Multifamily Bond Financing

Multifamily Bond Financing Program 

The CDC expands the supply of affordable housing by issuing multifamily mortgage revenue bonds through the Housing Authority of the County of Los Angeles (Housing Authority).

What is the Multifamily Bond Program?

Since 1984, the Housing Authority has issued more than $650 million in mortgage revenue bonds for multifamily housing. The bonds are issued to developers to finance low- and moderate-income housing for families.

The County may issue either tax-exempt or taxable bonds.  Taxable bonds would generally be issued only in combination with tax-exempt bonds.  Taxable bonds do not require an allocation of bond authority from the California Debt Limit Allocation Committee (CDLAC).

Program Overview

  • Public Benefit

    The County requires a defined public benefit before it is willing to act as an issuer for tax-exempt multifamily housing bonds. These benefits must conform to all federal and state requirements for tax-exempt multifamily housing bonds. To ensure a public benefit, developers must set aside at least 20% of the units in each project.  These units must be rented to or held available for rent to very low-income tenants (50% of median-income, adjusted for household size).  The County reserves the right to impose added restrictions.

  • Location

    Projects must be located within the County of Los Angeles.  If the project is located within an incorporated city, the Housing Authority will require a cooperative resolution adopted by that city.  The City of Los Angeles and the City of Long Beach have their own bond programs.

  • Priority Projects

    Projects are considered on a priority basis.  They include projects that will be instrumental to neighborhood turn-around, provide significant public benefit and preserve existing affordable housing.

  • Application Requirements

    The Housing Authority requires each applicant to complete its application.  Applications must be submitted for all multifamily projects seeking bond financing where the Housing Authority  will act as issuer or where the Housing Authority will sponsor or hold the public hearing required under the Tax Equity and Fiscal Responsibility Act (the "TEFRA" hearing).  This includes all new money issuances requiring an allocation of bond authority from the California Debt Limit Allocation Committee (CDLAC), new 501(c)(3) issues, and refunding of existing bond issues.

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

  • Process

    Bond Counsel

    The Housing Authority will approve the bond counsel firm, or if the applicant wishes to select bond counsel (subject to finance team approval) the applicant will pay any extra costs associated with separate issuer counsel.

    Finance Team Approval

    The Housing Authority will approve the financial advisory firm.

    Independent Study

    The Housing Authority reserves the right to require an independent study of any proposed project.


  • Types Bonds

    Tax-Exempt Private Activity Bonds

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

    The CDC helps to strengthen neighborhoods, empower families, support local economics, and promote individual achievement.

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

    Taxable Bonds

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

    Bond Rating and Credit Enhancement Requirements

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

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

  • Cost of Issuance

    Housing Authority Fees 

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

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

    The initial issuer fee of 12.5 basis points (0.125%) on the bond amount and the first year of the annual administrative fee of 12.5 basis points (0.125%) of the original bond amount are both paid at bond closing. Developers will also pay an annual administrative fee of 12.5 basis points (0.125%) of the original bond amount to the Housing Authority, for the qualified project period to cover the Housing Authority’s ongoing administration and monitoring costs for the project.

    Housing Authority Indemnity

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

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