City Council
Report
City Council Meeting: June 9, 2026
Agenda Item: 12.C
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To: Mayor and City Council
From: Aileen Reynolds, Director, Housing and Human Services Department Subject: Public Hearing and Adoption of Resolution Approving the California Municipal Finance Authority (“CMFA”) to Issue Revenue Bonds for the Benefit of Tierra Apts, L.P.
Recommended Action
Staff recommends that the City Council:
1. Determine that the development of affordable housing at 1211-1217 Fourteenth Street was previously analyzed in the 6th Cycle Housing Element Environmental Impact Report (SCH# 2020100575), and the issuance of the TEFRA bond for this project has no possibility of significant effect pursuant to Section 15061(b)(3) (Common Sense Exemption) of the California Environmental Quality Act (CEQA) Guidelines.
2. Hold a public hearing under the requirements of the Tax and Equity Fiscal Responsibility Act (“TEFRA”) and the Internal Revenue Code of 1986, as amended; and
3. Adopt a resolution approving the issuance of bonds by the CMFA in an amount not-to-exceed $28,000,000 for the benefit of Tierra Apts, L.P. to finance and refinance the acquisition, construction, development, and equipping of an affordable multifamily rental housing development to be located at 1402 Wilshire Boulevard and 1211-1217 Fourteenth Street.
Executive Summary
Tierra Apts, L.P. (“Borrower”), the limited partnership created by Hollywood Community Housing Corporation to develop affordable housing to be located at 1402 Wilshire Boulevard and 1211-1217 Fourteenth Street in Santa Monica (“City”), has requested the City’s approval for the California Municipal Finance Authority (“CMFA”), a joint powers authority of which the City is a member, to issue revenue obligations (“Bonds”) in an aggregate principal amount not to exceed $28,000,000 to finance and refinance the 2 of 8
acquisition, construction, development, and equipping of an 82-apartment qualified residential rental project (the “Project”) to be owned and operated by the Borrower.
To qualify as tax exempt facility bonds for a residential rental project pursuant to Section 147 (f) of the Internal Revenue Code and the Tax and Equity Fiscal Responsibility Act (“TEFRA”), the elected representatives of the City must approve the issuance of the Bonds at a public hearing.
A proposed resolution approving the issuance of the Bonds by CMFA is included as Attachment A. Approval of the Bonds does not obligate the City financially in any way and it is not an approval of the Project for any other purpose. The recommended action is solely to authorize CMFA’s bond issuance and is not for the purposes of approving any other funding, conditions, or business terms for the development. The tax-exempt bond financing was underwritten into the deal terms that were approved by Council when it authorized the City Manager to negotiate and execute the Disposition and Development Agreement (DDA) for the project on December 17, 2024.
Discussion
The CMFA proposes to issue up to $28 million of tax-exempt revenue bonds for the purposes of making a loan to Hollywood Community Housing Corporation, a California nonprofit public benefit corporation (the “Developer”), on behalf of Tierra Apts, L.P., a California limited partnership, or another ownership entity created by HCHC Tierra Apartments GP, LLC, a California limited liability company, its general partner (the “General Partner”), or by another affiliate of the Developer (such limited partnership or other ownership entity, the “Borrower”), to finance and refinance the acquisition, construction, development, and equipping of the “Project” to be owned and operated by the Borrower and located at 1402 Wilshire Boulevard and 1211-1217 Fourteenth Street within the City of Santa Monica, California.
