Actions
Meeting Date Description
June 10, 2025 Council directed the City Manager to return with a pilot program allowing market-rate housing projects more flexibility in how they provide affordable housing units off-site as a means to incentivize housing production for approved
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projects that are unable to proceed due to economic
uncertainty. The pilot program should include provisions to ensure that the off-site affordable housing units are
constructed and also allow housing projects to be eligible for density bonus, incentives/concessions, and modifications under State density bonus law.
August 12, 2025 Council adopted an emergency ordinance amending the Zoning Ordinance to establish a pilot program allowing for flexibility and incentives for complying with the City’s Affordable Housing Production Program.
September 30, 2025 Council held a study session to receive an update on the Offsite Affordable Housing Pilot Incentive Program and provided direction to staff to extend the pilot program to additional eligible approved projects, subject to certain conditions.
Financial Impacts and Budget Actions
There is no immediate financial impact or budget action necessary as a result of the recommended action.
City staff will monitor the pilot program and return to Council should additional resources be necessary for implementation and management of this program.
The effect of additional in-lieu fees on the City’s Housing Trust Funds is unknown and will be dependent on which eligible projects elect to utilize Option 3 of the pilot program.
Prepared By: Rachel Kwok, Environmental Planner
Approved Forwarded to Council
Attachments:
A. AHPP Ordinance Final 010626
B. September 30, 2025 Council Meeting
C. August 12, 2025 Council Meeting
D. June 10, 2025 Council Meeting
E. Written Comments
F. PowerPoint Presentation
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1 City Council Meeting: January 13, 2026 Santa Monica, California ORDINANCE NUMBER ____ (CCS)
(City Council Series)
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY
OF SANTA MONICA ADDING SECTIONS 9.64.065 AND 9.64.075 TO THE SANTA
MONICA MUNICIPAL CODE TO ESTABLISH AN OFF-SITE
AFFORDABLE HOUSING PILOT PROGRAM
WHEREAS, California has a statewide housing crisis, represented by a shortage of nearly 3,500,000 homes; and
WHEREAS, California’s housing crisis stifles economic growth, contributes to the homelessness epidemic, consumes an ever-growing share of the paychecks of working families; and
WHEREAS, the State has declared that restrictive zoning, land use, and burdensome permitting policies at the local and state level are a major cause of the shortfall between California’s housing needs and the available supply of housing; and WHEREAS, the City’s Affordable Housing Production Program (AHPP), codified as Chapter 9.64 of the Santa Monica Municipal Code, was enacted in 1998 and requires developers of market-rate housing projects to contribute to affordable housing production by either:
1) Constructing inclusionary affordable residences onsite in a development; 2) Constructing affordable residences offsite in another development; or 3) Paying an affordable housing fee that is deposited into the Citywide Housing Trust Fund and used by the City to subsidize affordable housing developments; and WHEREAS, Since the enactment of the AHPP, the City has produced more than 1,200 affordable lower income units; and
10.A.a
Packet Pg. 1018 Attachment: AHPP Ordinance Final 010626 (7403 : Ordinance to Extend the Off-Site Affordable Housing Pilot Program (AHPP)) 2 WHEREAS, the City’s AHPP has been amended numerous times to increase affordable housing production and meet the City’s housing goals; and WHEREAS, on April 9, 2019, the City Council adopted Ordinance Number 2609 (CCS), which authorized modification to the AHPP to remove the extremely-low income housing option from the Tier 2 community benefits for housing projects with an application that was determined complete before March 26, 2019, and after November 27, 2019; and WHEREAS, on October 22, 2019, the City Council adopted Ordinance Number 2622 (CCS), to extend the removal of the extremely-low income housing option from the Tier 2 community benefits to housing projects with an application that was determined complete before March 26, 2019, and after November 27, 2020; and WHEREAS, on October 27, 2020, the City Council adopted Ordinance Number 2654 (CCS), to extend the removal of the extremely-low income housing option from the Tier 2 community benefits to housing projects with an application that was determined complete before March 26, 2019, and after February 28, 2022; and WHEREAS, on April 11, 2023, as part of the 6th Cycle Housing Element implementing actions, the City Council adopted Ordinance Number 2742 (CCS), which included amendments to the Zoning Ordinance that included streamlining the approval of housing projects and modifying the AHPP to establish a 15% on-site inclusionary requirement; and
WHEREAS, pursuant to State Density Bonus Law, Government Code Section 65915 et seq., projects that provide a certain percentage of affordable units in a housing development project are eligible for density bonuses, incentives or concessions, and waivers or reductions of development standards; and
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Packet Pg. 1019 Attachment: AHPP Ordinance Final 010626 (7403 : Ordinance to Extend the Off-Site Affordable Housing Pilot Program (AHPP)) 3 WHEREAS, in accordance with Chapter 9.22, Density Bonus, housing projects of 20 units or more that provide onsite affordable units in accordance with the 15% inclusionary requirement set forth in the AHPP are eligible for the greatest density bonus and incentives or concessions permitted under State Density Bonus Law; and WHEREAS, the residential construction industry is facing significant financial challenges due to macroeconomic and global political factors; and WHEREAS, while the City has streamlined the approval of more than 3,400 market rate projects and 900 affordable units through a ministerial process, most of these projects have yet to begin construction; and
WHEREAS, the number of building permits that have been issued in the City has dropped significantly in the last two years and, in 2025, two building permits have been issued by the City to date; and
WHEREAS, in light of these factors, on June 20, 2025, the City Council gave direction to staff to “establish a pilot program allowing market-rate housing projects more flexibility in how they provide affordable housing units off-site, while also allowing these housing projects to be eligible for density bonus, incentives/concessions, and modifications”; and
WHEREAS, on August 12, 2025, the City Council adopted an urgency ordinance, Ordinance Number 2824 (CCS), adding Section 9.64.065 to the Santa Monica Municipal Code to establish an off-site affordable housing pilot program (the “Pilot Ordinance”); and WHEREAS, the Pilot Ordinance, by its own terms, effectively terminated upon the earlier to occur of (i) the submittal of applications utilizing the provisions of Section
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Packet Pg. 1020 Attachment: AHPP Ordinance Final 010626 (7403 : Ordinance to Extend the Off-Site Affordable Housing Pilot Program (AHPP)) 4 9.64.065 for a cumulative total of 1000 dwelling units for all the multiple-unit project applications submitted or (ii) September 30, 2025; and
WHEREAS, the Pilot Ordinance effectively terminated prior to September 30, 2025, because applications for the pilot program for a cumulative total of 1000 dwelling units were submitted prior to September 30, 2025; and
WHEREAS, at its public meeting on September 30, 2025, Council directed staff to extend the off-site pilot program to allow additional applications for market rate multifamily residential projects to be filed, subject to modified provisions and conditions, including that applications filed before the expiration of the Pilot Ordinance be subject to the terms and conditions set forth in Section 9.64.065 of this ordinance and applications filed after the expiration of the Pilot Ordinance be subject to the terms and conditions set forth in Section 9.64.075 of this ordinance; and
WHEREAS, housing development projects that do not provide affordable housing units on site are not eligible for bonuses, waivers and modifications or incentives and concessions under State Density Bonus Law; and
WHEREAS, there exists a current and immediate threat to public health, safety, and welfare due to factors that deter construction of previously entitled housing projects that have not pulled building permits to date; and
WHEREAS, this ordinance responds to Council’s direction to address the housing crisis in the City by creating an incentive program targeted at increasing the feasibility for previously entitled housing projects that have not pulled building permits to date; and WHEREAS, this ordinance will create flexibility in the AHPP off-site affordable housing option by removing the requirement that the Certificate of Occupancy for the
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Packet Pg. 1021 Attachment: AHPP Ordinance Final 010626 (7403 : Ordinance to Extend the Off-Site Affordable Housing Pilot Program (AHPP)) 5 affordable housing be issued before the Certificate of Occupancy for the market-rate housing, subject to alternative means of securing performance for production of the affordable units; and
WHEREAS, to incentivize the production of housing units, this ordinance will further ensure that housing projects that provide units offsite in accordance with the pilot program are eligible for local density bonuses, incentives and concessions and waivers and modifications equivalent to those provided for in Chapter 9.22, Density Bonus.
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF SANTA MONICA DOES HEREBY ORDAIN AS FOLLOWS:
SECTION 1. New Section 9.64.065 is hereby added to the Santa Monica Municipal Code and shall read in its entirety as follows:
Section 9.64.065 Off-Site Affordable Housing
A. Definitions. As used in this Section:
1. “100% affordable housing project” means a 100% affordable housing project as defined in Section 9.52.020.0050.
2. “Affordability covenants” means 75-year affordability covenants that are included in a recorded deed restriction, in form approved by the City Attorney.
3. “Affordable housing provider” means an affordable housing provider reasonably approved by the City.
4. “Applicant” means the applicant, or its successors in interest, for a discretionary and ministerial City permit applicable to a multiple-unit project.
5. “Building permit” means a final building permit issued by the City’s Building Official (excluding grading or early start construction permits).
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Packet Pg. 1022 Attachment: AHPP Ordinance Final 010626 (7403 : Ordinance to Extend the Off-Site Affordable Housing Pilot Program (AHPP)) 6 6. “Gap financing amount” means the amount of financing necessary to complete a 100% affordable housing project assuming that (a) the off-site affordable project will obtain a 4% federal Low-Income Housing Tax Credit and/or tax-exempt bond allocation; and (b) that there will be no land acquisition costs. The gap financing amount shall be $150,000, per offsite affordable unit to be constructed within the 100% affordable housing project. The gap financing amount shall be increased annually, commencing on the first anniversary from the effective date of this ordinance, by the last published annual average in the ENR Building Cost Index (BCI) for the Los Angeles region, but shall not exceed an annual increase of five (5) percent. The gap financing amount should be calculated from the effective date of the ordinance until deposited into escrow in accordance with Section 9.64.065(D).
7. “Multiple-unit project” means an eligible multiple-unit project pursuant to Section 9.64.065(B).
8. “Multiple-unit project property” means the property on which a multiple-unit project will be built.
9. “Off-site property” means a clean, uncontaminated property in the location specified in Section 9.64.060(E).
10. “Option” means a purchase option for the off-site property that may be exercised by the City or an affordable housing provider, at the election of the City, for the purchase amount of one hundred dollars ($100.00).
11. “Option agreement” means a purchase option agreement, including escrow instructions upon exercise of the Option, approved as to form by the City Attorney, and executed by the City or an affordable housing provider, at the election of the City, and the
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Packet Pg. 1023 Attachment: AHPP Ordinance Final 010626 (7403 : Ordinance to Extend the Off-Site Affordable Housing Pilot Program (AHPP)) 7 owner of the off-site property. The option agreement shall be recorded in the official records of Los Angeles County.
12. “Protected unit(s)” means any of the following:
a. Residential dwelling units that are or were subject to a recorded covenant, ordinance, or law that restricts rents to levels affordable to persons and families of lower or very low income within the past five years. b. Residential dwelling units that are or were subject to any form of rent or price control through a public entity’s valid exercise of its police power within the past five years.
c. Residential dwelling units that are or were occupied by lower or very low-income households within the past five years.
d. Residential dwelling units that were withdrawn from rent or lease in accordance with California Government Code Sections 7060 et seq. within the past 10 years.
13. “Rehabilitation property” means a property proposed for substantial rehabilitation of units pursuant to Section 9.64.065(E).
14. “Uncontaminated property” means a property free from hazardous substances, as defined under state and federal law.
B. Eligible Multiple-Unit Projects. In order for Applicants to use the provisions of this Section 9.64.065, each multiple-unit project shall contain 6 or more residential units; shall have obtained final approval of all required discretionary and ministerial City permits that have not expired, except for Architectural Review Board approval and post entitlement phase permits, as
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Packet Pg. 1024 Attachment: AHPP Ordinance Final 010626 (7403 : Ordinance to Extend the Off-Site Affordable Housing Pilot Program (AHPP)) 8 defined in Government Code Section 65913.3(j)(3), on or before August 12, 2025; and shall have submitted a complete application to use the provisions of this Section 9.64.065 within the 1000 unit cap and/or prior to September 30, 2025; provided, however, that except as otherwise expressly provided in Section (D)(5)(b), herein, multiple-unit projects that have obtained a building permit, are under construction, or have been completed are not eligible. The applicant of an entitled multiple-unit project that meets the requirements of Section 9.64.065.B may also use the provisions of Section 9.64.065 to satisfy the requirements of Section 9.64.060 for a project if the applicant obtains a new entitlement for the same multiple-unit property prior to December 31, 2026.
C. Exclusions. Nothing in this Section 9.64.065 shall conflict with or supersede state or local requirements for on-site replacement of protected units, including, but not limited to, those set forth in the Housing Crisis Act of 2019, as amended from time to time, Government Code Sections 66300 et seq., and Santa Monica Municipal Code Chapter 9.34, Residential Unit Replacement Requirements.
D. Alternative Off-Site Option. Notwithstanding Section 9.64.040(B), an applicant for a multiple-unit project may satisfy the affordable housing obligation in Chapter 9.64 by providing affordable housing units in a 100% affordable housing project on an off-site property in accordance with this section if the applicant complies with the following requirements:
1. The requirements of subsections (B) through (E), and (I) of Section 9.64.060 shall apply and be met by the applicant.
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Packet Pg. 1025 Attachment: AHPP Ordinance Final 010626 (7403 : Ordinance to Extend the Off-Site Affordable Housing Pilot Program (AHPP)) 9 2. The off-site property shall also meet the following requirements:
a. The off-site property shall not have any lien or encumbrance on title that would prevent the recordation of an option agreement and affordability covenants in first priority position on title in favor of the City. b. The off-site property shall be owned in whole or in part and operated by an affordable housing provider reasonably approved by the City for the life of the 100% affordable housing project.
3. Requirements for Affordable Units. The affordable units in the 100% affordable housing project shall be rental units and shall comply with the provisions of subsections (E)(2)-(5) of Section 9.64.050, unless modified pursuant to Section
9.64.065(G). The number of off-site affordable units in the 100% affordable housing project shall be calculated as set forth in Section 9.64.065(H).
4. Annual Report. The affordable housing provider operating the 100% affordable housing project shall submit an annual report pursuant to the Affordability Covenants recorded on the off-site affordable housing property as discussed in Section
9.64.065(D).
5. Additional Requirements for Off-Site Units.
a. The applicant shall satisfy all the following requirements prior to and as a condition of issuance of a building permit for any multiple-unit project:
i. Identify the location of the off-site property and identify each multiple-unit project that will locate its required affordable housing units in the 100% affordable housing project to be constructed on the off-site property, and the number, bedroom mix, size, and affordability level of units
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Packet Pg. 1026 Attachment: AHPP Ordinance Final 010626 (7403 : Ordinance to Extend the Off-Site Affordable Housing Pilot Program (AHPP)) 10 in the 100% affordable housing project that will be attributed to each multiple-unit project. Designated units in the 100% affordable housing project shall not be counted more than once to satisfy the required affordable housing units required for each multiple-unit project. ii. Identify and enter into an agreement with an affordable housing provider that will own, in whole or in part, and operate the 100% affordable housing project.
iii. The applicant shall procure a Phase 1 Environmental Site Assessment (ESA) of the off-site property, and a Phase II ESA of the offsite property, if necessary, conducted by a City approved experienced environmental professional, to determine the potential presence on or under the off-site property of hazardous waste, as defined under state and federal laws. If contaminants are detected in soil at or above regulatory levels, then the results of the soil sampling shall be shared with the City reviewed and acted upon by the appropriate regional, state, or local regulatory agencies as needed. If remediation is necessary, a No Further Action letter or similar documentation indicating case closure shall be obtained under the appropriate oversight agency prior to project occupancy. City has the right in its reasonable discretion to reject any off-site property that indicates the potential presence of hazardous waste and/or require the applicant to execute an environmental indemnity agreement in form approved by the City Attorney. In the event that the City rejects the off-site property due to the potential presence of hazardous waste, applicant shall have the
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Packet Pg. 1027 Attachment: AHPP Ordinance Final 010626 (7403 : Ordinance to Extend the Off-Site Affordable Housing Pilot Program (AHPP)) 11 opportunity to propose an alternate off-site location, subject to the same requirements under Section 9.64.065(D) or proceed with alternative options under Section 9.64.065(E) and (F).
b. The applicant of a multiple-unit project located in the Coastal Zone with an approved Coastal Development Permit requiring an on-site affordability covenant that has already been recorded against the multiple-unit project property may be eligible to relocate the affordable units to an off-site property pursuant to this Section 9.64.065 any time (1) after the California Coastal Commission has approved the relocation of the affordable units to an off-site property without any other material changes to the terms and/or conditions of the Coastal Development Permit; and (2) prior to issuance of a certificate of occupancy for the multiple-unit project; provided, however, that all other requirements under Section 9.64.065(D) are satisfied.
c. Prior to, and as a condition of, issuance of the first building permit issued for any multiple-unit project, or issuance of the first certificate of occupancy for a multiple-unit project located in the Coastal Zone, the applicant shall place the Gap Financing Amount for that multiple-unit project in an interest-bearing escrow account and enter into a joint escrow agreement executed by the City or an affordable housing provider, at the election of the City, and the applicant, with instructions that provide as follows:
i. The Gap Financing Amount shall be distributed to the City or an affordable housing provider at no cost to either the City or affordable housing provider, at the election of the City, if construction of the off-site
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Packet Pg. 1028 Attachment: AHPP Ordinance Final 010626 (7403 : Ordinance to Extend the Off-Site Affordable Housing Pilot Program (AHPP)) 12 affordable housing project does not commence within (a) forty-eight (48) months following the issuance of the first building permit for any multiple unit project not located in the Coastal Zone, or (b) eighteen (18) months following the date the Coastal Commission approves a Coastal Development Permit or Coastal Development Permit amendment that allows a multiple-unit project in the Coastal Zone to locate its affordable units on an off-site property; provided, that the City may grant a twelve (12) month extension by making a written finding of good cause prior to the expiration of the initial forty-eight (48) month term.
ii. If construction of the 100% affordable housing project does commence within the applicable forty-eight (48) months following the issuance of the first building permit for a multiple-unit project, or eighteen (18) months following the date the Coastal Commission approves a Coastal Development Permit or Coastal Development Permit amendment that allows a multiple-unit project in the Coastal Zone to locate its affordable units on an off-site property; or within the twelve (12) month extension period if an extension is granted by the City, then the Gap Financing Amount shall be returned to the applicant upon applicant’s deposit into the joint escrow account of a ready-to-issue building permit letter from the City to construct the 100% affordable housing project on the off-site property.
Following receipt by the escrow officer of the ready-to issue building permit letter, the Gap Financing Amount shall be disbursed to the applicant.
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Packet Pg. 1029 Attachment: AHPP Ordinance Final 010626 (7403 : Ordinance to Extend the Off-Site Affordable Housing Pilot Program (AHPP)) 13 iii. For purposes of this subsection (c)(i) and (c)(ii), “commence” means that the project has received a building permit and construction activities begin on the site.
6. Prior to and as a condition of issuance of any building permit(s) for the first multiple-unit project(s), or prior to and as a condition of issuance of any certificate of occupancy for a multiple-unit project in the Coastal Zone, the applicant shall complete the following steps:
a. Execute and record on the off-site property an Option Agreement that authorizes the City or an affordable housing provider, at the election of the City, to exercise the Option in the event that construction of the 100% affordable housing project does not commence (a) within forty-eight (48) months following the issuance of the first building permit for any multiple-unit project not located in the Coastal Zone that is locating its affordable housing units in the off-site affordable housing project, or (b) eighteen (18) months following the date the Coastal Commission approves a Coastal Development Permit or Coastal Development Permit amendment to allow a multiple-unit project in the Coastal Zone to locate its affordable units in the off-site affordable housing project, or within the twelve (12) month extension period if an extension is granted by the City. Upon exercise of the Option and as such process is provided in the Option Agreement, the fee simple interest in the property shall transfer to the City only if construction of the off-site 100% affordable housing project does not commence (a) within forty-eight (48) months following the issuance of the first building permit for any multiple-unit project not located in the Coastal Zone that is locating its affordable housing units
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Packet Pg. 1030 Attachment: AHPP Ordinance Final 010626 (7403 : Ordinance to Extend the Off-Site Affordable Housing Pilot Program (AHPP)) 14 in the off-site affordable housing project, or (b) eighteen (18) months following the date the Coastal Commission approves a Coastal Development Permit or Coastal Development Permit amendment to allow a multiple-unit project in the Coastal Zone to locate its affordable units in the off-site affordable housing project, unless the City grants a twelve (12) month extension for good cause in writing prior to the expiration of the forty-eight (48) month term. If construction of the off-site 100% affordable housing project does commence within the applicable forty-eight (48) month term, or within the twelve (12) month extension period if an extension is granted by the City, then the Option Agreement shall automatically become null and void and shall be removed from title upon issuance of a certificate of occupancy for the 100% affordable housing project. For purposes of this subsection (6)(a), “commence” has the meaning given in subsection (5)(c)(iii). b. Concurrently with the recordation of the Option Agreement on the offsite property, the applicant or owner shall execute and record on each multipleunit property a Notice of Off-Site Affordability Covenants that discloses the location of the off-site property and the description of the Affordability Covenants to be recorded on the off-site property. The Notice of Off-Site Affordability Covenants shall not impose any duty on the applicant or owner of the multiple-unit property to comply with any affordability requirements on-site and shall merely serve as notice that the affordability requirements of Chapter 9.64 are to be satisfied off-site. The Notice of Off-Site Affordability Covenants shall be in a form approved by the City Attorney.
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Packet Pg. 1031 Attachment: AHPP Ordinance Final 010626 (7403 : Ordinance to Extend the Off-Site Affordable Housing Pilot Program (AHPP)) 15 c. Concurrently with the recordation of the Option Agreement on the offsite property, the applicant or owner shall execute and record on the off-site housing property Affordability Covenants in compliance with Section 9.64.130, which shall be recorded ahead of any monetary liens.
d. The applicant or owner shall provide a current title report evidencing that no monetary liens are recorded on title of the off-site property at the time the Option Agreement and Affordability Covenants are recorded. The Option Agreement and Affordability Covenants shall each provide that no monetary liens may be recorded on the off-site property until the building permit is issued for construction of the 100% affordable housing project.
e. If an applicant of a multiple-unit project located in the Coastal Zone timely satisfies the requirements above, the City shall execute a termination of the preexisting multiple-unit project’s onsite affordable covenant agreement within ten (10) business days of issuance of the building permit for the 100% affordable housing project.
7. Unit Mix. Notwithstanding anything to the contrary herein, affordable units proposed for the off-site property shall not include studio units.
E. Substantial Rehabilitation of Units at an Off-Site Property in lieu of New Construction. Notwithstanding Section 9.64.040(B), and excluding any required affordable or rent controlled replacement units that may be required pursuant to Government Code Sections 66300.5 and 66300.6, an applicant for a multiple-unit project
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Packet Pg. 1032 Attachment: AHPP Ordinance Final 010626 (7403 : Ordinance to Extend the Off-Site Affordable Housing Pilot Program (AHPP)) 16 may satisfy the affordable housing obligation in Chapter 9.64 by substantial rehabilitation of affordable housing units at an off-site property, subject to the following conditions:
1. Substantially Rehabilitated. Units to be substantially rehabilitated at an off-site property must comply with the following provisions:
a. Prior to issuance of a building permit for a multiple-unit project, the City Council must determine at a public hearing that the units proposed for substantial rehabilitation at an off-site property must be at imminent risk of loss to the housing stock and the units proposed for substantial rehabilitation are unfit for human habitation due to the existence of at least four violations of the conditions listed in subdivisions (a) to (g), inclusive, of Section 17995.3 of the Health and Safety Code.
b. The applicant must commit to providing the displaced tenants with relocation assistance in accordance with Section 4.36.100 of the Santa Monica Municipal Code, provided that (i) if the owner elects to satisfy the temporary relocation obligations by payment of the daily per diem, the total amount paid to the tenant shall be no less than four times the tenant’s rent; and (ii) if the owner elects to satisfy their temporary relocation obligations by providing a comparable replacement unit, the owner shall additionally pay the tenant four times the tenant’s monthly rent and shall reduce the tenant’s monthly rent during relocation, if necessary, so that the rent does not exceed 30% of the tenant’s income. c. Any displaced tenant, regardless of income status for displaced tenants of rent-controlled units, must have the right to reoccupy the rehabilitated units.
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Packet Pg. 1033 Attachment: AHPP Ordinance Final 010626 (7403 : Ordinance to Extend the Off-Site Affordable Housing Pilot Program (AHPP)) 17 d. Rehabilitated units must have long-term affordability requirements for lower income households, for a term of not less than 75 years. e. As a condition to issuance of a certificate of occupancy for any multiunit property that will satisfy the affordable housing obligation in Chapter 9.64 by substantial rehabilitation of off-site units, and prior to initial occupancy after rehabilitation, the City’s Building Official shall issue a certificate of occupancy indicating compliance with all applicable state and local building code and health and safety code requirements for the substantially rehabilitated units.
2. Additional Requirements for Substantially Rehabilitated Units. a. Prior to obtaining a building permit for a multiple-unit project, the applicant shall provide a rehabilitation plan which has been approved by the City’s Housing Division Manager that includes the following information:
i. Documentation evidencing applicant’s ownership or control of the rehabilitation property during the period of rehabilitation; ii. A property assessment report performed by a licensed appraiser for the rehabilitation property, including all units proposed for substantial rehabilitation;
iii. Identification and location of the units that will be substantially rehabilitated;
iv. Scope and budget for substantial rehabilitation;
v. Demonstrated sources and uses of financing required for substantial rehabilitation; and
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Packet Pg. 1034 Attachment: AHPP Ordinance Final 010626 (7403 : Ordinance to Extend the Off-Site Affordable Housing Pilot Program (AHPP)) 18 b. Applicant shall indicate the exact location of units that will be provided to very and lower--income households.
c. Applicant shall comply with Chapter 8.100, Tenant Protection During Construction, as amended from time to time.
d. The applicant or owner shall provide a current title report evidencing that no monetary liens are recorded on title of the off-site property hosting the substantially rehabilitated units.
e. Execute and record on the property hosting the substantially rehabilitated units a 75-year deed restriction to ensure that the rehabilitated units are restricted for rental to qualifying lower income households at an affordable rent, in form approved by the City Attorney.
f. Notwithstanding anything to the contrary herein, substantially rehabilitated units shall not include studio units.
F. In Lieu Fee Option for Off-Site Housing (without land provided).
1. Notwithstanding Section 9.64.070, an applicant for a multiple-unit project may satisfy the affordable housing obligation in Chapter 9.64 by paying an in-lieu fee based on the following formula:
(Base Unit Fee per Square Foot) x (total square feet of the residential floor area in the multiple-unit project)
2. For purposes of this Section, the City's base unit fee per square foot shall be established pursuant to Section 9.64.070 by resolution of the City Council.
Commencing on July 1, 2026, and on July 1st of each fiscal year thereafter, the City's
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Packet Pg. 1035 Attachment: AHPP Ordinance Final 010626 (7403 : Ordinance to Extend the Off-Site Affordable Housing Pilot Program (AHPP)) 19 base unit fee per square foot shall be adjusted based on changes in construction costs and land costs.
3. The affordable housing fee shall be paid prior to issuance of a building permit for any multiple-unit project utilizing Section 9.64.065(F).
4. The City shall deposit any payment made pursuant to this Section
9.64.065(F) in a reserve account separate from the General Fund to be used only for development of affordable housing, administrative costs related to the production of this housing, substantial rehabilitation of existing affordable housing, a City sponsored program of rental subsidies for lower income Santa Monica residents, and monitoring and evaluation of this affordable housing production program.
G. Local Incentive Density Bonus. Multiple-unit projects satisfying their affordable housing obligation in lieu of Chapter 9.64 in accordance with Section 9.64.065 shall be eligible for a local incentive of density bonuses, incentives and concessions, waivers and reductions of development standards, and reduced parking ratios equivalent to those set forth in Chapter 9.22, Density Bonus, as if the affordable units were provided on the site of the multiple-unit project. Further, as an additional local density bonus, any on-site affordable units that were formerly part of an approved multiple-unit project can convert to market-rate units in the revised multiple-unit project. Any off-site affordable housing project shall be eligible for density bonuses, incentives and concessions, waivers and reductions of development standards, and reduced parking ratios under State Density Bonus Law.
H. Calculation of Off-Site Affordable Units. The number of affordable units to be provided in the 100% affordable housing project shall be calculated as follows:
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Packet Pg. 1036 Attachment: AHPP Ordinance Final 010626 (7403 : Ordinance to Extend the Off-Site Affordable Housing Pilot Program (AHPP)) 20 1. Eligible Housing Projects Entitled Without Additional Very Low or Moderate-Income Units to Obtain Additional Density Bonuses Pursuant to Government Code Section 65915(v): For housing projects previously entitled that do not propose additional moderate-income units to obtain additional density bonuses pursuant to Government Code section 65915(v), any applicant utilizing the off-site options under this Section 9.64.065 shall provide no less than fifteen percent (15%) of the base density number of units, prior to the award of any market rate density bonus units under State Density Bonus Law (California Government Code Section 65915 et. seq.) and Chapter 9.22, Density Bonus within each multiple-unit project as:
a. Affordable deed-restricted units in an offsite 100% affordable housing project in accordance with subsection (D),
b. Substantially rehabilitated deed-restricted units in accordance with subsection (E), or
c. Equivalent in-lieu fee in accordance with subsection (F).
By way of illustration, if the base density number of units (prior to the award of a market rate density bonus) is 100 units, then the applicant must provide 15 deed restricted units at the designated off-site property.
2. Eligible Housing Projects Entitled With Additional Proposed Density Bonuses Pursuant to Government Code Section 65915(v): For housing projects previously entitled with additional very low income or moderate-income units and proposed additional density bonuses pursuant to Government Code Section 65915(v), any applicant utilizing the off-site options under this Section 9.64.065 shall provide no
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Packet Pg. 1037 Attachment: AHPP Ordinance Final 010626 (7403 : Ordinance to Extend the Off-Site Affordable Housing Pilot Program (AHPP)) 21 less than the percentage of very low or moderate income units as required in the chart contained in Government Code Section 65915(2) as calculated against the base density.:
a. Affordable deed-restricted units in a 100% affordable housing project in accordance with subsection (D);
b. substantially rehabilitated deed-restricted units in accordance with subsection (E); or
c. Equivalent in-lieu fee in accordance with subsection (F).
By way of illustration, if the base density number of units (prior to the award of a market rate density bonus) is 100 units, and the applicant of a multiple-unit project has obtained approval of an additional 50 percent density bonus (for a total 100 percent density bonus) by providing additional Moderate Income units pursuant to Government Code Section 65915(v)(2), then the applicant must provide 30 deed restricted units at the designated off-site property.
SECTION 2. New Section 9.64.075 is hereby added to the Santa Monica Municipal Code and shall read in its entirety as follows:
Section 9.64.075 Off-Site Affordable Housing
A. Definitions. As used in this Section:
1. “100% affordable housing project” means a 100% affordable housing project as defined in Section 9.52.020.0050.
2. “Affordability covenants” means 75-year affordability covenants that are included in a recorded deed restriction, in form approved by the City Attorney.
3. “Affordable housing provider” means an affordable housing provider reasonably approved by the City.
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Packet Pg. 1038 Attachment: AHPP Ordinance Final 010626 (7403 : Ordinance to Extend the Off-Site Affordable Housing Pilot Program (AHPP)) 22 4. “Applicant” means the applicant, or its successors in interest, for a discretionary and ministerial City permit applicable to a multiple-unit project.
5. “At-risk covenants” means covenants that are contained in a recorded deed restriction to restrict rental units for occupancy by lower income households at affordable rent for lower income households, where the covenants are set to expire in accordance with the terms of the deed restriction within five (5) years from the date an owner or applicant files an application to use this Section 9.64.075.
6. “Building permit” means a final building permit issued by the City’s Building Official (excluding grading or early start construction permits).
7. “Chapter 6.96” means Chapter 6.96 of the Santa Monica Municipal Code, in effect as of September 30, 2025.
8. “City Manager” means the City Manager or his or her designee.
9. “Community Benefit Payment” means the payment to the City by the owner or applicant in an amount equal to the amount of real estate transfer taxes owed to the City pursuant to Chapter 6.96 of the Santa Monica Municipal Code, in effect as of September 30, 2025.
10. “Gap financing amount” means the amount of financing necessary to complete a 100% affordable housing project assuming that (a) the off-site affordable project will obtain a 4% federal Low-Income Housing Tax Credit and/or tax-exempt bond allocation; and (b) that there will be no land acquisition costs. The gap financing amount shall be $160,000, per offsite affordable unit to be constructed within the 100% affordable housing project. Commencing on July 1, 2026, and on July 1st of each fiscal year thereafter, the gap financing amount shall be adjusted by Council resolution based on
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Packet Pg. 1039 Attachment: AHPP Ordinance Final 010626 (7403 : Ordinance to Extend the Off-Site Affordable Housing Pilot Program (AHPP)) 23 changes in costs for building construction, as evidenced by the ENR Building Cost Index (BCI) for the Los Angeles region. The gap financing amount should be calculated from the effective date of the ordinance until deposited into escrow in accordance with Section
9.64.075(D).
11. “Measure GS Transfer” means a transfer of the multiple-unit project and/or multiple-unit project property, or portion thereof, which is subject to taxation under the City’s Third Tier Tax Rate, as defined in Chapter 6.96.
12. “Multiple-unit project” means an eligible multiple-unit project pursuant to Section 9.64.075(B).
13. “Multiple-unit project property” means the property on which a multiple-unit project will be built.
14. “Off-site property” means a clean, uncontaminated property in the location specified in Section 9.64.060(E).
15. “Option” means a purchase option for the off-site property that may be exercised by the City or an affordable housing provider, at the election of the City, for the purchase amount of one hundred dollars ($100.00).
16. “Option agreement” means a purchase option agreement, including escrow instructions upon exercise of the Option, approved as to form by the City Attorney, and executed by the City or an affordable housing provider, at the election of the City, and the owner of the off-site property. The option agreement shall be recorded in the official records of Los Angeles County.
17. “Owner” or “applicant” means the owner or applicant of the multiple-unit project.
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Packet Pg. 1040 Attachment: AHPP Ordinance Final 010626 (7403 : Ordinance to Extend the Off-Site Affordable Housing Pilot Program (AHPP)) 24 18. “Performance Deed of Trust” means a performance deed of trust recorded against the multiple-unit property to secure the Community Benefit Payment.
19. “Protected unit(s)” means any of the following:
a. Residential dwelling units that are or were subject to a recorded covenant, ordinance, or law that restricts rents to levels affordable to persons and families of lower or very low income within the past five years. b. Residential dwelling units that are or were subject to any form of rent or price control through a public entity’s valid exercise of its police power within the past five years.
c. Residential dwelling units that are or were occupied by lower or very low-income households within the past five years.
d. Residential dwelling units that were withdrawn from rent or lease in accordance with California Government Code Sections 7060 et seq. within the past 10 years.
20. “Rehabilitation property” means a property proposed for substantial rehabilitation of units pursuant to Section 9.64.075(E).
21. “Right of First Refusal Agreement” means an agreement that ensures the City has the priority to purchase the off-site property before a third-party prospective buyer can. Upon receiving an offer from third party, the owner must present this offer to the City, who can choose to pay the owner no more than fair market value or let it pass to the third party.
22. “Transfer” means any transfer of beneficial ownership of a multiple-unit project and/or multiple-unit project property, or portions thereof, that would be subject to
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Packet Pg. 1041 Attachment: AHPP Ordinance Final 010626 (7403 : Ordinance to Extend the Off-Site Affordable Housing Pilot Program (AHPP)) 25 taxation under California Revenue and Taxation Code Section 11911(a) and is not exempt from taxation under Sections 11921 (instrument securing debt), 11923 (conveyances under reorganization or adjustment plans), or 11924 (conveyances under order of securities and exchange commission). The term “transfer” includes, without limitation, any deed, instrument or writing to which the United States or any agency or instrumentality thereof, any state or territory, or political subdivision thereof, is acquiring title to a multipleunit project and/or multiple-unit property.
23. “Uncontaminated property” means a property free from hazardous substances, as defined under state and federal law.
E. Eligible Multiple-Unit Projects. In order for Applicants to use the provisions of this Section 9.64.075, each multiple-unit project shall contain 6 or more residential units; shall have obtained final approval of all required discretionary and ministerial City permits that have not expired, except for Architectural Review Board approval and post entitlement phase permits, as defined in Government Code Section 65913.3(j)(3) on or before August 12, 2025; and shall have submitted a complete application to use the provisions of this Section 9.64.075 after September 30, 2025; provided, however, that except as otherwise expressly provided in Section (D)(5)(b), herein, multiple-unit projects that have obtained a building permit, are under construction, or have been completed are not eligible. The applicant of an entitled multiple-unit property that meets the requirements of Section 9.64.075.B may also use the provisions of Section 9.64.075 to satisfy the requirements of Section 9.64.060 for a project if
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Packet Pg. 1042 Attachment: AHPP Ordinance Final 010626 (7403 : Ordinance to Extend the Off-Site Affordable Housing Pilot Program (AHPP)) 26 the applicant obtains a new entitlement for the same multiple-unit project prior to December 31, 2026.
B.
C. Exclusions. Nothing in this Section 9.64.075 shall conflict with or supersede state or local requirements for on-site replacement of protected units, including, but not limited to, those set forth in the Housing Crisis Act of 2019, as amended from time to time, Government Code Sections 66300 et seq., and Santa Monica Municipal Code Chapter
9.34, Residential Unit Replacement Requirements.
D. Alternative Off-Site Option. Notwithstanding Section 9.64.040(B), an applicant for a multiple-unit project may satisfy the affordable housing obligation in Chapter 9.64 by providing affordable housing units in a 100% affordable housing project on an off-site property in accordance with this section if the applicant complies with the following requirements:
1. The requirements of subsections (B) through (E), and (I) of Section 9.64.060 shall apply and be met by the applicant.
2. The off-site property shall also meet the following requirements:
a. The off-site property shall not have any lien or encumbrance on title that would prevent the recordation of an option agreement and affordability covenants in first priority position on title in favor of the City. b. The off-site property shall be owned in whole or in part and operated by an affordable housing provider reasonably approved by the City for the life of the 100% affordable housing project.
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Packet Pg. 1043 Attachment: AHPP Ordinance Final 010626 (7403 : Ordinance to Extend the Off-Site Affordable Housing Pilot Program (AHPP)) 27 3. Requirements for Affordable Units. The affordable units in the 100% affordable housing project shall be rental units, unless modified pursuant to Section
9.64.075(H). The number of off-site affordable units in the 100% affordable housing project shall be calculated as set forth in Section 9.64.075(I).
4. Annual Report. The affordable housing provider operating the 100% affordable housing project shall submit an annual report pursuant to the Affordability Covenants recorded on the off-site affordable housing property as discussed in Section
9.64.075(D).
5. Additional Requirements for Off-Site Units.
a. The applicant shall satisfy all the following requirements prior to and as a condition of issuance of a building permit for any multiple-unit project:
i. Identify the location of the off-site property and identify each multiple-unit project that will locate its required affordable housing units in the 100% affordable housing project to be constructed on the off-site property, and the number, bedroom mix, size, and affordability level of units in the 100% affordable housing project that will be attributed to each multiple-unit project. Designated units in the 100% affordable housing project shall not be counted more than once to satisfy the required affordable housing units required for each multiple-unit project. ii. Identify and enter into an agreement with an affordable housing provider that will own, in whole or in part, and operate the 100% affordable housing project.
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Packet Pg. 1044 Attachment: AHPP Ordinance Final 010626 (7403 : Ordinance to Extend the Off-Site Affordable Housing Pilot Program (AHPP)) 28 iii. The applicant shall procure a Phase 1 Environmental Site Assessment (ESA) of the off-site property, and a Phase II ESA of the offsite property, if necessary, conducted by a City approved experienced environmental professional, to determine the potential presence on or under the off-site property of hazardous waste, as defined under state and federal laws. If contaminants are detected in soil at or above regulatory levels, then the results of the soil sampling shall be shared with the City reviewed and acted upon by the appropriate regional, state, or local regulatory agencies as needed. If remediation is necessary, a No Further Action letter or similar documentation indicating case closure shall be obtained under the appropriate oversight agency prior to project occupancy. City has the right in its reasonable discretion to reject any off-site property that indicates the potential presence of hazardous waste and/or require the applicant to execute an environmental indemnity agreement in form approved by the City Attorney. In the event that the City rejects the off-site property due to the potential presence of hazardous waste, applicant shall have the opportunity to propose an alternate off-site location, subject to the same requirements under Section 9.64.075(D) or proceed with alternative options under Section 9.64.075(E), (F) and (G).
b. The applicant of a multiple-unit project located in the Coastal Zone with an approved Coastal Development Permit requiring an on-site affordability covenant that has already been recorded against the multiple-unit project property may be eligible to relocate the affordable units to an off-site property pursuant to
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Packet Pg. 1045 Attachment: AHPP Ordinance Final 010626 (7403 : Ordinance to Extend the Off-Site Affordable Housing Pilot Program (AHPP)) 29 this Section 9.64.075 any time (1) after the California Coastal Commission has approved the relocation of the affordable units to an off-site property without any other material changes to the terms and/or conditions of the Coastal Development Permit; and (2) prior to issuance of a certificate of occupancy for the multiple-unit project; provided, however, that all other requirements under Section 9.64.075(D) are satisfied.
c. Prior to, and as a condition of, issuance of the first building permit issued for any multiple-unit project, or issuance of the first certificate of occupancy for a multiple-unit project located in the Coastal Zone, the applicant shall place the Gap Financing Amount for that multiple-unit project in an interest-bearing escrow account and enter into a joint escrow agreement executed by the City or an affordable housing provider, at the election of the City, and the applicant, with instructions that provide as follows:
i. The Gap Financing Amount shall be distributed to the City or an affordable housing provider at no cost to either the City or affordable housing provider, at the election of the City, if construction of the off-site affordable housing project does not commence within (a) forty-eight (48) months following the issuance of the first building permit for any multipleunit project not located in the Coastal Zone, or (b) eighteen (18) months following the date the Coastal Commission approves a Coastal Development Permit or Coastal Development Permit amendment that allows a multiple-unit project in the Coastal Zone to locate its affordable units on an off-site property; provided, that the City may grant a twelve (12)
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Packet Pg. 1046 Attachment: AHPP Ordinance Final 010626 (7403 : Ordinance to Extend the Off-Site Affordable Housing Pilot Program (AHPP)) 30 month extension by making a written finding of good cause prior to the expiration of the initial forty-eight (48) month term.
ii. If construction of the 100% affordable housing project does commence within the applicable forty-eight (48) months following the issuance of the first building permit for a multiple-unit project, or eighteen (18) months following the date the Coastal Commission approves a Coastal Development Permit or Coastal Development Permit amendment that allows a multiple-unit project in the Coastal Zone to locate its affordable units on an off-site property; or within the twelve (12) month extension period if an extension is granted by the City, then the Gap Financing Amount shall be returned to the applicant upon applicant’s deposit into the joint escrow account of a ready-to-issue building permit letter from the City to construct the 100% affordable housing project on the off-site property.
Following receipt by the escrow officer of the ready-to issue building permit letter, the Gap Financing Amount shall be disbursed to the applicant. iii. For purposes of this subsection (c)(i) and (c)(ii), “commence” means that the project has received a building permit and construction activities begin on the site.
6. Prior to and as a condition of issuance of any building permit(s) for the first multiple-unit project(s), or prior to and as a condition of issuance of any certificate of occupancy for a multiple-unit project in the Coastal Zone, the applicant shall complete the following steps:
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Packet Pg. 1047 Attachment: AHPP Ordinance Final 010626 (7403 : Ordinance to Extend the Off-Site Affordable Housing Pilot Program (AHPP)) 31 a. Execute and record on the off-site property an Option Agreement that authorizes the City or an affordable housing provider, at the election of the City, to exercise the Option in the event that construction of the 100% affordable housing project does not commence (a) within forty-eight (48) months following the issuance of the first building permit for any multiple-unit project not located in the Coastal Zone that is locating its affordable housing units in the off-site affordable housing project, or (b) eighteen (18) months following the date the Coastal Commission approves a Coastal Development Permit or Coastal Development Permit amendment to allow a multiple-unit project in the Coastal Zone to locate its affordable units in the off-site affordable housing project, or within the twelve (12) month extension period if an extension is granted by the City. Upon exercise of the Option and as such process is provided in the Option Agreement, the fee simple interest in the property shall transfer to the City only if construction of the off-site 100% affordable housing project does not commence (a) within forty-eight (48) months following the issuance of the first building permit for any multiple-unit project not located in the Coastal Zone that is locating its affordable housing units in the off-site affordable housing project, or (b) eighteen (18) months following the date the Coastal Commission approves a Coastal Development Permit or Coastal Development Permit amendment to allow a multiple-unit project in the Coastal Zone to locate its affordable units in the off-site affordable housing project, unless the City grants a twelve (12) month extension for good cause in writing prior to the expiration of the forty-eight (48) month term. If construction of the off-site 100% affordable housing project does commence within the applicable forty-eight (48)
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Packet Pg. 1048 Attachment: AHPP Ordinance Final 010626 (7403 : Ordinance to Extend the Off-Site Affordable Housing Pilot Program (AHPP)) 32 month term, or within the twelve (12) month extension period if an extension is granted by the City, then the Option Agreement shall automatically become null and void and shall be removed from title upon issuance of a certificate of occupancy for the 100% affordable housing project. For purposes of this subsection (6)(a), “commence” has the meaning given in subsection (5)(c)(iii). c. Concurrently with the recordation of the Option Agreement on the offsite property, the applicant or owner shall execute and record on each multipleunit property a Notice of Off-Site Affordability Covenants that discloses the location of the off-site property and the description of the Affordability Covenants to be recorded on the off-site property. The Notice of Off-Site Affordability Covenants shall not impose any duty on the applicant or owner of the multiple-unit property to comply with any affordability requirements on-site and shall merely serve as notice that the affordability requirements of Chapter 9.64 are to be satisfied off-site. The Notice of Off-Site Affordability Covenants shall be in a form approved by the City Attorney. Concurrently with the recordation of the Option Agreement on the offsite property, the applicant or owner shall execute and record on the off-site housing property Affordability Covenants in compliance with Section 9.64.130, which shall be recorded ahead of any monetary liens. If the applicant or owner has recorded affordability covenants on the multiple unit property, and if the owner desires to utilize the provisions of Section 9.64.075. D, then the applicant or owner must request release of the on-site affordability covenants on the multiple unit property prior to issuance of a building permit on the multiple unit property and such covenants shall be released by the City concurrently with the recording of the
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Packet Pg. 1049 Attachment: AHPP Ordinance Final 010626 (7403 : Ordinance to Extend the Off-Site Affordable Housing Pilot Program (AHPP)) 33 Affordability Covenants on the off-site housing property, provided that the applicant or owner has complied with all other conditions set forth in Section 9.64.075.B and D. Concurrently with the recordation of the Affordability Covenants on the off-site property, the applicant or owner shall execute and record on the off-site housing property a Right of First Refusal Agreement in form approved by the City Attorney, which have a concurrent term with the Affordability Covenants and shall be recorded ahead of any monetary liens; provided, however, that If, at any time during the term of the Right of First Refusal Agreement, the owner proposes to refinance any of the existing indebtedness on the off-site property or intends to borrow additional funds after commencement of the term of the Right of First Refusal Agreement, the City Manager may approve subordination of the Right of First Refusal to the new secured (re)financing. The City shall not unreasonably withhold its approval if: (i) the terms and conditions of the additional loan or refinanced loan provide the City with such security and remedies as the City deems adequate in the City’s sole discretion; (ii) the additional loan or refinanced loan is consistent with the City’s objectives to preserve the City's affordable housing stock; (iii) the owner is not taking cash out of the equity of the off-site property for any purposes other than effecting necessary structural and equipment replacements and improvements of a capital nature for the property; and (iv) the additional indebtedness will not impair the security of the Affordability Covenants and/or Right of First Refusal.
d. The applicant or owner shall provide a current title report evidencing that no monetary liens are recorded on title of the off-site property at the time the
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Packet Pg. 1050 Attachment: AHPP Ordinance Final 010626 (7403 : Ordinance to Extend the Off-Site Affordable Housing Pilot Program (AHPP)) 34 Option Agreement, Affordability Covenants, and Right of First Refusal Agreement are recorded. The Option Agreement, Affordability Covenants, and Right of First Refusal Agreement shall each provide that no monetary liens may be recorded on the off-site property until the building permit is issued for construction of the 100% affordable housing project.
e. If an applicant for a multiple-unit project located in the Coastal Zone timely satisfies the requirements above, the City shall execute a termination of the preexisting multiple-unit project’s onsite affordable covenant agreement within ten (10) business days of issuance of the building permit for the 100% affordable housing project.
f. Prior and as a condition to obtaining a building permit for any multiple-unit project, owner or applicant shall submit a complete entitlement application for the 100% affordable housing project.
g. Prior to and as a condition to obtaining a certificate of occupancy for any multiple-unit project, owner or applicant shall have submitted a complete set of construction plans for the 100% affordable housing project, as reasonably determined by the City’s Building Official.
h. Notwithstanding any other provisions in this ordinance to the contrary, City may exercise the Option to purchase the off-site property in accordance with the Option Agreement before issuance of the certificate of occupancy for any multiple-unit project if the owner or applicant does not submit a complete set of construction plans for the off-site property within sixty (60) days of
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Packet Pg. 1051 Attachment: AHPP Ordinance Final 010626 (7403 : Ordinance to Extend the Off-Site Affordable Housing Pilot Program (AHPP)) 35 applicant’s or owner’s request for issuance of a certificate of occupancy for any multiple-unit project.
7. Unit Mix. Notwithstanding anything to the contrary herein, affordable units proposed for the off-site property shall not include studio units.
