Meeting_Body
REGULAR BOARD MEETING
SEPTEMBER 27, 2015
Preamble
Motion by:
Ridley-Thomas, Garcetti, Dupont-Walker and Kuehl
September 27, 2015
Relating to Item 58, File ID 2015-1088;
IMPLEMENTATION OF AFFORDABLE HOUSING AND BUSINESS LOAN FUNDS
In March 2015, the Metropolitan Transportation Authority (Metro) Board of Directors (Board) directed the Chief Executive Officer to negotiate the terms and conditions for Metro’s participation in a multi-partner Countywide Transit-Oriented Affordable Housing and Business Loan Fund (Proposed Fund). The purpose of the Proposed Fund was to promote development and preservation of affordable housing and small businesses within a half-mile of Metro rail stations, bus rapid transit or rapid bus stops.
Staff has engaged members of the community development and finance communities in exploring potential formats for the Proposed Fund with an emphasis on transit oriented communities. While the residential and commercial purposes of the Proposed Fund are synergistic, their administration, approach and objectives are materially different, therefore necessitating two separate funding frameworks.
With regard to the Affordable Housing Loan Fund, staff has identified a consortium led by the California Community Foundation and Low Income Investment Fund that has the local experience, depth of potential investor interest and deep experience in creating and implementing housing investment funds to meet the Board’s objectives for this investment. The consortium has committed to securing over $60 million to match Metro’s $10 million commitment in order to meaningfully capitalize the loan fund.
With regard to the Business Loan Fund, staff has reached out to a number of impacted stakeholders, and has indicators that a potential comprehensive package of loan products requires additional consideration. However, staff has identified an immediate and critical gap in available funding for commercial tenant improvements both as a component of mixed-use affordable housing projects and in small, free standing commercial properties in close proximity to transit facilities, but the challenge extends to community-based retail tenants within one and one-half mile of transit corridors. With regard to ground floor retail in mixed-use affordable housing projects, a study by the City of Los Angeles indicated that nearly 20% of the City of LA’s funded affordable housing projects have vacancies, with most of these vacancies concentrated in underserved neighborhoods. In addition, Metro affordable housing joint developments have chronic vacancies at Hollywood and Western, Westlake MacArthur Park, 1st and Boyle, and Del Mar Stations. Providing grants to support the establishment of local, small businesses within projects such as these can support local economic development initiatives and promote job creation while lowering the risks of displacement and contributing to the revitalization of transit-oriented communities.
Title
MOTION by Ridley-Thomas, Garcetti, Dupont-Walker and Kuehl directing the Chief Executive Officer to move forward with implementation of Affordable Housing and Business Loan Funds as follows:
A. Engage the consortium led by California Community Foundation and Low Income Investment Fund to negotiate terms and conditions, in a multi-partner Countywide Transit-Oriented Affordable Housing Loan Fund to support the production and preservation of transit-oriented affordable housing (including mixed use projects)that leverages Metro’s financial contribution, as previously approved by the Boardin March 2015, and return to the Board for approval of the final terms and conditions;
B. Design a pilot Countywide Transit-Oriented Small Business Loan Fund program to provide financing under favorable terms for commercial tenant improvements within transit adjacent, mixed use (including affordable housing) or commercial projects with particular emphasis on tenant improvements for local small businesses, with priority for ones that have been operating in the community for at least 5 years. Should Metro be unable to administer the loan fund internally, the agency should contract with an external administrator with relevant expertise (e.g. community development financial institutions, banks, the Community Development Commission, or small business centers);
C. Continue research and engagement with community development financial institutions, municipalities, private sector banks, regional economic development corporations, and other interested parties on the potential expansion of the Countywide Transit-Oriented Small Business Loan Fund program to include a variety of financial products and report back within 120 days;
D. For purposes of furthering the above described objectives, amend the budget to initially allocate $500,000 of the previously-committed funding for the Affordable Housing and Business Loan Fund to the pilot Countywide Transit-Oriented Small Business Loan Fund, to be dispersed over the next two fiscal years, and be administered by the Office of Management and Budget and the Diversity & Economic Opportunity Department, in coordination with the Office of Countywide Planning and Development; and
E. Provide a quarterly written update to the Board on the status, implementation and impacts of both Loan Fund programs.