City Council Approved the Project on December 17, 2024
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The City owns the land at 1211-1217 Fourteenth Street. The City provided a $6,000,000 loan to HCHC to acquire 1402 Wilshire Boulevard so that HCHC could build 100% affordable housing on the site, consistent with the City’s certified Housing Element. To facilitate the redevelopment of these parcels for 100% affordable housing, the City Council took several actions on December 17, 2024, as follows:
1. Authorize the City Manager to negotiate and execute a Ground Lease with a fifty five (55) year term, with two options to extend by twenty-two (22) years each, and a Disposition and Development Agreement (DDA) with HCHC for development and operation of senior affordable and senior permanent supportive housing at 1211-1217 Fourteenth Street on property to be acquired by HCHC at 1402 Wilshire Boulevard and deeded to the City;
2. Declare 1402 Wilshire Boulevard “exempt surplus land” as defined in Government Code Section 54221(f) upon the City receiving fee title to the site at closing of construction financing;
3. Adopt a Resolution declaring 1402 Wilshire Boulevard as exempt surplus land, contingent upon HCHC acquiring the site and transferring fee title to the City at closing of construction financing, and authorize the City Manager to take actions necessary to comply with the Surplus Land Act (Government Code sections 54220 et seq.;
4. Authorize the City Manager to submit the report of declared exempt surplus land as part of the Annual Report to the California Department of Housing and Community Development (HCD), in conformance with state law; 6. Authorize the City Manager to negotiate and execute all necessary documents to make a Housing Trust Fund loan to HCHC in an amount consistent with the Housing Trust Fund Guidelines loan limits;
5. Provide direction to staff regarding public replacement parking including any City investment from the Housing Trust Fund;
6. Adopt a finding that the actions to approve the Ground Leases and DDAs for the Developments are exempt from CEQA pursuant to CEQA Guidelines Section 4 of 8
15182 and a finding that the Developments have been previously analyzed in the 6th Cycle Housing Element Environmental Impact Report (SCH# 2020100575).
The December 17, 2024 staff report is attached as Attachment B.
The TEFRA Bonds
To finance the development of the Project, HCHC has applied for and successfully obtained 4% tax credit financing, which is supplemented by the loan of bond proceeds issued by the CMFA. A portion of this CMFA loan will be used to repay the City’s $6,000,000 acquisition loan, which allowed HCHC to acquire 1402 Wilshire Boulevard.
The CMFA was formed to assist local governments, non-profit organizations and businesses with the issuance of taxable and tax-exempt bonds aimed at improving the standard of living of California. The CMFA is a public entity, separate and apart from each member, and the debts and obligations of the CMFA do not constitute debts, liabilities, or obligations of the members.
The Bonds to be issued by the CMFA on behalf of the Borrower will be the sole responsibility of the Borrower, and the City will have no financial, legal, moral obligation, liability, or responsibility for the repayment of the bonds. All financing documents with respect to the issuance of the Bonds will contain clear disclaimers that the bonds are not obligations of the City or the State of California but are to be paid for solely from funds provided by the Borrower.
The Board of Directors of the California Foundation for Stronger Communities, a California non-profit public benefit corporation (the “Foundation”), acts as the Board of Directors for the CMFA. Through its conduit issuance activities, the CMFA shares a portion of the issuance fees it receives with its member communities and donates a portion of these issuance fees to the Foundation for the support of local charities. With respect to the City of Santa Monica, it is expected that that a portion of the issuance fee 5 of 8
attributable to the City will be granted by the CMFA to the general fund of the City. Such grant may be used for any lawful purpose of the City.
There are no costs associated with membership in the CMFA and the City will in no way become exposed to any financial liability by reason of its membership in the CMFA. In addition, participation by the City in the CMFA will not impact the City’s appropriations limits and will not constitute any type of indebtedness by the City. Outside of holding the TEFRA hearing and adopting the required resolution, no other participation or activity of the City or the City Council with respect to the issuance of the Bonds will be required.
The recommended action is solely to authorize CMFA’s bond issuance and is not for the purposes of approving any other funding, conditions, or business terms for the development.
As required by law, a public hearing notice was published in the Santa Monica Daily Press at least 7 days prior to the hearing date.
TEFRA Bonds and the City’s Obligations to Affirmatively Further Fair Housing While the decision to approve the issuance of the Bonds by CMFA is within the City’s discretion, the City is required to additionally consider its legal duty to affirmatively further fair housing. Program 2.E of the City’s certified 6th Cycle (2021-2029) Housing Element identified the City-owned site at 1217 14th Street as suitable for a 100% affordable housing project and the City has already committed, by City Council action taken on December 17, 2024, to providing the land to develop 100% affordable housing on the site. According to a technical assistance letter issued by California Department of Housing and Community Development Division of Housing Policy Development, to the City of Concord, dated June 10, 2024, failure to approve the TEFRA resolution could be construed as a denial of the Project and thus subject the City to penalties and other enforcement actions under the Housing Accountability Act (Government Code section 65589.5). HCD’s technical assistance letter is attached as Attachment C.