E. Substantial Rehabilitation of Units at an Off-Site Property in lieu of New Construction. Notwithstanding Section 9.64.040(B), and excluding any required affordable or rent controlled replacement units that may be required pursuant to Government Code Sections 66300.5 and 66300.6, an applicant for a multiple-unit project may satisfy the affordable housing obligation in Chapter 9.64 by substantial rehabilitation of affordable housing units at an off-site property, subject to the following conditions:
1. Substantially Rehabilitated. Units to be substantially rehabilitated at an off-site property must comply with the following provisions:
a. Prior to issuance of a building permit for a multiple-unit project, the City Council must determine at a public hearing that the units proposed for substantial rehabilitation at an off-site property must be at imminent risk of loss to the housing stock and the units proposed for substantial rehabilitation are unfit for human habitation due to the existence of at least four violations of the conditions listed in subdivisions (a) to (g), inclusive, of Section 17995.3 of the Health and Safety Code.
b. The applicant must commit to providing the displaced tenants with relocation assistance in accordance with Section 4.36.100 of the Santa Monica Municipal Code, provided that (i) if the owner elects to satisfy the temporary relocation obligations by payment of the daily per diem, the total amount paid to
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Packet Pg. 1052 Attachment: AHPP Ordinance Final 010626 (7403 : Ordinance to Extend the Off-Site Affordable Housing Pilot Program (AHPP)) 36 the tenant shall be no less than four times the tenant’s rent; and (ii) if the owner elects to satisfy their temporary relocation obligations by providing a comparable replacement unit, the owner shall additionally pay the tenant four times the tenant’s monthly rent and shall reduce the tenant’s monthly rent during relocation, if necessary, so that the rent does not exceed 30% of the tenant’s income. c. Any displaced tenant, regardless of income status for displaced tenants of rent-controlled units, must have the right to reoccupy the rehabilitated units.
d. Rehabilitated units must have long-term affordability requirements for lower income households, for a term of not less than 75 years. e. As a condition to issuance of a certificate of occupancy for any multiunit property that will satisfy the affordable housing obligation in Chapter 9.64 by substantial rehabilitation of off-site units, and prior to initial occupancy after rehabilitation, the City’s Building Official shall issue a certificate of occupancy indicating compliance with all applicable state and local building code and health and safety code requirements for the substantially rehabilitated units.
2. Additional Requirements for Substantially Rehabilitated Units. a. Prior to obtaining a building permit for a multiple-unit project, the applicant shall provide a rehabilitation plan which has been approved by the City’s Housing Division Manager that includes the following information:
i. Documentation evidencing applicant’s ownership or control of the rehabilitation property during the period of rehabilitation;
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Packet Pg. 1053 Attachment: AHPP Ordinance Final 010626 (7403 : Ordinance to Extend the Off-Site Affordable Housing Pilot Program (AHPP)) 37 ii. A property assessment report performed by a licensed appraiser for the rehabilitation property, including all units proposed for substantial rehabilitation;
iii. Identification and location of the units that will be substantially rehabilitated;
iv. Scope and budget for substantial rehabilitation;
v. Demonstrated sources and uses of financing required for substantial rehabilitation; and
b. Applicant shall indicate the exact location of units that will be provided to very and lower--income households.
c. Applicant shall comply with Chapter 8.100, Tenant Protection During Construction, as amended from time to time.
d. The applicant or owner shall provide a current title report evidencing that no monetary liens are recorded on title of the off-site property hosting the substantially rehabilitated units.
e. Execute and record on the property hosting the substantially rehabilitated units a 75-year deed restriction to ensure that the rehabilitated units are restricted for rental to qualifying lower income households at an affordable rent, in form approved by the City Attorney.
f. Notwithstanding anything to the contrary herein, substantially rehabilitated units shall not include studio units.
F. In Lieu Fee Option for Off-Site Housing (without land provided).
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Packet Pg. 1054 Attachment: AHPP Ordinance Final 010626 (7403 : Ordinance to Extend the Off-Site Affordable Housing Pilot Program (AHPP)) 38 1. Notwithstanding Section 9.64.070, an applicant for a multiple-unit project may satisfy the affordable housing obligation in Chapter 9.64 by paying an in-lieu fee based on the following formula:
(Base Unit Fee per Square Foot) x (total square feet of the residential floor area in the multiple-unit project)
2. For purposes of this Section, the City's base unit fee per square foot shall be established pursuant to Section 9.64.070 by resolution of the City Council.
Commencing on July 1, 2026, and on July 1st of each fiscal year thereafter, the City's base unit fee per square foot shall be adjusted based on changes in construction costs and land costs.
3. The affordable housing fee shall be paid prior to issuance of a building permit for any multiple-unit project utilizing Section 9.64.075(F).
4. The City shall deposit any payment made pursuant to this Section
9.64.075(F) in a reserve account separate from the General Fund to be used only for development of affordable housing, administrative costs related to the production of this housing, substantial rehabilitation of existing affordable housing, a City sponsored program of rental subsidies for lower income Santa Monica residents, and monitoring and evaluation of this affordable housing production program.
G. Purchase of At-Risk Covenants. Notwithstanding Section 9.64.040(B), and excluding any required affordable or rent controlled replacement units that may be required pursuant to Government Code Sections 66300.5 and 66300.6, an owner or applicant for a multiple-unit project may satisfy the affordable housing obligation in
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Packet Pg. 1055 Attachment: AHPP Ordinance Final 010626 (7403 : Ordinance to Extend the Off-Site Affordable Housing Pilot Program (AHPP)) 39 Chapter 9.64 by purchasing at-risk covenants on an off-site property, subject to the following conditions:
a. The term of the at-risk covenants shall be extended by recording of new Affordability Covenants in compliance with Section 9.64.130 with a term of seventy-five (75) years from the issuance of the building permit issued for any multiple-unit project to be issued a building permit.
b. The affordable units shall be rental units \. The number of affordable units shall be calculated as set forth in Section 9.64.075(I). c. The owner of the property shall submit an annual report pursuant to the new Affordability Covenants recorded on the off-site property as discussed in Section
9.64.075(D).
H. Local Incentive Density Bonus. Multiple-unit projects satisfying their affordable housing obligation in lieu of Chapter 9.64 in accordance with Section 9.64.075 shall be eligible for a local incentive of density bonuses, incentives and concessions, waivers and reductions of development standards, and reduced parking ratios equivalent to those set forth in Chapter 9.22, Density Bonus, as if the affordable units were provided on the site of the multiple-unit project. Further, as an additional local density bonus, any on-site affordable units that were formerly part of an approved multiple-unit project can convert to market-rate units in the revised multiple-unit project. Any off-site affordable housing project shall be eligible for density bonuses, incentives and concessions, waivers and reductions of development standards, and reduced parking ratios under State Density Bonus Law.
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Packet Pg. 1056 Attachment: AHPP Ordinance Final 010626 (7403 : Ordinance to Extend the Off-Site Affordable Housing Pilot Program (AHPP)) 40 I. Calculation of Off-Site Affordable Units. The number of affordable units to be provided in the 100% affordable housing project shall be calculated as follows:
1. Eligible Housing Projects Entitled Without Additional Very Low or Moderate-Income Units to Obtain Additional Density Bonuses Pursuant to Government Code Section 65915(v): For housing projects previously entitled that do not propose additional moderate-income units to obtain additional density bonuses pursuant to Government Code section 65915(v), any applicant utilizing the off-site options under this Section 9.64.075 shall provide no less than fifteen percent (15%) of the base density number of units, prior to the award of any market rate density bonus units under State Density Bonus Law (California Government Code Section 65915 et. seq.) and Chapter 9.22, Density Bonus within each multiple-unit project as:
a. Affordable deed-restricted units in an offsite 100% affordable housing project in accordance with subsection (D);
b. Substantially rehabilitated deed-restricted units in accordance with subsection (E);
c. Equivalent in-lieu fee in accordance with subsection (F); or d. Purchase of at-risk covenants in accordance with subsection (G).
By way of illustration, if the base density number of units (prior to the award of a market rate density bonus) is 100 units, then the applicant must provide 15 deed restricted units at the designated off-site property.
2. Eligible Housing Projects Entitled With Additional Proposed Density Bonuses Pursuant to Government Code Section 65915(v): For housing projects previously entitled with additional very low income or moderate-income units and
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Packet Pg. 1057 Attachment: AHPP Ordinance Final 010626 (7403 : Ordinance to Extend the Off-Site Affordable Housing Pilot Program (AHPP)) 41 proposed additional density bonuses pursuant to Government Code Section 65915(v), any applicant utilizing the off-site options under this Section 9.64.075 shall provide no less than the percentage of very low or moderate income units as required in the chart contained in Government Code Section 65915(2) as calculated against the base density:
a. Affordable deed-restricted units in a 100% affordable housing project in accordance with subsection (D);
b. substantially rehabilitated deed-restricted units in accordance with subsection (E);
c. Equivalent in-lieu fee in accordance with subsection (F); or d. Purchase of at-risk covenants in accordance with subsection (G).
By way of illustration, if the base density number of units (prior to the award of a market rate density bonus) is 100 units, and the applicant of a multiple-unit project has obtained approval of an additional 50 percent density bonus (for a total 100 percent density bonus) by providing additional Moderate Income units pursuant to Government Code Section 65915(v)(2), then the applicant must provide 30 deed restricted units at the designated off-site property.
J. Administrative Fee. An administrative fee shall be assessed and paid to the City by the owner or applicant at the time of issuance of the building permit for any multipleunit project. The administrative fee shall be imposed to cover cost of administering and implementing the requirements of this Section and shall be set by City Council resolution.
K. Community Benefit Payment. In consideration for the local density bonus granted herein, solely in connection with the first transfer of a multiple-unit project and/or multiple-unit project property, or portion thereof, if such first transfer does not constitute a
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Packet Pg. 1058 Attachment: AHPP Ordinance Final 010626 (7403 : Ordinance to Extend the Off-Site Affordable Housing Pilot Program (AHPP)) 42 Measure GS Transfer for any reason, the owner or applicant shall pay the Community Benefit Payment to City in the amount of 4.6% of the amount of consideration or value paid for the first transfer of the multiple-unit project and/or multiple-unit project property, or portion thereof.
1. No Change to Applicability of Chapter 6.96. Notwithstanding anything to the contrary herein, nothing in this Section 9.64.075 shall be interpreted to alter, modify, negate, reduce or void the applicability of Chapter 6.96 to any first or subsequent transfers of the multiple-unit project and/or multiple-unit project property, or portion thereof.
2. Security for the Community Benefit Payment. As a condition to obtaining a building permit for any multiple-unit project, the applicant or owner shall execute and record a Performance Deed of Trust on the multiple-unit project to secure the payment of the Community Benefit Payment to the City. Alternatively, in lieu of a Performance Deed of Trust, the City Manager may accept equivalent security in the form of an irrevocable standby letter of credit issued by an FDIC insured financial institution in form approved by the City Attorney.
3. Timing for Community Benefit Payment. The Community Benefit Payment shall be due upon first transfer of a multiple-unit project and/or a multiple-unit project property from the owner or applicant to a third-party, as set forth, below:
a. If Chapter 6.96 is in effect at the time of the transfer, the Community Benefit Payment shall be deemed as paid and the Performance Deed of Trust shall be reconveyed or, if accepted as an alternative to the Performance Deed of Trust, the irrevocable standby letter of credit shall be released, concurrently with the
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Packet Pg. 1059 Attachment: AHPP Ordinance Final 010626 (7403 : Ordinance to Extend the Off-Site Affordable Housing Pilot Program (AHPP)) 43 transfer through escrow provided that the owner or applicant provides no less than thirty (30) days written notice of the transfer to the City. b. If Chapter 6.96 is not in effect at the time of the transfer for any reason, the owner or applicant shall be required to pay the Community Benefit Payment directly to the City no later than the date of the transfer and the Performance Deed of Trust shall be reconveyed or, if accepted as an alternative to the Performance Deed of Trust, the irrevocable standby letter of credit shall be released, concurrently with the transfer through escrow provided that the owner or applicant provides no less than thirty (30) days written notice of the transfer to the City.
c. If Chapter 6.96 is not in effect at the time of the transfer for any reason and Community Benefit Payment has not been paid prior to the transfer, the City may exercise its remedies under the Performance Deed of Trust, or, alternatively, draw down on the irrevocable standby letter of credit, to recover the Community Benefit Payment, plus all City costs to recover the Community Benefit Payment, including reasonable attorneys’ fees, in addition to any other remedies allowed by law.
SECTION 3. Any provision of the Santa Monica Municipal Code or appendices thereto inconsistent with the provisions of this Ordinance, to the extent of such inconsistencies and no further, are hereby repealed or modified to that extent necessary to effect the provisions of this Ordinance.
SECTION 4. If any section, subsection, sentence, clause, or phrase of this Ordinance is for any reason held to be invalid or unconstitutional by a decision of any
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Packet Pg. 1060 Attachment: AHPP Ordinance Final 010626 (7403 : Ordinance to Extend the Off-Site Affordable Housing Pilot Program (AHPP)) 44 court of competent jurisdiction, such decision shall not affect the validity of the remaining portions of this Ordinance. The City Council hereby declares that it would have passed this Ordinance and each and every section, subsection, sentence, clause, or phrase not declared invalid or unconstitutional without regard to whether any portion of the ordinance would be subsequently declared invalid or unconstitutional.
SECTION 5. The Mayor shall sign and the City Clerk shall attest to the passage of this Ordinance. The City Clerk shall cause the same to be published once in the official newspaper within 15 days after its adoption. This Ordinance shall become effective 30 days from its adoption.
APPROVED AS TO FORM:
_________________________
Heidi von Tongeln, Interim City Attorney
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Packet Pg. 1061 Attachment: AHPP Ordinance Final 010626 (7403 : Ordinance to Extend the Off-Site Affordable Housing Pilot Program (AHPP)) 1 David Yakobson
From: Soloff, Michael <[email protected]>
Sent: Tuesday, January 13, 2026 1:56 PM
To: Caroline Torosis; Jesse Zwick; Lana Negrete; Dan Hall; Ellis Raskin; Barry Snell; Natalya Zernitskaya; councilmtgitems
Cc: [email protected]; SMRR - Santa Monicans for Renters' Rights; Patricia Hoffman Subject: RE: Agenda Item 10.A (1.13.2026 City Councill Meeting)
EXTERNAL
Apologies to all for the mislabeling—these SMRR comments sent at 10:11 this morning are about 10-A, not 11-A.
From: Soloff, Michael <[email protected]>
Sent: Tuesday, January 13, 2026 10:11 AM
To: [email protected]; [email protected]; [email protected]; [email protected]; [email protected]; [email protected]; [email protected]; [email protected] Cc: [email protected]; SMRR - Santa Monicans for Renters' Rights <[email protected]>; Patricia Hoffman <[email protected]>
Subject: RE: Agenda Item 11.A (1.13.2026 City Councill Meeting) Please find attached the comments of Santa Monicans for Renters’ Rights regarding Agenda Item 11.A on tonight’s City Council Agenda. PLEASE BE SURE TO PRINT THE ATTACHMENT AND INCLUDE IT IN THE PUBLIC COMMENTS. Thank you.
Item 10-A
January 13, 2026
Item 10-A
January 13, 2026
10.A.e
Packet Pg. 1062 Attachment: Written Comments [Revision 1] (7403 : Ordinance to Extend the Off-Site Affordable Housing Pilot Program (AHPP)) 10 David Yakobson
From: Soloff, Michael <[email protected]>
Sent: Tuesday, January 13, 2026 10:11 AM
To: Caroline Torosis; Jesse Zwick; Lana Negrete; Dan Hall; Ellis Raskin; Barry Snell; Natalya Zernitskaya; councilmtgitems
Cc: [email protected]; SMRR - Santa Monicans for Renters' Rights; Patricia Hoffman Subject: RE: Agenda Item 11.A (1.13.2026 City Councill Meeting) Attachments: CC 1.13.2026 Agenda Item 11-A SMRR Comments Regarding Proposed AHPP Pilot Program Ordinance.pdf
EXTERNAL
Please find attached the comments of Santa Monicans for Renters’ Rights regarding Agenda Item 11.A on tonight’s City Council Agenda. PLEASE BE SURE TO PRINT THE ATTACHMENT AND INCLUDE IT IN THE PUBLIC COMMENTS. Thank you.
Item 10-A
January 13, 2026
Item 10-A
January 13, 2026
10.A.e
Packet Pg. 1063 Attachment: Written Comments [Revision 1] (7403 : Ordinance to Extend the Off-Site Affordable Housing Pilot Program (AHPP)) January 13, 2026
To: Santa Monica City Council
Re: 1.13.26 Agenda Item 10A—AHPP Pilot Program Ordinance Dear Councilmembers:
I. BACKGROUND
As SMRR stated (in part) in its June 10, 2025 letter to City Council (italics in original; bolding added):
We are writing to express the support of Santa Monicans for Renters’ Rights (“SMRR”) for development of a pilot program to allow greater flexibility in how market-rate housing projects contribute to the creation of deed-restricted affordable housing units in Santa Monica in order to create more affordable housing than that which otherwise will occur under the existing requirements of the State Density Bonus Law (“SDBL”) and Santa Monica’s Affordable Housing Production Program (“AHPP”). . . . The City then should present its proposal and supporting analysis to the relevant Commissions and the public well in advance of any City Council adoption of the proposed pilot program. If properly designed and justified, the City Council then should authorize a true pilot program of limited size to test in the real world the assumptions underlying the supporting analysis.
Both before and at the August 12, 2025 City Council meeting, SMRR expressed its deep concern that an AHPP pilot program had been agendized for that meeting, with the staff report and draft emergency ordinance being made public for the first time on the Thursday before the Tuesday City Council meeting. This deprived SMRR and other members of the public of a meaningful opportunity to review and comment on the proposed pilot terms, which SMRR viewed as wrong both as a matter of process, and because SMRR’s preliminary review raised serious questions about the proposed pilot terms.
City Council nevertheless voted to proceed with the pilot program for up to 1000 units selected on a first-come-first served basis. The City Council also directed that the matter return at the September 30, 2025 City Council meeting for consideration of potential amendments to the program.
The City quickly received applications for the full 1000 units, covering five projects by one developer that contain more than 900 units, and a sixth smaller project from a second developer.
Item 10-A
January 13, 2026
Item 10-A
January 13, 2026
10.A.e
Packet Pg. 1064 Attachment: Written Comments [Revision 1] (7403 : Ordinance to Extend the Off-Site Affordable Housing Pilot Program (AHPP)) On September 18, SMRR submitted to the City Manager and the City Council a 27 page analysis of the pilot program terms (attached hereto as Exhibit A). The analysis explained in detail (1) why SMRR believed that the pilot offsite option imposes both too great a risk that the offsite affordable housing project (“OAP”) will not be built for a very long time, as well as a serious financial risk that the City will have to provide substantial additional funds in order to complete the OAPs, and (2) methods of mitigating both the timing and financial risks. The analysis also explained in detail why SMRR believed that the in-lieu fee option used an improperly low fee figure.
Based on this analysis, SMRR advised that:
SMRR believes that the current terms of the pilot program do not properly serve the goal of creating more affordable housing. However, SMRR also believes that with appropriate improvements, the pilot program could serve that goal— resulting in a win-win for the City and developers—and therefore should move forward under those improved terms.
In response, Cypress Equity (“CE”), the developer that had submitted pilot program applications for the five projects with over 900 units, submitted a purported critique of SMRR’s analysis to the City Council. On September 30, SMRR submitted to City Council a response to CE’s purported critique (attached hereto as Exhibit B).
At its meeting, City Council voted to extend the program, and to apply new criteria to new applicants. Staff has now returned to Council with an ordinance to do that, and to revote on the initial pilot given the issues surrounding Councilmember Zwick outlined in the Staff Report.
II. SMRR’S POSITIONS REGARDING PROPOSED NEW ORDINANCE
A. SMRR’s Positions Regarding The Pilot Expansion Criteria SMRR stands by its analysis that the financial risks to the City imposed by the original pilot terms regarding the offsite option are too great. But SMRR also recognizes that for new applicants the proposed expansion criteria significantly mitigate this risk by (1) increasing the gap financing amount by $10,000 per affordable unit, and (2) with some small edits SMRR understands Staff will propose to the language in the draft ordinance as presented in the Staff report, by imposing a community benefit payment assuring that upon the first sale of the marketrate project the City will receive a payment equal to 5% of the sales price pursuant to Measure GS and/or a community benefit payment to be used for Measure GS’s homelessness prevention and affordable housing purposes.
Similarly, SMRR stands by its analysis that the in-lieu fee imposed by the original pilot terms is too low for its purpose, but SMRR recognizes that this issue is significantly mitigated by the “community benefit” provision (as SMRR understands it will stand after Staff edits) that SMRR understands applies to this option as well.
SMRR further stands by its analysis that the original pilot terms for the offsite option impose too great a risk that the OAP will not be built for a very long time. And while SMRR recognizes that some steps have been taken to mitigate this risk, SMRR believes they have not yet gone far enough.
Item 10-A
January 13, 2026
Item 10-A
January 13, 2026
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Packet Pg. 1065 Attachment: Written Comments [Revision 1] (7403 : Ordinance to Extend the Off-Site Affordable Housing Pilot Program (AHPP)) In particular, the only milestones added are (1) that a full entitlement package for the OAP must be submitted before building permits can issue for the market-rate project, (2) full architectural plans for the OAP must be submitted before certificates of occupancy can issue for the marketrate project, and (3) construction must commence on the OAP within four years of the issuance of a building permit for the market-rate project (with a City option to extend that an additional year) or else the gap funding in escrow transfers to the City and the City can exercise its option on the land for the OAP.
The biggest issues not addressed by these provisions are (1) there is no obligation for the developer to seek the 4% tax credit financing which the ordinance says is required before it is financially possible for the developer to build the OAP, and (2) there is no obligation for the developer to commence construction of the OAP. While it is possible that some developers might try to make a profit developing the OAP, others likely will not consider that a viable or valuable proposition and so simply do nothing. SMRR therefore urges that Staff and Council add requirements to address these concerns, perhaps provisions requiring that (1) the developer apply for the 4% tax credit financing each round until obtained, beginning within six months of approval of the OAP entitlements, unless the City in any round either directs the developer not to do so or waives the requirement, and (2) that the developer begin construction of the OAP within six months of the later of obtaining the tax credit fundings or approval of the architectural plans for the OAP. These provisions can be enforced by the right of the City to take the gap financing and exercise its land option in the event these milestones are missed (which City Council and Staff preferred on September 30 to SMRR’s proposed financial penalties). [NOTE: If Staff and City Council are unable to properly evaluate and include a detailed milestone provision addressing these concerns tonight, they can include a provision stating that new applicants must comply with the additional tax credit financing application and construction commencement milestone requirements to be issued by the City.] In short, while SMRR retains various reservations expressed in its prior correspondence (including with respect to the size of the expanded program), on balance SMRR would support the proposed expansion that incorporates both the foregoing City Council and Staff improvements over the initial pilot terms (including the fixes to the community benefit provision we have discussed with Staff and understand they will propose to you at the meeting), as well as the additional milestone provisions discussed above .
B. SMRR’s Position Regarding The Revote On The Initial 1000 Unit Pilot SMRR remains of the view that the initial pilot criteria impose both too great a risk that the OAPs will not be built for a very long time, as well as a serious financial risk that the City will have to provide substantial additional funds in order to complete the OAPs. SMRR therefore feels strongly as a matter of policy that the criteria discussed above for new applicants in the expanded program should apply to the initial 1000 units as well. SMRR also strongly believes that such a result is more fair to all developers with entitled projects not yet in construction, and avoids any perception that the rushed decision on August 12 resulted from anything other than proper deliberation of a novel new program concept.
SMRR is aware of statements in the Staff Report regarding the possibility of legal constraints on adjusting the criteria for the first 1000 units. SMRR is not a legal organization and offers no legal advice to the City. However, given that there apparently is a question about the validity of Item 10-A
January 13, 2026
Item 10-A
January 13, 2026
10.A.e
Packet Pg. 1066 Attachment: Written Comments [Revision 1] (7403 : Ordinance to Extend the Off-Site Affordable Housing Pilot Program (AHPP)) the August 12 vote, SMRR urges the City Council to refrain from re-voting on the first 1000 units tonight and for the City to obtain the best possible legal advice regarding whether or not it still can conform the requirements of the first 1000 units to the requirements it intends to impose on new applicants. Given that the increased $10,000 per affordable unit by itself is an issue worth more than $9 million, and the “community benefit” provision is potentially worth many times that much, obtaining the best possible legal advice seems prudent.
Thank you for considering our views on these important matters.
Sincerely,
Denny Zane Mike Soloff
Co-Chair, Santa Monicans for Renters’ Rights Co-Chair, Santa Monicans for Renters’ Rights Item 10-A
January 13, 2026
Item 10-A
January 13, 2026
10.A.e
Packet Pg. 1067 Attachment: Written Comments [Revision 1] (7403 : Ordinance to Extend the Off-Site Affordable Housing Pilot Program (AHPP))
EXHIBIT A
Item 10-A
January 13, 2026
Item 10-A
January 13, 2026
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Packet Pg. 1068 Attachment: Written Comments [Revision 1] (7403 : Ordinance to Extend the Off-Site Affordable Housing Pilot Program (AHPP)) September 18, 2025
TO: Oliver Chi, Santa Monica City Manager
CC: Santa Monica City Council
SMRR ANALYSIS OF CURRENT AHPP PILOT PROGRAM
I. INTRODUCTION AND SUMMARY
As SMRR stated (in part) in its June 10, 2025 letter to City Council (italics in original):
We are writing to express the support of Santa Monicans for Renters’ Rights (“SMRR”) for development of a pilot program to allow greater flexibility in how market-rate housing projects contribute to the creation of deed-restricted affordable housing units in Santa Monica in order to create more affordable housing than that which otherwise will occur under the existing requirements of the State Density Bonus Law (“SDBL”) and Santa Monica’s Affordable Housing Production Program (“AHPP”). . . . The City then should present its proposal and supporting analysis to the relevant Commissions and the public well in advance of any City Council adoption of the proposed pilot program. If properly designed and justified, the City Council then should authorize a true pilot program of limited size to test in the real world the assumptions underlying the supporting analysis.
At the August 12, 2025 City Council meeting, SMRR expressed its deep concern that an AHPP pilot program had been agendized for that meeting, before there had been a meaningful opportunity for SMRR and other members of the public to review and comment on the proposed pilot terms. City Council nevertheless adopted the pilot program to proceed for up to 1000 units selected on a first-come-first served basis. But the City Council also directed that the matter return at the September 30, 2025 City Council meeting for consideration of potential amendments to the program.
Staff advises that after that meeting, the City received the following applications (and stopped accepting new applications):
Item 10-A
January 13, 2026
Item 10-A
January 13, 2026
10.A.e
Packet Pg. 1069 Attachment: Written Comments [Revision 1] (7403 : Ordinance to Extend the Off-Site Affordable Housing Pilot Program (AHPP)) SMRR now has completed its review of the AHPP pilot program’s offsite option and in-lieu fee option (the only two options selected by the initial pilot program applicants). Based on that review, SMRR believes that the current terms of the pilot program do not properly serve the goal of creating more affordable housing. However, SMRR also believes that with appropriate improvements, the pilot program could serve that goal—resulting in a win-win for the City and developers—and therefore should move forward under those improved terms. In particular:
1. With respect to the offsite option, the current pilot program terms impose too great a risk that the offsite affordable housing project (“OAP”) will not be built for a very long time. This both undermines one of the potential value propositions of the pilot (delivery of currently frozen affordable units sooner), and increases the financial risk to the City (due to increases in construction costs over time outpacing any potential escalator on the amount that must be deposited into escrow and/or the rate of interest earned on the escrowed funds after deposit). To mitigate this risk, the pilot program should be amended to require the developer to meet various milestones along the path to commencement of construction of the OAP (e.g. hiring professionals to prepare plans for the OAP, submitting them for approval by the City, applying for tax credits, hiring contractors, etc.). Any step that is supposed to be completed under the timeline before the time the developer seeks the Certificates of Occupancy (“COOs”) for the market rate project (“MRP”) should have to be completed before the COOs for the MRP are issued. And, with respect to any step that is supposed to be taken after the COOs for the MRP in fact are issued, there should be a financial penalty for failing to timely take those steps.
Note that this would not undermine the financial certainty that Staff told the City Council at the August 12, 2025 meeting is required by the developers to move forward at this time with their projects. This is because the foregoing proposals do not impose any penalty for things that are beyond the developers’ reasonable control, such as either the failure of the California Tax Credit Allocation Committee (“CTCAC”) to grant a properly submitted tax credit application, or escalations in the cost of construction while the OAP is in the pre-development phase.
2. Also with respect to the offsite option, the current pilot program terms impose serious financial risk to the City. This is for a variety of reasons, including that the $150k per unit “gap financing amount” appears significantly lower than what it will take today to complete Item 10-A
January 13, 2026
Item 10-A
January 13, 2026
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Packet Pg. 1070 Attachment: Written Comments [Revision 1] (7403 : Ordinance to Extend the Off-Site Affordable Housing Pilot Program (AHPP)) the OAP even with 4% tax credit financing, and that this inadequacy will only grow over time if construction costs rise faster than 5% cap on pre-deposit escalation of the amount and then faster than the interest that can be collected on the escrow until construction begins (just as they have done over the past five years).
In particular, whatever merit the mode of analysis Staff applied to prior City funded affordable housing projects may or may not have for the question at hand, application of that same methodology to much more recent data points indicates that a much higher gap funding amount will be required (a minimum of $240k). These data points include the 4% tax credit application for the Venice Community Housing Corporation (“VCHC”) project on 20th Street that was approved by CTCAC in August of 2024; the pro forma shared by Hollywood Community Housing Corporation (“HCHC”) with City Staff to support the revisions to the 14th Street public land and 4% tax credits project that City Council approved in December of 2024; and the 9% tax credit application for the HCHC Euclid Street public land project that was approved by CTCAC in June of 2025, and then resubmitted by HCHC in July 2025 after the original tax credit award was declined due to uncertainty generated by the CEQA lawsuit over the project.
Moreover, the HR&A analysis of the single pro forma presented to it by a developer does not appear to provide credible support for the $150k. First, the pro forma assumes no parking.
While HR&A asserted that this is allowed, parking is being provided at the MRPs, and parking has been provided to varying degrees at all prior City-funded affordable housing projects (apparently depending on populations to be served and extent of ground floor retail). City Council was not asked to make a determination that the pilot OAPs will have no parking, and did not do so. Second, the unit sizes used in the pro forma—while satisfying CTCAC minimums— are substantially smaller than the minimums for inclusionary units that the pilot program ordinance incorporates as the minimums for the pilot OAPs. Third, the pro forma assumes no prevailing wages. But the only time the gap financing amount matters is when the developer fails to build the project and the land and money revert to the City (or its designee). Such a developer “default” seems the most likely scenario given (i) the likelihood that the gap financing deposit will not cover all of the required gap financing and (ii) Staff’s report at the August 12, 2025 City Council meeting that the developers want cost certainty (which means they do not intend to cover any further gap should it arise down the road). Although SMRR cannot offer and is not offering any legal opinions or advice, it would be surprising if the City has a legal opinion that prevailing wages will not have to be paid under those circumstances, and it would be shocking if the City had a legal opinion that prevailing wages would not have to be paid if the City had to contribute additional gap financing.
Furthermore, the fact that the ENR Building Cost Index – Los Angeles rose by 50% in the last 5 years illustrates the risk of cost increases outrunning either the capped at 5% gross up until time of deposit into escrow, or the interest rate available on any escrow.
To mitigate this financial risk, the first step is to insist that participants in the pilot program agree to pay the GS tax or its equivalent upon sale, whether or not the tax remains applicable to such a sale at the time of the sale. A provision similar to this was included in the recent amendment to the development agreement with RAND. Given the various past and continuing efforts to undermine Measure GS through local or Statewide initiatives and/or through legislation in Item 10-A
January 13, 2026
Item 10-A
January 13, 2026
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Packet Pg. 1071 Attachment: Written Comments [Revision 1] (7403 : Ordinance to Extend the Off-Site Affordable Housing Pilot Program (AHPP)) Sacramento, such a provision should be included in this pilot program. Once again, this would not undermine the economics for the developers as it was announced at the August 12, 2025 City Council meeting that one developer was urging adoption of the pilot and pointed out that doing so would lead to a large payment of GS taxes upon sale of its projects in 2030. Assurance of receipt of the GS taxes helps to mitigate the financial risks discussed above, and without such assurance the value proposition for this pilot from an affordable housing point of view evaporates.
Given the statement by Staff at the August 12, 2025 City Council meeting that the developers view certainty of funding commitment a key benefit of the pilot program, the additional step to mitigate these financial risks is to increase the required initial deposit into escrow. One possibility SMRR would consider acceptable—assuming it could be done logistically and legally—would be to effectively allow some (or, if truly justified economically, potentially even all) of the additional amount (i.e., above the $150k) the City requires the developers to deposit into the escrow to constitute a prepayment of (or in some other way a credit against) the subsequent GS tax.
One other source of financial risk in the pilot program as currently drafted is its release of all of the security (i.e., the land purchase option and the deposited escrow funds) upon commencement of construction of the OAP. Given the City’s past experience with Craig Jones (which led to imposition of the requirement that COOs for an OAP must be issued prior to COOs for the associated MRP)—and given the financial woes experienced by NMS—prudence in light of history requires some continuing security until the OAP is complete. Staff is better position to determine whether that continuing security should be a continued option and construction escrow, completion bonding and/or something else.
3. Another risk posed by the pilot offsite option is that it assumes the pilot OAPs will obtain 4% Low Income Housing Tax Credits (“LIHTCs”), without which the pilot OAPs will not be built. At present the competitiveness of the pilot OAPs for an award of these tax credits is unknown. Also unknown, at least to the public (which has not seen the responses to the Notice of Availability issued on June 30, 2025 for Bergamot, 4th & 5th and Arizona, and Parking Structure 1), is the full extent to which 4% LIHTCs are needed to create the affordable housing on public land that the City committed to in the 2021-2028 Housing Element, and therefore the risk of delaying those projects if they have to compete with pilot OAPs for those tax credits. To date that risk has been mitigated by limiting the pilot to 1000 units, which in turn has limited the pilot OAPs to two ~48 unit projects. But if Staff can demonstrate that expansion of the pilot program will not delay or otherwise put at risk the affordable housing on public land to which the City committed in the Housing element, and can demonstrate that expansion needs to happen immediately if the City is to meet its 6th Cycle RHNA market-rate housing target and/or respond adequately to its current fiscal distress, then SMRR could support the expansion of the pilot program (assuming it first incorporates SMRR’s recommendations for improvements to the program) to include all already approved projects in the downtown. These downtown projects have the greatest revenue generating potential and pose the least risk of disruption to existing neighborhoods. If, but only if, participating downtown projects do not include at least the additional 800 market rate units likely needed—in addition to the 1000 market-rate units already included in the initial pilot, as well as the market rate units already completed or in construction Item 10-A
January 13, 2026
Item 10-A
January 13, 2026
10.A.e
Packet Pg. 1072 Attachment: Written Comments [Revision 1] (7403 : Ordinance to Extend the Off-Site Affordable Housing Pilot Program (AHPP)) outside the pilot program—to assure the City will meet its current RHNA market-rate housing target, then already approved projects outside the downtown could be included as well in the expanded pilot until the 800 additional market-rate housing unit requirement is met.
4. A final risk posed by the pilot offsite option is the expiration of the affordability covenants on the OAPs in 75 years. The City should avoid this risk by insisting upon an option to purchase the OAPs at the end of the 75 year period for a de minimis price. This change will not impact the developers’ economic calculus, but will help assure the City’s affordable housing goals will continue to be served both now and in the future.
5. With respect to the in-lieu fee option, the figure used in the pilot needs to be raised. The in-lieu fee chosen—the “base unit fee” from S.M.M.C. § 9.64.070.A—never was meant to represent the cost of creating an affordable housing unit. Rather, it was the amount calculated by HR&A long ago as part of a nexus study calculating the fraction of an additional affordable housing unit that needed to be added to the City housing stock in order to house the additional low income households needed to provide additional low wage workers to meet the increased services demands created by the new City residents in each new 5 unit project. This has no conceptual relationship to paying a fee in-lieu of including affordable units in a project in order to obtain a local density bonus, instead of building those affordable housing units either onsite or offsite. Nor has the “base unit fee” escalated over the past 20 years in a manner realistically tied to the actual increase in the cost of developing affordable housing units.
The City instead should develop a realistic in-lieu fee tied to the actual cost of developing affordable housing units in 100% affordable housing projects, multiplied by the number of inclusionary affordable units the MRPs are no longer providing. This could potentially be a gap financing figure when the cost of land and creating the manager’s units is included, but it would have to be adjusted upward to take account of the delay from when the in-lieu fee would be paid to when the substitute affordable housing project would be built (including due to the risk of competition for tax credits), as well as other risks. Once a realistic figure is established, then the City can adjust it downward if but only if there is some reason to encourage developers to pay fees, rather than use the pilot offsite option, as part of the City’s overall plan to advance its affordable housing goals. No such case has been made to date.
II. SMRR REVIEW OF THE AHPP PILOT’S OFFSITE OPTION
A. Background
State density bonus law provides developers with greater density in exchange for affordable units, BUT it requires that those affordable units be inclusionary units that are onsite at the market rate project (“MRP”).
Santa Monica’s AHPP program already provides an offsite affordable option. BUT that option requires 5% more affordable units be provided offsite than are required onsite, AND does not provide the developer with the additional density onsite that the State allows.
Item 10-A
January 13, 2026
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January 13, 2026
10.A.e
Packet Pg. 1073 Attachment: Written Comments [Revision 1] (7403 : Ordinance to Extend the Off-Site Affordable Housing Pilot Program (AHPP)) Developers have asserted that their already approved MRPs—which all use the State density bonus law—are infeasible under current market conditions (high interest rates, tariff issues, construction labor issues, Measure GS, etc.).
In response, and at City Council direction, Staff proposed a new offsite option for projects with unexpired approvals that have not yet pulled building permits1 whereby market-rate developers
can move all of their inclusionary units offsite2
AND obtain same density in their MRPs as
otherwise would have been permitted under State density bonus law3 (including by re-entitling the already approved projects by 12/31/26 to take advantage of additional density bonuses not yet in State law when initial entitlements for the projects were obtained4), so long as they satisfy the following conditions:
1. The OAP used to satisfy a developers’ AHPP obligation for an MRP must comply with these criteria:
(a) The number of offsite affordable units the developer must provide is equal to 15% of base MRP, plus whatever additional percent of the base MRP the developer agreed to provide—if it did so—in order to receive the additional 50% State density bonus under Gov.
Code § 65915(v).5 Fractional unit obligations are handled in accordance with S.M.M.C. § 9.64.060.B;6
(b) Affordability is governed by S.M.M.C. § 9.64.060.B (“The off-site affordable housing units shall be affordable to 80% income households or lower.”); 7 (c) The unit mix may not include studios,8 and otherwise must satisfy S.M.M.C. § 9.64.050.E.2 (“The unit mix percentage for affordable two- and three-bedroom housing units shall be equal to or greater than the unit mix percentage for the corresponding market rate units.”);9
1 See S.M.M.C. § 9.64.065.B; 8/12/25 Staff Slide “Clarifying Changes To Proposed Ordinance”.
The adopted Ordinance, incorporating the Staff’s “Clarifying Changes”, is available at https://www.santamonica.gov/media/Document%20Library/Topic%20Explainers/Planning%20R esources/AHPP%20Off-site%20Affordable%20Pilot%20Ordinance%202824.pdf. 2 See S.M.M.C. § 9.64.065.D.
3 See S.M.M.C. § 9.64.065.G.
4 See S.M.M.C. § 9.64.065.B.
5 See S.M.M.C. § 9.64.065.H.
6 See S.M.M.C. § 9.64.065.D.1.
7 See S.M.M.C. § 9.64.065.D.1.
8 See S.M.M.C. § 9.64.065.D.7.
9 See S.M.M.C. § 9.64.065.D.3; 8/12/25 Staff Slide “Clarifying Changes To Proposed Ordinance”.
Item 10-A
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Packet Pg. 1074 Attachment: Written Comments [Revision 1] (7403 : Ordinance to Extend the Off-Site Affordable Housing Pilot Program (AHPP)) (d) The minimum size of the units must satisfy S.M.M.C. § 9.64.050.E.4 (“An affordable housing unit shall have a minimum total floor area, depending upon the number of bedrooms provided, of no less than the following: 0 bedrooms 500 square feet[;] 1 bedroom 600 square feet[;] 2 bedrooms 850 square feet[;] 3 bedrooms 1,020 square feet[; and] 4 bedrooms 1,200 square feet”);10
(e) The minimum occupancy must satisfy S.M.M.C. § 9.64.050.E.5;11 (f) There must be a 75 year affordability covenant;12
(g) An approved non-profit must own (in whole or part) and operate the OAP.
13 2. Prior to obtaining building permit for an MRP not in the Coastal Zone, the developer must:
(a) Identify land for the OAP and satisfy the City that the land is environmentally sound;14
(b) Identify the MRP(s) using the OAP to satisfy their obligations under the AHPP, and identify all the units that will be in the OAP (presumably to allow City to verify that the number and types of units satisfy the pilot AHPP requirements described above).15 (c) Identify and enter into a contract with a City approved non-profit to own (in whole or part) and operate the OAP;16
(d) Provide a title report demonstrating that the option agreement (described below) and the affordability covenant (described above) will not be behind any other lien on the property;17
10 See S.M.M.C. § 9.64.065.D.3; 8/12/25 Staff Slide “Clarifying Changes To Proposed Ordinance”.
11 See S.M.M.C. § 9.64.065.D.3; 8/12/25 Staff Slide “Clarifying Changes To Proposed Ordinance”.
12 See S.M.M.C. § 9.64.065.A.2.
13 See S.M.M.C. §§ 9.64.065.D.2.b.
14 See S.M.M.C. §§ 9.64.065.D.2.a, 5.a.i, 5.a.iii; see also S.M.M.C. §§ 9.64.060.D-.E,
9.64.065.D.2.a (incorporated portions require demonstrate to City site control and that the site not be in the prohibition area (i.e., Pico)).
15 See S.M.M.C. §§ 9.64.065.D.5.a.i.
16 See S.M.M.C. §§ 9.64.065.D.5.a.ii.
17 See S.M.M.C. §§ 9.64.065.D.6.d.
Item 10-A
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Packet Pg. 1075 Attachment: Written Comments [Revision 1] (7403 : Ordinance to Extend the Off-Site Affordable Housing Pilot Program (AHPP)) (e) Record an option for the City (or, at the City’s election, for a non-profit) to acquire the property for $100 in the event the developer does not pull a building permit for the OAP—and commence construction activities for the OAP—within 4 years from issuance of the building permits for MRP (with the City having the right but not the obligation to extend this period to 5 years). The option becomes void if a building permit is pulled for the OAP, and construction activities commence for the OAP, within the required time period; 18 (f) Record the affordability covenants;19
(g) Deposit into an interest-bearing escrow the “gap financing amount” of $150k per offsite unit (adjusted each year following the effective date of the pilot program ordinance by the percentage increase in the ENR Building Cost Index – Los Angeles, but the adjustment cannot exceed an annual increase of 5% (although it is unclear whether this limit applies individually each year, or cumulatively across all years prior to the deposit)).20 [Note: Developers must satisfy these same requirements before pulling building permits for MRPs that are in the Coastal zone except that (a) deadline for placing the “gap financing amount” into escrow, and recording the option, is after Coastal Commission has approved an amendment to the Coastal Development Permit allowing the relocation of the affordable units to an off-site property (without other material changes to that permit) and (b) the time-limit for pulling a building permit and commencing construction of the OAP is 18 months (or 30 months if the City grants a 12 month extension) following the approval of the Coastal Development Permit amendment.21]
This pilot offsite option improves the economics for the market-rate developers because (1) it allows them to convert the formerly inclusionary units onsite into market rate units, thereby increasing the cash flow from the MRPs, and (2) it allows them to use LIHTCs to help finance the OAPs. Indeed, according to the City Council discussion on August 12, 2025, one developer asserted that with the benefit of the pilot program it would be able to proceed with its projects and—if all its approved projects were included—pay a very large sum in GS taxes upon sale of the projects in 2030.
B. SMRR Analysis Of Current Pilot Offsite Option And Proposed Improvements To That OptionTo Better Serve City Goals
As set forth above, in order to improve the economics for already approved MRPs, the AHHP pilot program’s offsite option (1) allows the developer to obtain all the benefits of State density bonus law at the MRP without any onsite inclusionary units, (2) does not require 5% more affordable units offsite, (3) does not require that the OAP be completed prior to the issuance of 18 See S.M.M.C. §§ 9.64.065.D.6.a.
19 See S.M.M.C. §§ 9.64.065.D.6.c.
20 See S.M.M.C. §§ 9.64.065.A.6, D.5.c; 8/12/25 Staff Slide “Clarifying Changes To Proposed Ordinance”.
21 See S.M.M.C. §§ 9.64.065.D.5.b-c, D.6.
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Packet Pg. 1076 Attachment: Written Comments [Revision 1] (7403 : Ordinance to Extend the Off-Site Affordable Housing Pilot Program (AHPP)) certificates of occupancy for the MRP, and (4) fixes the developer’s financial obligations with respect to the offsite affordable housing at the time it pulls its building permits for the MRP. But as explained below, these provisions impose a very substantial risk that (1) the OAPs will not be built for a very long time, and (2) that the City will have to contribute additional gap financing in order to get the OAPs built. Consequently, the AHPP pilot program’s offsite option should impose additional requirements to better manage these risks while still preserving the incentives for developers to utilize the pilot program.
1. The Current Pilot Offsite Option Should Be Changed To Better Manage The Timing Risks Associated With Creating The OAPs As currently written, there are no adverse consequences for a market-rate developer if the actual construction of the OAP does not begin for up to 4 years after building permits are pulled for the MRP (and the City can extend that period to 5 years). Indeed, even after that deadline passes, there still are no adverse consequences for the market-rate developer because all that happens is the developer forfeits land that would have no economic value to it anyway for at least 75 years while the land hosts the OAP, and the developer forfeits the gap financing amount that it deposited into escrow that likewise has no economic value to it anyway for at least 75 years because the developer would have had to spend that money anyway to construct the OAP.
SMRR believes this situation is unacceptable for at least two reasons. First, one of the purported value propositions for the City from the pilot program is that it will unfreeze the creation of the affordable housing units included in the approved MRPs (i.e., get them into service faster than would occur by simply waiting for economic conditions to change enough so that the approved MRPs—including their onsite inclusionary units—are built). That value proposition does not seem credible under the current terms of the pilot program.
Second, the longer it takes to begin construction on the OAPs, the greater the risk that escalations in construction costs will render insufficient the gap financing amount that the developers will deposit into escrow, and the greater the likely size of any such insufficiency. This is because, as explained in the discussion of financial risks in Part II.B.2.a at points 2-3, there is a very substantial risk that construction costs will rise faster than the pre-deposit escalation in the gap financing amount and/or the rate of interest paid on the escrowed amount. Thus delay in creating the OAPs imposes unnecessary additional financial risk on the City.
In order to mitigate these timing risks, the pilot program should be amended to require the market-rate developer (or its designee) to meet various milestones along the path to commencement of construction on the OAP (e.g. hiring professionals to prepare drawing and plans for the OAP, submitting them for approval by the City, applying for tax credits, hiring contractors, etc.). Any step that is supposed to be completed under the timeline before the time the market-rate developer actually seeks the COOs for the MRP should have to be completed before the COOs for the MRP are issued. And, with respect to any interim step that is supposed to be taken after the COOs for the MRP in fact are issued, there should be a financial penalty for failing to timely take those steps.
Note that the foregoing proposals do not undermine the financial certainty that Staff told the City Council at the August 12, 2025 meeting is required by the market-rate developers to move Item 10-A
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Packet Pg. 1077 Attachment: Written Comments [Revision 1] (7403 : Ordinance to Extend the Off-Site Affordable Housing Pilot Program (AHPP)) forward at this time with their approved projects. This is because the foregoing proposals do not impose any penalty for things that are beyond the market-rate developers’ reasonable control, such as either the failure of CTCAC to grant a properly submitted tax credit application, or escalations in the cost of construction while the OAP is in the pre-development phase.
2. The Current Pilot Offsite Option Should Be Changed To Better Manage The Financial Risks Associated With Creating The OAPs (a) The Current Pilot Offsite Option Creates A Very Substantial Risk That The City Will Have To Provide Additional Gap Financing To The OAPs
1. $150k Per Unit Does Not Appear To Be A Credible Estimate Of The Gap Financing That Would Be Required Even If Construction On The OAPs Could Begin Today Under the terms of the pilot program, the “gap financing amount” that the developer must deposit into escrow is supposed to be “the amount of financing necessary to complete a 100% affordable housing project assuming that (a) the off-site affordable project will obtain a 4% federal Low-Income Housing Tax Credit and/or tax-exempt bond allocation; and (b) that there will be no land acquisition costs.”22 But the $150k per unit used in the pilot program as the current “gap financing amount” does not appear to satisfy this definition.
In particular, Staff based its conclusion that $150k per unit was a reasonable estimate of the gap financing required based on two analyses; namely, (1) a Staff analysis of the amount of gap financing provided to the last six City-funded projects that have been completed, and (2) HR&A’s review of a pro forma for an offsite affordable project provided by a market-rate developer. But neither of these analyses appears to lend credible support to the $150k figure.
First, Staff itself performed the following exercise:
22 See S.M.M.C. § 9.64.065.A.6.
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Packet Pg. 1078 Attachment: Written Comments [Revision 1] (7403 : Ordinance to Extend the Off-Site Affordable Housing Pilot Program (AHPP)) The detailed calculations summarized above—which Staff kindly provided after the August 12 City Council meeting—are as follows:
Whatever the merits of this methodology for the question at hand may or may not be, all of the underlying data points used in the Staff analysis involve projects whose construction began during the period from June 2019 through August 2022.23 But an application of this same methodology to more recent data points shows that the gap financing amount required for an affordable housing project in Santa Monica using tax credit financing is much higher than $150k.
The more recent data points are:
23 Methodological issues include—but are not limited to—(1) the method of grossing up historical gap funding amounts to current requirements (using a flat 5% per year), and (2) including manager’s units in the per unit cost calculation (given that the offsite project pays a per affordable unit fee into escrow, but the resulting OAP also must include one or more manager’s units subsidized by the fee charged the affordable units for deposit into escrow.
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Packet Pg. 1079 Attachment: Written Comments [Revision 1] (7403 : Ordinance to Extend the Off-Site Affordable Housing Pilot Program (AHPP)) (a) The application of Venice Community Housing Corporation (“VCHC”) for 4% LIHTCs, in connection with a 78 unit project on 20th Street in Santa Monica, that was approved by the California Tax Credit Allocation Committee (“CTCAC”) in August of 2024.24 38 of the units are 1-bedroom units, 21 are 2-bedroom units, and 19 are 3-bedroom units. Because 38 of the units are for formerly homeless persons, and 20 are for persons with disabilities, the VCHC application includes significant reserves to cover the cost of providing supportive services to the residents of these units. Taking all of the non-tax credit public funds identified by VCHC to CTCAC as part of the permanent funding for this project, and deducting from that amount both the land costs and the reserves for the cost of providing supportive services, leaves public gap funding of $228,437 per unit. Applying the Staff methodology of escalating the historical gap financing figure by 5% per year yields a gap financing amount of $239,859 per unit as of August 2025. Applying instead the actual increase in the ENR Building Cost Index – Los Angeles from August 2024 to August 2025 (8.25%) yields a gap financing amount of $247,274 per unit.25 (b) The application of Hollywood Community Housing Corporation (“HCHC”) for 9% LIHTCs, in connection with an 82 unit project on Euclid Street in Santa Monica, that was approved by the CTCAC in June of 2025 (an award that HCHC declined due to legal uncertainty caused by a CEQA lawsuit filed against the project), and that then was resubmitted to CTCAC (with updates) in July of 2025.26 19 of the units are 1-bedroom units, 15 are 2-bedroom units, and 14 are 3-bedroom units. There is no land cost for this project because it is to be built on 24 See 8/6/2024 CTCAC Project Staff Report for VCHC’s 20th Street Apartments, available at https://www.treasurer.ca.gov/ctcac/meeting/2024/0806/staff/CA-24-414.pdf; 4/17/2024 Application to CTCAC by VCHC for 4% tax credits in connection with proposed 20th Street Apartments project, available at https://www.treasurer.ca.gov/ctcac/2024/firstround/index.asp (click on link for “CA-24-414 20th Street Apartments”). The project is a joint venture with Community Corporation of Santa Monica, and broke ground in April 2025. See Sharp, S., “Affordable housing breaks ground at 1640 20th Street in Santa Monica” Urbanize (Apr. 18, 2025), available at https://la.urbanize.city/post/affordable-housing-breaks-ground-1640-20thstreet-santa-monica. 25 If the gap funding is spread only among the 76 affordable units in this project (recognizing that the funds deposited into escrow under the pilot offsite option are charged against the affordable units only), then the gap financing figures are (a) $234,448 as of August 2024, (b) $246,171 as of August 2025 using Staff’s 5% per year escalator, and (c) $253,781 as of August 2025 using the actual increase in the ENR Building Cost Index – Los Angeles from August 2024 to August 2025 (8.25%).
26 See 6/18/2025 CTCAC Project Staff Report for HCHC’s Ollie Apartments, available at https://www.treasurer.ca.gov/ctcac/meeting/2025/0618/binder.pdf (pp. 57 et seq. of pdf); 3/17/2025 Application to CTCAC by HCHC for 9% tax credits in connection with proposed Ollie Apartments project, available at
https://www.treasurer.ca.gov/ctcac/2025/firstround/9percent/applications/index.asp (click on link for “CA-25-003 Ollie Apartments”); 7/8/2025 Application to CTCAC by HCHC for 9% tax credits in connection with proposed Ollie Apartments project, available at https://www.treasurer.ca.gov/ctcac/2025/secondround/9percent/applications/index.asp (click on link for “CA-25-091 Ollie Apartments”).
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Packet Pg. 1080 Attachment: Written Comments [Revision 1] (7403 : Ordinance to Extend the Off-Site Affordable Housing Pilot Program (AHPP)) City-owned land. The City also is to provide $13.5 million from the Housing Trust Fund, which amounts to gap funding of $281,250 per unit.27
(c) The undated pro forma provided by HCHC to Staff in connection with an 82 unit project on City-owned and acquired land at 14th Street in Santa Monica that will seek 4% LIHTCs. 80 of the units are 1-bedroom units, and 2 are 2-bedroom units. The City Council had directed in August of 2024 that such a project replace the original HCHC project City Council had approved for this site in March of 2024, and the City Council formally approved this revised project in December 2024. Taking all of the non-tax credit public funds identified by HCHC in the pro forma as part of the permanent funding for this project, and deducting from that amount the land costs, leaves public gap funding of $198,927 per unit. Applying the Staff methodology of escalating the historical gap financing figure by 5% per year—and making the most conservative possible assumption that the HCHC pro forma is from December of 2024—yields a gap financing amount of $205,558 per unit as of August 2025. Applying instead the actual increase in the ENR Building Cost Index – Los Angeles from December 2024 to August 2025 (5.8%) yields a gap financing amount of $210,392 per unit.28 But these figures almost certainly underestimate the gap financing that would be required as of August 2025 for the 14th Street project because (1) HCHC also provided to Staff an undated pro forma for the Euclid Street project at the same time as it provided the pro forma for this 14th Street project, (2) a comparison of HCHC’s July 2025 application to CTCAC for the Euclid Street project, with the HCHC pro forma provided to Staff for the Euclid Street project, shows that (a) construction costs are 11.1% higher on the CTCAC application, (b) construction loan interest and origination fees are 46.7% higher on the CTCAC application, and (c) the gap financing amount is 22.7% higher on the CTCAC application, and (3) in December of 2024, Staff requested—and City Council provided—authority for Staff to provide more gap financing, as needed, than the amounts indicated on HCHC’s Euclid and 14th Street project pro formas. In addition, the HCHC pro forma assumes 40 project-based Section 8 vouchers will be assigned to the project, and generate considerable additional cash flow that in turn supports a larger commercial loan. Staff has not indicated that it will be able to provide such support to the pilot OAPs, in which case the gap financing amount may well be higher for this reason as well.
Thus, even taking the most conservative approach, the average of these three much more recent real world data points indicates the gap financing amount required under Staff’s methodology is at least $242,222 per unit as of August 2025—and it is likely that the amount is considerably higher.
27 If the gap funding is spread only among the 47 affordable units in this project (recognizing that the funds deposited into escrow under the pilot offsite option are charged against the affordable units only), then the gap financing figure is $287,234. 28 If the gap funding is spread only among the 80 affordable units in this project (recognizing that the funds deposited into escrow under the pilot offsite option are charged against the affordable units only), then the gap financing figures are (a) $203,900 as of December 2024 at the latest, (b) $210,697 as of August 2025 using Staff’s 5% per year escalator, and (c) $215,652 as of August 2025 using the actual increase in the ENR Building Cost Index – Los Angeles from August 2024 to August 2025 (8.25%).
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Packet Pg. 1081 Attachment: Written Comments [Revision 1] (7403 : Ordinance to Extend the Off-Site Affordable Housing Pilot Program (AHPP)) Second, HR&A performed a review of a developer provided pro forma. That review was summarized at the August 12, 2025 City Council meeting as follows:
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Packet Pg. 1082 Attachment: Written Comments [Revision 1] (7403 : Ordinance to Extend the Off-Site Affordable Housing Pilot Program (AHPP)) But, based on the information disclosed in these slides (no other information having been provided to the public), it does not appear that the HR&A analysis provides credible support for a $150k per unit “gap financing amount” for the following reasons:
(a) The pro forma analyzed by HR&A does not include parking, which HR&A (Paul Silvern) identified at the August 12 meeting as a significant driver of cost savings. HR&A stated at the meeting that parking is not legally required. However, all of the market rate projects participating in the pilot provide parking (and so presumably would have provided parking to the inclusionary units had they remained onsite).29 And every one of the affordable projects included in the Staff’s analysis—as well all of the more recent deed-restricted affordable housing 29 The first five projects below applied for the pilot offsite option. The last project applied for the pilot in-lieu fee option. All of the data in this chart is from the approved plans for these projects that are linked to Status of Administrative Approvals chart available at https://www.santamonica.gov/media/Document%20Library/Topic%20Explainers/Santa%20Mon ica's%20Housing%20Progress/Status%20of%20Administrative%20Approvals_9.9.25.pdf.
PROJECT UNITS PARKING
1902 Wilshire (23ENT-0156) 140 168 residential, 22 commercial 1527 Lincoln (23ENT-0161) 210 279 residential
2501 Wilshire (23ENT-0173) 170 194 residential, 60 commercial 2025-2037 Wilshire (23ENT-0178) 150 184 residential, 27 commercial 1931 Wilshire (24ENT-0183) 260 308 residential, 18 commercial 2906 Santa Monica (20ENT-0311) 88 92 residential, 43 commercial Item 10-A
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Packet Pg. 1083 Attachment: Written Comments [Revision 1] (7403 : Ordinance to Extend the Off-Site Affordable Housing Pilot Program (AHPP)) projects approved for construction in the City—include parking to varying degrees.30 Furthermore, on the face of the slides, it is unclear whether HR&A analyzed whether the reduction in cost due to no parking would in fact reduce the gap funding otherwise required, would instead reduce the amount of tax credits for which the pilot OAPs could qualify due to their resultant lower cost basis, or some combination of both. Finally, and most importantly, a decision to eliminate all parking at the pilot OAPs was not called out in the Staff Report, and the City Council did not discuss—let alone vote on—whether or not to adopt a no-parking policy for pilot OAPs.
(b) The pro forma analyzed by HR&A assumed 1-bedroom units of 450 sq. ft., and 2- bedroom units of 700 sq. ft. This complies with CTCAC minimum unit sizes. However, under the pilot program—both as proposed by Staff and as adopted by the City Council—the OAPs are required to comply with S.M.M.C. § 9.64.050.E.2-.5.31 And S.M.M.C. § 9.64.050.E.4 provides that “[a]n affordable housing unit shall have a minimum total floor area, depending upon the number of bedrooms provided, of no less than the following: . . . 1 bedroom 600 square feet[;] 2 bedrooms 850 square feet . . . .”). In other words, the pro forma analyzed by HR&A underestimates the required size of every one of the 72 units by 150 sq. ft., or a total of 10,800 sq. ft. (which equates to an additional 20% of the “Gross Building SF” of 51,000 SF used on the pro forma HR&A analyzed).
30 The data in this chart is taken from Urbanize articles about the first six completed projects, from the VCHC and HCHC tax credit applications to CTCAC for next two projects, from the HCHC pro forma for the next project, and from the presentation by EAH to City Council on 4/10/24 for the last project.
PROJECT DEVELOPER UNITS POPULATION PARKING
1820&1826 14th St. CCSM 39 Seniors 10 below grade
1445&1453 10th St. EAH 40 Seniors 10 at grade
2120 Lincoln Blvd. CCSM 37 General 9 car garage
1819 Pico Blvd. CCSM 48 General 49 below grade
1834-1848 14th St. CCSM 73 General 55 below grade
1413 Michigan
Ave.
EAH 58 Supportive 9
20th St. Apts. VCHC 78 Supportive & General 26 covered
Euclid St. Apts. HCHC 48 General 35 covered, 3 uncovered 14th St. Apts. HCHC 82 Seniors & Senior Supportive 42 at grade 4th St. Apts. EAH 122 Supportive & General 115 below grade (59R/56C) 31 See S.M.M.C. § 9.64.065.D.3; 8/12/25 Staff Slide “Clarifying Changes To Proposed Ordinance”.
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Packet Pg. 1084 Attachment: Written Comments [Revision 1] (7403 : Ordinance to Extend the Off-Site Affordable Housing Pilot Program (AHPP)) (c) Most importantly, the pro forma analyzed by HR&A assumes that prevailing wages will not be paid, which HR&A (Paul Silvern) identified at the August 12 meeting as another significant driver of cost savings. But the Staff Report for August 12, 2025, did not even reference—let alone contain—a legal analysis concluding that the web of relationships created by the pilot program do not trigger the State’s Prevailing Wage Law in the first instance.
Moreover, the reason why the pilot program requires the market-rate developer to deposit the “gap financing amount” into escrow presumably is to provide assurance to the City that— notwithstanding the pilot program eliminating the AHPP requirement that COOs for OAPs must be issued before COOs for the MRPs—the pilot OAPs will actually get built even if the marketrate developers are either unable or unwilling to build them. While SMRR cannot offer legal advice to the City, and SMRR is not doing so, it would be surprising if the City has legal advice that the Prevailing Wage Law does not apply under those circumstances, and it would be shocking if the City has legal advice that the Prevailing Wage Law would not apply if the City has to provide additional gap financing to the OAPs. Therefore, whatever merit the assumption of no prevailing wage being paid might or might not have if the market-rate developers build the OAPs themselves without any further City funding, it does not seem to be a reasonable assumption to use when determining the “gap financing amount” the City should require the market-rate developers to deposit as security to assure completion of the OAPs. Indeed, given that the $150k initial deposit does not appear adequate as explained above, given that the rate of growth in that amount both pre-deposit and post-deposit could well be less than the escalation in construction costs as explained below, and given that Staff reported at the August 12, 2025 City Council meeting that developers would not be willing to add to the escrow because cost-certainty is a major benefit of the pilot program, it seems that by far the most likely scenario is that the City will have to build the OAPs (either directly or through a non-profit affordable housing developer).
In short, the HR&A analysis of a single market-rate developer pro forma does not lend credible support to $150k as the “gap financing amount” because the pro forma does not represent the type of OAP for which the “gap financing amount” is supposed to provide security. This is because (1) the HR&A analysis assumes no parking even though the MRPs in the pilot program all include parking, the affordable housing projects used in the Staff analysis all include parking to varying degrees, the more recent affordable housing projects under development in the City all include parking to varying degrees, and City Council neither discussed nor voted to remove all parking from the pilot OAPs; (2) the HR&A analysis assumes substantially smaller units than are required for units in the OAPs under the City Council adopted terms of the pilot program, and (3) the HR&A analysis assumes prevailing wages will not be paid when—absent some as yet not referenced or provided legal analysis—it seems that prevailing wages will have to be paid if the City if forced to use the escrowed funds to build the OAPs, which is by far the most likely scenario.
2. There Is A Substantial Risk That The “Gap Financing Amount” Will Grow Less Slowly Prior To Deposit Into Escrow Than The Rate At Which The Cost Of Building The OAPs Will Grow Prior To Deposit
The pilot program provides that:
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Packet Pg. 1085 Attachment: Written Comments [Revision 1] (7403 : Ordinance to Extend the Off-Site Affordable Housing Pilot Program (AHPP)) The gap financing amount shall be increased annually, commencing on the first anniversary from the effective date of this ordinance, by the last published annual average in the ENR Building Cost Index for the LA region, but shall not exceed an annual increase of five (5) percent. The gap financing amount should be calculated from the effective date of the ordinance until deposited into escrow in accordance with Section 9.64.065(D).
S.M.M.C. § 9.64.065.A.6. The pilot program contains no limit on how long the pre-deposit period may last (other than that it cannot last past the time the market-rate developer wants to pull building permits for the associated MRP, if it is not in the Coastal zone, or the time of an approved Coastal zone permit amendment if the MRP is in the Coastal zone).
This provision imposes a very substantial risk that—even if the $150k figure was a credible estimate of the “gap financing amount” for projects built today (which it is not)—the growth in the “gap financing amount” prior to deposit into escrow would not have kept up with the growth in cost of building the OAPs. This is patent from the fact that the ENR Building Cost Index – Los Angeles has grown 50% in the last five years.
32 This provision also contains a number of ambiguities which, depending upon how they are resolved, could further exacerbate the foregoing problem. First, it is unclear whether the gap financing amount is only “increased annually” (such that all change in the ENR Building Cost Index for the LA region occurring after the last annual adjustment but before the next annual adjustment is simply ignored), or is calculated using the change in that index “from the effective date of the ordinance until deposited into escrow”. If it is the former, that further exacerbates the risk that the gap financing amount will not have grown as fast prior to deposit as the costs to build the OAPs have grown prior to deposit. Second, it is unclear whether the 5% annual cap on growth is applied each year (such that the increase in any year cannot exceed 5% even if in a prior year the increase was less than 5%), or whether it is applied cumulatively (such that the average annual increase cannot exceed 5%, although any individual annual increase can do so when there was less than a 5% increase in one or more prior years). If the former, this too further exacerbates the risk that the gap financing amount will not have grown as fast prior to deposit as the costs to build the OAPs have grown prior to deposit.
3. There Is A Substantial Risk That The “Gap Financing Amount” Will Grow Less Slowly After Deposit Into Escrow Than The Rate At Which The Cost Of Building The OAPs Will Grow After Deposit Into Escrow
The pilot program provides that the gap financing amount will be deposited into an interestbearing escrow account.33 Under the terms of the pilot program, for MRPs located outside the coastal zone, this escrow can last up to four years (five if the City grants a 1-year extension). 34 32 This index is available (after paying a subscription fee) at https://www.enr.com/economics/historical_indices/losangeles. 33 See S.M.M.C. § 9.64.065.D.5.c.
34 See S.M.M.C. § 9.64.065.D.5.c.ii.
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Packet Pg. 1086 Attachment: Written Comments [Revision 1] (7403 : Ordinance to Extend the Off-Site Affordable Housing Pilot Program (AHPP)) And if those funds are needed to build the OAPs after a failure by the market-rate developer to do so, it could be a substantial additional period before construction of the OAPs actually begins.
Staff has not yet advised what interest rate an account of this type can earn today. However, a general review of bank interest rates indicates that this interest rate on the escrow deposit would not have come close to covering the 50% increase in the ENR Building Cost Index – Los Angeles over the last five years (and may well not even have covered the 5% annual increase that the pilot program would have required pre-deposit).
4. The Release Of All Security Upon The Commencement Of Construction Of The OAP Creates Risk For The City
The pilot program releases both the City’s option on the land—and all escrowed funds—upon the commencement of construction of an OAP (pulling building permits and beginning construction activity).35 No security is retained to assure completion of the OAP, however.
Given the City’s prior experience with Craig Jones36 (which led to the pre-pilot AHPP offsite requirement that COOs for an MRP could not issue prior to the issuance of COOs for the associated OAP)—and the financial woes of NMS37—the risk posed by this pre-completion release of all security is patent.
(b) SMRR Proposed Changes To The Pilot Offsite Option To Mitigate The Financial Risks It Poses To The City
SMRR believes four changes are required to properly mitigate the financial risks to the City posed by the pilot offsite option.
First, the City should require any developer utilizing the program to sign a written agreement that it will pay the amount of the GS tax upon sale for use in accordance with Measure GS, whether or not the GS tax is in place at the time of sale. A similar (but not identical) provision was included in the recent development agreement amendment that the City negotiated with RAND Corporation.38
The GS tax has been under assault locally through an initiative circulated in 2024 (which was withdrawn, but could return), by proposed legislation in Sacramento (which was withdrawn in 35 See S.M.M.C. §§ 9.64.065.D.5.c.ii-iii, .6.a.
36 See “Developer skips out on affordable housing”, Santa Monica Daily Press (Jun. 21, 2010), available at https://smdp.com/news/developer-skips-out-on-affordable-housing/. 37 See Hall, M. “Lawsuits undermine Neil Shekhter’s once grand rea estate empire”, Santa Monica Daily Press (Mar. 15, 2024), available at https://smdp.com/news/lawsuits-undermineneil-shekhters-once-grand-real-estate-empire/. 38 See “Amendment No. 2 To Development Agreement By And Between City Of Santa Monica And The RAND Corporation ______, 2025” at Section 7.2, available as part of Attachment C to Item 12.A on the City Council’s July 29, 2025 Agenda, available at https://santamonicacityca.iqm2.com/Citizens/Detail_Meeting.aspx?ID=1467.
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Packet Pg. 1087 Attachment: Written Comments [Revision 1] (7403 : Ordinance to Extend the Off-Site Affordable Housing Pilot Program (AHPP)) favor of an L.A. City only statute (which was then itself withdrawn), but could return), and by a Statewide ballot measure (which was held ineligible for the ballot by the California Supreme Court in 2024, but is about to go into circulation again for 2026). Assurance that the GS tax or its equivalent will in fact be received by the City would provide significant mitigation of the financial risks identified above. Moreover, the City should not be taking on financial risk through the offsite option in order to improve the economics of the market-rate developers sufficiently for them to proceed even with the GS tax—as they have advised they can do—only to set up a potential windfall for the developers if changes are made to remove the GS tax.
Second, the “gap financing amount” should be increased to a realistic level (i.e., a level that takes into account that $150k is inadequate, and that the pre-deposit and post-deposit rates of increase can be less than the increase in the cost of construction of the OAPs). SMRR recognizes that this proposal—unlike all of the others—changes the financial calculus for the market-rate developers.
Accordingly, SMRR is open to the idea that some (or, if economically justified, potentially even all) of the increased deposit (i.e., the amount above $150k)—if actually spent creating the OAPs—would be treated by the City as some form of credit against subsequently paid GS tax.
Given that the City lacks the power to reduce the amount subsequently paid in GS taxes, some form of rebate program would have to be developed to create this economic effect for the market-rate developers.
Third, as explained in more detail in Part II.B.1 above, imposing interim milestones toward development of the OAPs is needed to shorten the time between deposit of the gap financing amount into escrow and actual construction of the OAPs.
Fourth, real security for completion of the OAPs must continue past the time building permits are pulled and construction begins. The City is better positioned than SMRR to determine whether this continuing security should be a continued option and construction escrow, a requirement of completion bonding, and/or some other form of security.
3. Management Of The Risks Posed By Competition For Tax Credits The pilot offsite option assumes that the OAPs will obtain 4% LIHTCs, without which the OAPs will not be built. But the tax credits available to projects in Santa Monica are not unlimited, as all tax credit programs are oversubscribed. Data is not yet available regarding the competitiveness of the OAPs contemplated by the pilot offsite option, something that this pilot program will test.
Nor does the public yet have data on the extent to which these same tax credits will be required to fulfill the City’s public land commitments for affordable housing under the Housing Element.
The public knows that HCHC’s 82 unit project on 14th Street plans to seek 4% tax credits (although the timing apparently depends upon when it can obtain other State funding it included in its pro forma). But the public does not know what has been received in response to the June 30, 2025 Notice of Availability for Bergamot, 4th & 5th and Arizona, and Parking Garage 1— Item 10-A
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Packet Pg. 1088 Attachment: Written Comments [Revision 1] (7403 : Ordinance to Extend the Off-Site Affordable Housing Pilot Program (AHPP)) although Staff presumably already has seen any responses and can enlighten the public and City Council on this score.39
To date the pilot offsite program has mitigated these risks by limited the pilot to 1000 units. As a result, only two OAPs are being considered—one for 46 affordable units at 1333 7th Street and one for 47 affordable units at 1143-1145 25th Street.40 Depending upon whether—and if so, to what extent—the responses to the Notice of Availability indicate the need for those public land projects to obtain 4% LIHTCs (i.e., depending upon whether and to what extent expanding the pilot would create undesirable competition for such tax credits between the public land projects and the pilot OAPs)—and assuming that the need to meet the City’s RHNA market-rate housing target and/or to respond adequately to the City’s current fiscal distress precludes waiting for additional information regarding the tax credit competitiveness of the already contemplated pilot OAPs on 7th Street and 25th Street (and other uncertainties posed by the pilot offsite option)—SMRR could be open to expanding the pilot program (so long as it first is revised as recommended in this analysis). In particular, SMRR believes that if these conditions are met, then all approved projects in the downtown should be allowed to participate in an expanded pilot because (1) they have the highest revenue generating potential at a time when the City is facing fiscal distress, and (2) they pose the least risk of disruption to the existing City neighborhoods. If the already approved downtown projects that choose to participate in the expanded pilot—when combined with the original pilot projects, as well as the market-rate units already completed or in construction—put the City in a position to meet its RHNA market-rate housing target, then that should be the extent of any pilot expansion.
If, on the other hand, the downtown projects electing to participate in an expanded pilot by a deadline for them to apply do not put the City in a position to meet its RHNA market-rate housing target, then SMRR would consider allowing projects outside the downtown to participate in the expanded pilot up to whatever number of additional market rate units are needed to assure Santa Monica’s RHNA market-rate housing target is met.
In other words, given that (1) the City’s 6th RHNA cycle market-rate housing target is 2,727 units, (2) the annual progress reports submitted by Santa Monica to HCD for the first three years of this 6th Housing Element Cycle show that Santa Monica issued building permits for 899 market rate units, and some additional units undoubtedly have pulled building permits during this fourth year, and (3) the original pilot involves 1018 market rate units, another 800 market rate units are needed to assure (to the extent reasonable) that Santa Monica meets its RHNA marketrate target during the 6th Housing Element Cycle. If the already approved downtown projects that choose to participate in an expanded pilot program either meet or exceed this 800 unit figure, then that should be the extent of the pilot expansion. If those participating downtown projects do not meet this 800 unit figure, then additional projects outside the downtown should 39 See June 30, 2025 City of Santa Monica Notice of Availability/Offer to Lease Surplus Property, available at
https://www.santamonica.gov/media/Housing/City%20of%20Santa%20Monica%20- %20SLA%20NOA%20to%20Affordable%20Housing%20Developers.pdf. 40 See Chart of Pilot Applications prepared by Staff and included in Part I above.
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Packet Pg. 1089 Attachment: Written Comments [Revision 1] (7403 : Ordinance to Extend the Off-Site Affordable Housing Pilot Program (AHPP)) be allowed to participate in an expanded pilot to the extent necessary to reach a total of 800 additional market rate units in an expanded pilot program.
4. Management Of The Risk Posed By 75 Year Affordability Covenants As noted in Part II.A above, the pilot offsite program requires 75 year affordability covenants.
But as we are seeing today with the expiration of 55 year affordability covenants, the expiration of such covenants imposes the risk of losing affordable housing units in the future. Given that the potential to reacquire the OAPs 75 years into the future does not play any role in the investment decisions of market-rate developers (or those who invest in their projects), the City should insist that it have the option to acquire the pilot program OAPs for a de minimis amount upon expiration of the affordability covenants.
III. SMRR REVIEW OF THE AHPP PILOT’S IN-LIEU FEE OPTION A. Background
S.M.M.C. § 9.64.065.F provides:
F. In Lieu Fee Option for Off-Site Housing (without land provided).
1. Notwithstanding Section 9.64.070, an applicant for a multiple-unit project may satisfy the affordable housing obligation in Chapter 9.64 by paying an in-lieu fee based on the following formula:
(Base Unit Fee per Square Foot) x (total square feet of the residential floor area in the multi-unit project)41
2. For purposes of this Section, the City's base unit fee per square foot shall be established pursuant to Section 9.64.070 by resolution of the City Council.
Commencing on July 1, 2026, and on July 1st of each fiscal year thereafter, the City's base unit fee per square foot shall be adjusted based on changes in construction costs and land costs.
3. The affordable housing fee shall be paid prior to issuance of a building permit for any multiple-unit project utilizing Section 9.64.065(F).
4. The City shall deposit any payment made pursuant to this Section 9.64.065(F) in a reserve account separate from the General Fund to be used only for 41 As the August 12, 2025, Staff advised the Council that the residential floor area referenced is the residential floor area in the project after taking advantage of the local density bonus. But this should be made explicit if this approach is retained (notwithstanding SMRR’s objections described below) because the references to the in-lieu fee in S.M.M.C. §§ 9.64.065.H.1.c, .2.c, are made in the context of using the base project only to calculate the number of offsite units required.
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Packet Pg. 1090 Attachment: Written Comments [Revision 1] (7403 : Ordinance to Extend the Off-Site Affordable Housing Pilot Program (AHPP)) development of affordable housing, administrative costs related to the production of this housing, substantial rehabilitation of existing affordable housing, a City sponsored program of rental subsidies for lower income Santa Monica residents, and monitoring and evaluation of this affordable housing production program.
B. The Current Pilot Program Should Be Changed To Utilize An In-Lieu Fee Reasonably-Related To The Cost Of Creating Affordable Housing Units And To The City’s Overall Affordable Housing Plan
1. The “Base Unit Fee” Established Pursuant To Section 9.64.070 Is An Improperly Low In-Lieu Fee To Use For The Pilot Program The pilot program is using the “base unit fee” of S.M.M.C. § 9.64.070A, the fee already charged under the AHPP to multi-family projects of 2-5 units. However, the origin of the “base unit fee” is a 1998 nexus study by HR&A, which first calculated (1) the demand effect of new market rate housing on goods and services, and (2) the number of lower-income households (at that time 60% of AMI or below) needed to supply a portion of the lower-wage employees needed to service this demand. The nexus study then divided the cost to the City of creating a unit of housing affordable to such lower income households (assuming no other public subsidy) by the square footage of the typical market-rate multi-family project that HR&A used to establish the demand effect, and the result was deemed the “base unit fee”. The two key charts from the Executive Summary to that nexus study summarizing these calculations are:
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Packet Pg. 1091 Attachment: Written Comments [Revision 1] (7403 : Ordinance to Extend the Off-Site Affordable Housing Pilot Program (AHPP)) 42 What these charts show is that the “base unit fee” was supposed to represent the cost to create roughly one affordable housing unit for every 15 market rate units. By contrast, the inclusionary requirement in the single project that has elected to pay the pilot in lieu fee—measured against the total number of market rate units allowed under the pilot program—is one affordable housing units for every 9.78 units.
It appears than an update to the nexus study was completed by HR&A in July 2005 but, unlike the 1998 nexus study, it is not available online.43 According to a May 2005 Staff Report (which includes preliminary updated calculations by HR&A), the methodology is essentially the same, but updated data is used, and the demand for workers earning up to moderate income was included in the updated analysis.44
42 This 1998 HR&A Report is an attachment to a July 21, 1998 Staff Report entitled “Recommendation to Adopt Resolution Establishing Affordable Housing Base Fee”, available at https://publicdocs.smgov.net/WebLink/DocView.aspx?id=2206828&searchid=89ab0638-0a04- 461c-91a2-09ebf39869a6&dbid=0&repo=SMGOV.
43 The updated HR&A report was attached to a July 12, 2005 Staff Report entitled “Resolution to Increase the Affordable Housing Fee and Introduction and First Reading of an Ordinance Amending the Affordable Housing Production Program to Establish a Reduction or Waiver Provision of Chapter 9.56 and to Modify Affordable Housing Definitions and Consideration of Other Amendments to Provide for the Annual Adjustment of the Affordable Housing Fee and the Timing of the Affordable Housing Fee Calculation for a Particular Development”, but it is only available for inspection at the Clerk’s Office per a sheet in the online version, available at https://publicdocs.smgov.net/WebLink/DocView.aspx?id=2211477&searchid=3a50ebaa-8472- 47f7-afe7-e048020e099f&dbid=0&repo=SMGOV.
44 See May 10, 2005 Staff Report entitled “Strategies to Increase the City’s Supply of New Affordable Units” at pp. 5-6 & Attachments A-B, available at Item 10-A
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Packet Pg. 1092 Attachment: Written Comments [Revision 1] (7403 : Ordinance to Extend the Off-Site Affordable Housing Pilot Program (AHPP)) The current value of the “base unit fee” is the result of an annual adjustment pursuant to a formula developed by HR&A—and adopted by City Council in 2006—in which median price change of condominium sales is used as a proxy for change in land cost, change in Engineering News Record’s Construction Cost Index – Los Angeles is used as a proxy for change in construction cost, and each of these is weighted by the average weight of land versus construction costs in two most recent City-funded affordable housing developments. The current “base unit fee” for apartments is $43.91 per square foot.45 Under the AHPP pilot program, this figure is then multiplied by the residential floor area. Per the Staff chart included in Part I above, for the single project that has elected to pay the pilot inlieu fee this works out to $2.248 million—which equates to just under $250k per each inclusionary unit that no longer is part of that project.
There are two fundamental problems with using the “base unit fee” to calculate an in-lieu fee for the pilot program. First, the “base unit fee” is intended as an impact fee based on the additional demand for deed-restricted affordable housing caused by 2-5 unit multi-family housing projects.
This bears no conceptual relationship to the purpose of the AHPP pilot in-lieu fee, which is to obtain a reasonable financial contribution to the City’s affordable housing programs in exchange for granting a local density bonus equivalent to State density bonus without requiring the MRP to include any affordable housing units onsite or build any affordable housing units offsite.
Second, the “base unit fee” is far too low to satisfy the purpose of the pilot in-lieu fee. Part of this is due to the nature of the “base unit fee” calculation, as illustrated by the 1998 nexus study.
But part of this is also due to the apparent failure of the annual increase methodology to keep up with the actual increases in the cost of constructing affordable housing over the last 20 years.
This is evident from the fact that (1) this same methodology is used to gross up the “affordable housing unit development cost” pursuant to S.M.M.C. § 9.64.070.B, (2) the “affordable housing unit development cost”—developed by HR&A as part of the same nexus studies discussed above—is supposed to represent “the City’s total cost to develop a unit of affordable housing (i.e., land, construction, professional fees and other ‘soft’ costs and financing costs) minus the amount of construction loan that can be supported by the net operating income derived from operating a typical City-assisted affordable housing development,” without any other public https://publicdocs.smgov.net/WebLink/DocView.aspx?id=2211484&page=1&dbid=0&repo=SM GOV.
45 See Staff Memorandum entitled “Proposed FY 2024-25 Annual Automatic Adjustment for the Affordable Housing Unit Base Fee”, attachment c to Agenda Item 5.C for the City Council’s October 8, 2024 meeting, available at
https://santamonicacityca.iqm2.com/Citizens/Detail_Meeting.aspx?ID=1416.
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Packet Pg. 1093 Attachment: Written Comments [Revision 1] (7403 : Ordinance to Extend the Off-Site Affordable Housing Pilot Program (AHPP)) subsidy,46 and (c) the current “affordable housing unit development cost” is just $460,747,47 which is far below the actual cost to the City of developing an affordable housing unit when there is no other public subsidy.48
2. Developing A Proper Pilot In-Lieu Fee
The logical conceptual starting point for a proper pilot in-lieu fee is what it would cost the City to replace the foregone inclusionary units with units developed in a 100% affordable housing project, multiplied by the number of inclusionary units the developer no longer has to provide under the pilot program. While that could be the gap financing amount the City supplies to projects (including the cost of land and the cost of creating manager units), consideration would also have to be given to the delays between the time the in-lieu fee is paid and the time when an affordable housing construction would begin (a time frame likely to be lengthened given the increased competition for LIHTCs from both the pilot OAPs and public land OAPs), as well as other risks—i.e., the figure would have to be higher than current gap financing figures including the cost of land and creating manager units. This figure could be adjusted downward if the City had a particular need for cash to achieve its affordable housing goals that it cannot otherwise satisfy, and therefore wanted to incentivize participants in the pilot program to select the in-lieu fee option. But no such case has been made to date.
* * *
Thank you for your consideration of SMRR’s views on this important matter. Please let us know if you have any questions or otherwise with to discuss any of the foregoing. 46 See Staff Memorandum entitled “Proposed FY 2024-25 Annual Automatic Adjustment for the Affordable Housing Unit Development Cost”, attachment d to Agenda Item 5.C for the City Council’s October 8, 2024 meeting, available at
https://santamonicacityca.iqm2.com/Citizens/Detail_Meeting.aspx?ID=1416; May 10, 2005 Staff Report entitled “Strategies to Increase the City’s Supply of New Affordable Units” at pp. 5- 6 & Attachments A-B, available at
https://publicdocs.smgov.net/WebLink/DocView.aspx?id=2211484&page=1&dbid=0&repo=SM GOV; 1998 HR&A Report at 5, attached to July 21, 1998 Staff Report entitled “Recommendation to Adopt Resolution Establishing Affordable Housing Base Fee” at , available at https://publicdocs.smgov.net/WebLink/DocView.aspx?id=2206828&searchid=89ab0638- 0a04-461c-91a2-09ebf39869a6&dbid=0&repo=SMGOV.
47 See Staff Memorandum entitled “Proposed FY 2024-25 Annual Automatic Adjustment for the Affordable Housing Unit Development Cost”, attachment d to Agenda Item 5.C for the City Council’s October 8, 2024 meeting, available at
https://santamonicacityca.iqm2.com/Citizens/Detail_Meeting.aspx?ID=1416. 48 For just one example, the HCHC pro forma for the 14th Street project, which includes 80 senior 1-bedroom units, and two 2-bedroom manager units, indicates a per unit cost of ~$780k per unit (including the value of the land, but excluding the permanent private loan supported by the rental income).
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Packet Pg. 1094 Attachment: Written Comments [Revision 1] (7403 : Ordinance to Extend the Off-Site Affordable Housing Pilot Program (AHPP)) Sincerely,
Denny Zane Mike Soloff
Co-Chair, Santa Monicans for Renters’ Rights Co-Chair, Santa Monicans for Renters’ Rights Item 10-A
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Packet Pg. 1095 Attachment: Written Comments [Revision 1] (7403 : Ordinance to Extend the Off-Site Affordable Housing Pilot Program (AHPP))
EXHIBIT B
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Packet Pg. 1096 Attachment: Written Comments [Revision 1] (7403 : Ordinance to Extend the Off-Site Affordable Housing Pilot Program (AHPP)) September 30, 2025
To: Santa Monica City Council
Re: 9.30.25 Agenda Item 11A—AHPP Offsite Pilot Program
Dear Councilmembers:
On September 18, Santa Monicans for Renters’ Rights sent to the City Manager and to each of you the attached memorandum analyzing the Offsite Option and the In-Lieu Fee Option in the AHPP pilot program adopted on August 12. These are the only two options for which applications have been received to date. SMRR’s memorandum demonstrated that—as currently drafted—the Offsite Option exposes the City to substantial timing and financial risks with respect to creation of the offsite affordable housing, and makes a series of recommendations for mitigating those risks to acceptable levels. That memorandum further demonstrates that the particular in-lieu fee figure incorporated into the pilot had had no conceptual relevance to the issue at hand when first created, and that the updating of that original figure over the last 20 years had not kept pace with actual increased costs. It also explains how the City could approach constructing a conceptually relevant in-lieu fee. The memorandum further explains SMRR’s views on the conditions for and the limits of an appropriate expansion of the pilot program.
In this cover letter, SMRR briefly responds to the comments provided to Council by Cyress Equity (“CE”) regarding SMRR’s recommendations to improve the offsite option, and regarding potential expansion of the pilot. SMRR also briefly responds to the Staff Report.
1. Offsite Option Timing Risk: CE does not dispute SMRR’s suggestion that milestones be added for the offsite affordable project (“OAP”) to assure timely progress is being made toward creation of the OAP. Indeed, CE offers some suggested milestones both for steps to obtain entitlements for the OAP, and for steps to obtain the tax credits without which the OPA will never be built.1 Staff likewise offers some potential milestones for obtaining entitlements. 2 1
“Reasonable milestones would be (i) submission an entitlement package for the affordable project within 6 months of applying for the IZO, (ii) submission of a funding request to CDLAC and TCAC within 6 months of receiving building permits for the affordable project, and (iii) if funding is not initially awarded, funding requests must be resubmitted in every subsequent funding round that the project is eligible for. ”
2 “Prior to building permit for the first market rate project, require submittal of a complete entitlement application for the off-site affordable housing project[.] Prior to Certificate of Occupancy for the market rate project, require that the plan check process for the off-site affordable housing project be completed. The City could also include a Item 10-A
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Packet Pg. 1097 Attachment: Written Comments [Revision 1] (7403 : Ordinance to Extend the Off-Site Affordable Housing Pilot Program (AHPP)) SMRR agrees with CE that the milestones should cover both obtaining entitlements, and obtaining tax credits. SMRR also believes that the milestones should include commencement of construction following entitlements and tax credits.
What CE does object to is the imposition of consequences on the market rate developer if the OAP milestones are missed, suggesting instead a right of the City to replace the OAP developer.3 Staff, on the other hand, proposes as possible consequences that (1) submission of entitlement package be a condition for the market rate project (“MRP”), (2) that completion of the plan check be a condition of the certificates of occupancy for the MRP (including a provision of priority for the OAP plan check to assure City does not cause delay), and/or (3) that the program should “[a]llow[] the City to exercise its option on the off-site property, draw down on the gap financing, and receive an assignment of architectural and construction plans for the off-site housing development early if the developer does not complete the plan check process within a certain timeline of pulling a building permit on the market rate project.” SMRR supports adoption of Staff’s first two suggestions, absent some compelling showing that they are not practical. SMRR also supports Staff’s third suggestion (which appears to be the same as CE’s suggestion) for all other milestones (not just for plan check completion) IF BUT ONLY IF the financial risks of completing the OAP under these circumstances are properly mitigated (as discussed below). If those risks are not properly mitigated, then some other mechanism is needed to assure that tax credits and construction commencement milestones are met.
2. Offsite Option Financial Risk: CE purports to dispute SMRR’s showing that the only two methodologies disclosed to the public for validating the $150k gap financing amount— Staff’s analysis of the gap financing provided to prior completed City funded tax credit projects, and HR&A’s review of a confidential pro forma submitted (presumably by CE) for a tax credit project—are insufficient to validate that figure as sufficient. But CE’s response actually reinforces SMRR’s point. In particular, CE essentially repeats that HR&A found that an OAP with a certain mix of one and two bedroom units, with no parking and no payment of prevailing wages, today would involve a gap financing amount of ~$150k. However, as explained in the SMRR memorandum, (1) Council has not yet said that the only type of OAP it wants built under the AHPP pilot is that specific type, (2) no one has shown that if the City does have to take the project away, that it does not trigger a prevailing wage requirement (which CE acknowledges would make the $150k grossly inadequate), and (3) no one has shown that prevailing wages will have to be paid if the City has to provide additional gap financing (either because it turns out $150k actually is not enough today, or because the limit on pre-escrow deposit of the gap financing amount to 5% per year and/or because the interest available in escrow is less than the increase in construction costs—both of which are very real risks when construction costs have risen 50% over the last five years). Thus, CE has not refuted SMRR’s showing of substantial financial risk to the City with respect to completion of the OAP. provision for expedited, priority process of off-site affordable housing projects to ensure that delays are not attributable to the City.”
3 “If milestones are not met, the City should have the option to redirect the land and funds in escrow to a different affordable partnership that can hit its milestones.” Item 10-A
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Packet Pg. 1098 Attachment: Written Comments [Revision 1] (7403 : Ordinance to Extend the Off-Site Affordable Housing Pilot Program (AHPP)) CE also objects to SMRR’s two recommendations to mitigate this financial risk. First, CE states that SMRR recommended prepayment of the GS tax that will come due on sale of the market rate project. But SMRR did not recommend that. SMRR recommended that—just as the City recently required of RAND Corporation—the City should require pilot participants to agree that in the event the GS is not applicable to the sale of market rate project based on changes in the law, they still will pay the equivalent amount to the GS Homelessness Prevention and Affordable Housing Fund. This provides significant mitigation of the financial risks identified above, as the City will be assured of affordable housing funds if it becomes necessary to supply additional gap financing. And given that the City is acting to facilitate the market rate projects “penciling out” with the GS tax in place, there is no reason to allow the market rate developers to earn a windfall if various political efforts to limit the GS tax somehow succeed before the market rate projects are sold.
Second, CE asserts that SMRR recommended that the gap financing amount be increased to $240k. But SMRR did not recommend that. SMRR merely showed that City Staff’s methodology using gap financing in prior City funded projects—if applied to more recent data— indicated a gap financing amount of at least $240k (and probably more). The proper gap financing amount is for the City to establish, and depends upon the nature of the OAP City Council expects, the risks associated with increasing construction costs, and the risks of paying prevailing wages should the City have to exercise its options and/or add more gap financing.
Finally, CE does not dispute that—as currently written—the City loses its option on the land and the escrowed funds once construction of the OAP begins. CE states that SMRR said the escrow must continue, and objects to that as unnecessary given other security put in place at that point by persons other than the City. But SMRR never said that the escrow must continue. Rather, SMRR stated:
real security for completion of the OAPs must continue past the time building permits are pulled and construction begins. The City is better positioned than SMRR to determine whether this continuing security should be a continued option and construction escrow, a requirement of completion bonding, and/or some other form of security.
In short, SMRR believes it is essential that the City require a commitment to pay into the Homelessness Prevention and Affordable Housing Fund the equivalent amount to the GS tax on the sale of the market rate project in the event the GS tax no longer applies at that time. The City also needs to provide more transparent and convincing support for the gap financing amount. Further, if the City can verify CE’s assertions of adequate security from other sources for completion of construction of the OAP once it begins, SMRR will be satisfied on that point.
3. In-Lieu Fee Option: CE does not address the in-lieu fee option. Staff states that a new nexus study is required to alter the in-lieu fee for the pilot. SMRR understands that nexus studies are required for impact fees / exactions that are based on mitigating costs imposed by a project. That is not what is at issue here—instead, this is about an alternative to satisfying the AHPP through onsite affordable units. Any in-lieu fee in this context should represent what it will take actually to produce through other means the affordable units that the developer otherwise would have had to produce onsite (with some credible plan as Item 10-A
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Packet Pg. 1099 Attachment: Written Comments [Revision 1] (7403 : Ordinance to Extend the Off-Site Affordable Housing Pilot Program (AHPP)) to how the City intends to otherwise create those units). Once that figure is known, it could be adjusted downward if the City wants to encourage payment of such fees in connection with a specific, immediate need for such funds to further concrete affordable housing plans.
4. Other Options: Staff has raised the possibility of extending the pilot program to include offsite moderate housing, and to allow some way of preserving affordable units at-risk of conversion to market rate units. SMRR believes that the City should first concentrate on correcting deficiencies in the offsite option and the in-lieu fee option before looking at other changes (none of which have been sufficiently explained, with enough time for SMRR and other members of the public—or Council—to adequately evaluate). These suggestions should be tabled for now.
5. Pilot Expansion: SMRR recommended that—if its other recommendations are adopted to improve that AHPP pilot, and if other conditions are met relating to City need to act immediately and City verification that it would not interfere with the recent public land Notices of Availability and responses received—the City could expand the pilot to all downtown approved projects or, if that does not put the City in a position to meet its market-rate target for the 6th RHNA Cycle, the additional units outside the downtown needed to put the City in that position.
CE asserts that there is not a competition problem given the size of the 4% program, and that projects should be allowed to go forward outside downtown. SMRR believes only Staff knows what is occurring with respect to the Notices of Availability and the responses, and therefore only Staff can provide the required assurance regarding competition for credits.
The fact that there are many credits does not answer the question, given that the program is oversubscribed already. SMRR also believes that a pilot program logically is limited in scope. SMRR further believes the biggest financial benefit to the City is from more housing in the downtown.
Thank you for considering our views on these important matters.
Sincerely,
Denny Zane Mike Soloff
Co-Chair, Santa Monicans for Renters’ Rights Co-Chair, Santa Monicans for Renters’ Rights Item 10-A
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Packet Pg. 1100 Attachment: Written Comments [Revision 1] (7403 : Ordinance to Extend the Off-Site Affordable Housing Pilot Program (AHPP)) 1 David Yakobson
From: Elizabeth Selby <[email protected]>
Sent: Tuesday, January 13, 2026 11:45 AM
To: Lana Negrete; Caroline Torosis; [email protected]; Dan Hall; Ellis Raskin; Barry Snell; Natalya Zernitskaya; councilmtgitems
Subject: Support for items 10.A and 11.C
EXTERNAL
Dear Mayor Torosis and Councilmembers,
As a 22-year resident of Santa Monica and a municipal affordable housing finance professional, I would like to provide my support to items 10.A and 11.C.
Regarding item 10.A, this program provides flexibility to developers to properly develop and finance Cityapproved multifamily housing projects. While Santa Monica residents continue to have the discretion to provide meaningful oversight of housing produced in the City, flexibility for developers to best address community needs and secure financing drives down costs and speeds production of approved projects. The more quickly a project is developed and the less expensive it is to develop drives rents down. This benefits our entire community.
Regarding item 11.C, I strongly support staff recommendations. These thoughtful and well-researched recommendations preserve environmental health, allow for new units to be built in a manner consistent with the scale of our community, and do not reduce safety outcomes for residents.
As the state becomes increasingly insistent on imposing their will over the will of individual communities, these recommendations are a thoughtful way for the City of Santa Monica to continue to determine our own destiny.
Kind regards,
Elizabeth Selby
Item 10-A
January 13, 2026
Item 10-A
January 13, 2026
10.A.e
Packet Pg. 1101 Attachment: Written Comments [Revision 1] (7403 : Ordinance to Extend the Off-Site Affordable Housing Pilot Program (AHPP)) 1 David Yakobson
From: irena mendez <[email protected]>
Sent: Tuesday, January 13, 2026 9:24 AM
To: Lana Negrete; Caroline Torosis; Barry Snell; Jesse Zwick; Dan Hall; Natalya Zernitskaya; Ellis Raskin
Cc: councilmtgitems
Subject: Request to Void Conflict-Tainted Votes and Require Clean Process Follow Up Flag: Follow up
Flag Status: Completed
EXTERNAL
Dear Mayor and City Councilmembers,
I urge you to vote NO on Agenda Item 11C and take similar action on all housing policy votes in which Councilmember Jesse Zwick participated.
The FPPC confirmed that Mr. Zwick held a disqualifying conflict of interest—his employment advocating for the exact policies he voted on. He proposed, motioned, and seconded these items while disqualified from participating.
Simply ratifying these compromised votes does not restore public trust.
I request that the City Council:
Declare these conflict-tainted votes null and void
Allow items to return ONLY if a councilmember without conflicts chooses to motion for them Require new motions, seconds, and votes through a clean process Our community deserves decisions made with integrity, regardless of where we stand on the policies themselves.
Thank you.
Sincerely,
Halina Mendez
Item 10-A
January 13, 2026
Item 10-A
January 13, 2026
10.A.e
Packet Pg. 1102 Attachment: Written Comments [Revision 1] (7403 : Ordinance to Extend the Off-Site Affordable Housing Pilot Program (AHPP)) 2 David Yakobson
From: greg chasen <[email protected]>
Sent: Tuesday, January 13, 2026 9:13 AM
To: Lana Negrete; Caroline Torosis; Jesse Zwick; Dan Hall; Ellis Raskin; Barry Snell; Natalya Zernitskaya; councilmtgitems
Subject: Support for Items 10.A and 11.C
EXTERNAL
Dear Mayor Torosis and City Council, I support housing, and I support the Council members who are taking action to deliver it. I am writing to express my support for Agenda Items 10.A and 11.C and for the Council’s continued efforts to make it easier to build all kinds of housing in Santa Monica. Removing barriers to housing production is essential if our city is to meet unmet demand, welcome new neighbors, and revitalize the local economy for the future. Thank you for your leadership and commitment to Santa Monica’s long-term success.