Fair Political Practices Commission Action
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The Fair Political Practices Commission (FPPC) has issued a letter dated March 16, 2026 confirming that Mayor Torosis’s employment with the County of Los Angeles did not create a disqualifying conflict of interest for purposes of participating in the December 2024 vote under the Political Reform Act. The letter from the FPPC is attached as Attachment D. Accordingly, Mayor Torosis is eligible to participate in the Tierra Apartments TEFRA hearing.
Environmental Review
The City’s actions have already been subject to CEQA review and are within the scope of the previously prepared EIRs and an Addendum. More specifically, development of affordable housing at 1211-1217 Fourteenth Street (APN #4282003900 and 4282003901) was included in the Housing Element’s Suitable Sites Inventory (SSI) [Category 4 – City Owned Sites listed in Figure F-7] and analyzed in its associated certified EIR. (SCH# 2020100575.) In October 2022, the City subsequently issued an Addendum to the Housing Element EIR, which considered development of 13,600 housing units. Currently, the City’s development inventory is well below that number of new units.
On December 17, 2024 the City took actions associated with both 1211-1217 Fourteenth Street and 1402 Wilshire, including CEQA actions. A “‘project’ refers to the underlying activity which may be subject to approval by one or more governmental agencies; it does not refer to each of the several approvals sequentially issued by different agencies.” (Citizens for a Megaplex-free Alameda v. City of Alameda (2007) 149 Cal.App.4th 91, 99.) The City’s actions are within the scope of the General Plan EIR (SCH# 200904117) and Housing Element EIR which contemplated 13,600 housing units in the City. Consistent with the General Plan “Mixed Use Boulevard” designation, the site is zoned as “MUB” Mixed-Use Boulevard, which allows residential uses as a permitted by right use, (SMC § 9.11.020), with heights up to 80 feet (excluding rooftop equipment), and Floor Area Ratio (FAR) up to 3.75 (SMC § 9.11.030.B). The housing development is consistent with these standards insofar as residential use is permitted 7 of 8
by right and the height of the project is less than 80 feet (excluding rooftop equipment).
There are no impacts that are peculiar to the parcel or the project, there are no impacts that were not analyzed in a prior EIR, and there are no more severe impacts than those discussed in the prior EIRs. These developments are consistent with the overall planned density and building intensity, geographic area analyzed, and covered infrastructure.
Furthermore, as discussed above, the City's actions simply assist in the application process to the California Municipal Finance Authority, and do not constitute approval of the bonds themselves. The application to another entity is not a project subject to CEQA. (Willow Glen Trestle Conservancy v. City of San Jose (2020) 49 Cal.App.5th 127 [The City's action of applying to a responsible agency for a permit is not a discretionary action subject to CEQA.]. Additionally, the approval of the bonds is exempt from the California Environmental Quality Act (CEQA) pursuant to Section 15061(b)(3) (Common Sense Exemption) of the CEQA Guidelines. The bonds are covered by the commonsense 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.” The approval of the bonds is an administrative procedure. Therefore, 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 & Budget Actions
The issuance of the Bonds will have no financial impact to the City other than it is expected that CMFA will provide a small portion of the issuance fees to the City. The CMFA will act as issuer and perform all necessary legal and administrative responsibilities associated with the financing. The Bonds are special, limited obligations of CMFA payable solely through the repayment of the loans from the CMFA, which repayment is used to pay the principal of and interest on the Bonds. The Bonds issued by CMFA are not an obligation of the City or any CMFA member. Neither the faith or credit, nor the taxing power of the City, any CMFA member, the State or any other political subdivision is pledged to the repayment of the Bonds. 8 of 8
Prepared By: Ayala Scott, Senior Development Analyst
Approved Forwarded to Council
Attachments:
A. A. Resolution of the City Council of the City of Santa Monica Approving the Issuance of Revenue Bonds by the California Municipal Finance Authority to Tierra Apartments, L.P.
B. B. December 17, 2024 Staff Report
C. C. HCD Letter to City of Concord
D. D. Rejection Letter - FPPC Complaint No. COM-01272026-00248; Caroline Torosis_Redacted
E. PowerPoint Presentation