Sincerely,
Greg Chasen
1318 10th St.
Item 10-A
January 13, 2026
Item 10-A
January 13, 2026
10.A.e
Packet Pg. 1103 Attachment: Written Comments [Revision 1] (7403 : Ordinance to Extend the Off-Site Affordable Housing Pilot Program (AHPP)) 3 David Yakobson
From: Lindsay Gibson <[email protected]>
Sent: Tuesday, January 13, 2026 9:14 AM
To: Lana Negrete; Caroline Torosis; Jesse Zwick; Dan Hall; Ellis Raskin; Barry Snell; Natalya Zernitskaya; councilmtgitems
Subject: Support for Items 10.A and 11.C
EXTERNAL
Dear Mayor Torosis and City Council,
I support housing, and I support the Council members who are taking action to deliver it.
I am writing to express my support for Agenda Items 10.A and 11.C and for the Council’s continued efforts to make it easier to build all kinds of housing in Santa Monica. Removing barriers to housing production is essential if our city is to meet unmet demand, welcome new neighbors, and revitalize the local economy for the future.
Thank you for your leadership and commitment to Santa Monica’s long-term success.
Sincerely,
Lindsay Gibson
Santa Monica Resident
Item 10-A
January 13, 2026
Item 10-A
January 13, 2026
10.A.e
Packet Pg. 1104 Attachment: Written Comments [Revision 1] (7403 : Ordinance to Extend the Off-Site Affordable Housing Pilot Program (AHPP)) 4 David Yakobson
From: Jacob Pierce <[email protected]>
Sent: Tuesday, January 13, 2026 9:12 AM
To: Caroline Torosis; Lana Negrete; Dan Hall; Ellis Raskin; Natalya Zernitskaya; Barry Snell; Jesse Zwick
Cc: councilmtgitems; Scott Epstein
Subject: Strong support for 10.A and 11.C (Offsite Affordable Housing Program and SB 1123 implementation)
Attachments: AHLA - Off-site Affordble, SB 1123 affirmations.pdf
EXTERNAL
Dear Mayor Torosis and members of the Santa Monica City Council, Abundant Housing LA writes with support for two items your body has already supported, the Offsite Affordable Housing Program and the efficacious implementation of SB 1123.
These are items from 10.A and 11.C, respectively, on tonight's agenda. Your efforts are making it easier to build all kinds of housing in Santa Monica, and these steps are essential to continuing your work to advance a more equitable, affordable and economically vibrant city. Our full letter is attached.
Thank you,
Jacob Pierce
Housing Elements & Policy Analyst
Abundant Housing LA
@jacobpierceLA
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Item 10-A
January 13, 2026
Item 10-A
January 13, 2026
10.A.e
Packet Pg. 1105 Attachment: Written Comments [Revision 1] (7403 : Ordinance to Extend the Off-Site Affordable Housing Pilot Program (AHPP)) 5 David Yakobson
From: Dustin Shahan <[email protected]>
Sent: Tuesday, January 13, 2026 9:25 AM
To: Lana Negrete; Caroline Torosis; Jesse Zwick; Dan Hall; Ellis Raskin; Barry Snell; Natalya Zernitskaya; councilmtgitems
Subject: Support for Items 10.A and 11.C
EXTERNAL
Dear Mayor Torosis and City Council,
I support housing, and I support the Council members who are taking action to deliver it.
I am writing to express my support for Agenda Items 10.A and 11.C and for the Council’s continued efforts to make it easier to build all kinds of housing in Santa Monica. Removing barriers to housing production is essential if our city is to meet unmet demand, welcome new neighbors, and revitalize the local economy for the future.
Thank you for your leadership and commitment to Santa Monica’s long-term success.
Sincerely,
Dustin Shahan
90401
Item 10-A
January 13, 2026
Item 10-A
January 13, 2026
10.A.e
Packet Pg. 1106 Attachment: Written Comments [Revision 1] (7403 : Ordinance to Extend the Off-Site Affordable Housing Pilot Program (AHPP)) 6 David Yakobson
From: Ali F <[email protected]>
Sent: Tuesday, January 13, 2026 9:41 AM
To: Lana Negrete; Caroline Torosis; Jesse Zwick; Dan Hall; Ellis Raskin; Barry Snell; Natalya Zernitskaya; councilmtgitems
Subject: Support for Items 10.A and 11.C
EXTERNAL
Dear Mayor Torosis and City Council, I support housing, and I support the Council members who are taking action to deliver it. I am writing to express my support for Agenda Items 10.A and 11.C and for the Council’s continued efforts to make it easier to build all kinds of housing in Santa Monica. Removing barriers to housing production is essential if our city is to meet unmet demand, welcome new neighbors, and revitalize the local economy for the future. Thank you for your leadership and commitment to Santa Monica’s long-term success. Sincerely, [Your Name] [Santa Monica Resident / Voter] Best,
Ali
Ali Fallahassady
310.591.9172
Item 10-A
January 13, 2026
Item 10-A
January 13, 2026
10.A.e
Packet Pg. 1107 Attachment: Written Comments [Revision 1] (7403 : Ordinance to Extend the Off-Site Affordable Housing Pilot Program (AHPP)) 1 David Yakobson
From: Eli Gill <[email protected]>
Sent: Sunday, January 11, 2026 4:59 PM
To: Lana Negrete; Caroline Torosis; Jesse Zwick; Dan Hall; Ellis Raskin; Barry Snell; Natalya Zernitskaya; councilmtgitems
Subject: Support for Items 10.A and 11.C
EXTERNAL
Dear Mayor Torosis and City Council,
I support housing, and I support the Council members who are taking action to deliver it.
I am writing to express my support for Agenda Items 10.A and 11.C and for the Council’s continued efforts to make it easier to build all kinds of housing in Santa Monica. Removing barriers to housing production is essential if our city is to meet unmet demand, welcome new neighbors, and revitalize the local economy for the future.
Thank you for your leadership and commitment to Santa Monica’s long-term success.
Sincerely,
Eli Gill
Wilmont Resident
Item 10-A
January 13, 2026
Item 10-A
January 13, 2026
10.A.e
Packet Pg. 1108 Attachment: Written Comments [Revision 1] (7403 : Ordinance to Extend the Off-Site Affordable Housing Pilot Program (AHPP)) 1 David Yakobson
From: Sam Shapiro-Kline <[email protected]>
Sent: Monday, January 12, 2026 1:42 PM
To: Lana Negrete; Caroline Torosis; Jesse Zwick; Dan Hall; Ellis Raskin; Barry Snell; Natalya Zernitskaya; councilmtgitems
Subject: Support for Items 10.A and 11.C
EXTERNAL
Dear Mayor Torosis and City Council,
I support housing, and I support the Council members who are taking action to deliver it.
I am writing to express my support for Agenda Items 10.A and 11.C and for the Council’s continued efforts to make it easier to build all kinds of housing in Santa Monica. Removing barriers to housing production is essential if our city is to meet unmet demand, welcome new neighbors, and revitalize the local economy for the future.
Thank you for your leadership and commitment to Santa Monica’s long-term success.
Sincerely,
Sam Shapiro-Kline
90403
Item 10-A
January 13, 2026
Item 10-A
January 13, 2026
10.A.e
Packet Pg. 1109 Attachment: Written Comments [Revision 1] (7403 : Ordinance to Extend the Off-Site Affordable Housing Pilot Program (AHPP)) 1/12/2026
Santa Monica City Council
1685 Main Street
Santa Monica CA 90401
Subject: Support for Items 10.A and 11.C
Dear Mayor Torosis and members of the Santa Monica City Council, Abundant Housing LA writes with support for two items your body has already supported, the Offsite Affordable Housing Program and the efficacious implementation of SB 1123.
Together, these items represent a critical step in addressing Santa Monica’s housing shortage, and it is imperative that you continue to lead on this issue. Abundant Housing LA strongly supports these programs, which serve invaluable and related ends in efforts to advance justice and inclusion in the community and beyond. The Off-Site Affordable Housing Program (10.A) ensures the feasibility of multifamily housing construction at multiple levels of affordability. We encourage you to, again, extend and expand the Off-site Affordable Housing Pilot Program.
The SB 1123 item (11.C) implements state law to legalize small-lot starter homes to create more for-sale missing-middle housing, with an additional provision to allow accessory dwelling units.
This program must be properly calibrated to ensure projects on vacant single-family parcels are both legally permitted and also financially and physically feasible. We respectfully urge you to adopt the staff recommendations.
These steps are essential to continuing your work to advance a more equitable and affordable Santa Monica.
Thank you,
Azeen Khanmalek
Executive Director
Abundant Housing LA
Item 10-A
January 13, 2026
Item 10-A
January 13, 2026
10.A.e
Packet Pg. 1110 Attachment: Written Comments [Revision 1] (7403 : Ordinance to Extend the Off-Site Affordable Housing Pilot Program (AHPP)) 1 David Yakobson
From: Santa Monica Forward <[email protected]> Sent: Monday, January 12, 2026 1:51 PM
To: Lana Negrete; Caroline Torosis; Jesse Zwick; Dan Hall; Ellis Raskin; Barry Snell; Natalya Zernitskaya; councilmtgitems
Subject: Support for Items 10.A and 11.C
EXTERNAL
Dear Mayor Torosis and City Council,
Santa Monica Forward supports housing, and I support the Council members who are taking action to deliver it.
We are writing in support for Agenda Items 10.A and 11.C and for the Council’s continued efforts to make it easier to build all kinds of housing in Santa Monica. Removing barriers to housing production is essential if our city is to meet unmet demand, welcome new neighbors, and revitalize the local economy for the future. Additionally, it is crucial that the city does not expose itself to legal liability by attempting to change the terms of the interim ordinance establishing the offsite affordable housing program.
Thank you for your leadership and commitment to Santa Monica’s long-term success.
Sincerely,
Sam Shapiro-Kline and Brad Ewing
Co-Chairs, Santa Monica Forward
--
We are working for a diverse, progressive, sustainable and equitable Santa Monica.
SantaMonicaForward.org
Item 10-A
January 13, 2026
Item 10-A
January 13, 2026
10.A.e
Packet Pg. 1111 Attachment: Written Comments [Revision 1] (7403 : Ordinance to Extend the Off-Site Affordable Housing Pilot Program (AHPP)) Off-Site Affordable Housing
Pilot Incentive Program
City Council
January 13, 2026
Item 10-A
January 13, 2026
Item 10-A
January 13, 2026
10.A.f
Packet Pg. 1112 Attachment: PowerPoint Presentation (7403 : Ordinance to Extend the Off-Site Affordable Housing Pilot Purpose
• On June 10, 2025, Council gave direction to staff to “establish a pilot program allowing market-rate housing projects more flexibility in how they provide affordable housing units off-site, while also allowing these housing projects to be eligible for density bonus, incentives/concessions, and modifications.”
• On August 12, 2025, Council approved an emergency ordinance to establish the Off-Site Affordable Housing Pilot Program to first 1,000 units or September 30, 2026
• On September 30, 2025, Council received an update of the Pilot Program and gave direction to amend and extend the program for additional multiple unit housing projects, subject to certain conditions Summary
Item 10-A
January 13, 2026
Item 10-A
January 13, 2026
10.A.f
Packet Pg. 1113 Attachment: PowerPoint Presentation (7403 : Ordinance to Extend the Off-Site Affordable Housing Pilot AHPP Pilot Program Overview
• Approved on August 12, 2025 in Section 9.64.065 of the SMMC as Emergency Ordinance
• Recommended action for Council to introduce for first reading a regular ordinance to codify the AHPP pilot program (Section
9.64.065 of the Santa Monica Municipal Code) for the applications for 1000 units, filed and pending prior to September 30, 2025, with the same terms and conditions as the August 12 emergency ordinance . • This action is recommended out of an abundance of caution in light of the advice from the FPPC and the timing of Council Member Zwick’s employment with Housing Action Coalition.
Item 10-A
January 13, 2026
Item 10-A
January 13, 2026
10.A.f
Packet Pg. 1114 Attachment: PowerPoint Presentation (7403 : Ordinance to Extend the Off-Site Affordable Housing Pilot Be multiple-unit project of 6 units or more
Have obtained final approval of all required discretionary and ministerial City permits, on or before August 12, 2025
AB130 time limits do not apply to previously approved projects Cannot be under construction or have been completed
A previously approved project can be redesigned and approved prior to December 31, 2026
Could use new standards for housing projects and new pilot program potentially resulting in more units
Limited to first 1,000 units
AHPP Pilot Program Overview
Item 10-A
January 13, 2026
Item 10-A
January 13, 2026
10.A.f
Packet Pg. 1115 Attachment: PowerPoint Presentation (7403 : Ordinance to Extend the Off-Site Affordable Housing Pilot Pilot Program Options
• Option 1: Alternative Site
• Construct same number of off-site affordable units (all lower income) after the market rate project begins construction • Pay gap financing at $150,000 per unit (assumes 4% tax credits) • Option 2: Rehabilitation Option
• Complete substantial rehabilitation of existing units in a number equivalent to required off-site affordable units
• Option 3: In-Lieu Fee Option
• Pay in-lieu fee of $43.91/sf for apartments and $51.30/sf for condominiums per off-site affordable housing unit (adjusted annually) into Housing Trust fund
AHPP Pilot Program Overview
Item 10-A
January 13, 2026
Item 10-A
January 13, 2026
10.A.f
Packet Pg. 1116 Attachment: PowerPoint Presentation (7403 : Ordinance to Extend the Off-Site Affordable Housing Pilot AHPP Pilot Program Extension
• Council on September 30, 2025, provided direction to extend program for new projects but with the following additional conditions:
Program Option for At Risk Units
Community Benefit Payment
Increase Gap Financing Amount
Strong Enforceable Milestones
Long Term affordability protections
• New Ordinance for Extension would be added as Section 9.64.075 • Additional edits since publication of Council Staff Report are proposed and indicated in Green of this presentation
Item 10-A
January 13, 2026
Item 10-A
January 13, 2026
10.A.f
Packet Pg. 1117 Attachment: PowerPoint Presentation (7403 : Ordinance to Extend the Off-Site Affordable Housing Pilot SMMC Section 9.64.075
Option 1 Gap Financing: Gap financing amount for new program applicants is increased to $160,000 per unit, to be reviewed and updated annually based on the ENR Building Cost index. Program Option for At-Risk Units: New option to purchase covenants for at-risk units (i.e., affordable-deed restricted units with covenants at risk of expiring) and record an extension of the covenant for a term of 75 years.
• Units must be deemed by City Manager that the structural condition of the property supports the purchase of at-risk covenants and the 75 year extension
Item 10-A
January 13, 2026
Item 10-A
January 13, 2026
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Packet Pg. 1118 Attachment: PowerPoint Presentation (7403 : Ordinance to Extend the Off-Site Affordable Housing Pilot SMMC Section 9.64.075
Community Benefit Payment: In the event that Measure GS is no longer in place, applicant must pay a Community Benefit Payment • Applies to the first transfer of a multiple-unit project (or its property) and is equal to 5.0% of the amount of consideration or value of that transfer or
• If the City’s Third Tier Tax Rate is reduced for any reason, applicant must pay the reduced amount plus the difference between 5.0% of first transfer payment above and the reduced amount ·
Item 10-A
January 13, 2026
Item 10-A
January 13, 2026
10.A.f
Packet Pg. 1119 Attachment: PowerPoint Presentation (7403 : Ordinance to Extend the Off-Site Affordable Housing Pilot SMMC Section 9.64.075
Enforceable Milestones for Option 1 for Construction of Off-Site Units:
• Prior to issuance of a building permit for the first market rate project, applicant must submit a complete entitlement application for the off-site affordable housing project.
• Prior to receiving a CofO for the first market rate project, applicant must submit construction plans for the off-site affordable housing project.
• Off-site affordable housing construction must commence within 48 months of issuance of the first building permit for any market-rate project (or 18 months for Coastal Zone projects), unless City grants extension
• If construction does not commence on time, the City may exercise its option to acquire the off-site property and may retain the Gap Financing Amount.
Item 10-A
January 13, 2026
Item 10-A
January 13, 2026
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Packet Pg. 1120 Attachment: PowerPoint Presentation (7403 : Ordinance to Extend the Off-Site Affordable Housing Pilot SMMC Section 9.64.075
Long Term Affordability Protections: Applicant must record a Right of First Refusal Agreement on that off-site property.
• The City has the first opportunity to purchase the off-site property before it can be sold to any third party.
• If the property owner receives a purchase offer, the City may choose to match that offer and acquire the property, or allow the sale to proceed.
Item 10-A
January 13, 2026
Item 10-A
January 13, 2026
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Packet Pg. 1121 Attachment: PowerPoint Presentation (7403 : Ordinance to Extend the Off-Site Affordable Housing Pilot Recommended Actions • Adopt CEQA findings • Introduce for first reading a regular ordinance to:
1. Codify the AHPP pilot program (Section 9.64.065 of the Santa Monica Municipal Code) for the applications for 1000 units, filed and pending prior to September 30, 2025, with the same terms and conditions as the emergency ordinance presented to Council on August 12, 2025; and
2. Codify the expansion of the AHPP pilot program (Section 9.64.075 of the Santa Monica Municipal Code) beyond the 1000 units approved, but with different conditions and requirements
Item 10-A
January 13, 2026
Item 10-A
January 13, 2026
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Packet Pg. 1122 Attachment: PowerPoint Presentation (7403 : Ordinance to Extend the Off-Site Affordable Housing Pilot Questions?
Item 10-A
January 13, 2026
Item 10-A
January 13, 2026
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Packet Pg. 1123 Attachment: PowerPoint Presentation (7403 : Ordinance to Extend the Off-Site Affordable Housing Pilot Redevelopment Successor
Agency Report
City Council Meeting: January 13, 2026
Agenda Item: 11.A
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To: Redevelopment Successor Agency
From: Oscar Santiago, Director, Finance Department
Subject: Adoption of Resolution Authorizing Issuance of Tax Allocation Refunding Bonds, Series 2026 (refinancing of the 2006 TABs and the 2011 TABs) Recommended Action
Staff recommends that the Successor Agency:
1. Adopt the attached Resolution Authorizing Issuance of Tax Allocation Refunding Bonds and approving the related documents and other actions in connection with the issuance of Tax Allocation Refunding Bonds (Attachments A, B, C, D and E).
2. Adopt a finding of no possibility of significant effect pursuant to Section 15061(b)(3) (Common Sense Exemption) of the California Environmental Quality Act (CEQA) Guidelines.
Summary
Staff is requesting that the Successor Agency to the Redevelopment Agency of the City of Santa Monica (Successor Agency) adopt the attached Resolution (Attachment A) approving the issuance of tax allocation refunding bonds in one or more series (2026 Bonds) for the purpose of refunding all or a portion of the prior Series 2006 and Series 2011 Bonds (together, Prior Bonds). The Prior Bonds are currently outstanding in the amount of $56,925,000. This transaction would take advantage of a reduction in interest rates since the Prior Bonds were issued.
If approved, the refinance is expected to result in gross savings of around $12.2 million over the life of the issuance, which is equivalent to a net present value savings of approximately $7.0 million. This will equate to an average annual reduction in total debt service payments of approximately $763,263 per year.
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This reduction in annual debt service payments will result in freed up property tax monies available for redistribution to affected taxing entities, which will result in the City realizing a cost savings of around $106,000 per year. The net proceeds of the issuance of the proposed 2026 Bonds would be used to refund the Prior Bonds and to pay the costs incurred in connection with the issuance of the 2026 Bonds.
Background
Pursuant to Assembly Bill No. 1X 26, as modified by Assembly Bill No. 1484 and as further modified by Senate Bill No. 107, which added Parts 1.8 and 1.85 to Division 24 of the Health and Safety Code (Dissolution Act), the former Redevelopment Agency for the City of Santa Monica (Former Agency) was dissolved on February 1, 2012 and the Successor Agency to the Redevelopment Agency for the City of Santa Monica (Successor Agency) was vested with all authority, rights, powers, duties and obligations of the Former Agency.
Health and Safety Code Section 34177.5(a)(1) authorizes successor agencies to refinance outstanding debt obligations to produce debt service savings. A successor agency is generally not permitted to issue bonds that would increase the overall indebtedness of the successor agency or provide additional proceeds to be expended, but it can issue bonds to refund prior debt obligations and effectuate debt service savings. In such circumstances, the successor agency’s debt service payments will be reduced, generating additional revenues as residual Redevelopment Property Tax Trust Fund moneys to all taxing entities within the redevelopment project area. Successor Agency staff has identified such an opportunity which is presented in this report.
In December 1999, the Former Agency issued tax-exempt tax allocation bonds for redevelopment purposes. In March 2006, the Former Agency approved the issuance of Earthquake Recovery Redevelopment Project 2006 Tax Allocation Bonds, Series A and Series B (2006 Bonds), to refund the 1999 Bonds and take advantage of a reduction in
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interest rates since the bonds were first issued. In May 2011, the Former Agency approved the issuance of Earthquake Recovery Redevelopment Project 2011 Tax Allocation Bonds (2011 Bonds) to help fund priority redevelopment projects.
Presently, the 2006 Bonds and 2011 Bonds (Prior Bonds) are outstanding in the aggregate principal amount of $56,925,000 and are eligible for prepayment on any date at par plus accrued interest, without premium. The final maturity for the Prior Bonds is July 1, 2042. Staff has determined, in consultation with the Successor Agency’s Municipal Advisor, that the current market conditions are favorable for the issuance of refunding bonds to refund and defease the Prior Bonds for debt service savings pursuant to Health and Safety Code Section 34177.5(a)(1).
The Successor Agency Board is asked to approve the issuance by the Successor Agency of tax allocation refunding bonds (2026 Bonds) in one or more series to refund all or a portion of the Prior Bonds for debt service savings in accordance with the Dissolution Act and to approve forms of various bond documents and related actions.
The resolution includes a not to exceed par amount of $58,000,000 to allow for potential changes in market conditions, bond structure, or financing assumptions before the bonds are priced and sold.
If the Successor Agency Board approves the proposed financing, the Los Angeles County Third Supervisorial District Consolidated Oversight Board (Oversight Board) will consider approving the proposed financing at its meeting on February 10, 2026. If the Oversight Board approves the issuance of the 2026 Bonds, then the Oversight Board action will be subject to approval by the Department of Finance (“DOF”). Pursuant to Health and Safety Code Section 34177.5(f), DOF has up to 65 days to review the Oversight Board’s action, which is expected to conclude in late April 2026. Around that time, staff will return to the Successor Agency Board for approval of the Preliminary Official Statement and Continuing Disclosure Certificate related to the 2026 Bonds.
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Discussion
The proposed 2026 Bonds are estimated to have a par amount of $51.5 million and a final maturity of July 1, 2042. Final interest rates and the resulting savings will not be determined until the 2026 Bonds are marketed to potential investors and the Successor Agency’s receives an offer to purchase the 2026 Bonds from the underwriter in the form of a bond purchase agreement and the Successor Agency accepts the offer. This process is often referred to as the “pricing” of the bonds. The Successor Agency is responsible for ensuring that the requirements of the Dissolution Act, including the debt service savings requirement, are met when the 2026 Bonds are priced. Debt service for the 2026 Bonds will be supported by a pledge of all property tax revenues deposited into the Successor Agency’s Redevelopment Property Tax Trust Fund, after payment of pass-through obligations and certain other obligations of the Successor Agency.
The Dissolution Act permits successor agencies to refund outstanding bonds and other obligations of a former redevelopment agency, subject to the approval of the successor agency, Oversight Board and the California Department of Finance. Because the impact of the refunding would be to reduce the interest costs associated with the Prior Bonds, it is anticipated that DOF will not object to the action.
As shown in the Municipal Advisor Report attached hereto as Attachment E, based on market conditions as of December 8, 2025, it is anticipated that a current refunding of the Prior Bonds will produce net present value savings of approximately $7.0 million over the life of the indebtedness and an annual average reduction in bond payments of $763,000 between 2027 and 2042. However, the total level of savings will depend upon market conditions at the time the 2026 Bonds are priced.
Table1: Summary of Savings Results for the 2026 Bonds*
Net Present Value Savings ($) $6,969,245
Net Present Value Savings (% of Par Value Refunded) 12.2% Avg. Annual Savings (Bond Year 2027-2042) $763,000
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Total Debt Service Savings $12,216,710
*Estimated savings are based on market rates as of December 8, 2025; subject to change.
Presently, the average annual debt service for the Prior Bonds through 2042 is $4,926,000. After the refunding, using market conditions as of December 8, 2025, the average annual debt service is $4,163,000. The reduction in annual debt service payments frees up additional property tax revenues for distribution to affected taxing entities. Below is a summary of the potential savings each taxing entity would receive through their allocated redevelopment property tax trust fund (RPTTF) distribution, based on total debt service savings of $12.2 million.
Table 2: Savings Distribution
Total Gross Average Annual
Dollar Savings Dollar Savings
From Bond Sizing Dated December 8, 2025 $12,216,710 $763,263 City of Santa Monica 13.93% $1,702,033 $106,338
Santa Monica-Malibu USD 17.26% 2,109,143 131,773
Los Angeles County (inc. Fire & Flood) 41.67% 5,090,230 318,022 Santa Monica CCD 4.26% 519,948 32,485
ERAF (State) 22.21% 2,713,679 169,542
Los Angeles County Office of Education 0.49% 59,494 3,717 Other 0.19% 23,519 1,469
Staff recommends adoption of the attached Resolution (Attachment A). The Resolution approves all documents and actions needed for the issuance of the 2026 Bonds, including the following substantially final form financing documents together with any changes or additions deemed advisable and approved by any Authorized Officer:
• Indenture of Trust between the Successor Agency and the Trustee (U.S. Bank), which sets forth the material terms and provisions relating to the 2026 Bonds and whereby the Trustee agrees to certain rights and duties related to the 2026 Bonds.
• Form of Escrow Agreement between the Successor Agency and the Escrow Agent (U.S. Bank), containing terms by which the Escrow Agent will hold the
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2026 Bond proceeds on behalf of the owners of the Prior Bonds to pay and discharge these Bonds on the redemption date, and give proper notice to the owners.
• Bond Purchase Agreement between the Successor Agency and the Underwriter of the 2026 Bonds (Stifel, Nicolaus & Company, Incorporated), pursuant to terms and provisions of which the 2026 Bonds will be sold with a negotiated method of sale, such terms and provisions including an underwriter’s discount not to exceed
0.70% of the principal amount of the 2026 Bonds.
It is anticipated that staff will return to the Successor Agency for approval of the Preliminary Official Statement and Continuing Disclosure Certificate related to the 2026 Bonds in March 2026. The Preliminary Official Statement and Continuing Disclosure Certificate will be required to market and sell the 2026 Bonds.
Environmental Review
The authorization of the issuance of tax allocation refunding Bonds are exempt from CEQA pursuant to Section 15061(b)(3) of the CEQA Guidelines. The proposal is covered by the common sense exemption which states that CEQA does not apply, “where it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment.” If enacted, the issuance of tax allocation refunding Bonds would create revenue and promote equity for the City.
Therefore, it can be seen with certainty that actions would not result in adverse physical impacts on the environment, and as such, is categorically exempt from CEQA Financial Impacts and Budget Actions
As illustrated in table 1 above, an estimated $7.0 million in net present value savings and $12.2 million in total debt service savings would be generated by refinancing the Prior Bonds. Savings would be distributed among various taxing entities, including the City. It is estimated that the refinancing will result in an average annual increase of $106,000 in property tax revenues to the City.
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7 of 7
In accordance with California Government Code Section 5852.1, good faith estimates of certain financial aspects of the 2026 Bonds are provided with respect to the 2026 Bonds as an attachment to the Resolution.
Other accounts required to record transactions related to the bond issuance and debt service payments are listed in the table below. Any necessary budget changes will be incorporated into the budget after the bonds are issued and exact amounts are known.
The following transactions would be required to effectuate the bond refunding transaction.
Description Account Est. Amount
2026 RDA Refunding Bonds 43.2xxxxx $58,000,000
2011 RDA Bonds
2006 RDA Refunding Bonds
43.227351
43.227341
($15,875,000)
($41,050,000)
Bond Issuance Costs 43800004.5xxxxx $750,000
RPTTF residuals 01800004.400070 $106,000
Prepared By: Oscar Santiago, Director
Approved Forwarded to Council
Attachments:
A. Attachment A - Successor Agency Resolution
B. Attachment B - Indenture of Trust
C. Attachment C - Form Escrow Agreement
D. Attachment D - Bond Purchase Agreement
E. Attachment E - Municipal Advisor Report
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Packet Pg. 1130
RESOLUTION NO. ___ (SA)
RESOLUTION OF THE SUCCESSOR AGENCY TO THE
REDEVELOPMENT AGENCY OF THE CITY OF SANTA
MONICA AUTHORIZING THE ISSUANCE AND SALE OF
TAX ALLOCATION REFUNDING BONDS IN AN AMOUNT
OF NOT TO EXCEED $58,000,000, AND APPROVING THE
FORM OF AN INDENTURE OF TRUST, A FORM OF
ESCROW AGREEMENT, AND A FORM OF BOND
PURCHASE AGREEMENT, AND AUTHORIZING CERTAIN
OTHER ACTIONS IN CONNECTION THEREWITH
WHEREAS, the Redevelopment Agency for the City of Santa Monica (the “Former Agency”) was a public body, corporate and politic, duly created, established and authorized to transact business and exercise its powers under and pursuant to the provisions of the Community Redevelopment Law (Part 1 of Division 24 of the Health and Safety Code of the State of California (commencing with Section 33000) including for all purposes the Community Redevelopment Financial Assistance and Disaster Project Law (commencing with Section 34000 of the Health and Safety Code) (collectively, the “Law”), and the powers of the Former Agency included the power to issue bonds for any of its corporate purposes; and
WHEREAS, a redevelopment plan for the Santa Monica Earthquake Recovery Redevelopment Project (the “Project Area”) within the City of Santa Monica, California (the “City”) was adopted and approved, and amended from time to time (as so amended, the “Redevelopment Plan”), in compliance with all requirements of the Law, and all requirements of law for and precedent to the adoption and approval of the Redevelopment Plan, have been duly complied with; and
WHEREAS, on June 28, 2011, the California Legislature adopted ABx1 26 (the “Dissolution Act”) and ABx1 27 (the “Opt-in Bill”); and
WHEREAS, the California Supreme Court subsequently upheld the provisions of the Dissolution Act and invalidated the Opt-in Bill, resulting in the dissolution of the redevelopment component of the Former Agency as of February 1, 2012; and WHEREAS, the Former Agency’s redevelopment powers, assets and obligations were transferred on February 1, 2012 to the Successor Agency to the Redevelopment Agency of the City of Santa Monica (the “Successor Agency”); and
WHEREAS, on or about June 27, 2012, the Dissolution Act was amended pursuant to AB1484, adopted as a trailer bill in connection with the 2012-13 California Budget; and WHEREAS, prior to its dissolution, the Former Agency issued the following bonds, among others, to finance and refinance redevelopment activities within or of benefit to the Project Area (collectively, the “Prior Bonds”): (i) the Redevelopment Agency of the City of Santa Monica Earthquake Recovery Redevelopment Project 2006 Tax Allocation Refunding Bonds, Series A; and (ii) the Redevelopment Agency of the City of Santa Monica Earthquake Recovery Redevelopment Project 2011 Tax Allocation Bonds; and
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Packet Pg. 1131 Attachment: Attachment A - Successor Agency Resolution (7425 : Adoption of Resolution Authorizing Issuance of Tax Allocation Refunding 2 WHEREAS, Section 34177.5(a)(1) of the Health and Safety Code authorizes successor agencies to refund outstanding bonds or other indebtedness provided that (i) the total interest cost to maturity on the refunding bonds or other indebtedness, plus the principal amount of the refunding bonds or other indebtedness, does not exceed the total remaining interest cost to maturity on the bonds or other indebtedness to be refunded, plus the remaining principal of the bonds or other indebtedness to be refunded, and (ii) the principal amount of the refunding bonds or other indebtedness does not exceed the amount required to defease the bonds or other indebtedness to be refunded, to establish customary debt service reserves and to pay related costs of issuance (collectively, the “Savings Parameters”); and
WHEREAS, the Successor Agency now desires to authorize and approve the issuance of one or more series of tax allocation refunding bonds (the “2026 Bonds”) in an aggregate principal amount sufficient to refund all or a portion of the Prior Bonds, and to irrevocably set aside proceeds of the 2026 Bonds in one or more separate escrow funds or accounts which will be used to refund the outstanding Prior Bonds being refunded, to pay costs in connection with the issuance of the 2026 Bonds and to make certain other deposits as required by the Indenture (as defined below); and WHEREAS, the Successor Agency has caused its municipal advisor, Urban Futures, Inc. (the “Municipal Advisor”), to prepare an analysis (the “Municipal Advisor Work Product”) to demonstrate that the issuance of the 2026 Bonds to refund the Prior Bonds will meet the Savings Parameters; and
WHEREAS, the 2026 Bonds will be secured by a pledge of property tax revenues authorized by Section 34177.5(a) and (g) of the Health and Safety Code, and will be issued pursuant to the provisions of Article 11 of Chapter 3 of Part 1 of Division 2 of Title 5 of the California Government Code; and
WHEREAS, the Successor Agency wishes to approve matters relating to the issuance and sale of the 2026 Bonds; and
WHEREAS, the Successor Agency previously adopted a Debt Management Policy that complies with Section 8855(i) of the California Government Code (the “Debt Management Policy”), and the sale and issuance of the 2026 Bonds as contemplated by this Resolution complies with the Debt Management Policy; and
WHEREAS, good faith estimates of certain information relating to the 2026 Bonds are disclosed and set forth in Exhibit A attached to this Resolution as required by Section 5852.1 of the Government Code; such estimates were provided by the Municipal Advisor based on preliminary bond pricing information provided by Stifel, Nicolaus & Company, Incorporated, as the underwriter of the 2026 Bonds;
NOW THEREFORE, THE SUCCESSOR AGENCY TO THE REDEVELOPMENT
AGENCY OF THE CITY OF SANTA MONICA, DOES HEREBY RESOLVE AS FOLLOWS:
Section 1. All of the recitals herein contained are true and correct and the Successor Agency so finds.
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Packet Pg. 1132 Attachment: Attachment A - Successor Agency Resolution (7425 : Adoption of Resolution Authorizing Issuance of Tax Allocation Refunding 3 Section 2. The Successor Agency hereby finds that there are significant potential savings available to the Successor Agency and to applicable taxing entities in compliance with the Savings Parameters as a result of the use of proceeds of the 2026 Bonds to refund the Prior Bonds as described herein, as evidenced by the Municipal Advisor Work Product, which Municipal Advisor Work Product is hereby approved.
Section 3. Subject to the provisions of the Indenture referred to in Section 2 hereof, the issuance of the 2026 Bonds, in one or more series, on a taxable or tax-exempt basis, and from time to time, in an aggregate principal amount of not to exceed $58,000,000, or such lesser amount as is sufficient to refund all or a portion of the Prior Bonds for the purpose of achieving debt service savings in accordance with the Savings Parameters and the pledge of property tax revenues to the 2026 Bonds pursuant to the Indenture approved by Section 2 of this Resolution (as authorized by Code Section 34177.5(a) and (g) of the Health and Safety Code) is hereby approved on the terms and conditions set forth in, and subject to the limitations specified in, the Indenture. The 2026 Bonds will be dated, will bear interest at the rates, will mature on the dates, will be issued in the form, will be subject to redemption, and will be as otherwise provided in the Indenture, as the same will be completed as provided in this Resolution. The proceeds of the sale of the 2026 Bonds shall be applied as provided in the Indenture. The 2026 Bonds may be issued as a single issue, or from time to time, in separate series of taxable or tax-exempt bonds, as the Successor Agency shall determine.
The approval of the issuance of the 2026 Bonds by the Successor Agency and the Los Angeles County Third Supervisorial District Consolidated Oversight Board (the “Oversight Board”) shall constitute the approval of each and every separate series of 2026 Bonds and the sale of the 2026 Bonds at a public or private sale, without the need for any further approval from the Oversight Board.
Section 4. The form of the Indenture of Trust (the “Indenture”) presented herewith, providing for the issuance of the 2026 Bonds, is hereby approved. The City Manager and the Finance Director of the City, or their respective written designee (each an “Authorized Officer” and collectively, the “Authorized Officers”), acting on behalf of the Successor Agency, are, and each of them is, hereby authorized and directed, for and in the name of the Successor Agency, to execute and deliver the Indenture, in substantially said form, with such changes therein as the Authorized Officer executing the same may require or approve, such requirement or approval to be conclusively evidenced by the execution and delivery thereof. If the Bonds are to be sold in separate series at different times, each of the Authorized Officers is hereby authorized and directed in the name of the Successor Agency to execute any supplement to the Indenture to provide for the issuance of such series of 2026 Bonds consistent with the terms of the Resolution.
Each of the Authorized Officers is hereby authorized and directed to execute and countersign each of the 2026 Bonds on behalf of the Successor Agency, either manually or in facsimile, and such signing as herein provided shall be a sufficient and binding execution of the 2026 Bonds on behalf of the Successor Agency. In case either of such officers whose signature appears on the 2026 Bonds shall cease to be such officer before the delivery of the 2026 Bonds, such signature shall nevertheless be valid and sufficient for all purposes as though such officer had remained in office until the delivery of the 2026 Bonds.
Section 5. The form of Escrow Agreement presented herewith is hereby approved. The Authorized Officers are, and each of them is, hereby authorized and directed, for and in the name of the Successor Agency, to execute and deliver one or more Escrow Agreements for each of the Prior Bonds in substantially said form, with such changes therein as the Authorized Officer executing the
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Packet Pg. 1133 Attachment: Attachment A - Successor Agency Resolution (7425 : Adoption of Resolution Authorizing Issuance of Tax Allocation Refunding 4 same may require or approve, such requirement or approval to be conclusively evidenced by the execution and delivery thereof by an Authorized Officer.
Section 6. The form of the Bond Purchase Agreement (the “Bond Purchase Agreement”) between the Successor Agency and Stifel, Nicolaus & Company, Incorporated, as underwriter, in the form presented herewith is hereby approved. The Authorized Officers are, and each of them is, hereby authorized and directed, for and in the name of the Successor Agency, to execute and deliver the Bond Purchase Agreement in substantially said form, with such changes therein as the Authorized Officer executing the same may require or approve, such requirement or approval to be conclusively evidenced by the execution and delivery thereof by an Authorized Officer; provided, however, that the Bond Purchase Agreement shall be signed only if the underwriter’s discount (exclusive of original issue discount) does not exceed 0.70% of the principal amount of the 2026 Bonds and shall be consistent with the parameters for the sale of the 2026 Bonds set forth in this Resolution.
Section 7. Anzel Galvan LLP is hereby approved and appointed as Bond Counsel and Disclosure Counsel, Urban Futures, Inc. is hereby approved and appointed as Municipal Advisor, and HDL Coren & Cone is hereby appointed as Fiscal Consultant. Each of the Authorized Officers, acting alone, is hereby authorized and directed to execute agreements with said firms and companies, in forms as shall be approved by an Authorized Officer. Additionally, U.S. Bank Trust Company, National Association is hereby appointed as Trustee and Escrow Agent, and Stifel, Nicolaus & Company, Incorporated is hereby selected as the underwriter of the 2026 Bonds, each to provide such services and any other related services as may be required to issue the 2026 Bonds and to defease and/or refund the Prior Bonds.
Section 8. The Successor Agency hereby certifies that the Debt Management Policy complies with Section 8855(i) of the Government Code, and that the refunding of the Prior Bonds as described in this Resolution and its obligations under the Indenture as contemplated by this Resolution are in compliance with the Debt Management Policy, and to the extent the sale and issuance of the 2026 Bonds is not in compliance with the Debt Management Policy, such noncompliance is waived in accordance with the terms of the Debt Management Policy. The Successor Agency further instructs Anzel Galvan LLP, as Bond Counsel, on behalf of the Successor Agency, with respect to the 2026 Bonds, (a) to cause notices of the proposed sale and final sale of the 2026 Bonds to be filed in a timely manner with the California Debt and Investment Advisory Commission pursuant to Section 8855 of the Government Code, and (b) to certify, on behalf of the Successor Agency, that the Debt Management Policy complies with Section 8855(i) of the Government Code in the notice of proposed sale filed pursuant to said Section 8855.
Section 9. The Successor Agency hereby finds and determines, based on all evidence and testimony contained in the record, that the Successor Agency has made diligent efforts to ensure that the lowest long-term cost financing will be obtained for the 2026 Bonds, that the financing shall not provide for any bullets or spikes and shall not use variable rates and that the Successor Agency has retained the Municipal Advisor in developing financing proposals. The Successor Agency hereby further authorizes and the directs the City Clerk of the City, as Secretary of the Successor Agency, to file the Municipal Advisor Work Product, together with a certified copy of this Resolution, with the Oversight Board, and, as provided in Section 34180(j) of the Health and Safety Code, with the Los Angeles County Administrative Officer, the Los Angeles County Auditor-Controller, and the California Department of Finance.
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Packet Pg. 1134 Attachment: Attachment A - Successor Agency Resolution (7425 : Adoption of Resolution Authorizing Issuance of Tax Allocation Refunding 5 Section 10. Each of the Authorized Officers and other appropriate officers of the Successor Agency, acting alone, is authorized and directed, jointly and severally, to do any and all things and to execute and deliver any and all documents and contracts that they may deem necessary or advisable in order to consummate the sale, execution and delivery of the 2026 Bonds and otherwise to carry out, give effect to and comply with the terms and intent of this Resolution, the 2026 Bonds, the Indenture, the Escrow Agreements, the Bond Purchase Agreement, each in order to facilitate the issuance of the 2026 Bonds and otherwise to carry out, give effect to and comply with the terms and intent of this Resolution, including, without limitation, to amend any of the legal documents entered in connection with the Prior Bonds in order to effectuate the defeasance and refunding of such Prior Bonds, to execute irrevocable refunding instructions with respect to the Prior Bonds, to secure municipal bond insurance for any or all of the 2026 Bonds and/or a debt service reserve policy to fund any reserve account or fund established for the 2026 Bonds, if available (which may include entering into a mutual insurance agreement(s) therefor), to request subordination of any amounts required to be paid to an affected taxing entity to any or all of the 2026 Bonds, as the Authorized Officer may require or approve, in consultation with Bond Counsel and the Successor Agency’s municipal advisor, and any such actions heretofore taken by such officers in connection therewith are hereby ratified, confirmed and approved.
Section 11. If any provision of this Resolution or the application of any such provision to any person or circumstance is held invalid, such invalidity shall not affect other provisions or applications of this Resolution that can be given effect without the invalid provision or application, and to this end the provisions of this Resolution are severable. The Successor Agency declares that it would have adopted this Resolution irrespective of the invalidity of any particular portion of this Resolution.
Section 12. This Resolution shall take effect immediately upon its adoption and the City Clerk, as Secretary of the Successor Agency, shall certify the vote adopting this resolution.
APPROVED AS TO FORM:
Heidi Von Tongeln
Interim Successor Agency General
Counsel
Adopted and approved by the Successor Agency to the Redevelopment Agency for the City of Santa Monica, this 13th day of January 2026.
Caroline Torosis
Chair
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Packet Pg. 1135 Attachment: Attachment A - Successor Agency Resolution (7425 : Adoption of Resolution Authorizing Issuance of Tax Allocation Refunding 6 I, ______________, City Clerk of the City of Santa Monica, as Secretary of the Successor Agency to the Redevelopment Agency of the City of Santa Monica, do certify that the foregoing Resolution was duly adopted at the meeting of the Successor Agency to the Redevelopment Agency of the City of Santa Monica held on January 13th, 2026, by the following vote AYES:
NOES:
ABSENT:
ABSTAINED:
ATTESTED:
______________
Secretary
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Packet Pg. 1136 Attachment: Attachment A - Successor Agency Resolution (7425 : Adoption of Resolution Authorizing Issuance of Tax Allocation Refunding A-1
EXHIBIT A
GOOD FAITH ESTIMATES
The good faith estimates set forth herein are provided with respect to the 2026 Bonds in accordance with Section 5852.1 of the Government Code. Such good faith estimates have been provided to the Successor Agency by their Municipal Advisor, Urban Futures, Inc., in consultation with Stifel, Nicolaus & Company, Incorporation, the underwriter of the 2026 Bonds.
Principal Amount. The Municipal Advisor has informed the Successor Agency that, based on the Successor Agency’s financing plan and current market conditions, its good faith estimate of the aggregate principal amount of the 2026 Bonds to be issued and sold is $51,515,000 (the “Estimated Principal Amount”).
True Interest Cost of the 2026 Bonds. The Municipal Advisor has informed the Successor Agency that, assuming that the Estimated Principal Amount of the 2026 Bonds is issued and sold, and based on market interest rates prevailing at the time of preparation of such estimate, its good faith estimate of the true interest cost of the 2026 Bonds, which means the rate necessary to discount the amounts payable on the respective principal and interest payment dates to the purchase price received for the 2026 Bonds, is 3.62%.
Finance Charge of the 2026 Bonds. The Municipal Advisor has informed the Successor Agency that, assuming that the Estimated Principal Amount of the 2026 Bonds is issued and sold, and based on market interest rates prevailing at the time of preparation of such estimate and expectation to purchase bond insurance at a net beneficial cost to the Successor Agency (meaning the cost of the insurance premium will be less than the reduced interest cost to the Successor Agency), its good faith estimate of the finance charge for the 2026 Bonds, which means the sum of all fees and charges paid to third parties (or costs associated with the 2026 Bonds), is $734,661.
Amount of Proceeds to be Received. The Municipal Advisor has informed the Successor Agency that, assuming that the Estimated Principal Amount of the 2026 Bonds is issued and sold, and based on market interest rates prevailing at the time of preparation of such estimate, its good faith estimate of the amount of proceeds expected to be received by the Successor Agency for sale of the 2026 Bonds, less the finance charge of the 2026 Bonds, as estimated above, and any reserves or capitalized interest paid or funded with proceeds of the 2026 Bonds, is $55,685,040.
Total Payment Amount. The Municipal Advisor has informed the Successor Agency that, assuming that the Estimated Principal Amount of the 2026 Bonds is issued and sold, and based on market interest rates prevailing at the time of preparation of such estimate, its good faith estimate of the total payment amount, which means the sum total of all payments the Successor Agency will make to pay debt service on the 2026 Bonds, plus the finance charge for the 2026 Bonds, as described above, not paid with the proceeds of the 2026 Bonds, calculated to the final maturity of the 2026 Bonds, is $71,813,101, which excludes any reserves or capitalized interest paid or funded with proceeds of the 2026 Bonds (which may offset such total payment amount). The Municipal Advisor has informed the Successor Agency that such total estimated payments would result in a savings in debt service of approximately $12.2 million.
The foregoing estimates constitute good faith estimates only and are based on market conditions prevailing at the time of preparation of such estimates. The actual principal amount of the
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Packet Pg. 1137 Attachment: Attachment A - Successor Agency Resolution (7425 : Adoption of Resolution Authorizing Issuance of Tax Allocation Refunding A-2
2026 Bonds issued and sold, the true interest cost thereof, the finance charges thereof, the amount of proceeds received therefrom and total payment amount with respect thereto may differ from such good faith estimates due to (a) the actual date of the sale of the 2026 Bonds being different than the date assumed for purposes of such estimates, (b) the actual principal amount of 2026 Bonds issued and sold being different from the Estimated Principal Amount, (c) the actual amortization of the 2026 Bonds being different than the amortization assumed for purposes of such estimates, (d) the actual market interest rates at the time of sale of the 2026 Bonds being different than those estimated for purposes of such estimates, (e) other market conditions, (f) alterations to the Successor Agency’s financing plan, or a combination of such factors.
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Packet Pg. 1138 Attachment: Attachment A - Successor Agency Resolution (7425 : Adoption of Resolution Authorizing Issuance of Tax Allocation Refunding Agenda Draft
INDENTURE OF TRUST
Dated as of [April 1], 2026
by and between the
SUCCESSOR AGENCY TO THE
REDEVELOPMENT AGENCY OF THE CITY OF SANTA MONICA
and
U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION,
as Trustee
Relating to
$[PAR]
SUCCESSOR AGENCY TO THE
REDEVELOPMENT AGENCY OF THE CITY OF SANTA MONICA
2026 TAX ALLOCATION REFUNDING BONDS
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Packet Pg. 1139 Attachment: Attachment B - Indenture of Trust (7425 : Adoption of Resolution Authorizing Issuance of Tax Allocation Refunding Bonds, Series
TABLE OF CONTENTS
Page
i
ARTICLE I
DETERMINATIONS; DEFINITIONS
Section 1.01 Findings and Determinations..................................................................................... 3 Section 1.02 Definitions.................................................................................................................3 Section 1.03 Rules of Construction ..............................................................................................13
ARTICLE II
AUTHORIZATION AND TERMS
Section 2.01 Authorization of 2026 Bonds...................................................................................13 Section 2.02 Terms of 2026 Bonds...............................................................................................13 Section 2.03 Redemption of 2026 Bonds.....................................................................................14 Section 2.04 Form of 2026 Bonds................................................................................................ 17 Section 2.05 Execution of Bonds.................................................................................................. 17 Section 2.06 Transfer of Bonds.................................................................................................... 17 Section 2.07 Exchange of Bonds.................................................................................................. 18 Section 2.08 Registration of Bonds..............................................................................................18 Section 2.09 Bonds Mutilated, Lost, Destroyed or Stolen ........................................................... 18 Section 2.10 Book-Entry System.................................................................................................. 19 Section 2.11 Applicability of Provisions to Parity Debt............................................................... 20
ARTICLE III
DEPOSIT AND APPLICATION; ADDITIONAL DEBT
Section 3.01 Issuance of Bonds....................................................................................................21 Section 3.02 Application of Proceeds of Sale and Certain Other Amounts................................. 21 Section 3.03 Costs of Issuance Fund ............................................................................................21 Section 3.04 Issuance of Parity Debt............................................................................................ 21 Section 3.05 Issuance of Subordinate Debt ..................................................................................22
ARTICLE IV
SECURITY OF BONDS; FLOW OF FUNDS
Section 4.01 Security of Bonds; Equal Security........................................................................... 22 Section 4.02 Redevelopment Obligation Retirement Fund; Special Fund; Deposit of Tax Revenues..................................................................................................................23 Section 4.03 Deposit of Amounts by Trustee...............................................................................24 Section 4.04 Rebate Fund............................................................................................................. 27 Section 4.05 Provisions Relating to 2026 Reserve Policy............................................................ 27
ARTICLE V
OTHER COVENANTS OF THE SUCCESSOR AGENCY
Section 5.01 Punctual Payment ....................................................................................................28 Section 5.02 Limitation on Additional Indebtedness; Against Encumbrances ............................ 28 Section 5.03 Extension of Payment..............................................................................................28 Section 5.04 Payment of Claims...................................................................................................28 Section 5.05 Books and Accounts; Financial Statements............................................................. 28 Section 5.06 Protection of Security and Rights of Owners..........................................................29 Section 5.07 Payments of Taxes and Other Charges.................................................................... 29
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Packet Pg. 1140 Attachment: Attachment B - Indenture of Trust (7425 : Adoption of Resolution Authorizing Issuance of Tax Allocation Refunding Bonds, Series
TABLE OF CONTENTS
(continued)
Page
ii
Section 5.08 [Reserved]................................................................ Error! Bookmark not defined.
Section 5.09 [Reserved]................................................................ Error! Bookmark not defined.
Section 5.10 Maintenance of Tax Revenues................................................................................. 29 Section 5.11 Tax Covenants.........................................................................................................29 Section 5.12 Continuing Disclosure .............................................................................................30 Section 5.13 Compliance with the Dissolution Act...................................................................... 31 Section 5.14 Further Assurances .................................................................................................. 32 Section 5.15 Last and Final Recognized Obligation Payment Schedule...................................... 32
ARTICLE VI
THE TRUSTEE
Section 6.01 Duties, Immunities and Liabilities of Trustee .........................................................32 Section 6.02 Merger or Consolidation..........................................................................................34 Section 6.03 Liability of Trustee ..................................................................................................34 Section 6.04 Right to Rely on Documents and Opinions.............................................................37 Section 6.05 Preservation and Inspection of Documents ............................................................. 37 Section 6.06 Compensation and Indemnification.........................................................................38 Section 6.07 Deposit and Investment of Moneys in Funds..........................................................38 Section 6.08 Accounting Records and Financial Statements ....................................................... 39 Section 6.09 Other Transactions with Successor Agency ............................................................ 40
ARTICLE VII
MODIFICATION OR AMENDMENT OF THIS INDENTURE
Section 7.01 Amendment With And Without Consent of Owners...............................................40 Section 7.02 Effect of Supplemental Indenture............................................................................41 Section 7.03 Endorsement or Replacement of Bonds After Amendment .................................... 41 Section 7.04 Amendment by Mutual Consent.............................................................................. 41 Section 7.05 Opinion of Counsel.................................................................................................. 41 Section 7.06 Copy of Supplemental Indenture to S&P and Moody’s.......................................... 41
ARTICLE VIII
EVENTS OF DEFAULT AND REMEDIES OF OWNERS
Section 8.01 Events of Default and Acceleration of Maturities...................................................42 Section 8.02 Application of Funds Upon Acceleration................................................................43 Section 8.03 Power of Trustee to Control Proceedings................................................................44 Section 8.04 Limitation on Owner’s Right to Sue........................................................................ 44 Section 8.05 Non-Waiver ............................................................................................................. 45 Section 8.06 Actions by Trustee as Attorney-in-Fact...................................................................45 Section 8.07 Remedies Not Exclusive..........................................................................................45 Section 8.08 Determination of Percentage of Bondowners..........................................................46
ARTICLE IX
MISCELLANEOUS
Section 9.01 Special Obligations.................................................................................................. 46 Section 9.02 Benefits Limited to Parties ...................................................................................... 46
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Packet Pg. 1141 Attachment: Attachment B - Indenture of Trust (7425 : Adoption of Resolution Authorizing Issuance of Tax Allocation Refunding Bonds, Series
TABLE OF CONTENTS
(continued)
Page
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Section 9.03 Successor is Deemed Included in All References to Predecessor ........................... 46 Section 9.04 Discharge of Indenture ............................................................................................46 Section 9.05 Execution of Documents and Proof of Ownership by Owners................................ 48 Section 9.06 Disqualified Bonds.................................................................................................. 48 Section 9.07 Waiver of Personal Liability....................................................................................49 Section 9.08 Destruction of Cancelled Bonds..............................................................................49 Section 9.09 Notices.....................................................................................................................49 Section 9.10 Partial Invalidity ...................................................................................................... 49 Section 9.11 Unclaimed Moneys.................................................................................................. 50 Section 9.12 Execution in Counterparts; Electronic Delivery of Signatures................................50 Section 9.13 Governing Law........................................................................................................ 50 EXHIBIT A FORM OF 2026 BOND.........................................................................................A-1
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Packet Pg. 1142 Attachment: Attachment B - Indenture of Trust (7425 : Adoption of Resolution Authorizing Issuance of Tax Allocation Refunding Bonds, Series
INDENTURE OF TRUST
THIS INDENTURE OF TRUST (this “Indenture”) is made and entered into and dated as of [April 1], 2026, by and between the SUCCESSOR AGENCY TO THE REDEVELOPMENT AGENCY OF THE CITY OF SANTA MONICA, a public entity duly existing under the laws of the State of California (the “Successor Agency”), as successor to the redevelopment activities of the Redevelopment Agency of the City of Santa Monica (the “Former Agency”), and U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION, a national banking association duly organized and existing under the laws of the United States of America, as trustee (the “Trustee”); WITNESSETH:
WHEREAS, the Former Agency was a public body, corporate and politic, duly established and authorized to transact business and exercise powers under and pursuant to the provisions of the Community Redevelopment Law (Part 1 of Division 24 of the Health and Safety Code of the State of California (commencing with Section 33000) including for all purposes the Community Redevelopment Financial Assistance and Disaster Project Law (commencing with Section 34000 of the Health and Safety Code) (collectively, the “Law”), including the power to issue bonds and incur debt for any of its corporate purposes; and
WHEREAS, a redevelopment plan for the Santa Monica Earthquake Recovery Redevelopment Project (the “Project Area”) within the City of Santa Monica, California (the “City”) was adopted and approved, and amended from time to time (as so amended, the “Redevelopment Plan”), in compliance with all requirements of the Law, and all requirements of law for and precedent to the adoption and approval of the Redevelopment Plan, have been duly complied with; and
WHEREAS, prior to its dissolution, the Former Agency issued the following bonds, among others, to finance and refinance redevelopment activities within or of benefit to the Project Area (collectively, the “Prior Bonds”): (i) the Redevelopment Agency of the City of Santa Monica Earthquake Recovery Redevelopment Project 2006 Tax Allocation Refunding Bonds, Series A; and (ii) the Redevelopment Agency of the City of Santa Monica Earthquake Recovery Redevelopment Project 2011 Tax Allocation Bonds; and
WHEREAS, by implementation of California Assembly Bill X1 26, which amended provisions of the Law, and the California Supreme Court’s decision in California Redevelopment Association v. Matosantos, the redevelopment components of the Former Agency were dissolved on February 1, 2012 in accordance with California Assembly Bill X1 26 approved by the Governor of the State of California on June 28, 2011 (as amended, the “Dissolution Act”), and on February 1, 2012, the Successor Agency assumed the redevelopment related duties and obligations of the Former Agency as provided in the Dissolution Act, including, without limitation, the obligations of the Former Agency under the Prior Bonds and the related documents to which the Former Agency was a party; and
WHEREAS, Section 34177.5(a)(1) of the California Health and Safety Code authorizes successor agencies to refund outstanding bonds or other indebtedness provided that: (i) the total interest cost to maturity on the refunding bonds or other indebtedness, plus the principal amount of the refunding bonds or other indebtedness, does not exceed the total remaining interest cost to
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Packet Pg. 1143 Attachment: Attachment B - Indenture of Trust (7425 : Adoption of Resolution Authorizing Issuance of Tax Allocation Refunding Bonds, Series 2 maturity on the bonds or other indebtedness to be refunded, plus the remaining principal of the bonds or other indebtedness to be refunded; and (ii) the principal amount of the refunding bonds or other indebtedness does not exceed the amount required to defease the bonds or other indebtedness to be refunded, to establish customary debt service reserves and to pay related costs of issuance; and WHEREAS, said Section 34177.5 also authorizes the Successor Agency to issue bonds pursuant to Article 11 (commencing with Section 53580) of Chapter 3 of Part 1 of Division 2 of Title 5 of the Government Code (the “Refunding Law”) for the purposes and within the parameters set forth in said Section 34177.5; and
WHEREAS, the Successor Agency desires to refund all of the outstanding Prior Bonds pursuant to Section 34177.5 of the California Health and Safety Code in order to achieve debt service savings; and
WHEREAS, in order to provide moneys to refund the Prior Bonds in accordance with Section 34177.5(a)(1) of the California Health and Safety Code, the Successor Agency has determined to issue its 2026 Tax Allocation Refunding Bonds (the “2026 Bonds”); and WHEREAS, the 2026 Bonds will be secured by a pledge of and lien on the Tax Revenues (defined herein), subject to (a) the payment by the County Auditor-Controller of certain amounts (i) to the County for administrative costs allowed under Section 34182 and Section 95.3 of the Revenue and Taxation Code, and (ii) to taxing entities pursuant to Sections 33607.5, 33607.7 and 33676 of the Law (unless such payments are subordinated to payments on the 2026 Bonds and Parity Debt pursuant to Section 33607.5(e) of the Law or Section 34177.5(c) of the Dissolution Act), and (b) the payment by the Successor Agency of amounts due under the BofA Credit Agreement (as defined herein); and
WHEREAS, in order to provide for the authentication and delivery of the 2026 Bonds, to establish and declare the terms and conditions upon which the 2026 Bonds are to be issued and secured and to secure the payment of the principal thereof and interest and redemption premium (if any) thereon, the Successor Agency and the Trustee have duly authorized the execution and delivery of this Indenture; and
WHEREAS, the Successor Agency has determined that all acts and proceedings required by law necessary to make the 2026 Bonds when executed by the Successor Agency, and authenticated and delivered by the Trustee, the valid, binding and legal special obligations of the Successor Agency, and to constitute this Indenture a legal, valid and binding agreement for the uses and purposes herein set forth in accordance with its terms, have been done or taken; NOW, THEREFORE, THIS INDENTURE WITNESSETH, that in order to secure the payment of the principal of and the interest and redemption premium (if any) on all the Bonds (as defined below), including the 2026 Bonds, issued and Outstanding under this Indenture, according to their tenor, and to secure the performance and observance of all the covenants and conditions therein and herein set forth, and to declare the terms and conditions upon and subject to which the Bonds, including the 2026 Bonds, are to be issued and received, and in consideration of the premises and of the mutual covenants herein contained and of the purchase and acceptance of the Bonds, including the 2026 Bonds, by the Owners thereof, and for other valuable considerations, the receipt of which is hereby acknowledged, the Successor Agency and the Trustee do hereby covenant and agree with one
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Packet Pg. 1144 Attachment: Attachment B - Indenture of Trust (7425 : Adoption of Resolution Authorizing Issuance of Tax Allocation Refunding Bonds, Series 3 another, for the benefit of the respective Owners from time to time of the Bonds, including the 2026 Bonds, as follows:
ARTICLE I
DETERMINATIONS; DEFINITIONS
Section 1.01 Findings and Determinations. The Successor Agency has reviewed all proceedings heretofore taken and, as a result of such review, hereby finds and determines that all things, conditions and acts required by law to exist, happen or be performed precedent to and in connection with the issuance of the 2026 Bonds do exist, have happened and have been performed in due time, form and manner as required by law, and the Successor Agency is now duly empowered, pursuant to each and every requirement of law, to issue the 2026 Bonds in the manner and form provided in this Indenture.
Section 1.02 Definitions. Unless the context otherwise requires, the terms defined in this Section 1.02 shall, for all purposes of this Indenture, of any Supplemental Indenture, and of any certificate, opinion or other document herein mentioned, have the meanings herein specified. “Additional Allowance” means, as the date of calculation, the amount of Tax Revenues which, as shown in the Report of an Independent Redevelopment Consultant, are estimated to be receivable by the Successor Agency as a result of increases in the assessed valuation of taxable property in the Project Area due to construction which has been completed or transfers of ownership that have occurred but are not yet reflected on the tax rolls. For purposes of this definition, the term “increases in the assessed valuation” means the amount by which the assessed valuation of taxable property in the Project Area in any Fiscal Year is estimated to exceed the assessed valuation of taxable property in the Project Area (as reported by the County Auditor-Controller) for the Fiscal Year for which such calculation is made.
“Annual Debt Service” means, for each Bond Year, the sum of (a) the interest payable on the Outstanding Bonds in such Bond Year, and (b) the principal amount of the Outstanding Bonds scheduled to be paid in such Bond Year.
“BofA Credit Agreement” means that certain Credit Agreement dated as of May 1, 2008, between Bank of America, N.A., and the Successor Agency, as successor to the Former Agency, pursuant to which Bank of America, N.A., as amended or otherwise modified from time to time. “Bonds” means the 2026 Bonds and any Parity Debt issued pursuant to a Supplemental Indenture.
“Bond Counsel” means (a) Anzel Galvan LLP, or (b) any other attorney or firm of attorneys appointed by or acceptable to the Successor Agency, of nationally-recognized experience in the issuance of obligations the interest on which is excludable from gross income for federal income tax purposes under the Code.
“Bond Year” means each twelve (12) month period extending from August 2 in one calendar year to August 1 of the succeeding calendar year, both dates inclusive; provided that the first Bond Year with respect to the 2026 Bonds shall commence on the Closing Date and end on [August 1, 2026].
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Packet Pg. 1145 Attachment: Attachment B - Indenture of Trust (7425 : Adoption of Resolution Authorizing Issuance of Tax Allocation Refunding Bonds, Series 4 “Business Day” means any day, other than a Saturday or Sunday or a day on which commercial banks in New York, New York, or any other city or cities where the Principal Corporate Trust Office of the Trustee is located are required or authorized by law to close or a day on which the New York Stock Exchange or the payment system of the Federal Reserve System is closed. “City” means the City of Santa Monica, California.
“Closing Date” means the date on which a series of Bonds is delivered by the Successor Agency to the original purchaser thereof. The Closing Date with respect to the 2026 Bonds is April __, 2026.
“Code” means the Internal Revenue Code of 1986, as amended. “Continuing Disclosure Certificate” means that certain Continuing Disclosure Certificate, with respect to the 2026 Bonds, executed by the Successor Agency, as originally executed and as it may be amended from time to time in accordance with the terms thereof. “Costs of Issuance” means all items of expense directly or indirectly payable by or reimbursable to the Successor Agency relating to the authorization, issuance, sale and delivery of the Bonds, including but not limited to printing expenses, bond insurance and surety bond premiums, if any, rating agency fees, filing and recording fees, fees and charges of the Trustee and Escrow Agent and fees and expenses of its counsel, fees, charges and disbursements of attorneys, financial advisors, accounting firms, continuing disclosure consultants, dissemination agent, and other consultants and professionals, fees and charges for preparation, execution and safekeeping of the Bonds, administrative costs of the Successor Agency and the City incurred in connection with the issuance of the Bonds, expenses of the underwriters of the Bonds, and any other cost, charge or fee in connection with the original issuance of the Bonds.
“Costs of Issuance Fund” means the fund by that name established and held by the Trustee pursuant to Section 3.03.
“County” means Los Angeles County.
“County Auditor-Controller” means the Auditor-Controller of the County. “Debt Service Fund” means the fund by that name established and held by the Trustee pursuant to Section 4.03.
“Defeasance Obligations” means any of the following which, at the time of investment, are legal investments under the laws of the State for the moneys proposed to be invested therein and are in compliance with the Successor Agency’s investment policies then in effect (provided that the Trustee shall be entitled to rely upon any investment direction from the Successor Agency as conclusive certification to the Trustee that investments described therein are legal and are in compliance with the Successor Agency’s investment policies then in effect), but only to the extent the same are acquired at Fair Market Value:
(a) Cash;
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Packet Pg. 1146 Attachment: Attachment B - Indenture of Trust (7425 : Adoption of Resolution Authorizing Issuance of Tax Allocation Refunding Bonds, Series 5 (b) Federal Securities, including direct obligations of the Treasury which have been stripped by the Treasury itself, CATS, TIGRS and similar securities; (c) The interest component of Resolution Funding Corporation strips which have been stripped by request to the Federal Reserve Bank of New York in book-entry form; (d) Pre-refunded municipal bonds rated “Aaa” by Moody’s and “AAA” by S&P, provided that, if the issue is rated only by S&P (i.e., there is no Moody’s rating), then the prerefunded municipal bonds must have been pre-refunded with cash, direct U.S. or U.S. guaranteed obligations, or AAA rated pre-refunded municipals; and
(e) Bonds, debentures, notes or other evidence of indebtedness issued or guaranteed by any of the following federal agencies and provided such obligations are backed by the full faith and credit of the United States of America (stripped securities are only permitted if they have been stripped by the agency itself): (i) direct obligations or fully guaranteed certificates of beneficial ownership of the U.S. Export-Import Bank; (ii) certificates of beneficial ownership of the Farmers Home Administration; (iii) participation certificates of the General Services Administration; (iv) Federal Financing Bank bonds and debentures; (v) guaranteed Title XI financings of the U.S.
Maritime Administration; and (vi) project notes, local authority bonds, new communities debentures and U.S. public housing notes and bonds of the U.S. Department of Housing and Urban Development.
“Department of Finance” means the Department of Finance of the State of California. “Depository” means (a) initially, DTC, and (b) any other Securities Depository acting as Depository pursuant to Section 2.10.
“Depository System Participant” means any participant in the Depository’s book-entry system.
“Dissolution Act” means California Assembly Bill X1 26 approved by the Governor of the State of California on June 28, 2011, as it has heretofore been amended and as it may hereafter be amended.
“DTC” means The Depository Trust Company, New York, New York, and its successors and assigns.
“Escrow Agent” means U.S. Bank Trust Company, National Association “Event of Default” means any of the events described in Section 8.01. “Fair Market Value” means the price at which a willing buyer would purchase the investment from a willing seller in a bona fide, arm’s length transaction (determined as of the date the contract to purchase or sell the investment becomes binding) if the investment is traded on an established securities market (within the meaning of Section 1273 of the Code) and, otherwise, the term “Fair Market Value” means the acquisition price in a bona fide arm’s length transaction (as referenced above) if (i) the investment is a certificate of deposit that is acquired in accordance with applicable regulations under the Code, (ii) the investment is an agreement with specifically negotiated withdrawal or reinvestment provisions and a specifically negotiated interest rate (for
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Packet Pg. 1147 Attachment: Attachment B - Indenture of Trust (7425 : Adoption of Resolution Authorizing Issuance of Tax Allocation Refunding Bonds, Series 6 example, a guaranteed investment contract, a forward supply contract or other investment agreement) that is acquired in accordance with applicable regulations under the Code, (iii) the investment is a United States Treasury Security--State and Local Government Series that is acquired in accordance with applicable regulations of the United States Bureau of Public Debt, or (iv) any commingled investment fund in which the Successor Agency and related parties do not own more than a ten percent (10%) beneficial interest therein if the return paid by the fund is without regard to the source of the investment.
“Federal Securities” means any direct, noncallable general obligations of the United States of America (including obligations issued or held in book-entry form on the books of the Department of the Treasury of the United States of America and CATS and TGRS), or obligations the payment of principal of and interest on which are directly or indirectly guaranteed by the United States of America.
“Fiscal Year” means any twelve-month period beginning on July 1 in any year and extending to the next succeeding June 30, both dates inclusive, or any other twelve month period selected and designated by the Successor Agency to the Trustee in writing as its official fiscal year period.
“Former Agency” means the Redevelopment Agency of the City of Santa Monica. “Indenture” means this Indenture of Trust by and between the Successor Agency and the Trustee, as originally entered into or as it may be amended or supplemented by any Supplemental Indenture entered into pursuant to the provisions hereof. “Independent Accountant” means any accountant or firm of such accountants duly licensed or registered or entitled to practice as such under the laws of the State, appointed by the Successor Agency, and who, or each of whom:
(a) is in fact independent and not under domination of the Successor Agency or the City;
(b) does not have any substantial interest, direct or indirect, with the Successor Agency or the City; and
(c) is not connected with the Successor Agency or the City as an officer or employee of the Successor Agency or the City, but who may be regularly retained to make reports to the Successor Agency or the City.
“Independent Redevelopment Consultant” means any consultant or firm of such consultants appointed by the Successor Agency, and who, or each of whom:
(a) is judged by the Successor Agency to have experience in matters relating to the collection of Tax Revenues or otherwise with respect to the financing of redevelopment projects; (b) is in fact independent and not under domination of the Successor Agency or the City;
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Packet Pg. 1148 Attachment: Attachment B - Indenture of Trust (7425 : Adoption of Resolution Authorizing Issuance of Tax Allocation Refunding Bonds, Series 7 (c) does not have any substantial interest, direct or indirect, with the Successor Agency or the City; and
(d) is not connected with the Successor Agency or the City as an officer or employee of the Successor Agency or the City, but who may be regularly retained to make reports to the Successor Agency or the City.
“Information Services” means, in accordance with then current guidelines of the Securities and Exchange Commission, such services providing information with respect to the redemption of bonds as the Successor Agency may designate in a Written Request of the Successor Agency filed with the Trustee.
“Insurer” means the 2026 Insurer and, as applicable, the provider of a municipal bond or financial guaranty insurance policy with respect to other Bonds. “Interest Account” means the account by that name established and held by the Trustee pursuant to Section 4.03(a).
“Interest Payment Date” means each [February 1 and August 1], commencing [August 1, 2026], for so long as any of the Bonds remain Outstanding hereunder. “Late Payment Rate” means, ____________.
“Law” means the Community Redevelopment Law of the State, constituting Part 1 of Division 24 of the Health and Safety Code of the State, and the acts amendatory thereof and supplemental thereto.
“Maximum Annual Debt Service” means, as of the date of calculation, the largest amount of principal and interest payments due with respect to the current or any future Bond Year payable in such Bond Year. For purposes of such calculation, there shall be excluded payments with respect to each series of Bonds to the extent that amounts due with respect to such series of Bonds are prepaid or otherwise discharged in accordance with this Indenture. “Moody’s” means Moody’s Investors Service and its successors. “Nominee” means (a) initially, Cede & Co., as nominee of DTC, and (b) any other nominee of the Depository designated pursuant to Section 2.10(a). “Outstanding” when used as of any particular time with reference to Bonds, means (subject to the provisions of Section 9.04) all Bonds except:
(a) Bonds theretofore canceled by the Trustee or surrendered to the Trustee for cancellation;
(b) Bonds paid or deemed to have been paid within the meaning of Section 9.03; and
(c) Bonds in lieu of or in substitution for which other Bonds shall have been authorized, executed, issued and delivered by the Successor Agency pursuant hereto.
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Packet Pg. 1149 Attachment: Attachment B - Indenture of Trust (7425 : Adoption of Resolution Authorizing Issuance of Tax Allocation Refunding Bonds, Series 8 “Oversight Board” means the Los Angeles County Third Supervisorial District Consolidated Countywide Oversight Board established pursuant to Section 34179 of the Dissolution Act.
“Owner” or “Bondowner” means, with respect to any Bond, the person in whose name the ownership of such Bond shall be registered on the Registration Books. “Parity Debt” means any additional bonds, loans, advances or indebtedness issued or incurred by the Successor Agency on a parity with the 2026 Bonds pursuant to Section 3.04, whether issued as Bonds under a Supplemental Indenture or issued under a Parity Debt Instrument. “Parity Debt Instrument” means a resolution, indenture of trust, supplemental indenture of trust, loan agreement, trust agreement or other instrument authorizing the issuance of any Parity Debt, other than a Supplemental Indenture.
“Participating Underwriter” has the meaning ascribed thereto in the Continuing Disclosure Certificate.
“Permitted Investments” means any of the following which, at the time of investment, are legal investments under the laws of the State for the moneys proposed to be invested therein and are in compliance with the Successor Agency’s investment policies then in effect (provided that the Trustee shall be entitled to rely upon any investment direction from the Successor Agency as conclusive certification to the Trustee that investments described therein are legal and are in compliance with the Successor Agency’s investment policies then in effect and are Permitted Investments), but only to the extent the same are acquired at Fair Market Value:
(a) Federal Securities;
(b) Bonds, debentures, notes or other evidence of indebtedness issued or guaranteed by any of the following federal agencies and provided such obligations are backed by the full faith and credit of the United States of America (stripped securities are only permitted if they have been stripped by the agency itself): (i) direct obligations or fully guaranteed certificates of beneficial ownership of the U.S. Export-Import Bank; (ii) certificates of beneficial ownership of the Farmers Home Administration; (iii) Federal Housing Administration debentures; (iv) participation certificates of the General Services Administration; (v) Federal Financing Bank bonds and debentures; (vi) guaranteed mortgage-backed bonds or guaranteed pass-through obligations of Ginnie Mae (formerly known as the Government National Mortgage Association); (vii) guaranteed Title XI financings of the U.S. Maritime Administration; and (viii) project notes, local authority bonds, new communities debentures and U.S. public housing notes and bonds of the U.S. Department of Housing and Urban Development;
(c) Bonds, debentures, notes or other evidence of indebtedness issued or guaranteed by any of the following non-full faith and credit U.S. government agencies (stripped securities only as stripped by the agency itself): (i) senior debt obligations of the Federal Home Loan Bank System; (ii) participation certificates and senior debt obligations of the Federal Home Loan Mortgage Corporation; (iii) mortgaged-backed securities and senior debt obligations of Fannie Mae; (iv) senior debt obligations of Sallie Mae (formerly known as the Student Loan Marketing Association); (v) obligations of the Resolution Funding Corporation; and (vi) consolidated systemwide bonds and notes of the Farm Credit System;
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Packet Pg. 1150 Attachment: Attachment B - Indenture of Trust (7425 : Adoption of Resolution Authorizing Issuance of Tax Allocation Refunding Bonds, Series 9 (d) Money market mutual funds registered under the Federal Investment Company Act of 1940, whose shares are registered under the Federal Securities Act of 1933, and having a rating by S&P of at least AAAm-G, AAAm or AAm, and a rating by Moody’s of Aaa, Aa1 or Aa2 (such funds may include those for which the Trustee or an affiliate receives and retains a fee for services provided to the fund, whether as a custodian, transfer agent, investment advisor or otherwise);
(e) Unsecured certificates of deposit (having maturities of not more than 365 days) of any bank the short-term obligations of which are rated on the date of purchase “A-1+” or better by S&P and “P-1” by Moody’s and or certificates of deposit (including those of the Trustee, its parent and its affiliates) secured at all times by collateral that may be used by a national bank for purposes of satisfying its obligations to collateralize pursuant to federal law which are issued by commercial banks, savings and loan associations or mutual savings bank whose short-term obligations are rated on the date of purchase A-1 or better by S&P, Moody’s and Fitch; (f) Certificates of deposit, including those placed by a third party pursuant to an agreement between the Trustee and the Successor Agency, time deposits, deposit accounts, demand deposits, trust funds, trust accounts, overnight bank deposits, interest-bearing deposits, other deposit products, or bankers acceptances of depository institutions, or interest bearing money market deposits or accounts (including those of the Trustee, its parent and its affiliates) that are fully insured by FDIC, including BIF and SAIF;
(g) Investment agreements, including guaranteed investment contracts, forward purchase agreements, reserve fund put agreements and collateralized investment agreements with an entity rated “Aa” or better by Moody’s and “AA” or better by S&P, or unconditionally guaranteed by an entity rated “Aa” or better by Moody’s and “AA” or better by S&P; (h) Commercial paper rated, at the time of purchase, “Prime-1” by Moody’s and “A-1+” or better by S&P;
(i) Bonds or notes issued by any state or municipality which are rated by Moody’s and S&P in one of the two highest rating categories assigned by such agencies; (j) Federal funds or bankers acceptances with a maximum term of one year of any bank which has an unsecured, uninsured and unguaranteed obligation rating of “Prime-1” or “A3” or better by Moody’s, and “A-1+” by S&P; and
(k) The Local Agency Investment Fund that is administered by the California Treasurer for the investment of funds belonging to local agencies within the State of California, provided that for investment of funds held by the Trustee, the Trustee is entitled to make investments and withdrawals in its own name as Trustee.
Ratings of Permitted Investments shall be determined at the time of purchase of such Permitted Investments and without regard to ratings subcategories. [“Policy Costs” means the repayments for draws and payments of expenses related to the 2026 Reserve Policy and the interest thereon at the Late Payment Rate.]
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Packet Pg. 1151 Attachment: Attachment B - Indenture of Trust (7425 : Adoption of Resolution Authorizing Issuance of Tax Allocation Refunding Bonds, Series 10 “Principal Account” means the account by that name established and held by the Trustee pursuant to Section 4.03(b).
“Principal Corporate Trust Office” means the corporate trust office of the Trustee in Los Angeles, California, or such other or additional offices as the Trustee may designate in writing to the Successor Agency from time to time as the corporate trust office for purposes of the Indenture; except that with respect to presentation of Bonds for payment or for registration of transfer and exchange, such term means the office or agency of the Trustee at which, at any particular time, its corporate trust agency business is conducted.
“Prior Bonds” means, collectively, the 2006 Bonds and the 2011 Bonds. “Project Area” means the project area that is described in the Redevelopment Plan, known as the Santa Monica Earthquake Recovery Redevelopment Project Area. “Qualified Reserve Account Credit Instrument” means (i) the 2026 Reserve Policy, and (ii) an irrevocable standby or direct-pay letter of credit, insurance policy, surety bond or reserve policy issued by a commercial bank or insurance company and deposited with the Trustee with respect to other Bonds, provided that all of the following requirements are met at the time of acceptance thereof by the Trustee: (a) S&P or Moody’s have assigned a long-term credit rating to such bank or insurance company at the time of issuance of such Qualified Reserve Account Credit Instrument of “A” (without regard to modifier) or higher; (b) such letter of credit, insurance policy, surety bond or reserve policy has a term of at least 12 months; (c) such letter of credit, insurance policy, surety bond or reserve policy has a stated amount at least equal to the portion of the Reserve Requirement with respect to the Bonds with respect to which it is deposited or with respect to which funds are proposed to be released; and (d) the Trustee is authorized pursuant to the terms of such letter of credit, insurance policy, surety bond or reserve policy to draw thereunder an amount equal to any deficiencies which may exist from time to time in the Interest Account or the Principal Account for the purpose of making payments required pursuant to Sections 4.03(a), 4.03(b) or 4.03(c) of this Indenture.
“Recognized Obligation Payment Schedule” means a Recognized Obligation Payment Schedule, each prepared and approved from time to time pursuant to subdivision (o) of Section 34177 of the California Health and Safety Code. “Record Date” means, with respect to any Interest Payment Date, the close of business on the fifteenth (15th) calendar day of the month preceding such Interest Payment Date, whether or not such fifteenth (15th) calendar day is a Business Day.
“Redevelopment Obligation Retirement Fund” means the fund by that name established pursuant to California Health and Safety Code Section 34170.5(a), held and administered by the Successor Agency.
“Redevelopment Plan” means the Redevelopment Plan for the Project Area, as such Redevelopment Plan has heretofore been amended and as it may hereafter be amended in accordance with the law.
“Redevelopment Project” means the undertaking of the Successor Agency pursuant to the Redevelopment Plan and the Law for the redevelopment of the Project Area.
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Packet Pg. 1152 Attachment: Attachment B - Indenture of Trust (7425 : Adoption of Resolution Authorizing Issuance of Tax Allocation Refunding Bonds, Series 11 “Redevelopment Property Tax Trust Fund” and “RPTTF” mean the fund by that name established pursuant to California Health & Safety Code Sections 34170.5(b) and 34172(c) and administered by the County Auditor-Controller.
“Refunding Law” means Article 11 (commencing with Section 53580) of Chapter 3 of Part 1 of Division 2 of Title 5 of the Government Code of the State, and the acts amendatory thereof and supplemented thereto.
“Registration Books” means the records maintained by the Trustee pursuant to Section 2.08 for the registration and transfer of ownership of the Bonds. “Report” means a document in writing signed by an Independent Redevelopment Consultant and including:
(a) a statement that the person or firm making or giving such Report has read the pertinent provisions of this Indenture to which such Report relates; (b) a brief statement as to the nature and scope of the examination or investigation upon which the Report is based; and
(c) a statement that, in the opinion of such person or firm, sufficient examination or investigation was made as is necessary to enable said consultant to express an informed opinion with respect to the subject matter referred to in the Report. “Reserve Account” means the account by that name established and held by the Trustee pursuant to Section 4.03(c).
“Reserve Requirement” means, subject to Section 4.03(c) of this Indenture, with respect to the 2026 Bonds or any series (or multiple series) of Parity Debt for which a debt service reserve account or fund is to be funded and as of any date of computation, the lesser of:
(i) 125% of the average Annual Debt Service with respect to such series (or multiple series) of Bonds,
(ii) Maximum Annual Debt Service with respect to such series (or multiple series) of Bonds, or
(iii) with respect to such series (or multiple series) of Bonds, 10% of the original principal amount of such series (or multiple series) of Bonds (or, if such series (or multiple series) of Bonds has more than a de minimis amount of original issue discount or premium, 10% of the issue price of such series (or multiple series) of Bonds);
provided, that in no event shall the Successor Agency, in connection with the issuance or incurrence of Parity Debt be obligated to deposit an amount in the Reserve Account (or applicable reserve account or subaccount thereof) which is in excess of the amount permitted by the applicable provisions of the Code to be so deposited from the proceeds of tax-exempt bonds without having to restrict the yield of any investment purchased with any portion of such deposit and, in the event the amount of any such deposit into the Reserve Account (or applicable reserve account or subaccount thereof)is so limited, the Reserve Requirement with respect to the 2026 Bonds or any series (or
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Packet Pg. 1153 Attachment: Attachment B - Indenture of Trust (7425 : Adoption of Resolution Authorizing Issuance of Tax Allocation Refunding Bonds, Series 12 multiple series) of Parity Debt for which a reserve is to be funded shall, in connection with the issuance of such Parity Debt, be increased only by the amount of such deposit as permitted by the Code; and, provided further that the Successor Agency may meet all or a portion of the Reserve Requirement by depositing a Qualified Reserve Account Credit Instrument meeting the requirements of the definition of Section 4.03(c) hereof. For the avoidance of doubt, the Reserve Requirement for any Parity Debt may, at the option and instruction of the Successor Agency, be determined on a combined or standalone basis. As of the Closing Date, the Reserve Requirement for the 2026 Bonds is $______; the Reserve Requirement for the 2026 Bonds shall not increase following the Closing Date.
“ROPS Period” means each annual period beginning on July 1 of any calendar year and ending on June 30 of the next calendar year, or such other period as provided in the Dissolution Act. “S&P” means S&P Global Ratings, or any successor thereto. “Securities Depositories” means The Depository Trust Company, New York, New York; or, in accordance with then current guidelines of the Securities and Exchange Commission, such other addresses and/or such other securities depositories as the Successor Agency may designate in a Written Request of the Successor Agency delivered to the Trustee. “Semiannual Period” means (a) each six-month period beginning on January 1 of any calendar year and ending on June 30 of such calendar year, and (b) each six-month period beginning on July 1 of any calendar year and ending on December 31 of such calendar year. “Special Fund” means the fund held by the Successor Agency established within the Redevelopment Obligation Retirement Fund pursuant to Section 4.02. “State” means the State of California.
“Supplemental Indenture” means any supplement to this Indenture which has been duly adopted or entered into by the Successor Agency, but only if and to the extent that such Supplemental Indenture is specifically authorized hereunder. “Tax Revenues” means all taxes (i) that were eligible for allocation to the Former Agency with respect to the Project Area and are allocated to the Successor Agency pursuant to Article 6 of Chapter 6 (commencing with Section 33670) of the Law and Section 16 of Article XVI of the Constitution of the State, or pursuant to other applicable State laws and (ii) that are deposited or available for deposit by the County Auditor-Controller in the Redevelopment Property Tax Trust Fund, all as provided in Section 34172(d) of the Dissolution Act. “Trustee” means U.S. Bank Trust Company, National Association, as trustee hereunder, or any successor thereto appointed as trustee hereunder in accordance with the provisions of Article VI. “Written Request of the Successor Agency” or “Written Certificate of the Successor Agency” means a request or certificate, in writing signed by the [City Manager or Finance Director] of the City, on behalf of the Successor Agency, or the designee of either, or by any other officer of the Successor Agency or the City duly authorized by the Successor Agency for that purpose.
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Packet Pg. 1154 Attachment: Attachment B - Indenture of Trust (7425 : Adoption of Resolution Authorizing Issuance of Tax Allocation Refunding Bonds, Series 13 “2006 Bonds” means the Redevelopment Agency of the City of Santa Monica Earthquake Recovery Redevelopment Project 2006 Tax Allocation Refunding Bonds, Series A. “2006 Bonds Escrow Agreement” means that certain Escrow Agreement (2006 Bonds) dated as of [April 1], 2026, by and between the Successor Agency and the Escrow Agent, relating to the 2006 Bonds.
“2011 Bonds” means the Redevelopment Agency of the City of Santa Monica Earthquake Recovery Redevelopment Project 2011 Tax Allocation Bonds. “2011 Bonds Escrow Agreement” means that certain Escrow Agreement (2011 Bonds) dated as of [April 1], 2026, by and between the Successor Agency and the Escrow Agent, relating to the 2011 Bonds.
“2026 Bonds” means, collectively, the $[PAR] initial aggregate principal amount of Successor Agency to the Redevelopment Agency of the City of Santa Monica 2026 Tax Allocation Refunding Bonds.
“2026 Insurer” means [INSURER], or any successor thereto or assignee thereof. “2026 Reserve Policy” means the municipal bond debt service reserve insurance policy issued by the 2026 Insurer guaranteeing certain payments into the Reserve Account with respect to the 2026 Bonds as provided therein and subject to the limitation set forth therein.
Section 1.03 Rules of Construction. All references herein to “Articles,” “Sections” and other subdivisions are to the corresponding Articles, Sections or subdivisions of this Indenture, and the words “herein,” “hereof,” “hereunder” and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or subdivision hereof.
ARTICLE II
AUTHORIZATION AND TERMS
Section 2.01 Authorization of 2026 Bonds. An initial series of Bonds are hereby authorized to be issued by the Successor Agency under and subject to the terms of this Indenture, the Refunding Law, the Dissolution Act and the Law. This Indenture constitutes a continuing agreement with the Owners of all of the Bonds issued or to be issued hereunder and then Outstanding to secure the full and final payment of principal and redemption premiums (if any) and the interest on all Bonds which may from time to time be executed and delivered hereunder, subject to the covenants, agreements, provisions and conditions herein contained. Such initial series of Bonds shall be designated the “Successor Agency to the Redevelopment Agency of the City of Santa Monica 2026 Tax Allocation Refunding Bonds,” issued in the initial aggregate principal amount of $[PAR].
Section 2.02 Terms of 2026 Bonds.
(a) The 2026 Bonds shall be issued in fully registered form without coupons.
The 2026 Bonds shall be issued in denominations of $5,000 or any integral multiple thereof, so long as no 2026 Bond shall have more than one maturity date. The 2026 Bonds shall be dated as of their
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Packet Pg. 1155 Attachment: Attachment B - Indenture of Trust (7425 : Adoption of Resolution Authorizing Issuance of Tax Allocation Refunding Bonds, Series 14 Closing Date. The 2026 Bonds shall be lettered and numbered as the Participating Underwriter shall prescribe.
The 2026 Bonds shall mature and shall bear interest (calculated on the basis of a 360-day year comprised of twelve 30-day months) at the rate per annum as follows:
Maturity Date
(August 1)
Principal
Amount
Interest
Rate
(b) Each 2026 Bond shall bear interest from the Interest Payment Date next preceding the date of authentication thereof, unless (a) it is authenticated after a Record Date and on or before the following Interest Payment Date, in which event it shall bear interest from such Interest Payment Date; or (b) it is authenticated on or before [July 15, 2026], in which event it shall bear interest from its Closing Date; provided, however, that if, as of the date of authentication of any 2026 Bond, interest thereon is in default, such 2026 Bond shall bear interest from the Interest Payment Date to which interest has previously been paid or made available for payment thereon.
Interest on the 2026 Bonds (including the final interest payment upon maturity or redemption) is payable when due by wire or check of the Trustee mailed on the Interest Payment Date to the Owner thereof at such Owner’s address as it appears on the Registration Books at the close of business on the preceding Record Date; provided that at the written request of the Owner of at least $1,000,000 aggregate principal amount of 2026 Bonds, which written request is on file with the Trustee as of any Record Date, interest on such 2026 Bonds shall be paid on the succeeding Interest Payment Date by wire to such account in the United States as shall be specified in such written request. The principal of the 2026 Bonds and premium, if any, upon redemption, are payable in lawful money of the United States of America upon presentation and surrender thereof at the Principal Corporate Trust Office of the Trustee.
Section 2.03 Redemption of 2026 Bonds.
(a) Optional Redemption of 2026 Bonds. The 2026 Bonds are subject to optional redemption prior to their respective maturity dates as a whole, or in part by lot, on any date on or after [August 1, 20__], by such maturity or maturities as shall be directed by the Successor Agency (or in absence of such direction, pro rata by maturity and by lot within a maturity), from any source of available funds. Such optional redemption shall be at a redemption price equal to 100% of the principal amount to be redeemed, plus accrued but unpaid interest to the date fixed for redemption,
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Packet Pg. 1156 Attachment: Attachment B - Indenture of Trust (7425 : Adoption of Resolution Authorizing Issuance of Tax Allocation Refunding Bonds, Series 15 without premium. Any such optional redemption of the 2026 Bonds shall be at the election of the Successor Agency, which shall give written notice thereof to the Trustee (which notice shall include the principal amount of 2026 Bonds to be optionally redeemed together with the redemption date) no later than five (5) Business Days prior to the date when the Trustee is required to give notice of such optional redemption pursuant to Section 2.03(c).
(b) Mandatory Sinking Fund Redemption of 2026 Bonds. The 2026 Bonds maturing August 1, 20__ and August 1, 20__ (the “2026 Term Bonds”) shall also be subject to mandatory redemption in whole, or in part by lot, on July 1 in each year, commencing August 1, 20__ and August 1, 20__, respectively, as set forth below, from sinking fund payments made by the Successor Agency to the Principal Account pursuant to Section 4.03(b), at a redemption price equal to the principal amount thereof to be redeemed, without premium, in the aggregate respective principal amounts and on August 1 in the respective years as set forth in the following tables; provided however, that (y) in lieu of redemption thereof such 2026 Term Bonds may be purchased by the Successor Agency pursuant to Section 2.03(h), and (z) if some but not all of such 2026 Term Bonds have been redeemed pursuant to subsection (a) above, the total amount of all future sinking fund payments shall be reduced by the aggregate principal amount of such 2026 Term Bonds so redeemed, to be allocated among such sinking fund payments in integral multiples of $5,000 as determined by the Successor Agency (written notice of which determination shall be given by the Successor Agency to the Trustee and shall include a revised sinking fund schedule). 2026 Term Bonds of 20__
August 1 Principal Amount
(Maturity)
2026 Term Bonds of 20__
August 1 Principal Amount
(Maturity)
(c) Notice of Redemption; Rescission. Subject to its timely receipt of notice from the Successor Agency of its election to optionally redeem the 2026 Bonds, in the case of an optional redemption pursuant to Section 2.03(a), the Trustee on behalf and at the expense of the Successor Agency shall mail (by first class mail, postage prepaid) notice of any redemption at least twenty (20) but not more than sixty (60) days prior to the redemption date, (i) to any Insurer and to the Owners of any Bonds designated for redemption at their respective addresses appearing on the Registration Books, and (ii) to the Securities Depositories and (iii) post to the Electronic Municipal Market Access (EMMA) internet website maintained by the Municipal Securities Rulemaking Board and, if designated in a Written Request of the Successor Agency filed with the Trustee, to one or more additional Information Services; but such mailing shall not be a condition precedent to such redemption and neither failure to receive any such notice nor any defect therein shall affect the
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Packet Pg. 1157 Attachment: Attachment B - Indenture of Trust (7425 : Adoption of Resolution Authorizing Issuance of Tax Allocation Refunding Bonds, Series 16 validity of the proceedings for the redemption of such Bonds or the cessation of the accrual of interest thereon. Such notice shall state the redemption date and the redemption price, shall state, in the case of a redemption pursuant to (a) or (b) above, that such redemption is conditioned upon the timely delivery of the redemption price by the Successor Agency to the Trustee for deposit in the Redemption Account, shall designate the CUSIP number of the Bonds to be redeemed, shall state the individual number of each Bond to be redeemed or shall state that all Bonds between two stated numbers (both inclusive) or all of the Bonds Outstanding are to be redeemed, and shall require that such Bonds be then surrendered at the Principal Corporate Trust Office of the Trustee for redemption at the redemption price, giving notice also that (further interest on such Bonds will not accrue from and after the redemption date.
(d) The Successor Agency shall have the right to rescind any notice of optional redemption by written notice to the Trustee on or prior to the date fixed for redemption and such rescission shall not constitute an Event of Default under this Indenture. Any such notice of optional redemption shall be canceled and annulled if for any reason funds will not be or are not available on the date fixed for redemption for the payment in full of the Bonds then called for redemption, and such cancellation shall not constitute an Event of Default under this Indenture. The Successor Agency and the Trustee shall have no liability to the Owners or any other party related to or arising from any such rescission or cancellation of redemption. The Trustee shall mail notice of such rescission of redemption in the same manner and to the same recipients as the original notice of redemption was sent.
(e) Upon the payment of the redemption price of Bonds being redeemed, each check or other transfer of funds issued for such purpose shall, to the extent practicable, bear the CUSIP number identifying, by issue and maturity, the Bonds being redeemed with the proceeds of such check or other transfer.
(f) Partial Redemption of Bonds. In the event only a portion of any Bond is called for redemption, then upon surrender of such Bond the Successor Agency shall execute and the Trustee shall authenticate and deliver to the Owner thereof, at the expense of the Successor Agency, a new Bond or Bonds of the same interest rate and maturity, of authorized denominations, in aggregate principal amount equal to the unredeemed portion of the Bond to be redeemed. (g) Effect of Redemption. From and after the date fixed for redemption, if funds available for the payment of the redemption price of and interest on the Bonds so called for redemption shall have been duly deposited with the Trustee, such Bonds so called shall cease to be entitled to any benefit under this Indenture other than the right to receive payment of the redemption price and accrued interest to the redemption date, and no interest shall accrue thereon from and after the redemption date specified in such notice.
(h) Manner of Redemption. Whenever any Bonds or portions thereof are to be selected for redemption by lot, the Trustee shall make such selection, in such manner as the Trustee shall deem appropriate, and shall notify the Successor Agency thereof to the extent Bonds are no longer held in book-entry form. In the event of redemption by lot of Bonds, the Trustee shall assign to each Bond then Outstanding a distinctive number for each $5,000 of the principal amount of each such Bond. The Bonds to be redeemed shall be the Bonds to which were assigned numbers so selected, but only so much of the principal amount of each such Bond of a denomination of more than $5,000 shall be redeemed as shall equal $5,000 for each number assigned to it and so selected.
All Bonds redeemed or purchased pursuant to this Section 2.03 shall be cancelled and destroyed.
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Packet Pg. 1158 Attachment: Attachment B - Indenture of Trust (7425 : Adoption of Resolution Authorizing Issuance of Tax Allocation Refunding Bonds, Series 17 (i) Purchase in Lieu of Redemption. In lieu of redemption of the Bonds, amounts on deposit in the Special Fund or in the Principal Account may also be used and withdrawn by the Successor Agency and the Trustee, respectively, at any time, upon the Written Request of the Successor Agency, for the purchase of the Bonds at public or private sale as and when and at such prices (including brokerage and other charges, but excluding accrued interest, which is payable from the Interest Account) as the Successor Agency may in its discretion determine. The par amount of any Bonds so purchased by the Successor Agency in any twelve-month period ending on July 1 in any year shall be credited towards and shall reduce the par amount of the Bonds required to be redeemed pursuant to a Supplemental Indenture on July 1 in each year; provided that evidence satisfactory to the Trustee of such purchase has been delivered to the Trustee by said July 1.
Section 2.04 Form of 2026 Bonds. The 2026 Bonds, the form of Trustee’s Certificate of Authentication, and the form of Assignment to appear thereon, shall be substantially in the form set forth in Exhibit A, which is attached hereto and by this reference incorporated herein, with necessary or appropriate variations, omissions and insertions, as permitted or required by this Indenture.
Section 2.05 Execution of Bonds. The Bonds shall be executed on behalf of the Successor Agency by the manual or facsimile signature of the City Manager of the City or his or her written designee and the manual or facsimile signature of its Secretary who are in office on the date of execution and delivery of this Indenture or at any time thereafter. If any officer whose signature appears on any Bond ceases to be such officer before delivery of the Bonds to the purchaser, such signature shall nevertheless be as effective as if the officer had remained in office until the delivery of the Bonds to the purchaser. Any Bond may be signed and attested on behalf of the Successor Agency by such persons as at the actual date of the execution of such Bond shall be the proper officers of the Successor Agency although on the date of such Bond any such person shall not have been such officer of the Successor Agency.
Only such of the Bonds as shall bear thereon a Certificate of Authentication in the form hereinbefore set forth, manually executed and dated by the Trustee, shall be valid or obligatory for any purpose or entitled to the benefits of this Indenture, and such Certificate shall be conclusive evidence that such Bonds have been duly authenticated and delivered hereunder and are entitled to the benefits of this Indenture.
Section 2.06 Transfer of Bonds. Any Bond may, in accordance with its terms, be transferred, upon the Registration Books, by the person in whose name it is registered, in person or by a duly authorized attorney of such person, upon surrender of such Bond to the Trustee at its Principal Corporate Trust Office for cancellation, accompanied by delivery of a written instrument of transfer in a form acceptable to the Trustee, duly executed. Whenever any Bond shall be surrendered for transfer, the Successor Agency shall execute and the Trustee shall thereupon authenticate and deliver to the transferee a new Bond or Bonds of like series, tenor, maturity and aggregate principal amount of authorized denominations. The Holder requesting such transfer shall as a condition precedent to the exercise of the privilege of making such transfer remit to the Trustee an amount sufficient to pay any tax or other governmental charge required to be paid with respect to such transfer. The cost of printing Bonds and any services rendered or expenses incurred by the Trustee in connection with any transfer shall be paid by the Successor Agency.
The Trustee may refuse to transfer, under the provisions of this Section 2.06, either (a) any Bonds during the period fifteen (15) days prior to the date established by the Trustee for the selection of Bonds for redemption, or (b) any Bonds selected by the Trustee for redemption. The Trustee may
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Packet Pg. 1159 Attachment: Attachment B - Indenture of Trust (7425 : Adoption of Resolution Authorizing Issuance of Tax Allocation Refunding Bonds, Series 18 further require all information it deems necessary to allow the Trustee to comply with any applicable reporting or withholding obligations under the Code. The Trustee may rely on the information provided to it and shall have no responsibility to verify or ensure the accuracy of such information.
To the extent any such information is not timely provided or is incomplete or inaccurate in any respect, the Trustee will be entitled to report or withhold on any payments hereunder, without liability, to the extent it determines in its discretion such reporting or withholding, as applicable, is required under the Code.
Prior to any transfer of the Bonds outside the book-entry system (including, but not limited to, the initial transfer outside the book-entry system) the transferor shall provide or cause to be provided to the Trustee all information necessary to allow the Trustee to comply with any applicable tax reporting obligations, including without limitation any cost basis reporting obligations under Internal Revenue Code Section 6045, as amended. The Trustee shall conclusively rely on the information provided to it and shall have no responsibility to verify or ensure the accuracy of such information.
Section 2.07 Exchange of Bonds. Bonds may be exchanged at the Principal Corporate Trust Office of the Trustee for Bonds of the same series, tenor and maturity and of other authorized denominations. The Holder requesting such exchange shall as a condition precedent to the exercise of the privilege of making such exchange remit to the Trustee an amount sufficient to pay any tax or other governmental charge required to be paid with respect to such exchange. The cost of printing Bonds and any services rendered or expenses incurred by the Trustee in connection with any exchange shall be paid by the Successor Agency.
The Trustee may refuse to exchange, under the provisions of this Section 2.07, either (a) any Bonds during the fifteen (15) days prior to the date established by the Trustee for the selection of Bonds for redemption or (b) any Bonds selected by the Trustee for redemption. The Trustee may further require all information it deems necessary to allow the Trustee to comply with any applicable reporting or withholding obligations under the Code. The Trustee may rely on the information provided to it and shall have no responsibility to verify or ensure the accuracy of such information.
To the extent any such information is not timely provided or is incomplete or inaccurate in any respect, the Trustee will be entitled to report or withhold on any payments hereunder, without liability, to the extent it determines in its discretion such reporting or withholding, as applicable, is required under the Code.
Section 2.08 Registration of Bonds. The Trustee will keep or cause to be kept, at its Principal Corporate Trust Office, sufficient records for the registration and registration of transfer of the Bonds, which shall at all times during normal business hours be open to inspection and copying by the Successor Agency, upon reasonable prior written notice to the Trustee; and, upon presentation for such purpose, the Trustee shall, under such reasonable regulations as it may prescribe, register or transfer or cause to be registered or transferred, on the Registration Books Bonds as hereinbefore provided.
Section 2.09 Bonds Mutilated, Lost, Destroyed or Stolen. If any Bond shall become mutilated, the Successor Agency, at the expense of the Owner of such Bond, shall execute, and the Trustee shall thereupon authenticate and deliver, a new Bond of like tenor and amount in exchange and substitution for the Bond so mutilated, but only upon surrender to the Trustee of the Bond so mutilated. Every mutilated Bond so surrendered to the Trustee shall be canceled by it. If any Bond shall be lost, destroyed or stolen, evidence of such loss, destruction or theft may be submitted to the
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Packet Pg. 1160 Attachment: Attachment B - Indenture of Trust (7425 : Adoption of Resolution Authorizing Issuance of Tax Allocation Refunding Bonds, Series 19 Trustee and, if such evidence be satisfactory to the Trustee and Successor Agency and indemnity satisfactory to the Trustee and Successor Agency shall be given, the Successor Agency, at the expense of the Owner, shall execute, and the Trustee shall thereupon authenticate and deliver, a new Bond of like tenor and amount in lieu of and in substitution for the Bond so lost, destroyed or stolen (or if any such Bond has matured or has been called for redemption, instead of issuing a substitute Bond, the Trustee may pay the same without surrender thereof upon receipt of indemnity satisfactory to the Trustee and the Successor Agency). The Successor Agency may require payment by the Owner of a sum not exceeding the actual cost of preparing each new Bond issued under this Section 2.09 and of the expenses which may be incurred by the Successor Agency and the Trustee in the premises. Any Bond issued under the provisions of this Section in lieu of any Bond alleged to be lost, destroyed or stolen shall constitute an original additional contractual obligation on the part of the Successor Agency whether or not the Bond so alleged to be lost, destroyed or stolen be at any time enforceable by anyone, and shall be equally and proportionately entitled to the benefits of this Indenture with all other Bonds issued pursuant to this Indenture.
Section 2.10 Book-Entry System.
(a) Original Delivery. The Bonds shall be initially delivered in the form of a separate single fully registered Bond without coupons (which may be typewritten) for each maturity of the Bonds. Upon initial delivery, the ownership of each such Bond shall be registered on the Registration Books in the name of the Nominee. Except as provided in subsection (c), the ownership of all of the Outstanding Bonds shall be registered in the name of the Nominee on the Registration Books.
With respect to Bonds the ownership of which shall be registered in the name of the Nominee, neither the Successor Agency nor the Trustee shall have any responsibility or obligation to any Depository System Participant or to any person on behalf of which the Depository System Participant holds an interest in the Bonds. Without limiting the generality of the immediately preceding sentence, neither the Successor Agency nor the Trustee shall have any responsibility or obligation with respect to (i) the accuracy of the records of the Depository, the Nominee or any Depository System Participant with respect to any ownership interest in the Bonds, (ii) the delivery to any Depository System Participant or any other person, other than a Bondowner as shown in the Registration Books, of any notice with respect to the Bonds, including any notice of redemption, (iii) the selection by the Depository of the beneficial interests in the Bonds to be redeemed in the event the Successor Agency elects to redeem the Bonds in part, (iv) the payment to any Depository System Participant or any other person, other than a Bondowner as shown in the Registration Books, of any amount with respect to principal, premium, if any, or interest on the Bonds or (v) any consent given or other action taken by the Depository as Owner of the Bonds. The Successor Agency and the Trustee may treat and consider the person in whose name each Bond is registered as the absolute owner of such Bond for the purpose of payment of principal, premium and interest on such Bond, for the purpose of giving notices of redemption and other matters with respect to such Bond, for the purpose of registering transfers of ownership of such Bond, and for all other purposes whatsoever.
The Trustee shall pay the principal of and interest and premium, if any, on the Bonds only to the respective Owners or their respective attorneys duly authorized in writing, and all such payments shall be valid and effective to fully satisfy and discharge all obligations with respect to payment of principal of and interest and premium, if any, on the Bonds to the extent of the sum or sums so paid.
No person other than a Bondowner shall receive a Bond evidencing the obligation of the Successor Agency to make payments of principal, interest and premium, if any, pursuant to this Indenture.
Upon delivery by the Depository to the Nominee of written notice to the effect that the Depository
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Packet Pg. 1161 Attachment: Attachment B - Indenture of Trust (7425 : Adoption of Resolution Authorizing Issuance of Tax Allocation Refunding Bonds, Series 20 has determined to substitute a new nominee in its place, and subject to the provisions herein with respect to Record Dates, such new nominee shall become the Nominee hereunder for all purposes; and upon receipt of such a notice the Successor Agency shall promptly deliver a copy of the same to the Trustee. The requirement for physical delivery of the Bonds in connection with a demand for purchase under this Indenture shall be deemed satisfied when the ownership rights in the Bonds are transferred by Depository System Participants on the records of the Depository to the participant account.
(b) Representation Letter. In order to qualify the Bonds for the Depository’s book-entry system, the Successor Agency shall execute and deliver to such Depository a letter representing such matters as shall be necessary to so qualify the Bonds. The execution and delivery of such letter shall not in any way limit the provisions of subsection (a) above or in any other way impose upon the Successor Agency or the Trustee any obligation whatsoever with respect to persons having interests in the Bonds other than the Bondowners. The Trustee agrees to comply with all provisions in such letter with respect to the giving of notices thereunder by the Trustee. In addition to the execution and delivery of such letter, upon written request of the Depository or the Trustee, the Successor Agency may take any other actions, not inconsistent with this Indenture, to qualify the Bonds for the Depository’s book-entry program.
(c) Transfers Outside Book-Entry System. In the event that either (i) the Depository determines not to continue to act as Depository for the Bonds, or (ii) the Successor Agency determines to terminate the Depository as such, then the Successor Agency shall thereupon discontinue the book-entry system with such Depository. In such event, the Depository shall cooperate with the Successor Agency and the Trustee in the issuance of replacement Bonds by providing the Trustee with a list showing the interests of the Depository System Participants in the Bonds, and by surrendering the Bonds, registered in the name of the Nominee, to the Trustee on or before the date such replacement Bonds are to be issued. The Depository, by accepting delivery of the Bonds, agrees to be bound by the provisions of this subsection (c). If, prior to the termination of the Depository acting as such, the Successor Agency fails to identify another Securities Depository to replace the Depository, then the Bonds shall no longer be required to be registered in the Registration Books in the name of the Nominee, but shall be registered in whatever name or names the Owners transferring or exchanging Bonds shall designate, in accordance with the provisions of this Article II.
Prior to its termination, the Depository shall furnish the Trustee with the names and addresses of the Depository System Participants and respective ownership interests thereof. (d) Payments to the Nominee. Notwithstanding any other provision of this Indenture to the contrary, so long as any Bond is registered in the name of the Nominee, all payments with respect to principal of and interest and premium, if any, on such Bond and all notices with respect to such Bond shall be made and given, respectively, as provided in the letter described in subsection (b) of this Section or as otherwise instructed by the Depository.
Section 2.11 Applicability of Provisions to Parity Debt. Unless otherwise provided in a Supplemental Indenture, the provisions of subdivisions (d) through (j) of Section 2.03 and Sections 2.05 through 2.10 shall apply to all Bonds unless otherwise provided in a Parity Debt Instrument or Supplemental Indenture.
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Packet Pg. 1162 Attachment: Attachment B - Indenture of Trust (7425 : Adoption of Resolution Authorizing Issuance of Tax Allocation Refunding Bonds, Series 21 ARTICLE III
DEPOSIT AND APPLICATION; ADDITIONAL DEBT
Section 3.01 Issuance of Bonds. Upon the execution and delivery of this Indenture, the Successor Agency shall execute and deliver to the Trustee the 2026 Bonds in the aggregate principal amount of $[PAR] and the Trustee shall authenticate and deliver the 2026 Bonds upon the Written Request of the Successor Agency.
Section 3.02 Application of Proceeds of Sale and Certain Other Amounts. On the Closing Date the net proceeds of sale of the 2026 Bonds received by the Trustee, being $________ (calculated as the par amount thereof, plus original issue premium in the amount of $________, less the discount of the original purchaser thereof in the amount of $________, less the premium for the 2026 Reserve Policy in the amount of $________ paid directly to the 2026 Insurer), shall be applied as follows:
(a) The Trustee shall deposit the amount of $________ in the Costs of Issuance Fund.
(b) The Trustee shall transfer $________to the Escrow Agent for deposit into the escrow fund established under the 2006 Bonds Escrow Agreement. (c) The Trustee shall transfer $________to the Escrow Agent for deposit into the escrow fund established under the 2011 Bonds Escrow Agreement.
The Trustee may establish and maintain for so long as is necessary one or more temporary funds and accounts (or sub-accounts) under this Indenture, including but not limited to a temporary fund for holding the proceeds of the Bonds.
Section 3.03 Costs of Issuance Fund. There is hereby established a separate fund to be known as the “Costs of Issuance Fund,” which shall be held by the Trustee in trust. The moneys in the Costs of Issuance Fund shall be used and withdrawn by the Trustee from time to time to pay the Costs of Issuance with respect to the 2026 Bonds upon submission of a Written Request of the Successor Agency stating the person to whom payment is to be made, the amount to be paid, the purpose for which the obligation was incurred, instructions for the manner such payment is to be made, and that such payment is a proper charge against said fund. Each such Written Request of the Successor Agency shall be sufficient evidence to the Trustee of the facts stated therein and the Trustee shall have no duty to confirm the accuracy of such facts and shall be fully protected in relying thereon. On the date that is ninety (90) days following the Closing Date, or upon the earlier Written Request of the Successor Agency, the Trustee shall transfer all amounts (if any) remaining in the Costs of Issuance Fund to the 2026 Account of the Interest Account within the Debt Service Fund and shall thereupon close the Costs of Issuance Fund.
Section 3.04 Issuance of Parity Debt. In addition to the 2026 Bonds, the Successor Agency may issue Parity Debt to refund any outstanding 2026 Bonds or Parity Debt for savings, in such principal amount as shall be determined by the Successor Agency. The Successor Agency may issue and deliver any such Parity Debt subject to the following specific conditions all of which are hereby made conditions precedent to the issuance and delivery of such Parity Debt:
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Packet Pg. 1163 Attachment: Attachment B - Indenture of Trust (7425 : Adoption of Resolution Authorizing Issuance of Tax Allocation Refunding Bonds, Series 22 (a) No Event of Default hereunder and no event of default under any Parity Debt Instrument shall have occurred and be continuing unless cured by the issuance of such Parity Debt; (b) The Parity Debt shall be issued to provide savings to the Successor Agency calculated in accordance with Health and Safety Code Section 34177.5(a); (c) A Supplemental Indenture or Parity Debt Instrument shall have been adopted which shall (i) state the applicable reserve requirement, if any, and the amount, if any, from the proceeds of sale of such Parity Debt or the stated amount of Qualified Reserve Account Credit Instrument to be deposited in a separate subaccount of the Reserve Account or other debt service reserve account or fund as provided in such Supplemental Indenture or Parity Debt Instrument, to be held as separate security for such series of Parity Debt; (ii) designate accounts and subaccounts within the Debt Service Fund, including within the Reserve Account if applicable, to be used in connection with such Parity Debt; and (iii) set forth such other provisions that are appropriate or necessary and are not inconsistent with the provisions hereof; (d) Such Supplemental Indenture or Parity Debt Instrument shall not provide as a remedy for any event of default thereunder a declaration that all of such Parity Debt then outstanding, and the interest accrued thereon, is due and payable immediately; and (e) The Successor Agency shall deliver to the Trustee a Written Certificate of the Successor Agency certifying that the conditions precedent to the issuance of such Parity Debt set forth above have been satisfied.
Section 3.05 Issuance of Subordinate Debt. Notwithstanding the foregoing, no provision herein shall prevent the Successor Agency from issuing additional bonds or incurring other loans, advances or indebtedness payable from Tax Revenues on a subordinate basis to the 2026 Bonds and Parity Debt.
ARTICLE IV
SECURITY OF BONDS; FLOW OF FUNDS
Section 4.01 Security of Bonds; Equal Security. Subject to the provisions of Section 4.02 and Section 6.06 hereof allowing for the application of Tax Revenues, all Tax Revenues and the Redevelopment Obligation Retirement Fund, including the Special Fund therein, and all amounts in the Redevelopment Property Tax Trust Fund are irrevocably pledged under this Indenture to secure the payment of the principal of and interest on the 2026 Bonds and all Parity Debt without preference or priority for series, issue, number, dated date, sale date, date of execution or date of delivery. Such pledge shall constitute a lien on and security interest in the Tax Revenues and the Redevelopment Obligation Retirement Fund, including the Special Fund therein, and all amounts in the Redevelopment Property Tax Trust Fund, and will attach, be perfected and be valid and binding against all parties having claims of any kind in tort, contract or otherwise against the Successor Agency, irrespective of whether such parties have notice of this Indenture; provided however, the parties hereto acknowledge that the County Auditor-Controller is authorized by Section 34183(a) of the Dissolution Act to use Tax Revenues to pay the County’s administrative costs allowed under Section 34182 and Section 95.3 of the Revenue and Taxation Code and is required by Section 34183(a)(1) of the Dissolution Act to pay Tax Revenues to taxing entities pursuant to Sections 33607.5, 33607.7 and 33676 of the Law (unless such payments are subordinated to
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Packet Pg. 1164 Attachment: Attachment B - Indenture of Trust (7425 : Adoption of Resolution Authorizing Issuance of Tax Allocation Refunding Bonds, Series 23 payments on the 2026 Bonds and Parity Debt pursuant to Section 33607.5(e) of the Law or 34177.5(c) of the Dissolution Act), and provided further that the Successor Agency may use Tax Revenues to make payments under the BofA Credit Agreement on a basis senior to the 2026 Bonds.
Except for the Tax Revenues, such amounts and such funds and accounts, no other moneys, funds, accounts or properties of the Successor Agency are pledged to, or otherwise liable for, the payment of principal of or interest or redemption premium (if any) on the 2026 Bonds or Parity Debt except as provided in the following paragraph with respect to the 2026 Bonds and other Bonds.
The Debt Service Fund and any fund or account or sub-accounts created under this Indenture (other than the Costs of Issuance Fund and the Rebate Fund), including amounts on deposit therein (including proceeds of the 2026 Bonds), are irrevocably pledged under this Indenture to secure the payment of the principal of and interest on the 2026 Bonds and other Bonds without preference or priority for series issue, number, dated date, sale date, date of execution or date of delivery.
Notwithstanding the foregoing, the 2026 Subaccount of the Reserve Account secures only the 2026 Bonds. Such pledge shall constitute a first and exclusive lien on and security interest in the Debt Service Fund and any other fund or account created under this Indenture, and including amounts on deposit therein (including proceeds of the 2026 Bonds), and will attach, be perfected and be valid and binding against all parties having claims of any kind in tort, contract or otherwise against the Successor Agency, irrespective of whether such parties have notice of this Indenture.
The parties acknowledge that Section 34177.5(g) of the Dissolution Act provides that the 2026 Bonds and Parity Debt are further secured by a pledge of, and lien on moneys deposited in the Redevelopment Property Tax Trust Fund held by the County Auditor Controller related to the Successor Agency, which moneys, subject to (i) the payment by the County Auditor Controller of certain amounts to the County for administrative costs allowed under Section 34182 and Section 95.3 of the Revenue and Taxation Code, to taxing entities pursuant to Sections 33607.5, 33607.7 and 33676 of the Law (unless such payments are subordinated to payments on the 2026 Bonds and Parity Debt pursuant to Section 33607.5(e) of the Law or Section 34177.5(c) of the Dissolution Act), and (ii) the payments by the Successor Agency under the BofA Credit Agreement, constitute Tax Revenues as defined herein.
In consideration of the acceptance of the 2026 Bonds and other Bonds by those who shall hold the same from time to time, this Indenture shall be deemed to be and shall constitute a contract between the Successor Agency and the Owners from time to time of the Bonds, and the covenants and agreements herein set forth to be performed on behalf of the Successor Agency shall be for the equal and proportionate benefit, security and protection of all Owners of the 2026 Bonds and other Bonds without preference, priority or distinction as to security or otherwise of any of the 2026 Bonds and other Bonds over any of the others by reason of the number or date thereof or the time of sale, execution and delivery thereof, or otherwise for any cause whatsoever, except as expressly provided therein or herein.
Section 4.02 Redevelopment Obligation Retirement Fund; Special Fund; Deposit of Tax Revenues. There is hereby established a special fund to be known as the “Special Fund” which is to be held by the Successor Agency within the Redevelopment Obligation Retirement Fund. The Special Fund shall be held by the Successor Agency separate and apart from other funds of the Successor Agency.
The Successor Agency shall deposit all of the Tax Revenues received with respect to any ROPS Period into the Special Fund promptly upon receipt thereof by the Successor Agency in
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Packet Pg. 1165 Attachment: Attachment B - Indenture of Trust (7425 : Adoption of Resolution Authorizing Issuance of Tax Allocation Refunding Bonds, Series 24 accordance with Section 5.13 hereof. Except as may be provided to the contrary in this Indenture or in any Supplemental Indenture or Parity Debt Instrument, upon receipt by the Successor Agency of money from the Redevelopment Property Tax Trust Fund requested in accordance with Section 5.13, on each January 2 and June 1 or other date(s) on which Redevelopment Property Tax Trust Fund moneys are distributed to the Successor Agency, and deposit of such amounts into the Special Fund, all Tax Revenues received by the Successor Agency in excess of such amounts shall be released from the pledge and lien hereunder and shall be applied in accordance with the Law and the Dissolution Act, including but not limited to the payment of debt service on any subordinate debt. Prior to the payment in full of the principal of and interest and redemption premium (if any) on the Bonds and the payment in full of all other amounts payable hereunder and under any Supplemental Indentures or other Parity Debt Instrument, the Successor Agency shall not have any beneficial right or interest in the moneys on deposit in the Special Fund, except as may be provided in this Indenture and in any Supplemental Indenture or other Parity Debt Instrument.
Section 4.03 Deposit of Amounts by Trustee. There is hereby established a trust fund to be known as the Debt Service Fund, and an Interest Account and Principal Account therein (together with the Reserve Account and the 2026 Bonds Subaccount therein established under Section 4.03(c)), which shall be held by the Trustee hereunder in trust. If Parity Debt is issued in the form of Bonds, the Trustee may establish subaccounts within each account for each issue of Parity Debt, including a separate subaccount of the Reserve Account as security for Parity Debt pursuant to and as provided in a Supplemental Indenture to the extent provided under Section 3.04 hereof, if applicable. Moneys in the Special Fund shall be transferred by the Successor Agency to the Trustee in the following amounts, at the following times, and deposited by the Trustee, on a pro-rata basis amongst series of Bonds, in the following respective special accounts, which are hereby established in the Debt Service Fund, and in the following order of priority (provided further that, if on the fifth (5th) Business Day prior to the date the Successor Agency is required to transfer amounts on deposit in the Special Fund to the Trustee amounts on deposit therein are insufficient to make the following deposits, taking into account amounts required to be transferred with respect to Bonds other than the 2026 Bonds, the Successor Agency shall immediately notify the Trustee in writing of the amount of any such insufficiency and the Trustee shall deposit amounts received from the Successor Agency into subaccounts of the Interest Account and/or Principal Account, as applicable, on a pro-rata basis):
(a) Interest Account. On or before the fifth (5th) Business Day preceding each Interest Payment Date, the Successor Agency shall withdraw from the Special Fund and transfer to the Trustee, for deposit in the Interest Account an amount which when added to the amount contained in the Interest Account on that date, will be equal to the aggregate amount of the interest becoming due and payable on the Outstanding Bonds on such Interest Payment Date. No such transfer and deposit need be made to the Interest Account if the amount contained therein is at least equal to the interest to become due on the next succeeding Interest Payment Date upon all of the Outstanding Bonds. All moneys in the Interest Account shall be used and withdrawn by the Trustee solely for the purpose of paying the interest on the Bonds as it shall become due and payable. The Trustee shall establish a 2026 Account within the Interest Account for payment of interest due on the 2026 Bonds, and may establish sub-accounts within the Interest Account for the payment of interest due on other Bonds, provided that all such Bonds shall be paid on a parity basis. (b) Principal Account. On or before the fifth (5th) Business Day preceding July 1 in each year in which principal is due on any Bonds, the Successor Agency shall withdraw from the Special Fund and transfer to the Trustee for deposit in the Principal Account an amount which, when added to the amount then contained in the Principal Account, will be equal to the
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Packet Pg. 1166 Attachment: Attachment B - Indenture of Trust (7425 : Adoption of Resolution Authorizing Issuance of Tax Allocation Refunding Bonds, Series 25 principal becoming due and payable on the Outstanding Bonds, including pursuant to mandatory sinking account redemption, on the next July 1. No such transfer and deposit need be made to the Principal Account if the amount contained therein is at least equal to the principal to become due on the next July 1 on all of the Outstanding Bonds. All moneys in the Principal Account shall be used and withdrawn by the Trustee solely for the purpose of paying the principal of the Bonds, including by mandatory sinking account redemption, as the same shall become due and payable. The Trustee shall establish a 2026 Account within the Principal Account for payment of interest due on the 2026 Bonds within the Principal Account for payment of interest due on the 2026 Bonds, and may establish additional sub-accounts within the Principal Account for the payment of principal due on the 2026 Bonds and other Bonds, provided that all such Bonds shall be paid on a parity basis. (c) Reserve Account. There is hereby established in the Debt Service Fund a separate account known as the “Reserve Account.” Within the Reserve Account, there is hereby established a “2026 Subaccount” therein which 2026 Subaccount solely as security for payments of 2026 Bonds payable by the Successor Agency pursuant to this Section 4.03 which shall in each case be held by the Trustee in trust for the benefit of the Owners of the 2026 Bonds. Separate subaccounts may be established in the Reserve Account as separate security for any future issue of Parity Debt.
The Reserve Requirement for the 2026 Bonds (calculated on a standalone basis) will be satisfied by the delivery of the 2026 Reserve Policy by the 2026 Insurer on the Closing Date with respect to the 2026 Bonds. The Successor Agency will have no obligation to replace the 2026 Reserve Policy or to fund the 2026 Subaccount of the Reserve Account with cash if, at any time that the 2026 Bonds are Outstanding, any rating assigned to the 2026 Insurer is downgraded, suspended or withdrawn or amounts are not available under the 2026 Reserve Policy, other than in connection with a draw on the 2026 Reserve Policy.
Except as provided in the preceding paragraph and as may be provided in a Supplemental Indenture or Parity Debt Instrument, in the event that the amount on deposit in the Reserve Account (or the applicable subaccount) at any time becomes less than the Reserve Requirement applicable thereto (as determined by the Trustee as provided in Section 6.7), the Trustee shall promptly notify the Successor Agency of such fact. Upon receipt of any such notice and as promptly as is permitted by the Law, the Successor Agency shall transfer to the Trustee an amount sufficient to maintain the Reserve Requirement on deposit in the applicable Reserve Account.
The amounts available under the 2026 Reserve Policy shall be used and withdrawn by the Trustee solely for the purpose of making transfers to the Interest Account and the Principal Account in such order of priority, in the event of any deficiency at any time in any of such accounts with respect to the payment of scheduled debt service on the 2026 Bonds.
Moneys, if any, on deposit in the Reserve Account (or the applicable subaccount therein) shall be withdrawn and applied by the Trustee for the final payment or payments of principal of and interest on the 2026 Bonds or any Bonds secured by the applicable account therein, respectively.
The Trustee shall compute the Reserve Requirement annually on or before August 1.
In no event shall amounts in the Reserve Account (exclusive of subaccounts therein, which shall be applied in accordance with the terms of the Supplemental Indenture providing for Parity Debt) be applied to payment of any Bonds or Parity Debt other than 2026 Bonds.
Except as provided above, the amount on deposit in the Reserve Account and the subaccounts therein shall be maintained at the Reserve Requirement applicable thereto at all times
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Packet Pg. 1167 Attachment: Attachment B - Indenture of Trust (7425 : Adoption of Resolution Authorizing Issuance of Tax Allocation Refunding Bonds, Series 26 prior to the payment of the applicable series of Bonds in full. If there shall then not be sufficient Tax Revenues to transfer an amount sufficient to maintain the applicable Reserve Requirement on deposit in the Reserve Account (or the applicable subaccount), the Successor Agency shall be obligated to continue making transfers as Tax Revenues become available until there is an amount sufficient to maintain the applicable Reserve Requirement on deposit in the Reserve Account (or the applicable subaccount). No such transfer and deposit need be made to the Reserve Account or the applicable subaccount) so long as there shall be on deposit therein a sum at least equal to the applicable Reserve Requirement. All money in the Reserve Account shall be used and withdrawn by the Trustee solely for the purpose of making transfers pursuant to this Indenture to the Interest Account and the Principal Account, in the event of any deficiency at any time in either of such accounts or for the retirement of all the 2026 Bonds (and other Bonds secured by the Reserve Account or subaccounts therein to the extent provided in a Supplemental Indenture or Parity Debt Instrument) then Outstanding, except that so long as the Successor Agency is not in default hereunder or under any Parity Debt Instrument, any amount in the Reserve Account or subaccount thereof in excess of the applicable Reserve Requirement (other than amounts drawn under the Reserve Policy) shall be withdrawn from the Reserve Account or applicable subaccount thereof semiannually on each [February 1 and August 1] by the Trustee and deposited in the Interest Account or be applied pro rata in accordance with this Indenture and any applicable provision of a Parity Debt Instrument. On the Business Day preceding the final Interest Payment Date for a series of Bonds (or multiple series of Bonds issued under this Indenture or a single Parity Debt Instrument), all amounts held in the applicable subaccount of the Reserve Account (other than amounts drawn under the Reserve Policy) shall be withdrawn from such subaccount and shall be transferred to the applicable subaccounts of the Interest Account and the Principal Account, in such order, for such series of Bonds, to the extent required to make the deposits then required to be made pursuant to this Section 4.03, or shall be applied pro rata as required by any Parity Debt Instrument, as applicable.
The Successor Agency shall have the right at any time to direct the Trustee to release funds from the Reserve Account or subaccount thereof, in whole or in part, by tendering to the Trustee:
(i) a Qualified Reserve Account Credit Instrument, and (ii) an opinion of Bond Counsel stating that neither the release of such funds nor the acceptance of such Qualified Reserve Account Credit Instrument will cause interest on the Bonds or any Parity Debt the interest on which is excluded from gross income of the owners thereof for federal income tax purposes to become includable in gross income for purposes of federal income taxation. Upon tender of such items to the Trustee, and upon delivery by the Successor Agency to the Trustee of written calculation of the amount permitted to be released from the Reserve Account (upon which calculation the Trustee may conclusively rely), the Trustee shall transfer such funds from the Reserve Account or subaccount thereof to the Successor Agency to be applied in accordance with the Law and the Dissolution Act. The Trustee shall comply with all documentation relating to a Qualified Reserve Account Credit Instrument as shall be required to maintain such Qualified Reserve Account Credit Instrument in full force and effect and as shall be required to receive payments thereunder in the event and to the extent required to make any payment when and as required under this paragraph (d). Upon the expiration of any Qualified Reserve Account Credit Instrument, the Successor Agency shall either (i) replace such Qualified Reserve Account Credit Instrument with a new Qualified Reserve Account Credit Instrument, or (ii) deposit or cause to be deposited with the Trustee an amount of funds equal to the applicable Reserve Requirement, to be derived from the first legally available Tax Revenues. If the applicable Reserve Requirement is being maintained partially in cash and partially with a Qualified Reserve Account Credit Instrument, the cash shall be first used to meet any deficiency which may exist from time to time in the Interest Account or the Principal Account for the purpose of making payments
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Packet Pg. 1168 Attachment: Attachment B - Indenture of Trust (7425 : Adoption of Resolution Authorizing Issuance of Tax Allocation Refunding Bonds, Series 27 required pursuant to Sections 4.03(a) or 4.03(b) of this Indenture. If the Reserve Requirement is being maintained with two or more Qualified Reserve Account Credit Instruments, any draw to meet a deficiency which may exist from time to time in the Interest Account or the Principal Account for the purpose of making payments required pursuant to Sections 4.03(a) or 4.03(b) of this Indenture shall be pro-rata with respect to each such instrument.
The Reserve Account shall be maintained in the form of one or more separate sub-accounts which are established for the purpose of holding the proceeds of separate issues of any Parity Debt in conformity with applicable provisions of the Code to the extent directed by the Successor Agency in writing to the Trustee. Separate series of Parity Debt may be secured by common sub-accounts of the Reserve Account as provided in one or more Supplemental Indentures and/or Parity Debt Instruments from time to time.
Section 4.04 Rebate Fund.
(a) The Trustee shall establish a separate fund for the 2026 Bonds designated the “Rebate Fund.” Absent an opinion of Bond Counsel that the exclusion from gross income for federal income tax purposes of interest on the 2026 Bonds will not be adversely affected, the Successor Agency shall cause to be deposited in the Rebate Fund such amounts as are required to be deposited therein pursuant to this Section and the Tax Certificate. All money at any time deposited in the Rebate Fund shall be held by the Trustee in trust, for payment to the United States Treasury. All amounts on deposit in the Rebate Fund for the 2026 Bonds shall be governed by this Section and the Tax Certificate, unless the Successor Agency obtains and delivers to the Trustee an opinion of Bond Counsel that the exclusion from gross income of interest on the 2026 Bonds will not be adversely affected for federal income tax purposes if such requirements are not satisfied. Notwithstanding anything to the contrary contained herein or in the Tax Certificate, the Trustee shall be deemed conclusively to have complied with the provisions of this Section and the Tax Certificate if the Trustee follows the directions of the Successor Agency, and the Trustee shall have no independent responsibility to or liability resulting from failure of the Trustee to enforce compliance by the Successor Agency with the Tax Certificate or the provisions of this Section. (b) Any funds remaining in the Rebate Fund after redemption and payment of the 2026 Bonds or provision made therefor satisfactory to the Trustee, including accrued interest and payment of any applicable fees to the Trustee and satisfaction of the Rebate Requirement (as defined in the Tax Certificate), shall be transferred by the Trustee to the Successor Agency at the written direction of the Successor Agency and utilized in any manner by the Successor Agency. (c) Notwithstanding anything in this Section 4.04 or this Indenture to the contrary, the obligation to comply with the requirements of this Section shall survive the defeasance of the 2026 Bonds and any Parity Debt.
(d) The Trustee shall have no obligations or responsibilities under this Section other than to follow the written directions of the Successor Agency. The Trustee shall have no responsibility to make any calculations of rebate or to independently review or verify such calculations.
Section 4.05 Provisions Relating to 2026 Reserve Policy. Notwithstanding anything herein to the contrary, the following terms shall govern the 2026 Reserve Policy and the Reserve
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Packet Pg. 1169 Attachment: Attachment B - Indenture of Trust (7425 : Adoption of Resolution Authorizing Issuance of Tax Allocation Refunding Bonds, Series 28 Account related to the 2026 Bonds so long as the 2026 Reserve Policy is deposited therein: [To come from Insurer]
ARTICLE V
OTHER COVENANTS OF THE SUCCESSOR AGENCY
Section 5.01 Punctual Payment. The Successor Agency shall punctually pay or cause to be paid the principal and interest to become due in respect of all the Bonds together with the premium thereon, if any, in strict conformity with the terms of the Bonds and of this Indenture. The Successor Agency shall faithfully observe and perform all of the conditions, covenants and requirements of this Indenture, all Supplemental Indentures and the Bonds. Nothing herein contained shall prevent the Successor Agency from making advances of its own moneys howsoever derived to any of the uses or purposes referred to herein.
Section 5.02 Limitation on Additional Indebtedness; Against Encumbrances. The Successor Agency hereby covenants that, so long as the Bonds are Outstanding, the Successor Agency shall not issue any bonds, notes or other obligations, enter into any agreement or otherwise incur any indebtedness, which is in any case payable from all or any part of the Tax Revenues (i) on a basis senior to the Bonds or (ii) on a parity with the Bonds except for Parity Debt issued to refund any of the Bonds or other Parity Debt that satisfies the requirements of Section 3.04 are met. The Successor Agency will not otherwise encumber, pledge or place any charge or lien upon any of the Tax Revenues or other amounts pledged to the Bonds superior or equal to the pledge and lien herein created for the benefit of the Bonds.
Section 5.03 Extension of Payment. The Successor Agency will not, directly or indirectly, extend or consent to the extension of the time for the payment of any Bond or claim for interest on any of the Bonds and will not, directly or indirectly, be a party to or approve any such arrangement by purchasing or funding the Bonds or claims for interest in any other manner. In case the maturity of any such Bond or claim for interest shall be extended or funded, whether or not with the consent of the Successor Agency, such Bond or claim for interest so extended or funded shall not be entitled, in case of default hereunder, to the benefits of this Indenture, except subject to the prior payment in full of the principal of all of the Bonds then Outstanding and of all claims for interest which shall not have been so extended or funded.
Section 5.04 Payment of Claims. The Successor Agency shall promptly pay and discharge, or cause to be paid and discharged, any and all lawful claims for labor, materials or supplies which, if unpaid, might become a lien or charge upon the properties owned by the Successor Agency or upon the Tax Revenues or other amounts pledged to the payment of the Bonds, or any part thereof, or upon any funds in the hands of the Trustee, or which might impair the security of the Bonds. Nothing herein contained shall require the Successor Agency to make any such payment so long as the Successor Agency in good faith shall contest the validity of said claims.
Section 5.05 Books and Accounts; Financial Statements. The Successor Agency shall keep, or cause to be kept, proper books of record and accounts, separate from all other records and accounts of the Successor Agency and the City, in which complete and correct entries shall be made of all transactions relating to the Redevelopment Project, the Tax Revenues and the Special Fund.
Such books of record and accounts shall at all times during business hours be subject to the
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Packet Pg. 1170 Attachment: Attachment B - Indenture of Trust (7425 : Adoption of Resolution Authorizing Issuance of Tax Allocation Refunding Bonds, Series 29 inspection of any Insurer and the Owners of not less than ten percent (10%) in aggregate principal amount of the Bonds then Outstanding, or their representatives authorized in writing.
The Successor Agency will cause to be prepared, on or before each April 1 so long as the Bonds are Outstanding, complete audited financial statements with respect to such Fiscal Year showing the Tax Revenues, all disbursements of Tax Revenues and the financial condition of the Redevelopment Project, including the balances in all funds and accounts relating to the Redevelopment Project, as of the end of such Fiscal Year. Upon request in writing, the Successor Agency shall promptly furnish a copy of such financial statements to the Trustee, the 2026 Insurer and any other Insurer at no expense and to any Owner at the expense of such Owner. The Trustee shall have no obligation to review, verify or analyze any financial statements provided to it by the Successor Agency and shall hold such financial statement solely as a repository for the benefit of the Owners of the Bonds. The Trustee shall not be deemed to have notice of any information contained therein, or default or Event of Default which may be disclosed therein in any manner.
The Successor Agency agrees, consents and will cooperate in good faith to provide information reasonably requested by the 2026 Insurer and will further provide appropriately designated individuals and officers to discuss the affairs, finances and accounts of the Successor Agency or any other matter as the 2026 Insurer may reasonably request.
Section 5.06 Protection of Security and Rights of Owners. The Successor Agency will preserve and protect the security of the Bonds and the rights of the Owners. From and after the Closing Date with respect to Bonds, the Bonds shall be incontestable by the Successor Agency.
Section 5.07 Payments of Taxes and Other Charges. Except as otherwise provided herein, the Successor Agency will pay and discharge, or cause to be paid and discharged, all taxes, service charges, assessments and other governmental charges which may hereafter be lawfully imposed upon the Successor Agency or the properties then owned by the Successor Agency in the Project Area, or upon the revenues therefrom when the same shall become due. Nothing herein contained shall require the Successor Agency to make any such payment so long as the Successor Agency in good faith shall contest the validity of said taxes, assessments or charges. The Successor Agency will duly observe and conform with all valid requirements of any governmental authority relative to the Project Area or any part thereof.
Section 5.08 [Reserved].
Section 5.09 [Reserved].
Section 5.10 Maintenance of Tax Revenues. The Successor Agency shall comply with all requirements of the Law and the Dissolution Act to ensure the allocation and payment to it of the Tax Revenues as provided in the Dissolution Act.
Section 5.11 Tax Covenants. In connection with the 2026 Bonds and Parity Debt issued on a tax-exempt basis, the Successor Agency covenants and agrees to contest by court action or otherwise any assertion by the United States of America or any departments or agency thereof that the interest received by the Bondowners is includable in gross income of the recipient under federal income tax laws on the date of issuance of the 2026 Bonds and Parity Debt issued on a tax-exempt basis. Notwithstanding any other provision of this Indenture, absent an opinion of Bond Counsel that the exclusion from gross income of interest with respect to the 2026 Bonds and Parity Debt issued on
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Packet Pg. 1171 Attachment: Attachment B - Indenture of Trust (7425 : Adoption of Resolution Authorizing Issuance of Tax Allocation Refunding Bonds, Series 30 a tax-exempt basis will not be adversely affected for federal income tax purposes, the Successor Agency covenants to comply with all applicable requirements of the Code necessary to preserve such exclusion from gross income and specifically covenants, without limiting the generality of the foregoing, as follows:
(a) Private Activity. The Successor Agency will take no action or refrain from taking any action or make any use of the proceeds of the 2026 Bonds or Parity Debt issued on a tax-exempt basis or of any other monies or property which would cause the 2026 Bonds or Parity Debt to be “private activity bonds” within the meaning of Section 141 of the Code; (b) Arbitrage. The Successor Agency will make no use of the proceeds of the 2026 Bonds or Parity Debt issued on a tax-exempt basis or of any other amounts or property, regardless of the source, or take any action or refrain from taking any action which will cause the 2026 Bonds or Parity Debt issued on a tax-exempt basis to be “arbitrage bonds” within the meaning of Section 148 of the Code;
(c) Federal Guaranty. The Successor Agency will make no use of the proceeds of the 2026 Bonds or Parity Debt issued on a tax-exempt basis or take or omit to take any action that would cause the 2026 Bonds or the Parity Debt issued on a tax-exempt basis to be “federally guaranteed” within the meaning of Section 149(b) of the Code; (a) Maintenance of Tax-Exemption. The Successor Agency will take all actions necessary to assure the exclusion of interest on the 2026 Bonds and any Parity Debt issued on a tax-exempt basis from the gross income of the Owners of the 2026 Bonds and such Parity Debt to the same extent as such interest is permitted to be excluded from gross income under the Code as in effect on the date of issuance of the 2026 Bonds and such Parity Debt. (d) Information Reporting. The Successor Agency will take or cause to be taken all necessary action to comply with the informational reporting requirement of Section 149(e) of the Code;
(e) Hedge Bonds. The Successor Agency will make no use of the proceeds of the 2026 Bonds or any Parity Debt issued on a tax-exempt basis or any other amounts or property, regardless of the source, or take any action or refrain from taking any action that would cause either any 2026 Bonds or the Parity Debt issued on a tax-exempt basis to be considered “hedge bonds” within the meaning of Section 149(g) of the Code unless the Successor Agency takes all necessary action to assure compliance with the requirements of Section 149(g) of the Code to maintain the exclusion from gross income of interest on the 2026 Bonds and any Parity Debt issued on a tax-exempt basis for federal income tax purposes; and
(f) Miscellaneous. The Successor Agency will take no action or refrain from taking any action inconsistent with its expectations stated in that certain Tax Certificate executed by the Successor Agency in connection with each issuance of 2026 Bonds and Parity Debt issued on a tax-exempt basis and will comply with the covenants and requirements stated therein and incorporated by reference herein.
Section 5.12 Continuing Disclosure. The Successor Agency hereby covenants and agrees that it will comply with and carry out all of the provisions of the Continuing Disclosure Certificate.
Notwithstanding any other provision of this Indenture, failure of the Successor Agency to comply
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Packet Pg. 1172 Attachment: Attachment B - Indenture of Trust (7425 : Adoption of Resolution Authorizing Issuance of Tax Allocation Refunding Bonds, Series 31 with the Continuing Disclosure Certificate shall not be considered an Event of Default; however, the Trustee at the request of any Participating Underwriter (as defined in the Continuing Disclosure Certificate) or the holders of at least 25% aggregate principal amount of Outstanding 2026 Bonds, shall, but only to the extent the Trustee has been indemnified to its satisfaction from and against any loss, liability, cost or expense, including, without limitation, fees and expenses of its attorneys and advisors and additional fees and expenses of the Trustee, take such actions as may be necessary and appropriate to compel performance, including seeking mandate or specific performance by court order.
Section 5.13 Compliance with the Dissolution Act.
(a) The Successor Agency shall comply with all of the requirements of the Law and the Dissolution Act. Without limiting the generality of the foregoing, the Successor Agency covenants and agrees to file all required statements and hold all public hearings required under the Dissolution Act to assure compliance by the Successor Agency with its covenants hereunder.
Further, it will take all actions required under the Dissolution Act to include:
(i) Amounts due under the BofA Credit Agreement,
(ii) scheduled debt service on the 2026 Bonds and any Parity Debt and any amount required under this Indenture to replenish the Reserve Account established hereunder (including amounts payable to any Insurer as issuer of a Qualified Reserve Account Credit Instrument) or the reserve account established under any Parity Debt Instrument, and
(iii) amounts due to any Insurer (including the 2026 Insurer) hereunder, under any Parity Debt Instrument or under an insurance or surety bond agreement,
in Recognized Obligation Payment Schedules for each ROPS Period so as to enable the County Auditor-Controller to distribute from the Redevelopment Property Tax Trust Fund to the Successor Agency’s Redevelopment Obligation Retirement Fund on each January 2 and June 1 amounts required for the Successor Agency to pay principal of, and interest on, the Bonds coming due in the respective ROPS Period, to pay amounts owed to any Insurer, as well as the other amounts set forth above.
(b) In order to accomplish the foregoing, on or before each February 1 (or at such earlier time as may be required by the Dissolution Act), for so long as any Bonds are outstanding, the Successor Agency shall submit an Oversight Board-approved Recognized Obligation Payment Schedule to the State Department of Finance and to the County Auditor-Controller that shall include, from the first Tax Revenues distributed to the Successor Agency on each January 2 and June 1 Redevelopment Property Tax Trust Fund distribution date (subject to prior payments described in Section 4.01):
(i) a request for property tax revenues from the Project Area to be distributed from the Redevelopment Property Tax Trust Fund on each January 2 in an amount sufficient to pay all debt service coming due under the BofA Credit Agreement during the thencurrent Bond Year prior to any payment being made with respect to 2026 Bonds or any Parity Debt
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Packet Pg. 1173 Attachment: Attachment B - Indenture of Trust (7425 : Adoption of Resolution Authorizing Issuance of Tax Allocation Refunding Bonds, Series 32 or for any other purpose (specifically, the payments due on the following July 1, October 1, January 1, and March 1),
(ii) a request for property tax revenues from the Project Area to be distributed from the Redevelopment Property Tax Trust Fund on each January 2 in an amount sufficient to pay all debt service coming due on all Outstanding Bonds during the then-current Bond Year (specifically, the payments due on the following February 1 and August 1), and (iii) a request for any amount required to cure any deficiency in the Reserve Account pursuant to this Indenture or a reserve account established under any Parity Debt Instrument (including any amounts required due to a draw on any Qualified Reserve Account Credit Instrument (including the 2026 Reserve Policy) as well as all amounts due and owing to the 2026 Insurer hereunder or to any other Insurer).
(c) In the event the provisions set forth in the Dissolution Act as of the Closing Date of the 2026 Bonds that relate to the filing of Recognized Obligation Payment Schedules are amended or modified in any manner, the Successor Agency agrees to take all such actions as are necessary to comply with such amended or modified provisions so as to ensure the timely payment of debt service on the 2026 Bonds and other Parity Debt and, if the timing of distributions of the Redevelopment Property Tax Trust Fund is changed, the receipt of (i) not less than the full Bond Year’s debt service coming due under BofA Credit Agreement (specifically, the payments due on the following July 1, October 1, January 1, and March 1) prior to any payment being made with respect to 2026 Bonds or any Parity Debt or for any other purpose; and (ii) not less than the full Bond Year’s debt service coming due on all Outstanding Bonds and any Parity Debt.
Section 5.14 Further Assurances. The Successor Agency will adopt, make, execute and deliver any and all such further resolutions, instruments and assurances as may be reasonably necessary or proper to carry out the intention or to facilitate the performance of this Indenture, and for the better assuring and confirming unto the Owners of the Bonds the rights and benefits provided in this Indenture.
Section 5.15 Last and Final Recognized Obligation Payment Schedule. As long as the 2026 Bonds are Outstanding and the 2026 Insurer is not in default under the 2026 Reserve Policy, the Successor Agency will not submit to the Oversight Board or the California Department of Finance a request for the final amendment permitted for its Last and Final Recognized Obligation Payment Schedule pursuant to Section 34191.6 of the California Health and Safety Code without the prior written consent of the 2026 Insurer, unless all amounts that could become due and payable to the 2026 Insurer under this Indenture would be included as a line item on the last and final Recognized Obligation Payment Schedule following approval of the requested final amendment.
ARTICLE VI
THE TRUSTEE
Section 6.01 Duties, Immunities and Liabilities of Trustee. (a) The Trustee shall, prior to the occurrence of an Event of Default, and after the curing or waiver of all Events of Default which may have occurred, perform such duties and only such duties as are specifically set forth in this Indenture and no implied covenants, duties or
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Packet Pg. 1174 Attachment: Attachment B - Indenture of Trust (7425 : Adoption of Resolution Authorizing Issuance of Tax Allocation Refunding Bonds, Series 33 obligations shall be read into this Indenture against the Trustee. The Trustee shall, during the existence of any Event of Default known to it (which has not been cured or waived), exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in their exercise, as a prudent man would exercise or use under the circumstances in the conduct of his own affairs.
(b) The Successor Agency may remove the Trustee at any time upon thirty days’ prior written notice, unless an Event of Default shall have occurred and then be continuing, and shall remove the Trustee (i) if at any time requested to do so by an instrument or concurrent instruments in writing signed by the Owners of not less than a majority in aggregate principal amount of the Bonds then Outstanding (or their attorneys duly authorized in writing) or (ii) if at any time the Successor Agency has knowledge that the Trustee shall cease to be eligible in accordance with subsection (f) of this Section, or shall become incapable of acting, or shall be adjudged a bankrupt or insolvent, or a receiver of the Trustee or its property shall be appointed, or any public officer shall take control or charge of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation. In each case such removal shall be accomplished by the giving of written notice of such removal by the Successor Agency to the Trustee, with a copy to any Insurer, whereupon the Successor Agency shall appoint a successor Trustee by an instrument in writing. (c) The Trustee may at any time resign by giving written notice of such resignation to the Successor Agency and by giving the Owners and any Insurer notice of such resignation by first class mail, postage prepaid, at their respective addresses shown on the Registration Books. Upon receiving such notice of resignation, the Successor Agency shall promptly appoint a successor Trustee by an instrument in writing, with notice of such appointment to be furnished to any Insurer. Such removal shall be accomplished by the giving of at least thirty (30) days written notice of such removal by the Successor Agency to the Trustee whereupon the Successor Agency shall immediately appoint a successor Trustee by an instrument in writing. (d) Any removal or resignation of the Trustee and appointment of a successor Trustee shall become effective only upon acceptance of appointment by the successor Trustee. If no successor Trustee shall have been appointed and have accepted appointment within forty-five (45) days of giving notice of removal or notice of resignation as aforesaid, the resigning Trustee or any Owner (on behalf of such Owner and all other Owners) may petition any court of competent jurisdiction at the expense of the Successor Agency for the appointment of a successor Trustee and after being paid its fees and expenses then due and owing to it, and such court may thereupon, after such notice (if any) as it may deem proper, appoint such successor Trustee. Any successor Trustee appointed under this Indenture shall signify its acceptance of such appointment by executing, acknowledging and delivering to the Successor Agency and to its predecessor Trustee a written acceptance thereof, and thereupon such successor Trustee, without any further act, deed or conveyance, shall become vested with all the moneys, estates, properties, rights, powers, trusts, duties and obligations of such predecessor Trustee, with like effect as if originally named Trustee herein; but, nevertheless at the Written Request of the Successor Agency or the request of the successor Trustee, such predecessor Trustee shall execute and deliver any and all instruments of conveyance or further assurance and do such other things as may reasonably be required for more fully and certainly vesting in and confirming to such successor Trustee all the right, title and interest of such predecessor Trustee in and to any property held by it under this Indenture and shall pay over, transfer, assign and deliver to the successor Trustee any money or other property subject to the trusts and conditions herein set forth. Upon request of the successor Trustee, the Successor Agency shall execute and deliver any and all instruments as may be reasonably required for more fully and
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Packet Pg. 1175 Attachment: Attachment B - Indenture of Trust (7425 : Adoption of Resolution Authorizing Issuance of Tax Allocation Refunding Bonds, Series 34 certainly vesting in and confirming to such successor Trustee all such moneys, estates, properties, rights, powers, trusts, duties and obligations. Upon acceptance of appointment by a successor Trustee as provided in this subsection, the Successor Agency shall cause the successor Trustee to mail a notice of the succession of such Trustee to the trusts hereunder (subordinate to the lien in favor of the Bonds) to each rating agency which then has a current rating on the Bonds and to the Owners at their respective addresses shown on the Registration Books. (e) If an Event of Default hereunder occurs with respect to any Bonds of which the Trustee has been given or is deemed to have notice, as provided in Section 6.03(d) hereof, then the Trustee shall promptly give written notice thereof, by first-class mail to the any Insurer and the Owner of each such Bond, unless such Event of Default shall have been cured or waived before the giving of such notice; provided, however, that unless such Event of Default consists of the failure by the Successor Agency to make any payment when due, the Trustee shall, within thirty (30) days of the Trustee’s knowledge thereof, give such notice to any Insurer, and the Trustee, with the consent of any Insurer may elect not to give such notice if and so long as the Trustee in good faith determines that it is in the best interests of the Bondowners not to give such notice. (f) The Successor Agency agrees that, so long as any Bonds are Outstanding, the Trustee shall be: (i) a financial institution having a trust office in the State, having (or in the case of a corporation, national banking association or trust company included in a bank holding company system, the related bank holding company shall have) a combined capital and surplus of at least $50,000,000, and subject to supervision or examination by federal or state authority; (ii) a statechartered commercial bank that is a member of the Federal Reserve System having at least $1,000,000,000 of assets; or (iii) an entity otherwise approved by all Insurers in writing. If such financial institution publishes a report of condition at least annually, pursuant to law or to the requirements of any supervising or examining authority above referred to, then for the purpose of this subsection the combined capital and surplus of such financial institution shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. In case at any time the Trustee shall cease to be eligible in accordance with the provisions of this subsection (f), the Trustee shall resign immediately in the manner and with the effect specified in this Section.
Section 6.02 Merger or Consolidation. Any bank, national banking association or trust company into which the Trustee may be merged or converted or with which may be consolidated or any bank, national banking association or trust company resulting from any merger, conversion or consolidation to which it shall be a party or any bank, national banking association or trust company to which the Trustee may sell or transfer all or substantially all of its corporate trust business, provided such bank, national banking association or trust company shall be eligible under subsection (f) of Section 6.01, shall be the successor to such Trustee without the execution or filing of any paper or any further act, anything herein to the contrary notwithstanding.
Section 6.03 Liability of Trustee.
(a) The recitals of facts herein and in the Bonds contained shall be taken as statements of the Successor Agency, and the Trustee shall not assume responsibility for the correctness of the same, nor make any representations as to the validity or sufficiency of this Indenture or of the security for the Bonds or the tax status of interest thereon nor shall incur any responsibility in respect thereof, other than as expressly stated herein. The Trustee shall, however, be responsible for its representations contained in its certificate of authentication on the Bonds. The Trustee shall not be liable in connection with the performance of its duties hereunder, except for its
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Packet Pg. 1176 Attachment: Attachment B - Indenture of Trust (7425 : Adoption of Resolution Authorizing Issuance of Tax Allocation Refunding Bonds, Series 35 own negligence or willful misconduct as finally determined by a court of competent jurisdiction.
The Trustee shall not be liable for the acts of any agents of the Trustee selected by it with due care.
The Trustee and its officers and employees may become the Owner of any Bonds with the same rights it would have if they were not Trustee and, to the extent permitted by law, may act as depository for and permit any of its officers or directors to act as a member of, or in any other capacity with respect to, any committee formed to protect the rights of the Owners, whether or not such committee shall represent the Owners of a majority in principal amount of the Bonds then Outstanding.
(b) The Trustee shall not be liable with respect to any action taken or omitted to be taken by it in accordance with the direction of the Owners of not less than a majority in aggregate principal amount of the Bonds at the time Outstanding relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee under this Indenture.
(c) The Trustee shall not be liable for any action taken by it and believed by it to be authorized or within the discretion or rights or powers conferred upon it by this Indenture, except for actions arising from the negligence or willful misconduct of the Trustee as finally determined by a court of competent jurisdiction; and the Trustee shall not liable for errors in judgment made in good faith unless determined to be negligent in ascertaining pertinent facts. Where the Trustee is given the permissive right to do things enumerated in this Indenture, such right shall not be construed as a mandatory duty.
(d) The Trustee shall not be deemed to have knowledge of any default or Event of Default hereunder unless and until a responsible officer shall have actual knowledge thereof, or shall have received written notice thereof from the Successor Agency at its Principal Corporate Trust Office. In the absence of such actual knowledge or notice, the Trustee may conclusively assume that no default or Event of Default has occurred and is continuing under this Indenture. Except as otherwise expressly provided herein, the Trustee shall not be bound to ascertain or inquire as to the performance or observance by any other party of any of the terms, conditions, covenants or agreements herein or of any of the documents executed in connection with the Bonds, or as to the existence of an Event of Default thereunder. The Trustee shall not be responsible for the validity or effectiveness of any collateral given to or held by it. Without limiting the generality of the foregoing, the Trustee may rely conclusively on the Successor Agency’s certificates to establish the Successor Agency’s compliance with its financial covenants hereunder, including, without limitation, its covenants regarding the deposit of Tax Revenues into the Special Fund and the investment and application of moneys on deposit in the Special Fund (other than its covenants to transfer such moneys to the Trustee when due hereunder).
(e) The Trustee shall have no liability or obligation to the Bondowners with respect to the payment of debt service on the Bonds by the Successor Agency or with respect to the observance or performance by the Successor Agency of the other conditions, covenants and terms contained in this Indenture, or with respect to the investment of any moneys in any fund or account established, held or maintained by the Successor Agency pursuant to this Indenture or otherwise. (f) No provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers. The Trustee shall be entitled to interest on all amounts advanced by it at the maximum rate permitted by law.
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Packet Pg. 1177 Attachment: Attachment B - Indenture of Trust (7425 : Adoption of Resolution Authorizing Issuance of Tax Allocation Refunding Bonds, Series 36 (g) The Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents, attorneys or receivers and the Trustee shall not be responsible for any intentional misconduct or negligence on the part of any agent, attorney or receiver appointed with due care by it hereunder. (h) The Trustee shall have no responsibility, opinion, or liability with respect to any information, statements or recital in any offering memorandum or other disclosure material prepared or distributed with respect to the issuance of the Bonds. (i) Before taking any action under Article VIII or this Article, at the request of the Owners or any Insurer, the Trustee may require that a satisfactory indemnification be furnished by the Owners or any Insurer for the reimbursement of all expenses to which it may be put (including without limitation associated attorneys’ fees and expenses) and to protect it against all liability, except liability which is finally adjudicated by a court of competent jurisdiction to have resulted from its negligence or willful misconduct in connection with any action so taken. (j) The Trustee shall have the right to accept and act upon instructions, including funds transfer instructions (“Instructions”) given pursuant to this Indenture and delivered using Electronic Means (“Electronic Means” shall mean the following communications methods: e-mail, facsimile transmission, secure electronic transmission containing applicable authorization codes, passwords and/or authentication keys issued by the Trustee, or another method or system specified by the Trustee as available for use in connection with its services hereunder); provided, however, that the Successor Agency shall provide to the Trustee an incumbency certificate listing officers with the authority to provide such Instructions (“Authorized Officers”) and containing specimen signatures of such Authorized Officers, which incumbency certificate shall be amended by the Successor Agency whenever a person is to be added or deleted from the listing. If the Successor Agency elects to give the Trustee Instructions using Electronic Means and the Trustee in its discretion elects to act upon such Instructions, the Trustee’s understanding of such Instructions shall be deemed controlling. The Successor Agency understands and agrees that the Trustee cannot determine the identity of the actual sender of such Instructions and that the Trustee shall conclusively presume that directions that purport to have been sent by an Authorized Officer listed on the incumbency certificate provided to the Trustee have been sent by such Authorized Officer. The Successor Agency shall be responsible for ensuring that only Authorized Officers transmit such Instructions to the Trustee and that the Successor Agency and all Authorized Officers are solely responsible to safeguard the use and confidentiality of applicable user and authorization codes, passwords and/or authentication keys upon receipt by the Successor Agency. The Trustee shall not be liable for any losses, costs or expenses arising directly or indirectly from the Trustee’s reliance upon and compliance with such Instructions notwithstanding such directions conflict or are inconsistent with a subsequent written instruction.
The Successor Agency agrees: (i) to assume all risks arising out of the use of Electronic Means to submit Instructions to the Trustee, including without limitation the risk of the Trustee acting on unauthorized Instructions, and the risk of interception and misuse by third parties; (ii) that it is fully informed of the protections and risks associated with the various methods of transmitting Instructions to the Trustee and that there may be more secure methods of transmitting Instructions than the method(s) selected by the Successor Agency; (iii) that the security procedures (if any) to be followed in connection with its transmission of Instructions provide to it a commercially reasonable degree of protection in light of its particular needs and circumstances; and (iv) to notify the Trustee immediately upon learning of any compromise or unauthorized use of the security procedures.
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Packet Pg. 1178 Attachment: Attachment B - Indenture of Trust (7425 : Adoption of Resolution Authorizing Issuance of Tax Allocation Refunding Bonds, Series 37 (k) The Trustee shall not be liable to the parties hereto or deemed in breach or default hereunder if and to the extent its performance hereunder is prevented by reason of force majeure. The term “force majeure” means an occurrence that is beyond the control of the Trustee and could not have been avoided by exercising due care. Force majeure shall include but not be limited to acts of God, terrorism, war, riots, strikes, fire, floods, earthquakes, epidemics or other similar occurrences.
(l) The Trustee shall not be responsible for or accountable to anyone for the subsequent use or application of any moneys which shall be released or withdrawn in accordance with the provisions hereof.
(m) The Trustee shall not be liable for special, indirect, punitive, or consequential loss or damage of any kind whatsoever (including but not limited to lost profits), even if the Trustee has been advised of the likelihood of such loss or damage and regardless of the form of action.
Section 6.04 Right to Rely on Documents and Opinions. The Trustee shall have no liability in acting upon any notice, resolution, request, consent, order, certificate, report, opinion, facsimile transmission, electronic mail, or other paper or document reasonably believed by it to be genuine and to have been signed or prescribed by the proper party or parties, and shall not be required to make any investigation into the facts or matters contained thereon. The Trustee may consult with counsel, including, without limitation, counsel of or to the Successor Agency, with regard to legal questions, and the opinion or advice of such counsel shall be full and complete authorization and protection in respect of any action taken or suffered by the Trustee hereunder in accordance therewith.
The Trustee shall not be bound to recognize any person as the Owner of a Bond unless and until such Bond is submitted for inspection, if required, and his title thereto is established to the satisfaction of the Trustee.
Whenever in the administration of the trusts imposed upon it by this Indenture the Trustee shall deem it necessary or desirable that a matter be proved or established prior to taking or suffering any action hereunder, such matter (unless other evidence in respect thereof be herein specifically prescribed) may be deemed to be conclusively proved and established by a Written Certificate of the Successor Agency, which shall be full warrant to the Trustee for any action taken or suffered under the provisions of this Indenture in reliance upon such Written Certificate, but in its discretion the Trustee may, in lieu thereof, accept other evidence of such matter or may require such additional evidence as it may deem reasonable. The Trustee may conclusively rely on any certificate or report of any Independent Accountant or Independent Redevelopment Consultant appointed by the Successor Agency.
Section 6.05 Preservation and Inspection of Documents. All documents received by the Trustee under the provisions of this Indenture shall be retained in its possession and shall be subject at all reasonable times upon reasonable notice to the inspection of and copying by the Successor Agency and any Insurer and any Owner, and their agents and representatives duly authorized in writing, during regular business hours and under reasonable conditions. Delivery of reports or other documents to the Trustee shall not be deemed to constitute or impose actual or constructive notice or knowledge on the part of the Trustee, and such reports and documents may simply be held to be made available for inspection by Owners of Bonds.
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Packet Pg. 1179 Attachment: Attachment B - Indenture of Trust (7425 : Adoption of Resolution Authorizing Issuance of Tax Allocation Refunding Bonds, Series 38 Section 6.06 Compensation and Indemnification. The Successor Agency shall pay to the Trustee from time to time reasonable compensation for all services rendered under this Indenture in accordance with the letter proposal from the Trustee approved by the Successor Agency and also all reasonable expenses, charges, legal and consulting fees and other disbursements and those of its attorneys (including outside counsel and the allocated costs and disbursement of in-house counsel to the extent such services are not redundant with those provided by outside counsel), agents and employees, incurred in and about the performance of its powers and duties under this Indenture. The Trustee shall have a lien on the Tax Revenues and all funds and accounts held by the Trustee hereunder to secure the payment to the Trustee of all fees, costs and expenses, including reasonable compensation to its experts, attorneys and counsel (including outside counsel and the allocated costs and disbursement of in-house counsel to the extent such services are not redundant with those provided by outside counsel), and all indemnities provided to the Trustee herein. In addition, and without prejudice to any other provision, fees, costs and expenses paid or incurred by Trustee in providing services after an Event of Default, together with its compensation for such services, are intended to constitute expenses of administration under any applicable federal, state or other applicable bankruptcy, insolvency or other similar law.
The Successor Agency further covenants and agrees to indemnify, defend and save the Trustee and its officers, directors, agents and employees, harmless against any loss, expense, including legal fees and expenses, and liabilities which it may incur to the extent arising out of or in connection with the exercise and performance of its powers and duties hereunder, including the costs and expenses of defending against any claim of liability, but excluding any and all losses, expenses and liabilities which are due to the negligence or willful misconduct of the Trustee, its officers, directors, agents or employees as finally determined by a court of competent jurisdiction. The obligations of the Successor Agency and the rights of the Trustee under this Section 6.06 shall survive resignation or removal of the Trustee under this Indenture and payment of the Bonds and discharge of this Indenture.
Section 6.07 Deposit and Investment of Moneys in Funds. Moneys in the Debt Service Fund, the Interest Account, the Principal Account, the Reserve Account and the Costs of Issuance Fund shall be invested by the Trustee in Permitted Investments as directed by the Successor Agency in the Written Request of the Successor Agency filed with the Trustee at least two (2) Business Days in advance of the making of such investments, except that moneys in the Reserve Account shall not be invested in Permitted Investments having a maturity of more than five (5) years, unless any such Permitted Investment is described in clause (g) of the definition thereof. In the absence of any such Written Request of the Successor Agency, the Trustee shall hold any such moneys uninvested. The Trustee shall be entitled to rely conclusively upon the written instructions of the Successor Agency directing investments in Permitted Investments as to the fact that each such investment is permitted by the laws of the State and is a Permitted Investment in which the Successor Authority is authorized to invest, and shall not be required to make further investigation with respect thereto. With respect to any restrictions set forth in the above list which embody legal conclusions (e.g., the existence, validity and perfection of security interests in collateral), the Trustee shall be entitled to rely conclusively on an opinion of counsel or upon a representation of the provider of such Permitted Investment obtained at the Successor Agency’s expense. Moneys in the Special Fund may be invested by the Successor Agency in any obligations in which the Successor Agency is legally authorized to invest its funds. Obligations purchased as an investment of moneys in any fund shall be deemed to be part of such fund or account. All interest or gain derived from the investment of amounts in any of the funds or accounts held by the Trustee hereunder shall be deposited in the Interest Account (pro-rata among sub-accounts); provided, however, that all interest or gain from the
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Packet Pg. 1180 Attachment: Attachment B - Indenture of Trust (7425 : Adoption of Resolution Authorizing Issuance of Tax Allocation Refunding Bonds, Series 39 investment of amounts in the Reserve Account shall be deposited by the Trustee in the Interest Account only to the extent not required to cause the balance in the Reserve Account to equal the Reserve Requirement. The Trustee may act as principal or agent in the acquisition or disposition of any investment and may impose its customary charges therefor. The Trustee shall incur no liability for losses arising from any investments made at the direction of the Successor Agency or otherwise made in accordance with this Section. For investment purposes only, the Trustee may commingle the funds and accounts established hereunder, but shall account for each separately.
The Successor Agency acknowledges that to the extent regulations of the Comptroller of the Currency or other applicable regulatory entity grant the Successor Agency the right to receive brokerage confirmations of security transactions as they occur, the Successor Agency specifically waives receipt of such confirmations to the extent permitted by law. The Trustee will furnish the Successor Agency monthly cash transaction statements which shall include detail for all investment transactions made by the Trustee hereunder.
All moneys held by the Trustee shall be held in trust, but need not be segregated from other funds unless specifically required by this Indenture. Except as specifically provided in this Indenture, the Trustee shall not be liable to pay interest on any moneys received by it, but shall be liable only to account to the Successor Agency for earnings derived from funds that have been invested.
If applicable, the Successor Agency covenants that all investments of amounts deposited in any fund or account created by or pursuant to this Indenture, or otherwise containing gross proceeds of any tax-exempt Bonds (within the meaning of Section 148 of the Code), shall be acquired, disposed of, and valued (as of the date that valuation is required by this Indenture or the Code) at Fair Market Value. The Trustee shall have no duty in connection with the determination of Fair Market Value other than to follow its normal practice in determining the value of Permitted Investments, which may include utilizing generally recognized pricing services (including brokers and dealers in securities) that may be available to it including those available through its regular accounting system and rely conclusively and without liability thereon.
Investments in funds or accounts (or portions thereof) that are subject to a yield restriction under applicable provisions of the Code shall be valued by the Successor Agency at their present value (within the meaning of Section 148 of the Code). Investments on deposit in the Reserve Account shall be valued semiannually two (2) Business Days preceding each February 1 and August 1 at their Fair Market Value.
Section 6.08 Accounting Records and Financial Statements. The Trustee shall at all times keep, or cause to be kept, proper books of record and account, prepared in accordance with corporate trust industry standards, in which accurate entries shall be made of all transactions relating to the proceeds of the Bonds made by it and all funds and accounts held by the Trustee established pursuant to this Indenture. Such books of record and account shall be available for inspection by the Successor Agency upon reasonable prior written notice, at reasonable hours and under reasonable circumstances. The Trustee shall furnish to the Successor Agency, on at least a monthly basis, an accounting of all transactions in the form of its customary statements relating to the proceeds of the Bonds and all funds and accounts held by the Trustee pursuant to this Indenture.
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Packet Pg. 1181 Attachment: Attachment B - Indenture of Trust (7425 : Adoption of Resolution Authorizing Issuance of Tax Allocation Refunding Bonds, Series 40 Section 6.09 Other Transactions with Successor Agency. The Trustee, either as principal or agent, may engage in or be interested in any financial or other transaction with the Successor Agency.
ARTICLE VII
MODIFICATION OR AMENDMENT OF THIS INDENTURE
Section 7.01 Amendment With And Without Consent of Owners. This Indenture and the rights and obligations of the Successor Agency and of the Owners may be modified or amended at any time by a Supplemental Indenture which shall become binding upon adoption without the consent of any Owners or any Insurer, to the extent permitted by law, but only for any one or more of the following purposes:
(a) to add to the covenants and agreements of the Successor Agency in this Indenture contained, other covenants and agreements thereafter to be observed, including any covenant or agreement that provides for additional security for the Bonds, or to limit or surrender any rights or powers herein reserved to or conferred upon the Successor Agency; or (b) to make such provisions for the purpose of curing any ambiguity, or of curing, correcting or supplementing any defective provision contained in this Indenture, or in any other respect whatsoever as the Successor Agency may deem necessary or desirable, provided under any circumstances that such modifications or amendments shall not, in the reasonable determination of the Successor Agency, materially adversely affect the interests of the Owners; or (c) to provide for the issuance of Parity Debt in accordance with Section 3.04; or (d) if applicable, to amend any provision hereof relating to the requirements of or compliance with the Code, to any extent whatsoever but only if and to the extent such amendment will not adversely affect the exemption from federal income taxation of interest on any of the Bonds, in the opinion of Bond Counsel; or
(e) to comply with amendments or supplements to the Dissolution Act; or (f) to comply with the requirements of a provider of a Qualified Reserve Account Credit Instrument.
In addition, except as set forth in the preceding paragraph, this Indenture and the rights and obligations of the Successor Agency and of the Owners may be modified or amended at any time by a Supplemental Indenture which shall become binding when the written consent of each Insurer (but only with respect to any Bonds insured by such Insurer) and the Owners of a majority in aggregate principal amount of the Bonds then Outstanding are filed with the Trustee; provided, that for purposes of this sentence with respect to the Owners of 2026 Bonds, the written consent of the 2026 Insurer to any such amendment shall be deemed to satisfy the requirement to obtain the written consent of the Owners of such 2026 Bonds. Notwithstanding the foregoing, no such modification or amendment shall (a) extend the maturity of or reduce the interest rate on any Bond or otherwise alter or impair the obligation of the Successor Agency to pay the principal, interest, or redemption premiums (if any) at the time and place and at the rate and in the currency provided therein of any Bond without the express written consent of both the Insurer of such Bond (if any) and the Owner of
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Packet Pg. 1182 Attachment: Attachment B - Indenture of Trust (7425 : Adoption of Resolution Authorizing Issuance of Tax Allocation Refunding Bonds, Series 41 such Bond, or (b) reduce the percentage of Bonds required for the written consent to any such amendment or modification without the express written consent of both the Insurer of such Bond (if any) and the Owner of such Bond. In no event shall any Supplemental Indenture modify any of the rights or obligations of the Trustee without its prior written consent. In no event shall any Supplemental Indenture adversely affect the security for the Bonds or modify any of the rights or obligations of any Insurer without its prior written consent.
Section 7.02 Effect of Supplemental Indenture. From and after the time any Supplemental Indenture becomes effective pursuant to this Article VII, this Indenture shall be deemed to be modified and amended in accordance therewith, the respective rights, duties and obligations of the parties hereto or thereto and all Owners, as the case may be, shall thereafter be determined, exercised and enforced hereunder subject in all respects to such modification and amendment, and all the terms and conditions of any Supplemental Indenture shall be deemed to be part of the terms and conditions of this Indenture for any and all purposes.
Section 7.03 Endorsement or Replacement of Bonds After Amendment. After the effective date of any amendment or modification hereof pursuant to this Article VII, the Successor Agency may, with the prior written consent of any Insurer, determine that any or all of the Bonds shall bear a notation, by endorsement in form approved by the Successor Agency, as to such amendment or modification and in that case upon demand of the Successor Agency the Owners of such Bonds shall present such Bonds for that purpose at the Principal Corporate Trust Office of the Trustee, and thereupon a suitable notation as to such action shall be made on such Bonds. In lieu of such notation, the Successor Agency may determine that new Bonds shall be prepared at the expense of the Successor Agency and executed in exchange for any or all of the Bonds, and in that case, upon demand of the Successor Agency, the Owners of the Bonds shall present such Bonds for exchange at the Principal Corporate Trust Office of the Trustee, without cost to such Owners.
Section 7.04 Amendment by Mutual Consent. The provisions of this Article VII shall not prevent any Owner from accepting any amendment as to the particular Bond held by such Owner, provided that due notation thereof is made on such Bond and, provided further that written consent to such amendment shall first be obtained from any Insurer.
Section 7.05 Opinion of Counsel. Prior to executing any Supplemental Indenture, the Trustee shall be furnished an opinion of counsel, upon which it may conclusively rely to the effect that all conditions precedent to the execution of such Supplemental Indenture under this Indenture have been satisfied and such Supplemental Indenture is authorized and permitted under this Indenture and, if expressly required by the terms of such Supplemental Indenture, does not adversely affect the exclusion of interest on any tax-exempt Bonds from gross income for federal income tax purposes or adversely affect the exemption of interest on the Bonds from personal income taxation by the State.
Section 7.06 Copy of Supplemental Indenture to S&P and Moody’s. The Successor Agency shall provide to S&P and Moody’s, for so long as S&P and Moody’s, as the case may be, maintain a rating on any of the Bonds (without regard to any municipal bond or financial guaranty insurance), a copy of any Supplemental Indenture.
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Packet Pg. 1183 Attachment: Attachment B - Indenture of Trust (7425 : Adoption of Resolution Authorizing Issuance of Tax Allocation Refunding Bonds, Series 42 ARTICLE VIII
EVENTS OF DEFAULT AND REMEDIES OF OWNERS
Section 8.01 Events of Default and Acceleration of Maturities. The following events shall constitute Events of Default hereunder:
(a) if default shall be made by the Successor Agency in the due and punctual payment of the principal of or interest or redemption premium (if any) on any Bond when and as the same shall become due and payable, whether at maturity as therein expressed, by declaration or otherwise;
(b) if default shall be made by the Successor Agency in the observance of any of the covenants, agreements or conditions on its part in this Indenture or in the Bonds contained, other than a default described in the preceding clause (a), and such default shall have continued for a period of thirty (30) days following receipt by the Successor Agency of written notice from the Trustee or any Insurer or written notice from any Owner (with a copy of said notice delivered to the Trustee and any Insurer) of the occurrence of such default, provided that if in the reasonable opinion of the Successor Agency (as stated in a written certificate to such effect provided by the Successor Agency to the Trustee, on which it may conclusively rely) the failure stated in the notice can be corrected, but not within such thirty (30) day period, such failure will not constitute an event of default if corrective action is instituted by the Successor Agency (with the prior written consent of any Insurer) within such thirty (30) day period and the Successor Agency thereafter diligently and in good faith cures such failure in a reasonable period of time; (c) If the Successor Agency files a petition seeking reorganization or arrangement under the federal bankruptcy laws or any other applicable law of the United States of America, or if a court of competent jurisdiction will approve a petition by the Successor Agency seeking reorganization under the federal bankruptcy laws or any other applicable law of the United States of America, or, if under the provisions of any other law for the relief or aid of debtors, any court of competent jurisdiction will approve a petition by the Successor Agency, seeking reorganization under the federal bankruptcy laws or any other applicable law of the United States of America, or, if under the provisions of any other law for the relief or aid of debtors, any court of competent jurisdiction will assume custody or control of the Successor Agency or of the whole or any substantial part of its property; or
(d) The principal of the term loan made under the BofA Credit Agreement or Parity Debt shall be declared immediately due and payable under the terms of a BofA Credit Agreement or Parity Debt Instrument.
In determining whether an Event of Default has occurred under (a) above, no effect shall be given to payments made under any municipal bond insurance policy, financial guaranty insurance policy or Qualified Reserve Account Credit Instrument.
If an Event of Default has occurred under this Section and is continuing, the Trustee may, with the consent of the 2026 Insurer (so long as any 2026 Bonds are Outstanding), and, if requested in writing by the Owners of a majority in aggregate principal amount of the Bonds then Outstanding and the 2026 Insurer with respect to the 2026 Bonds, the Trustee shall, (y) declare the principal of the Bonds, together with the accrued interest thereon, to be due and payable immediately, and upon any
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Packet Pg. 1184 Attachment: Attachment B - Indenture of Trust (7425 : Adoption of Resolution Authorizing Issuance of Tax Allocation Refunding Bonds, Series 43 such declaration the same shall become immediately due and payable, anything in this Indenture or in the Bonds to the contrary notwithstanding, and (z) subject to the provisions of Section 8.06, exercise any other remedies available to the Trustee and the Bondowners in law or at equity, including an action in mandamus.
Nothing herein shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Owner any plan of reorganization, arrangement, adjustment, or composition affecting the Bonds or the rights of any Holder thereof, or to authorize the Trustee to vote in respect of the claim of any Owner in any such proceeding without the approval of the Owners so affected. Nothing herein shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Owner any plan of reorganization, arrangement, adjustment, or composition affecting the Bonds or the rights of any Holder thereof, or to authorize the Trustee to vote in respect of the claim of any Owner in any such proceeding without the approval of the Owners so affected.
Immediately upon receiving written notice or actual knowledge of the occurrence of an Event of Default, the Trustee shall give notice of such Event of Default to each Insurer and to the Successor Agency by telephone promptly confirmed in writing. Such notice shall also state whether the principal of the Bonds shall have been declared to be or have immediately become due and payable.
With respect to any Event of Default described in subsections (a) or (c) above the Trustee shall, and with respect to any Event of Default described in subsection (b) above the Trustee in its sole discretion may, also give such notice to the Owners by mail, which shall include the statement that interest on the Bonds shall cease to accrue from and after the date, if any, on which the Trustee shall have declared the Bonds to become due and payable pursuant to the preceding paragraph (but only to the extent that principal and any accrued, but unpaid, interest on the Bonds is actually paid on such date).
This provision, however, is subject to the condition that if, at any time after the principal of the Bonds shall have been so declared due and payable, and before any judgment or decree for the payment of the moneys due shall have been obtained or entered, the Successor Agency shall, with the written consent of a majority in aggregate principal amount of the Owners of the Bonds then Outstanding, deposit with the Trustee a sum sufficient to pay all principal on the Bonds matured prior to such declaration and all matured installments of interest (if any) upon all the Bonds, with interest on such overdue installments of principal and interest (to the extent permitted by law), and the reasonable fees and expenses of the Trustee, (including the allocated costs and disbursements of its in-house counsel to the extent such services are not redundant with those provided by outside counsel) and any and all other defaults known to the Trustee (other than in the payment of principal of and interest on the Bonds due and payable solely by reason of such declaration) shall have been made good or cured to the satisfaction of the Trustee or provision deemed by the Trustee to be adequate shall have been made therefor, then, and in every such case, the Trustee shall promptly give written notice of the foregoing to any Insurer and the Owners of all Bonds then Outstanding, and with the prior written approval of the Owners of at least a majority in aggregate principal amount of the Bonds then Outstanding, by written notice to the Successor Agency and to the Trustee, may, on behalf of the Owners of all of the Bonds then Outstanding, rescind and annul such declaration and its consequences. However, no such rescission and annulment shall extend to or shall affect any subsequent default or shall impair or exhaust any right or power consequent thereon.
Section 8.02 Application of Funds Upon Acceleration. All amounts received by the Trustee pursuant to any right given or action taken by the Trustee under the provisions of this
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Packet Pg. 1185 Attachment: Attachment B - Indenture of Trust (7425 : Adoption of Resolution Authorizing Issuance of Tax Allocation Refunding Bonds, Series 44 Indenture (including the Trustee’s share of any Tax Revenues) and all sums in the funds and accounts established and held by the Trustee hereunder upon the date of the declaration of acceleration as provided in Section 8.01, and all sums thereafter received by the Trustee hereunder, shall be applied by the Trustee in the following order upon presentation of the Bonds, and the stamping thereon of the payment if only partially paid, or upon the surrender thereof if fully paid:
First, to the payment of the fees, costs and expenses of the Trustee in declaring such Event of Default and in exercising the rights and remedies set forth in this Article VIII, including reasonable compensation to its agents, attorneys (including the allocated costs and disbursements of its in-house counsel to the extent such services are not redundant with those provided by outside counsel) and counsel and any outstanding fees and expenses of the Trustee; and Second, to the payment of the whole amount then owing and unpaid upon the 2026 Bonds and Parity Debt for principal and interest, as applicable, with interest on the overdue principal, and installments of interest at the net effective rate then borne by the Outstanding 2026 Bonds or Parity Debt (to the extent that such interest on overdue installments of principal and interest shall have been collected), and in case such moneys shall be insufficient to pay in full the whole amount so owing and unpaid upon the 2026 Bonds and Parity Debt, then to the payment of such principal and interest without preference or priority, ratably to the aggregate of such principal and interest; and Third, to the payment of amounts required to restore the Reserve Account (including subaccounts therein) or any reserve account established under a Parity Debt Instrument to the applicable Reserve Requirement or reserve requirement under a Parity Debt Instrument, as applicable, and to repay any amounts owed to the 2026 Insurer in connection with a draw on the 2026 Reserve Policy.
Section 8.03 Power of Trustee to Control Proceedings. In the event that the Trustee, upon the happening of an Event of Default, shall have taken any action, by judicial proceedings or otherwise, pursuant to its duties hereunder, whether upon its own discretion or upon the request of the Owners of a majority in principal amount of the Bonds then Outstanding, it shall have full power, in the exercise of its discretion for the best interests of the Owners of the Bonds, with respect to the continuance, discontinuance, withdrawal, compromise, settlement or other disposal of such action; provided, however, that the Trustee shall not, unless there no longer continues an Event of Default, discontinue, withdraw, compromise or settle, or otherwise dispose of any litigation pending at law or in equity, if at the time there has been filed with it a written request signed by the Owners of a majority in principal amount of the Outstanding Bonds hereunder opposing such discontinuance, withdrawal, compromise, settlement or other disposal of such litigation.
Section 8.04 Limitation on Owner’s Right to Sue. No Owner of any Bond issued hereunder shall have the right to institute any suit, action or proceeding at law or in equity, for any remedy under or upon this Indenture, unless (a) such Owner shall have previously given to the Successor Agency, the Trustee and any Insurer written notice of the occurrence of an Event of Default; (b) the Owners of a majority in aggregate principal amount of all the Bonds then Outstanding shall have made written request upon the Trustee to exercise the powers hereinbefore granted or to institute such action, suit or proceeding in its own name; (c) said Owners shall have tendered to the Trustee indemnity reasonably acceptable to the Trustee against the costs, expenses and liabilities to be incurred in compliance with such request; and (d) the Trustee shall have refused or omitted to comply with such request for a period of sixty (60) days after such written request shall have been received by, and said tender of indemnity shall have been made to, the Trustee.
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Packet Pg. 1186 Attachment: Attachment B - Indenture of Trust (7425 : Adoption of Resolution Authorizing Issuance of Tax Allocation Refunding Bonds, Series 45 Such notification, request, tender of indemnity and refusal or omission are hereby declared, in every case, to be conditions precedent to the exercise by any Owner of any remedy hereunder; it being understood and intended that no one or more Owners shall have any right in any manner whatever by his or their action to enforce any right under this Indenture, except in the manner herein provided, and that all proceedings at law or in equity to enforce any provision of this Indenture shall be instituted, had and maintained in the manner herein provided and for the equal benefit of all Owners of the Outstanding Bonds.
The right of any Owner of any Bond to receive payment of the principal of (and premium, if any) and interest on such Bond as herein provided, shall not be impaired or affected without the written consent of such Owner, notwithstanding the foregoing provisions of this Section or any other provision of this Indenture.
Section 8.05 Non-Waiver. Nothing in this Article VIII or in any other provision of this Indenture or in the Bonds, shall affect or impair the obligation of the Successor Agency, which is absolute and unconditional, to pay from the Tax Revenues and other amounts pledged hereunder, the principal of and interest and redemption premium (if any) on the Bonds to the respective Owners on the respective Interest Payment Dates, as herein provided, or affect or impair the right of action, which is also absolute and unconditional, of the Owners or the Trustee to institute suit to enforce such payment by virtue of the contract embodied in the Bonds.
A waiver of any default by any Owner or the Trustee shall not affect any subsequent default or impair any rights or remedies on the subsequent default. No delay or omission of any Owner to exercise any right or power accruing upon any default shall impair any such right or power or shall be construed to be a waiver of any such default or an acquiescence therein, and every power and remedy conferred upon the Owners and the Trustee by the Law or by this Article VIII may be enforced and exercised from time to time and as often as shall be deemed expedient by the Owners and the Trustee.
If a suit, action or proceeding to enforce any right or exercise any remedy shall be abandoned or determined adversely to the Owners or the Trustee, the Successor Agency, the Trustee and the Owners shall be restored to their former positions, rights and remedies as if such suit, action or proceeding had not been brought or taken.
Section 8.06 Actions by Trustee as Attorney-in-Fact. Any suit, action or proceeding which any Owner shall have the right to bring to enforce any right or remedy hereunder may be brought by the Trustee for the equal benefit and protection of all Owners similarly situated and the Trustee is hereby appointed (and the successive respective Owners by taking and holding the Bonds shall be conclusively deemed so to have appointed it) the true and lawful attorney-in-fact of the respective Owners for the purpose of bringing any such suit, action or proceeding and to do and perform any and all acts and things for and on behalf of the respective Owners as a class or classes, as may be necessary or advisable in the opinion of the Trustee as such attorney-in-fact, provided, however, the Trustee shall have no duty or obligation to exercise any such right or remedy unless it has been indemnified to its satisfaction from any loss, liability or expense (including fees and expenses of its outside counsel and the allocated costs and disbursements of its in-house counsel to the extent such services are not redundant with those provided by outside counsel).
Section 8.07 Remedies Not Exclusive. No remedy herein conferred upon or reserved to the Owners is intended to be exclusive of any other remedy. Every such remedy shall be cumulative
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Packet Pg. 1187 Attachment: Attachment B - Indenture of Trust (7425 : Adoption of Resolution Authorizing Issuance of Tax Allocation Refunding Bonds, Series 46 and shall be in addition to every other remedy given hereunder or now or hereafter existing, at law or in equity or by statute or otherwise, and may be exercised without exhausting and without regard to any other remedy conferred by the Law or any other law.
Section 8.08 Determination of Percentage of Bondowners. Whenever in this Indenture the consent, direction or other action is required or permitted to be given or taken by a percentage of the Owners of an aggregate principal amount of Outstanding Bonds (including by the Owners of a majority in aggregate principal amount of the Outstanding Bonds), such percentage shall be calculated on the basis of the principal amount of the Outstanding Bonds determined as of the next succeeding Interest Payment Date.
ARTICLE IX
MISCELLANEOUS
Section 9.01 Special Obligations. The Bonds are special obligations of the Successor Agency secured by a pledge and lien as described in Section 4.01 hereof. The Bonds are not debts, liabilities or obligations of the City, the State of California, or any of its political subdivisions, and neither the City, said State, nor any of its political subdivisions is liable thereon, nor in any event shall the Bonds be payable out of any funds or properties other than those pledged by the Successor Agency. The Bonds do not constitute an indebtedness in contravention of any constitutional or statutory debt limitation or restriction.
Section 9.02 Benefits Limited to Parties. Nothing in this Indenture, expressed or implied, is intended to give to any person other than the Successor Agency, each Insurer, the Trustee and the Owners, any right, remedy or claim under or by reason of this Indenture. Any covenants, stipulations, promises or agreements in this Indenture contained by and on behalf of the Successor Agency shall be for the sole and exclusive benefit of the Trustee, such Insurers and the Owners. To the extent that this Indenture confers upon or gives any Insurer any right, remedy or claim under or by reason of this Indenture, each Insurer is hereby explicitly recognized as being third-party beneficiaries hereunder and may enforce any such right remedy or claim conferred, given or granted hereunder.
Section 9.03 Successor is Deemed Included in All References to Predecessor.
Whenever in this Indenture or any Supplemental Indenture either the Successor Agency or the Trustee is named or referred to, such reference shall be deemed to include the successors or assigns thereof, and all the covenants and agreements in this Indenture contained by or on behalf of the Successor Agency or the Trustee shall bind and inure to the benefit of the respective successors and assigns thereof whether so expressed or not.
Section 9.04 Discharge of Indenture. (a) If the Successor Agency shall pay and discharge the entire indebtedness on all Bonds or any portion thereof in any one or more of the following ways:
(i) by well and truly paying or causing to be paid the principal of and interest and premium (if any) on all or the applicable portion of Outstanding Bonds, as and when the same become due and payable;
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Packet Pg. 1188 Attachment: Attachment B - Indenture of Trust (7425 : Adoption of Resolution Authorizing Issuance of Tax Allocation Refunding Bonds, Series 47 (ii) by irrevocably depositing with the Trustee in trust or an escrow agent, at or before maturity, money which, together with the available amounts then on deposit in the funds and accounts established pursuant to this Indenture, is fully sufficient to pay all or the applicable portion of Outstanding Bonds, including all principal, interest and redemption premiums, if any, or; (iii) by irrevocably depositing with the Trustee in trust or an escrow agent, Defeasance Obligations in such amount as an Independent Accountant shall determine will, together with the interest to accrue thereon and available moneys then on deposit in the funds and accounts established pursuant to this Indenture or on deposit with such escrow agent, be fully sufficient to pay and discharge the indebtedness on all Bonds or the applicable portion thereof (including all principal, interest and redemption premiums) at or before maturity; then, at the election of the Successor Agency, and notwithstanding that any Bonds shall not have been surrendered for payment, the pledge of the Tax Revenues and other amounts, funds and accounts described in Section 4.01 hereof and all other obligations of the Trustee and the Successor Agency under this Indenture shall cease and terminate with respect to all Outstanding Bonds or, if applicable, with respect to that portion of the Bonds which has been paid and discharged, except only (A) the covenants of the Successor Agency hereunder with respect to the Code, (B) the obligation of the Trustee to transfer and exchange Bonds hereunder, (C) the obligations of the Successor Agency under Section 6.06 hereof, and (D) the obligation of the Successor Agency to pay or cause to be paid to the Owners (or any Insurer), from the amounts so deposited with the Trustee, all sums due thereon and to pay the Trustee and any Insurer all fees, expenses and costs of the Trustee and any Insurer, which obligations to the 2026 Insurer shall expressly survive payment in full of the 2026 Bonds and termination of this Indenture. In the event the Successor Agency shall, pursuant to the foregoing provision, pay and discharge any portion or all of the Bonds then Outstanding, the Trustee shall be authorized to take such actions and execute and deliver to the Successor Agency all such instruments as may be necessary or desirable to evidence such discharge, including, without limitation, selection by lot of Bonds of any maturity of the Bonds that the Successor Agency has determined to pay and discharge in part.
In the case of a defeasance or payment of all of the Bonds Outstanding, any funds thereafter held by the Trustee which are not required for said purpose or for payment of amounts due the Trustee pursuant to Section 6.06 shall be paid over to the Successor Agency.
Notwithstanding the foregoing, only (1) cash, (2) non-callable direct obligations of the United States of America (“Treasuries”), (3) evidences of ownership of proportionate interests in future interest and principal payments on Treasuries held by a bank or trust company as custodian, under which the owner of the investment is the real party in interest and has the right to proceed directly and individually against the obligor and the underlying Treasuries are not available to any person claiming through the custodian or to whom the custodian may be obligated, (4) subject to the prior written consent of the 2026 Insurer, pre-refunded municipal obligations rated “AAA” and “Aaa” by S&P and Moody's, respectively, or (5) subject to the prior written consent of the 2026 Insurer, securities eligible for “AAA” defeasance under then existing criteria of S&P or any combination thereof, shall be used to effect defeasance of the 2026 Bonds unless the 2026 Insurer otherwise approves.
To accomplish defeasance of the 2026 Bonds, the Authority shall cause to be delivered to the 2026 Insurer (i) other than with respect to a current refunding that is gross funded, a report of either a nationally recognized verification agent or an Independent Accountant as shall be
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Packet Pg. 1189 Attachment: Attachment B - Indenture of Trust (7425 : Adoption of Resolution Authorizing Issuance of Tax Allocation Refunding Bonds, Series 48 acceptable to the 2026 Insurer verifying the sufficiency of the escrow established to pay the 2026 Bonds in full on the maturity or redemption date (“Verification”), (ii) an escrow deposit agreement or other irrevocable written instructions (which shall be acceptable in form and substance to the 2026 Insurer), and (iii) an opinion of Bond Counsel to the effect that the 2026 Bonds are no longer “Outstanding” under the Indenture; each Verification and defeasance opinion shall be acceptable in form and substance, and addressed, to the Authority, the Trustee and the 2026 Insurer. The 2026 Insurer shall be provided with final drafts of the above-referenced documentation not less than five (5) Business Days prior to the funding of the escrow.
(b) Notwithstanding anything herein to the contrary, in the event that the principal and/or interest due of the Bonds is paid by any Insurer, such Bonds shall remain Outstanding for all purposes, not be defeased or otherwise satisfied and not be considered paid by the Successor Agency, and the assignment and pledge of the Tax Revenues and other assets hereunder and all covenants, agreements and other obligations of the Successor Agency to the Bondowners so paid shall continue to exist and shall run to the benefit of such Insurer, and such Insurer shall be subrogated to the rights of such Bondowners, as applicable.
Section 9.05 Execution of Documents and Proof of Ownership by Owners. Any request, consent, declaration or other instrument which this Indenture may require or permit to be executed by any Owner may be in one or more instruments of similar tenor, and shall be executed by such Owner in person or by such Owner’s attorneys appointed in writing.
Except as otherwise herein expressly provided, the fact and date of the execution by any Owner or his attorney of such request, declaration or other instrument, or of such writing appointing such attorney, may be proved by the certificate of any notary public or other officer authorized to take acknowledgments of deeds to be recorded in the state in which he purports to act, that the person signing such request, declaration or other instrument or writing acknowledged to him the execution thereof, or by an affidavit of a witness of such execution, duly sworn to before such notary public or other officer.
The ownership of Bonds and the amount, maturity, number and date of ownership thereof shall be proved by the Registration Books.
Any demand, request, direction, consent, declaration or other instrument or writing of the Owner of any Bond shall bind all future Owners of such Bond in respect of anything done or suffered to be done by the Successor Agency or the Trustee and in accordance therewith, provided, however, that the Trustee shall not be deemed to have knowledge that any Bond is owned by or for the account of the Successor Agency unless the Successor Agency is the registered Owner or the Trustee has received written notice that any other registered Owner is such an affiliate.
Section 9.06 Disqualified Bonds. In determining whether the Owners of the requisite aggregate principal amount of Bonds have concurred in any demand, request, direction, consent or waiver under this Indenture, Bonds which are owned or held by or for the account of the Successor Agency or the City (but excluding Bonds held in any employees’ retirement fund) shall be disregarded and deemed not to be Outstanding for the purpose of any such determination. Upon request of the Trustee, the Successor Agency and the City shall specify in a certificate to the Trustee those Bonds disqualified pursuant to this Section and the Trustee may conclusively rely on such certificate.
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Packet Pg. 1190 Attachment: Attachment B - Indenture of Trust (7425 : Adoption of Resolution Authorizing Issuance of Tax Allocation Refunding Bonds, Series 49 Section 9.07 Waiver of Personal Liability. No member, officer, agent or employee of the Successor Agency shall be individually or personally liable for the payment of the principal or interest or any premium on the Bonds; but nothing herein contained shall relieve any such member, officer, agent or employee from the performance of any official duty provided by law.
Section 9.08 Destruction of Cancelled Bonds. Whenever in this Indenture provision is made for the surrender to the Trustee of any Bonds which have been paid or cancelled pursuant to the provisions of this Indenture, the Trustee shall destroy such bonds and upon request of the Successor Agency provide the Successor Agency a certificate of destruction. The Successor Agency shall be entitled to rely upon any statement of fact contained in any certificate with respect to the destruction of any such Bonds therein referred to.
Section 9.09 Notices. Any notice, request, demand, communication or other paper shall be sufficiently given and shall be deemed given when delivered or upon receipt when mailed by first class, registered or certified mail, postage prepaid, or sent by Electronic Means, addressed as follows:
If to the Successor Agency: Successor Agency to the
Redevelopment Agency of the City of Santa Monica
1685 Main Street
Santa Monica, California 90401
Attention: [City Manager]
If to the Trustee: U.S. Bank Trust Company, National Association [To come from US Bank]
Attention:
If to the 2026 Insurer: [____________]
Attention:
Re:
Telephone:
Email:
In each case in which notice or other communication to the 2026 Insurer refers to an Event of Default, then a copy of such notice or other communication shall also be sent to ________.
The Successor Agency and the Trustee may designate any further or different addresses to which subsequent notices, certificates or other communications shall be sent.
Section 9.10 Partial Invalidity. If any Section, paragraph, sentence, clause or phrase of this Indenture shall for any reason be held illegal, invalid or unenforceable, such holding shall not affect the validity of the remaining portions of this Indenture. The Successor Agency hereby declares that it would have adopted this Indenture and each and every other Section, paragraph, sentence, clause or phrase hereof and authorized the issue of the Bonds pursuant thereto irrespective of the fact that any one or more Sections, paragraphs, sentences, clauses, or phrases of this Indenture may be held illegal, invalid or unenforceable. If, by reason of the judgment of any court, the Trustee is rendered unable to perform its duties hereunder, all such duties and all of the rights and powers of the Trustee hereunder shall, pending appointment of a successor Trustee in accordance with the provisions of Section 6.01 hereof, be assumed by and vest in the Finance Officer of the Successor Agency in trust for the benefit of the Owners. The Successor Agency covenants for the direct benefit
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Packet Pg. 1191 Attachment: Attachment B - Indenture of Trust (7425 : Adoption of Resolution Authorizing Issuance of Tax Allocation Refunding Bonds, Series 50 of the Owners that its Finance Officer in such case shall be vested with all of the rights and powers of the Trustee hereunder, and shall assume all of the responsibilities and perform all of the duties of the Trustee hereunder, in trust for the benefit of the Bonds, pending appointment of a successor Trustee in accordance with the provisions of Section 6.01 hereof.
Section 9.11 Unclaimed Moneys. Anything contained herein to the contrary notwithstanding, any money held by the Trustee in trust for the payment and discharge of the interest or premium (if any) on or principal of the Bonds which remains unclaimed for two (2) years after the date when the payments of such interest, premium and principal have become payable, if such money was held by the Trustee at such date, or for two (2) years after the date of deposit of such money if deposited with the Trustee after the date when the interest and premium (if any) on and principal of such Bonds have become payable, shall be repaid by the Trustee to the Successor Agency as its absolute property free from trust, and the Trustee shall thereupon be released and discharged with respect thereto and the Bondowners shall look only to the Successor Agency for the payment of the principal of and interest and redemption premium (if any) on of such Bonds.
Section 9.12 Execution in Counterparts; Electronic Delivery of Signatures. This Indenture may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. Signatures appearing on any counterpart of this Indenture may be delivered by facsimile transmission or by electronic delivery in PDF format, which transmission or delivery shall be deemed delivery of an originally executed document.
Section 9.13 Governing Law. This Indenture shall be construed and governed in accordance with the laws of the State.
[Signature Page]
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Packet Pg. 1192 Attachment: Attachment B - Indenture of Trust (7425 : Adoption of Resolution Authorizing Issuance of Tax Allocation Refunding Bonds, Series S-1
IN WITNESS WHEREOF, the SUCCESSOR AGENCY TO THE REDEVELOPMENT AGENCY OF THE CITY OF SANTA MONICA has caused this Indenture to be signed in its name by the City Manager of the City of Santa Monica, on behalf of the Successor Agency, and U.S.
BANK TRUST COMPANY, NATIONAL ASSOCIATION, in token of its acceptance of the trusts created hereunder, has caused this Indenture to be signed in its corporate name by its officer thereunto duly authorized, all as of the day and year first above written.
SUCCESSOR AGENCY TO THE
REDEVELOPMENT AGENCY OF THE CITY OF
SANTA MONICA
By:
[City Manager]
[City of Santa Monica]
ATTEST:
Secretary
U.S. BANK TRUST COMPANY, NATIONAL
ASSOCIATION, as Trustee
By:
Authorized Officer
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Packet Pg. 1193 Attachment: Attachment B - Indenture of Trust (7425 : Adoption of Resolution Authorizing Issuance of Tax Allocation Refunding Bonds, Series B-1
Error! Unknown document property name.
EXHIBIT A
FORM OF BOND
UNITED STATES OF AMERICA
STATE OF CALIFORNIA
SUCCESSOR AGENCY TO THE
REDEVELOPMENT AGENCY OF THE CITY OF SANTA MONICA
2026 TAX ALLOCATION REFUNDING BOND
INTEREST RATE: MATURITY DATE: DATED DATE: CUSIP:
_____% [August 1], 20__ _____, 2022 ________
REGISTERED OWNER: CEDE & CO.
PRINCIPAL SUM: ___________________________________ DOLLARS The SUCCESSOR AGENCY TO THE REDEVELOPMENT AGENCY OF THE CITY OF SANTA MONICA, a public entity duly existing under and by virtue of the laws of the State of California (the “Successor Agency”), for value received hereby promises to pay to the Registered Owner stated above, or registered assigns (the “Registered Owner”), on the Maturity Date stated above (subject to any right of prior redemption hereinafter provided for, if any), the Principal Sum stated above and to pay interest thereon from the Interest Payment Date (as hereinafter defined) next preceding the date of authentication of this Bond (as defined below), unless (i) this Bond is authenticated on or before an Interest Payment Date and after the close of business on the fifteenth (15th) calendar day of the month preceding such Interest Payment Date, whether or not such fifteenth (15th) calendar day is a Business Day (the “Record Date”) and on or before the following Interest Payment Date, in which event it shall bear interest from such Interest Payment Date, or (ii) this Bond is authenticated on or before [July 15, 2026], in which event it shall bear interest from the Dated Date above; provided however, that if at the time of authentication of this Bond, interest is in default on this Bond, this Bond shall bear interest from the Interest Payment Date to which interest has previously been paid or made available for payment on this Bond, until payment of such Principal Sum in full, at the Interest Rate per annum stated above, payable semiannually on [February 1 and August 1 in each year, commencing August 1, 2026] (each an “Interest Payment Date”), calculated on the basis of a 360-day year comprised of twelve 30-day months. Principal hereof and premium, if any, upon redemption hereof, if any, are payable in lawful money of the United States of America upon presentation and surrender of this Bond at the corporate trust office (the “Principal Corporate Trust Office”) of U.S. Bank Trust Company, National Association, as trustee (the “Trustee”).
Interest hereon (including the final interest payment upon maturity or redemption) is payable when due by check or draft of the Trustee mailed on the Interest Payment Date to the Registered Owner hereof at the Registered Owner’s address as it appears on the Registration Books maintained by the Trustee at the close of business on the preceding Record Date; provided however, that at the written request of any Registered Owner of at least $1,000,000 aggregate principal amount of the Bonds, which written request is on file with the Trustee on any Record Date, interest hereon shall be paid by wire to such account in the United States as is specified in such written request.
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Packet Pg. 1194 Attachment: Attachment B - Indenture of Trust (7425 : Adoption of Resolution Authorizing Issuance of Tax Allocation Refunding Bonds, Series A-2
This Bond is one of a duly authorized issue of bonds of the Successor Agency designated as “Successor Agency to the Redevelopment Agency of the City of Santa Monica 2026 Tax Allocation Refunding Bonds” (the “2026 Bonds”), of an aggregate principal amount of $__________, all of like tenor and date (except for such variation, if any, as may be required to designate varying series, numbers, maturities, interest rates, or redemption, if any, and other provisions) and all issued pursuant to the provisions of the Refunding Law, the Dissolution Act, and the Law (as such terms are defined in the Indenture), and pursuant to an Indenture of Trust, dated as of [April 1], 2026, entered into by and between the Successor Agency and the Trustee (the “Indenture”). The 2026 Bonds constitute Bonds and are secured on a parity with any other Bonds and Parity Debt issued or incurred in the future under the Indenture. Capitalized terms not otherwise defined herein shall have the meanings given them in the Indenture.
The Bonds are being issued in the form of registered Bonds without coupons. Additional Parity Debt may be issued on a parity with the Bonds, but only subject to the terms of the Indenture.
Reference is hereby made to the Indenture (copies of which are on file at the office of the Successor Agency) and all indentures supplemental thereto and to the Refunding Law, the Dissolution Act, and the Law for a description of the terms on which the Bonds are issued, the provisions with regard to the nature and extent of the Tax Revenues (as that term is defined in the Indenture), and the rights thereunder of the Registered Owners of the Bonds and the rights, duties and immunities of the Trustee and the rights and obligations of the Successor Agency thereunder, to all of the provisions of which Indenture the Registered Owner of this Bond, by acceptance hereof, assents and agrees.
The Bonds have been issued by the Successor Agency for the purpose of providing funds to refinance certain bonds issued by the Former Agency with respect to the Project Area and to pay certain expenses of the Successor Agency in issuing the Bonds.
The Bonds are special obligations of the Successor Agency and this Bond and the interest hereon and all other Bonds and the interest thereon (to the extent set forth in the Indenture), are secured by a statutory pledge of, and lien on, Tax Revenues deposited in the Redevelopment Property Tax Trust Fund held by the Auditor-Controller of Los Angeles County, a pledge of, security interest in and lien on the Tax Revenues on deposit in the Redevelopment Obligation Retirement Fund, including the Special Fund therein, the Debt Service Fund, and any fund or account created under the Indenture, and are payable from Tax Revenues remaining after payment of certain amounts to the County Auditor-Controller for its administrative expenses, to certain taxing entities as statutory passthrough payments, and payments which the Successor Agency is required to make under the BofA Credit Agreement on a basis senior to the Bonds, as provided in the Dissolution Act and the Indenture.
There has been created, and will be maintained by, the Successor Agency the Special Fund into which Tax Revenues deposited by the Auditor-Controller of Los Angeles County in the Redevelopment Obligation Retirement Fund shall be transferred and from which the Successor Agency shall transfer amounts to the Trustee for payment, when due, of the principal of and the interest and redemption premium, if any, on the Bonds and any Parity Debt (as defined in the Indenture).
[The 2026 Bonds are subject to optional and mandatory sinking fund redemption prior to maturity as provided in the Indenture.]
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Packet Pg. 1195 Attachment: Attachment B - Indenture of Trust (7425 : Adoption of Resolution Authorizing Issuance of Tax Allocation Refunding Bonds, Series A-3
If an Event of Default, as defined in the Indenture, shall occur, the principal of all Bonds may be declared due and payable upon the conditions, in the manner and with the effect provided in the Indenture, but such declaration and its consequences may be rescinded and annulled as further provided in the Indenture.
The Bonds are issuable as fully registered Bonds without coupons in denominations of $5,000 and any integral multiple thereof. Subject to the limitations and conditions and upon payment of the charges, if any, as provided in the Indenture, Bonds may be exchanged for a like aggregate principal amount of Bonds of other authorized denominations and of the same series, tenor and maturity.
This Bond is transferable upon the Registration Books, by the person in whose name it was registered, in person or by a duly authorized attorney of such person upon surrender to the Trustee at the Principal Corporate Trust Office for cancellation, but only in the manner and subject to the limitations provided in the Indenture. Upon registration of such transfer a new fully registered Bond or Bonds, of any authorized denomination or denominations, for the same aggregate principal amount and of the same series, tenor and maturity will be issued to the transferee in exchange herefor. The Trustee may refuse to transfer or exchange (a) any Bond during the fifteen (15) days prior to the date established for the selection of Bonds for redemption, or (b) any Bond selected for redemption.
The Successor Agency and the Trustee may treat the Registered Owner hereof as the absolute owner hereof for all purposes, and the Successor Agency and the Trustee shall not be affected by any notice to the contrary.
The rights and obligations of the Successor Agency and the Registered Owners of the Bonds may be modified or amended at any time in the manner, to the extent and upon the terms provided in the Indenture, but no such modification or amendment shall (a) extend the maturity of or reduce the interest rate on any Bond or otherwise alter or impair the obligation of the Successor Agency to pay the principal, interest or redemption premiums (if any) at the time and place and at the rate and in the currency provided herein of any Bond without the express written consent of the respective Insurer and the Registered Owner of such Bond, or (b) reduce the percentage of Bonds required for the written consent to any such amendment or modification. In no event shall a Supplemental Indenture modify any of the rights or obligations of the Trustee without its prior written consent. In no event shall any Supplemental Indenture modify any of the rights or obligations of any Insurer without its prior written consent.
Unless this Bond is presented by an authorized representative of The Depository Trust Company, a New York corporation (“DTC”), to the Successor Agency or the Trustee for registration of transfer, exchange, or payment, and any Bond issued is registered in the name of Cede & Co. or in such other name as is requested by an authorized representative of DTC (and any payment is made to Cede & Co. or to such other entity as is requested by an authorized representative of DTC), ANY
TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the Registered Owner hereof, Cede & Co., has an interest herein.
This Bond is not a debt, liability or obligation of the City of Santa Monica, the State of California, or any of its political subdivisions, and neither said City, said State, nor any of its political subdivisions is liable hereon, nor in any event shall this Bond be payable out of any funds or
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Packet Pg. 1196 Attachment: Attachment B - Indenture of Trust (7425 : Adoption of Resolution Authorizing Issuance of Tax Allocation Refunding Bonds, Series A-4
properties other than those pledged by the Successor Agency. The Bonds do not constitute an indebtedness in contravention of any constitutional or statutory debt limitation or restriction.
It is hereby certified that all of the things, conditions and acts required to exist, to have happened or to have been performed precedent to and in the issuance of this Bond do exist, have happened or have been performed in due and regular time and manner as required by the Law and the laws of the State of California, and that the amount of this Bond, together with all other indebtedness of the Successor Agency, does not exceed any limit prescribed by the Law or any laws of the State of California, and is not in excess of the amount of Bonds permitted to be issued under the Indenture.
This Bond shall not be entitled to any benefit under the Indenture or become valid or obligatory for any purpose until the Trustee’s Certificate of Authentication hereon shall have been manually signed by the Trustee.
IN WITNESS WHEREOF, the Successor Agency to the Redevelopment Agency of the City of Santa Monica has caused this Bond to be executed in its name and on its behalf with the facsimile signature of the City Manager of the City of Santa Monica, on behalf of the Successor Agency, and attested by the facsimile signature of its Secretary, all as of the Dated Date set forth above.
SUCCESSOR AGENCY TO THE
REDEVELOPMENT AGENCY OF THE CITY OF
SANTA MONICA
By:
[City Manager]
[City of Santa Monica]
ATTEST:
Secretary
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Packet Pg. 1197 Attachment: Attachment B - Indenture of Trust (7425 : Adoption of Resolution Authorizing Issuance of Tax Allocation Refunding Bonds, Series A-5
[FORM OF TRUSTEE’S CERTIFICATE OF AUTHENTICATION]
This is one of the Bonds described in the within-mentioned Indenture.
Authentication Date: _________, 2026
U.S. BANK TRUST COMPANY, NATIONAL
ASSOCIATION,
as Trustee
By:
Authorized Signatory
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Packet Pg. 1198 Attachment: Attachment B - Indenture of Trust (7425 : Adoption of Resolution Authorizing Issuance of Tax Allocation Refunding Bonds, Series A-6
[FORM OF ASSIGNMENT]
For value received the undersigned hereby sells, assigns and transfers unto (Name, Address and Tax Identification or Social Security Number of Assignee) the within-registered Bond and hereby irrevocably constitute(s) and appoints(s) attorney,
to transfer the same on the registration books of the Trustee with full power of substitution in the premises.
Dated: __________________________
Signatures Guaranteed:
Note: Signature(s) must be guaranteed by an
eligible guarantor.
Note: The signatures(s) on this Assignment
must correspond with the name(s) as
written on the face of the within Bond
in every particular without alteration or
enlargement or any change whatsoever.
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Packet Pg. 1199 Attachment: Attachment B - Indenture of Trust (7425 : Adoption of Resolution Authorizing Issuance of Tax Allocation Refunding Bonds, Series Agenda Draft
ESCROW AGREEMENT
([2006]/[2011]Bonds)
Dated as of [April 1], 2026
By and Between
SUCCESSOR AGENCY TO THE
REDEVELOPMENT AGENCY OF THE CITY OF SANTA MONICA
and
U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION,
as Escrow Agent, Trustee and 2026 Trustee
Relating to
Successor Agency to the
Redevelopment Agency of the City of Santa Monica
Earthquake Recovery Redevelopment Project
[2006]/[2011] Tax Allocation [Refunding] Bonds[, Series A]
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Packet Pg. 1200 Attachment: Attachment C - Form Escrow Agreement (7425 : Adoption of Resolution Authorizing Issuance of Tax Allocation Refunding -iTABLE OF CONTENTS
SECTION 1. Creation of Escrow Fund ...........................................................................................1 SECTION 2. Deposit to the Escrow Fund .......................................................................................2 SECTION 3. Investment of Escrow Account ..................................................................................2 SECTION 4. Creation of Lien on Escrow Fund ..............................................................................3 SECTION 5. Use of Escrow Fund...................................................................................................3 SECTION 6. Redemption and Defeasance Notices.........................................................................3 SECTION 7. Reinvestment; Substitution; Liquidation....................................................................3 SECTION 8. Liability of Escrow Agent..........................................................................................4 SECTION 9. Possible Deficiencies in Escrow ................................................................................6 SECTION 10. Successor Escrow Agent..........................................................................................6 SECTION 11. Transfer of Remaining Funds; Termination.............................................................6 SECTION 12. Tax-Exempt Nature of Interest on Bonds ................................................................7 SECTION 13. Severability ..............................................................................................................7 SECTION 14. Successors and Assigns............................................................................................7 SECTION 15. Compensation of Escrow Agent...............................................................................7 SECTION 16. Governing Law.........................................................................................................7 SECTION 17. Heading ....................................................................................................................7 SECTION 18. Counterparts.............................................................................................................7 SECTION 19. Application of Certain Terms of the Indenture. .......................................................7 SCHEDULE A - Defeased Bonds
SCHEDULE B - Escrowed Securities
SCHEDULE C - Payment and Redemption Schedule
SCHEDULE D - Form of Notice of Optional Redemption
SCHEDULE E - Form of Notice of Defeasance
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Packet Pg. 1201 Attachment: Attachment C - Form Escrow Agreement (7425 : Adoption of Resolution Authorizing Issuance of Tax Allocation Refunding
ESCROW AGREEMENT
([2006]/[2011]Bonds)
THIS ESCROW AGREEMENT ([2006]/[2011]Bonds), dated as of [April 1], 2026 (this “Escrow Agreement”), by and between the SUCCESSOR AGENCY TO THE REDEVELOPMENT AGENCY OF THE CITY OF SANTA MONICA, a public entity duly created and existing under the laws of the State of California (the “Successor Agency”), and U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION, a national banking association organized and existing under the laws of the United States of America, as escrow agent (the “Escrow Agent”), as successor trustee of the hereinafter defined [2006]/[2011] Bonds (the “Trustee”) and as trustee of the hereinafter defined 2026 Refunding Bonds (in such capacity, the “2026 Trustee”).
W I T N E S S E T H:
WHEREAS, the Successor Agency previously issued its Successor Agency to the Redevelopment Agency of the City of Santa Monica Earthquake Recovery Redevelopment Project [2006]/[2011] Tax Allocation [Refunding] Bonds[, Series A] (the “[2006]/[2011] Bonds”), pursuant to an Indenture of Trust dated as of April 1, 2006 (as amended and supplemented from time to time, the “Indenture”), by and between the Successor Agency and the Trustee; WHEREAS, the Successor Agency has determined that it is in the best financial interests of the Successor Agency to defease and refund, at this time, all of the outstanding [2006]/[2011] Bonds described in Schedule A hereto (collectively, the “Defeased Bonds”); WHEREAS, the Successor Agency anticipates issuing its Successor Agency to the Redevelopment Agency of the City of Santa Monica Tax Allocation Refunding Bonds, Series B (the “2026 Refunding Bonds”) and applying a portion of the proceeds thereof, together with certain other moneys, to defease and refund the Defeased Bonds in accordance with this Escrow Agreement; WHEREAS, the 2026 Refunding Bonds will be issued pursuant to an Indenture of Trust dated as of [April 1], 2026 (the “2026 Indenture”), between the Successor Agency and the 2026 Trustee; WHEREAS, the Successor Agency has determined to deposit moneys and investments, the principal of and interest on which when paid will provide an amount sufficient for the payment of principal of and interest on the Defeased Bonds when due in accordance with Section 9.03 of the Indenture; and
NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants hereinafter set forth, the parties hereto agree as follows:
SECTION 1. Creation of Escrow Fund. There is hereby created and established with the Escrow Agent a special and irrevocable escrow fund designated the “[2006]/[2011] Escrow Fund” (the “Escrow Fund”). The Escrow Fund shall be held in the name of the Escrow Agent and in the custody of the Escrow Agent in accordance with the Indenture under this Escrow Agreement for the benefit of the owners of the Defeased Bonds. Except to the extent of any excess that is to be released as provided in Section 11 hereof, none of the Successor Agency, the Escrow Agent, or the Trustee shall have any interest in the funds or investments held in the Escrow Fund. The moneys and securities held in the Escrow Fund are irrevocably set aside for the payment of the Defeased Bonds as provided in Section 5 hereof.
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Packet Pg. 1202 Attachment: Attachment C - Form Escrow Agreement (7425 : Adoption of Resolution Authorizing Issuance of Tax Allocation Refunding 2 SECTION 2. Deposit to the Escrow Fund. On [Closing Date] (the “Closing Date”), the Successor Agency shall transfer, or cause to be transferred, to the Escrow Agent for deposit into the Escrow Fund the amount of $_______ in immediately available funds to be derived from a portion of the proceeds of the sale of the 2026 Refunding Bonds. Further, the Successor Agency hereby directs the Trustee to transfer to the Escrow Fund on the Closing Date, the amount of _______ in immediately available funds from the Interest Account established and held by the Trustee under the Indenture and the amount of _______ in immediately available funds from the [_______] Account established and held by the Trustee under the Indenture. After the foregoing deposits into the Escrow Fund, the amount of $_________ shall remain on deposit in the Escrow Fund on the Closing Date.
The Escrow Agent shall be entitled to rely upon the conclusion of [Verification Agent] that the total deposit into the Escrow Fund will be fully sufficient to redeem the Defeased Bonds on the Redemption Date.
SECTION 3. Investment of Escrow Fund.
(a) General. On the Closing Date, the Escrow Agent shall use $________ of the amounts deposited in the Escrow Fund to purchase certain securities and investments described on Schedule B attached hereto and made a part hereof maturing on the dates and in the amounts necessary to make the transfer described in Section 5 and hold the remaining $____ deposited therein in cash, uninvested.
The securities and investments described on Schedule B attached hereto and made a part hereof are hereinafter referred to, collectively, as the “Escrowed Securities” and are Defeasance Obligations within the meaning of the Indenture.
The Escrow Agent will purchase the Escrowed Securities in the name of the Escrow Agent as provided above and will hold such Escrowed Securities, and any earnings received thereon and any reinvestment thereof in the Escrow Fund and disburse such amounts as provided herein. The Escrow Agent shall collect amounts due and shall sell or otherwise liquidate investments in the Escrow Fund as needed to make the payments and transfers required by this Escrow Agreement and may sell, liquidate or otherwise dispose of the Escrowed Securities in accordance with Section 7, may substitute, upon the written direction of the Successor Agency, Defeasance Obligations (as defined in the Indenture) subject to the terms and limitations in the Indenture and of Section 7, and shall make certain required reinvestments pursuant to subsection (b) of this Section 3, but otherwise shall have no power or duty to sell, transfer or otherwise dispose of the Escrowed Securities. (b) Additional Actions. In the event that at any time the Successor Agency is of the opinion that for purposes of Section 12 it is necessary to take certain additional action relating to amounts held in the Escrow Fund, the Successor Agency shall so instruct the Escrow Agent in writing, and the Escrow Agent shall take such action as may be directed in accordance with such instructions. The Escrow Agent shall rely fully on any such request and shall not be required to make any investigation in connection therewith.
(c) SLGS Window Closure. If the Escrow Agent learns that the Department of the Treasury or the Bureau of Fiscal Service will not, for any reason, accept a subscription of state and local government series securities (“SLGS”) that is to be submitted pursuant to this Escrow Agreement, the Escrow Agent shall promptly request alternative written investment instructions from the Successor Agency with respect to escrowed funds which were to be invested in SLGS. The Escrow Agent shall follow such instructions and, upon the maturity of any such alternative investment, the Escrow Agent shall hold such funds uninvested and without liability for interest until receipt of further written
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Packet Pg. 1203 Attachment: Attachment C - Form Escrow Agreement (7425 : Adoption of Resolution Authorizing Issuance of Tax Allocation Refunding 3 instructions from the Successor Agency. In the absence of investment instructions from the Successor Agency, the Escrow Agent shall not be responsible for the investment of such funds or interest thereon.
The Escrow Agent may conclusively rely upon the Successor Agency’s selection of an alternative investment as a determination of the alternative investment's legality and suitability and shall not be liable for any losses related to the alternative investments or for compliance with any yield restriction applicable thereto.
SECTION 4. Creation of Lien on Escrow Fund. The Escrow Fund shall be irrevocable, and the Escrow Agent is hereby appointed to act for the benefit of the owners of the Defeased Bonds. The owners of the Defeased Bonds are hereby granted an express lien on the Escrow Fund and all moneys and investments from time to time held therein for the payment of amounts described in Section 5 below. The Escrow Agent shall hold such moneys and investments in the Escrow Fund separate and apart from, and not commingled with, any other moneys or investments.
SECTION 5. Use of Escrow Fund. Not later than 9:00 a.m., California time, on the Payment Dates identified in Schedule C, the Escrow Agent is hereby instructed to withdraw from the Escrow Fund and transfer to the Trustee the amounts required to pay the principal of and interest on, including the redemption price of, the Defeased Bonds as described on Schedule C hereto and in accordance therewith. The Successor Agency hereby irrevocably elects to redeem the Defeased Bonds on the dates and at the prices set forth in Schedule C, and hereby directs the Escrow Agent to redeem such Defeased Bonds as provided in this Escrow Agreement.
SECTION 6. Redemption and Defeasance Notices. The Trustee is hereby instructed to mail and file:
(a) a notice of redemption for the Defeased Bonds with the Municipal Securities Rulemaking Board’s EMMA System, in substantially the form set forth on Schedule D, by no later than 30 days prior to [Redemption Date] (the “Redemption Date”) and to the recipients set forth in, and otherwise pursuant to the requirements of, the Indenture; and (b) a notice of defeasance for the Defeased Bonds with the Municipal Securities Rulemaking Board’s EMMA System, in substantially the form set forth on Schedule E, within three (3) business days of receipt of the amounts set forth in Section 2 above. The Trustee shall also send such notice of defeasance to the owners of the Defeased Bonds.
The sole remedy for failure to post notices on the EMMA system as described in this Section 6 shall be an action by the holders of the Defeased Bonds in mandamus for specific performance or similar remedy to compel performance.
SECTION 7. Reinvestment; Substitution; Liquidation. Interest income and other amounts received by the Escrow Agent as payments on the Escrowed Securities shall be held as part of the Escrow Fund to be used for the purposes set forth in Section 5 of this Escrow Agreement and shall be invested by the Escrow Agent in Defeasance Obligations but only at the written direction of the Successor Agency, provided that (a) such Defeasance Obligations are permitted under Section 4.05(h) of the Indenture, (b) investments in the Escrow Fund shall have maturities which do not extend beyond the date on which the moneys so invested will be needed to make the transfers required by Section 5 of this Escrow Agreement and (c) the investments in the Escrow Fund shall not have a yield in excess of the yield on the Defeased Bonds.
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Packet Pg. 1204 Attachment: Attachment C - Form Escrow Agreement (7425 : Adoption of Resolution Authorizing Issuance of Tax Allocation Refunding 4 If the Successor Agency, at any time, delivers to the Escrow Agent written instructions instructing the Escrow Agent to liquidate, sell or otherwise dispose of any or all securities or investments in any of the Escrow Fund, purchase or otherwise acquire securities or investments, and/or to release any moneys or securities therein to the Successor Agency, and further delivers to the Escrow Agent, each of the following:
(a) a revised Schedule C;
(b) a report of a nationally recognized firm of independent certified public accountants (or other independent firm acceptable to the Successor Agency) verifying that the securities or investments described on such Schedule C will provide moneys, available in both time and amount, to enable timely payment of all amounts for the Defeased Bonds required in accordance with Section 5; and
(c) an opinion of nationally recognized bond counsel to the effect that the liquidation, sale or other disposition of securities or investments in the Escrow Fund, the purchase or other acquisition of securities or investments and the deposit thereof in the Escrow Fund, or the release of amounts from the Escrow Fund as described in this Section 7 will not result in the loss of the exclusion from gross income for federal income tax purposes of interest on the Defeased Bonds or the 2026 Refunding Bonds, or the exemption of interest on the Defeased Bonds or the 2026 Refunding Bonds from State of California personal income taxes; then the Escrow Agent shall liquidate, sell or otherwise dispose of the securities in the Escrow Fund for the Defeased Bonds, shall purchase (or retain) the securities or investments described in such revised Schedule C and transfer to the amounts to the 2026 Trustee, free and clear of the lien of this Escrow Agreement, any and all amounts in the Escrow Fund not required for the purchase of the investments described on such Schedule C, for deposit into the Interest Account established under the 2026 Indenture to be used solely for the purpose of paying interest on the 2026 Refunding Bonds, all in accordance with such instructions from the Successor Agency referred to above. The Escrow Agent has no duty to confirm the compliance of such direction with the foregoing conditions.
SECTION 8. Liability of Escrow Agent.
(a) The Escrow Agent shall not be liable for any loss resulting from any investment made pursuant to this Escrow Agreement in compliance with the provisions hereof. The Escrow Agent shall have no lien whatsoever on the Escrow Fund or moneys on deposit therein for the payment of fees and expenses for services rendered by the Escrow Agent under this Escrow Agreement or otherwise. (b) The Escrow Agent shall not be liable for the accuracy of the calculations as to the sufficiency of any moneys deposited into the Escrow Fund or Escrowed Securities purchased at the direction of the Successor Agency to pay the principal and premium, if any, of, and interest on, the Defeased Bonds.
(c) In the event of the Escrow Agent's failure to account for any of the Escrow Fund or moneys received by it, the Escrow Fund or said moneys shall, nevertheless, be and remain in trust for the holders of the Defeased Bonds, as herein provided.
(d) The Escrow Agent undertakes to perform such duties and only such duties as are specifically set forth in this Escrow Agreement, and no implied covenants or obligations shall be read
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Packet Pg. 1205 Attachment: Attachment C - Form Escrow Agreement (7425 : Adoption of Resolution Authorizing Issuance of Tax Allocation Refunding 5 into this Escrow Agreement against the Escrow Agent. Neither the Escrow Agent nor any of its officers, directors, employees or agents shall be liable for any action taken or omitted under this Escrow Agreement or in connection herewith except to the extent caused by the Escrow Agent’s negligence or willful misconduct, as determined by the final judgment of a court of competent jurisdiction, no longer subject to appeal or review. Anything in this Escrow Agreement to the contrary notwithstanding, in no event shall the Escrow Agent be liable for special, indirect, punitive or consequential loss or damage of any kind whatsoever (including but not limited to lost profits), even if the Escrow Agent has been advised of the likelihood of such loss or damage and regardless of the form of action. (e) The Escrow Agent may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents, attorneys, custodians or nominees appointed with due care, and shall not be responsible for any willful misconduct or negligence on the part of any agent, attorney, custodian or nominee so appointed.
(f) The Escrow Agent shall not have any liability hereunder except to the extent of its own negligence or willful misconduct. In no event shall the Escrow Agent be liable for any special indirect or consequential damages.
(g) The Escrow Agent may consult with counsel of its own choice, and the advice or any opinion of counsel shall be full and complete authorization and protection in respect to any action taken or omitted hereunder in good faith and in accordance with such advice or opinion of counsel. (h) The Successor Agency acknowledges that to the extent regulations of the Comptroller of the Currency or other applicable regulatory entity grant the Successor Agency the right to receive brokerage confirmations of security transactions as they occur, the Successor Agency specifically waives receipt of such confirmations to the extent permitted by law. The Escrow Agent will, upon written request to the Escrow Agent, furnish the Successor Agency periodic cash transaction statements which include detail for all investment transactions made by the Escrow Agent hereunder. (i) The Escrow Agent shall have the right to accept and act upon instructions, including funds transfer instructions (“Instructions”) given pursuant to this Escrow Agreement and delivered using Electronic Means (“Electronic Means” shall mean the following communications methods: email, secure electronic transmission containing applicable authorization codes, passwords and/or authentication keys issued by the Escrow Agent, or another method or system specified by the Escrow Agent as available for use in connection with its services hereunder); provided, however, that the Successor Agency shall provide to the Escrow Agent an incumbency certificate listing officers with the authority to provide such Instructions (“Authorized Officers”) and containing specimen signatures of such Authorized Officers, which incumbency certificate shall be amended by the Successor Agency whenever a person is to be added or deleted from the listing. If the Successor Agency elects to give the Escrow Agent Instructions using Electronic Means and the Escrow Agent in its discretion elects to act upon such Instructions, the Escrow Agent’s understanding of such Instructions shall be deemed controlling. The Successor Agency understands and agrees that the Escrow Agent cannot determine the identity of the actual sender of such Instructions and that the Escrow Agent shall conclusively presume that directions that purport to have been sent by an Authorized Officer listed on the incumbency certificate provided to the Escrow Agent have been sent by such Authorized Officer. The Successor Agency shall be responsible for ensuring that only Authorized Officers transmit such Instructions to the Escrow Agent and that the Successor Agency and all Authorized Officers are solely responsible to safeguard the use and confidentiality of applicable user and authorization codes, passwords and/or authentication keys upon receipt by the Successor Agency. The Escrow Agent shall
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Packet Pg. 1206 Attachment: Attachment C - Form Escrow Agreement (7425 : Adoption of Resolution Authorizing Issuance of Tax Allocation Refunding 6 not be liable for any losses, costs or expenses arising directly or indirectly from the Escrow Agent’s reliance upon and compliance with such Instructions notwithstanding such directions conflict or are inconsistent with a subsequent written instruction. The Successor Agency agrees: (i) to assume all risks arising out of the use of Electronic Means to submit Instructions to the Escrow Agent, including without limitation the risk of the Escrow Agent acting on unauthorized Instructions, and the risk of interception and misuse by third parties; (ii) that it is fully informed of the protections and risks associated with the various methods of transmitting Instructions to the Escrow Agent and that there may be more secure methods of transmitting Instructions than the method(s) selected by the Successor Agency; (iii) that the security procedures (if any) to be followed in connection with its transmission of Instructions provide to it a commercially reasonable degree of protection in light of its particular needs and circumstances; and (iv) to notify the Escrow Agent immediately upon learning of any compromise or unauthorized use of the security procedures.
(j) No provision of this Escrow Agreement shall require the Escrow Agent to expend or risk its own funds or otherwise incur any financial liability in the performance or exercise of any of its duties hereunder, or in the exercise of its rights or powers. (k) The Successor Agency, to the extent permitted by law, covenants to indemnify and hold harmless the Escrow Agent against any loss, liability or expense, including legal fees, incurred in connection with the performance of any of its duties hereunder, except the Escrow Agent shall not be indemnified against any loss, liability or expense resulting from its negligence or willful misconduct.
The indemnity contained herein shall survive the termination of this Escrow Agreement or the resignation or removal of the Escrow Agent.
SECTION 9. Possible Deficiencies in Escrow Fund.
(a) If at any time the Escrow Agent has actual knowledge that the moneys in the Escrow Fund, including the anticipated proceeds of the Escrowed Securities, will not be sufficient to make all payments required by Section 5 hereof, the Escrow Agent shall notify the Successor Agency in writing as soon as is reasonably practicable, of such fact, the amount of such deficiency and the reason therefor solely to the extent actually known to it; provided, however, the Successor Agency shall have no liability for any deficiency and shall not be required to provide funds to eliminate any such deficiency. (b) The Escrow Agent shall in no manner be responsible or liable for any deficiency in the Escrow Fund.
SECTION 10. Successor Escrow Agent. Any bank, corporation or association into which the Escrow Agent may be merged or with which it may be consolidated, or any corporation resulting from any merger, conversion, consolidation or reorganization to which the Escrow Agent shall be a party, or any bank, corporation or association succeeding to all or substantially all of the corporate trust business of the Escrow Agent, shall, if satisfactory to the Successor Agency, be the successor Escrow Agent under this Escrow Agreement without the execution or filing of any paper with any party hereto or any further act on the part of any of the parties hereto except where an instrument of transfer or assignment is required by law to effect such succession, anything herein to the contrary notwithstanding.
SECTION 11. Transfer of Remaining Funds; Termination. After the payment and redemption of all of the Defeased Bonds pursuant to Section 5, the Escrow Agent shall withdraw any amounts remaining on deposit in the Escrow Fund and transfer such amounts to the 2026 Trustee for
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Packet Pg. 1207 Attachment: Attachment C - Form Escrow Agreement (7425 : Adoption of Resolution Authorizing Issuance of Tax Allocation Refunding 7 deposit into the Interest Account established under the 2026 Indenture to be used solely for the purpose of paying interest on the 2026 Refunding Bonds.
This Escrow Agreement shall terminate when (i) all transfers and payments required to be made by the Escrow Agent under the provisions of Section 5 hereof shall have been made, (ii) any moneys remaining in the Escrow Fund shall have been transferred to the 2026 Trustee as described in the preceding paragraph, and (iii) the Escrow Agent has provided a final statement with respect to the Escrow Fund to the Successor Agency.
SECTION 12. Tax-Exempt Nature of Interest on [2006]/[2011] Bonds. The Successor Agency covenants and agrees for the benefit of the owners of the Defeased Bonds that it will not perform or permit to be performed anything or act in such manner as would cause interest on the Defeased Bonds to be included in the gross income of the recipients thereof for federal income tax purposes under the Internal Revenue Code of 1986, as amended.
SECTION 13. Severability. If any one or more of the covenants and agreements provided in this Escrow Agreement on the part of the Successor Agency or the Escrow Agent should be determined by a court of competent jurisdiction to be contrary to law, such covenant or agreement shall be deemed and construed to be severable from the remaining covenants and agreements herein contained and shall in no way affect the validity of the remaining provisions of this Escrow Agreement.
SECTION 14. Successors and Assigns. All of the covenants and agreements in this Escrow Agreement contained by or on behalf of the Successor Agency and the Escrow Agent shall bind and inure to the benefit of their respective successors and assigns, whether so expressed or not.
SECTION 15. Compensation of Escrow Agent. For acting under this Escrow Agreement, the Escrow Agent shall be entitled to payment of fees for its services and reimbursement of advances, counsel fees and other expenses reasonably and necessarily made or incurred by the Escrow Agent in connection with its services under this Escrow Agreement; however, such amount shall never be payable from or become a lien upon the Escrow Fund, which fund shall be held solely for the purposes and subject to the lien set forth in Section 4 of this Escrow Agreement.
SECTION 16. Governing Law. This Escrow Agreement shall be governed by the applicable laws of the State of California, without regard to conflicts of laws principles thereof.
SECTION 17. Heading. Any headings preceding the text of the several Sections hereof, and any table of contents appended to copies hereof, shall be solely for convenience of reference and shall not constitute a part of this Escrow Agreement, nor shall they affect its meaning, construction or effect.
SECTION 18. Counterparts. This Escrow Agreement may be signed in several counterparts, each of which will constitute an original, but all of which shall constitute one and the same instrument.
SECTION 19. Application of Certain Terms of the Indenture. In acting as Escrow Agent hereunder, the Escrow Agent shall be entitled to the provisions of the Indenture relating to the indemnifications, limitations from liability and protections afforded the Trustee, and the provisions for resignation of the Trustee shall be followed in connection with the resignation of the Escrow Agent hereunder. The foregoing provisions are incorporated in this Escrow Agreement as if set forth herein. [Signature Page Follows]
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Packet Pg. 1208 Attachment: Attachment C - Form Escrow Agreement (7425 : Adoption of Resolution Authorizing Issuance of Tax Allocation Refunding [Signature Page to Escrow Agreement ([2006]/[2011]Bonds)] IN WITNESS WHEREOF, the Successor Agency to the Redevelopment Agency of the City of Santa Monica and U.S. Bank Trust Company, National Association, as Escrow Agent, Trustee, and 2026 Trustee, have caused this Escrow Agreement to be executed by their duly authorized officers as of the date first above written.
SUCCESSOR AGENCY TO THE
REDEVELOPMENT AGENCY OF THE
CITY OF SANTA MONICA
By:
[Executive Director]
U.S. BANK TRUST COMPANY,
NATIONAL ASSOCIATION,
as Escrow Agent, Trustee and 2026 Trustee
By:
Authorized Officer
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Packet Pg. 1209 Attachment: Attachment C - Form Escrow Agreement (7425 : Adoption of Resolution Authorizing Issuance of Tax Allocation Refunding A-1
SCHEDULE A
DEFEASED [2006]/[2011] Bonds
Maturity Date
(July 1)
Principal
Amount
Interest
Rate
CUSIP
(Base: 802447)
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Packet Pg. 1210 Attachment: Attachment C - Form Escrow Agreement (7425 : Adoption of Resolution Authorizing Issuance of Tax Allocation Refunding B
-1
SCHEDULE B
ESCROWED SECURITIES
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Packet Pg. 1211 Attachment: Attachment C - Form Escrow Agreement (7425 : Adoption of Resolution Authorizing Issuance of Tax Allocation Refunding C-1
SCHEDULE C
PAYMENT AND REDEMPTION SCHEDULE
Payment
Date Interest
Maturing
Principal
Principal
Redeemed
Total
Payment
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Packet Pg. 1212 Attachment: Attachment C - Form Escrow Agreement (7425 : Adoption of Resolution Authorizing Issuance of Tax Allocation Refunding D-1
SCHEDULE D
FORM OF NOTICE OF OPTIONAL REDEMPTION
SUCCESSOR AGENCY TO THE
REDEVELOPMENT AGENCY OF THE CITY OF SANTA MONICA
EARTHQUAKE RECOVERY REDEVELOPMENT PROJECT
[2006]/[2011] TAX ALLOCATION [REFUNDING] BONDS[, SERIES A] NOTICE IS HEREBY GIVEN pursuant to the terms of the Indenture of Trust dated as of April 1, 2006, by and between the Successor Agency to the Redevelopment Agency of the City of Santa Monica (the “Successor Agency”) and U.S. Bank Trust Company, National Association, as successor trustee (the “Trustee”) (as amended and supplemented from time to time, the “Indenture”), that the bonds listed below (the “Bonds”) have been selected for redemption on [Redemption Date] (the “Redemption Date”) at a redemption price (the “Redemption Price”) equal to the principal amount of such Bonds, together with interest accrued to the Redemption Date, without premium.
Maturity Date
(July 1)
Principal
Amount
Interest
Rate
CUSIP
(Base: 802447)
On the Redemption Date, the Redemption Price shall become due and payable on each of the Bonds, and from and after the Redemption Date, interest on the Bonds will cease to accrue. The Bonds are being called for redemption on the Redemption Date pursuant to the provisions of the Indenture.
All Bonds are required to be surrendered to the designated corporate trust office of the Trustee, on the Redemption Date at the following location. If the Bonds are mailed, the use of registered, insured mail is recommended:
[U.S. Bank Trust Company, National Association
Global Corporate Trust
111 Fillmore Avenue E
St. Paul, Minnesota 55107]
For a list of redemption requirements please visit our website at www.usbank.com/corporatetrust and click on the “Bondholder Information” link for Redemption instructions. You may also contact our Bondholder Communications team at 1-800-934-6802 Monday through Friday from 8 AM to 6 PM CST.
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Packet Pg. 1213 Attachment: Attachment C - Form Escrow Agreement (7425 : Adoption of Resolution Authorizing Issuance of Tax Allocation Refunding D-2
Under the Tax Cuts and Jobs Act of 2017, 24% of the Redemption Price will be withheld if tax identification number is not properly certified. The Form W-9 may be obtained from the Internal Revenue Service.
Neither the Successor Agency nor U.S. Bank Trust Company, National Association shall be held responsible for the selection or use of the CUSIP numbers, nor is any representation made as to its correctness as shown in this notice. It is included solely for convenience of the owners.
Dated: ________, 2026 U.S. Bank Trust Company, National Association, as Trustee
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Packet Pg. 1214 Attachment: Attachment C - Form Escrow Agreement (7425 : Adoption of Resolution Authorizing Issuance of Tax Allocation Refunding E-1
SCHEDULE E
FORM OF NOTICE OF DEFEASANCE
SUCCESSOR AGENCY TO THE
REDEVELOPMENT AGENCY OF THE CITY OF SANTA MONICA
EARTHQUAKE RECOVERY REDEVELOPMENT PROJECT
[2006]/[2011] TAX ALLOCATION [REFUNDING] BONDS[, SERIES A] NOTICE IS HEREBY GIVEN, pursuant to the Continuing Disclosure Certificate dated _______, [2006]/[2011] (the “Continuing Disclosure Certificate”), executed and delivered by the Successor Agency to the Redevelopment Agency of the City of Santa Monica (the “Successor Agency”) in connection with the issuance and delivery of the above-captioned bonds (the “Bonds”), and an Escrow Agreement ([2006]/[2011]Bonds) dated as of [April 1], 2026, by and between the Successor Agency and U.S. Bank Trust Company, National Association, as Escrow Agent, as trustee for the bonds described therein (the “Trustee”) and 2026 Trustee, the Bonds in the principal amounts set forth in the table below (the “Defeased Bonds”) have been defeased and discharged under and within the meaning of the Indenture of Trust dated as of April 1, 2006, by and between the Successor Agency to the Redevelopment Agency of the City of Santa Monica (the “Successor Agency”) and U.S.
Bank Trust Company, National Association, as successor trustee (the “Trustee”) (as amended and supplemented from time to time, the “Indenture”). The Defeased Bonds consist of the following maturities and amounts:
Maturity Date
(July 1)
Principal
Amount
Interest
Rate
CUSIP
(Base: 802447)
Funds for the payment on [Redemption Date] of the redemption price of the Defeased Bonds have been deposited with the Escrow Agent. The sufficiency of the funds and investments for such purposes has been verified by [Verification Agent].
The Successor Agency has irrevocably elected to redeem the Defeased Bonds on [Redemption Date], at a redemption price equal to the par amount thereof, together with accrued interest thereon to the redemption date, without premium.
Additionally, the Successor Agency’s obligations under the Continuing Disclosure Certificate have terminated as of [Closing Date].
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Packet Pg. 1215 Attachment: Attachment C - Form Escrow Agreement (7425 : Adoption of Resolution Authorizing Issuance of Tax Allocation Refunding E-2
Neither the Successor Agency nor U.S. Bank Trust Company, National Association shall be held responsible for the selection or use of the CUSIP numbers, nor is any representation made as to its correctness as shown in this notice. It is included solely for convenience of the owners.
Dated: ________, 2026 U.S. Bank Trust Company, National Association, as Trustee
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Packet Pg. 1216 Attachment: Attachment C - Form Escrow Agreement (7425 : Adoption of Resolution Authorizing Issuance of Tax Allocation Refunding Agenda Draft
4938-0719-2701v2/200356-0693
$__________
SUCCESSOR AGENCY TO THE
REDEVELOPMENT AGENCY OF THE CITY OF SANTA MONICA
2026 TAX ALLOCATION REFUNDING BONDS
BOND PURCHASE AGREEMENT
_____, 2026
Successor Agency to the
Redevelopment Agency of the City of Santa Monica
1685 Main Street
Santa Monica, California 90401
Ladies and Gentlemen:
Stifel, Nicolaus & Company, Incorporated (the “Underwriter”) offers to enter into this Bond Purchase Agreement (this “Purchase Agreement”) with the Successor Agency to the Redevelopment Agency of the City of Santa Monica (the “Agency”) which will be binding upon the Agency and the Underwriter upon the acceptance hereof by the Agency. This offer is made subject to its acceptance by the Agency by execution of this Purchase Agreement and its delivery to the Underwriter on or before 11:59 p.m., California time, on the date hereof, or at such other later time as the Underwriter shall agree to in writing. All terms used herein and not otherwise defined shall have the respective meanings given to such terms in the Indenture (as hereinafter defined).
The Agency acknowledges and agrees that: (i) the purchase and sale of the Bonds pursuant to this Purchase Agreement is an arm’s length commercial transaction between the Agency and the Underwriter; (ii) in connection with such transaction, the Underwriter is acting solely as principal and not as agent or a fiduciary of the Agency; (iii) the Underwriter has not assumed a fiduciary responsibility in favor of the Agency with respect to the offering contemplated hereby or the discussions, undertakings and procedures leading thereto (irrespective of whether the Underwriter has provided other services or is currently providing other services to the Agency on other matters); and (iv) the Agency has consulted with its own legal and financial advisors to the extent it has deemed appropriate.
1. Purchase and Sale. Upon the terms and conditions and upon the basis of the representations, warranties and agreements hereinafter set forth, the Underwriter hereby agrees to purchase from the Agency for offering to the public, and the Agency hereby agrees to sell to the Underwriter for such purpose, all (but not less than all) of the $___________ aggregate principal amount of the Successor Agency to the Redevelopment Agency of the City of Santa Monica 2026 Tax Allocation Refunding Bonds (the “Bonds”), at a purchase price equal to $__________ (being the aggregate principal amount thereof, less an Underwriter’s discount of $__________ and [plus/less] [net] an original issue [premium/discount] of $__________). [In addition, on behalf of the Agency, from the purchase price of the Bonds, the Underwriter shall wire the amount of $__________ to the Insurer (defined below) to pay the costs of the premiums for the 2026 Reserve Policy (defined below).] The Bonds are to be purchased by the Underwriter from the Agency. Such payment and
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Packet Pg. 1217 Attachment: Attachment D - Bond Purchase Agreement (7425 : Adoption of Resolution Authorizing Issuance of Tax Allocation Refunding 2 4938-0719-2701v2/200356-0693
delivery and the other actions contemplated hereby to take place at the time of such payment and delivery are herein sometimes called the “Closing.”
2. The Bonds and Related Documents. The Bonds shall be substantially in the form described in, and shall be issued and secured under the provisions of, an Indenture of Trust, dated as of _____ 1, 2026, (the “Indenture”), by and between the Agency and U.S. Bank Trust Company, National Association, as trustee (the “Trustee”). The Bonds will be issued pursuant to Part 1 of Division 24 of the California Health and Safety Code (the “Law”), Section 34177.5 of the California Health and Safety Code, and Article 11 of Chapter 3 of Part 1 of Division 2 of Title 5 of the California Government Code (the “Act”) and resolutions of the Agency adopted on ______, 2026 (the “Agency Resolution”) and on ______, 2026 (the “Agency OS Resolution”). The issuance of the Bonds was approved by the Los Angeles County Third Supervisorial District Consolidated Oversight Board (the “Oversight Board”) by a resolution adopted on _____, 2026 (the “Oversight Board Resolution”). The Bonds shall be as described in the Indenture and the Official Statement dated the date hereof relating to the Bonds (which, together with all exhibits and appendices included therein or attached thereto and such amendments or supplements thereto which shall be approved by the Underwriter, is hereinafter called the “Official Statement”). [A debt service reserve insurance policy (the “2026 Reserve Policy”) shall also be purchased from __________ (the “2026 Insurer”) for the Bonds.]
The net proceeds of the Bonds will be used to refund in full (i) the Redevelopment Agency of the City of Santa Monica Earthquake Recovery Redevelopment Project 2006 Tax Allocation Refunding Bonds, Series A (the “2006 Bonds”); and (ii) the Redevelopment Agency of the City of Santa Monica Earthquake Recovery Redevelopment Project 2011 Tax Allocation Bonds (the “2011 Bonds” and, together with the 2006 Bonds, the “Prior Bonds”).