Developers outline tax‑exempt bond plan, PILOT promise for Huntington Beach senior living project

Interim Chief Financial Officer David Cain introduced developer representatives and a proposed financing plan for the Marisol (Bolsa Chica/Warner Ave area) 214‑unit senior living project, telling council the project team plans to use tax‑exempt bonds issued through the California Public Finance Authority.

Scott Strusiner (presenting for the sponsor) and Andy Blum of the Bloom Family Foundation said a nonprofit subsidiary will be the project sponsor and that the team will seek TEFRA approval so bonds can be sold on a tax‑exempt basis. "The city has absolutely no liability under those bonds," Strusiner told council, and the sponsor presented a draft PILOT (payment in lieu of taxes) agreement that, the presenters said, would make the city ‘‘no better off and no worse off’’ than if the project were taxable.

Nut graf: Developers emphasized the PILOT would pay the city its portion of property taxes and any other taxes the sponsor might later be exempt from, and they committed to complying with city ordinances and fees despite nonprofit status. Council members pressed the team on how quickly tax revenue would grow, what protections exist if the project defaults, and whether the sponsor or lenders would provide guarantees.

Developers said the site currently brings about $22,000 a year in the city’s share of property taxes as a vacant parcel; they projected that upon stabilization tax flows could rise to about $240,000 annually. Council members asked when stabilization would occur; the developer estimated about two years of construction and two to three years of lease‑up — roughly a five‑year window to stabilization. Staff and bond counsel said the PILOT would be recorded on title so payments would continue if ownership changes and that if a future owner were no longer tax‑exempt normal property taxes would resume.

Council members also asked about worst‑case scenarios. Developers said lenders would take back the property in a default and likely sell it to a taxable buyer, after which taxes would resume. The project team acknowledged the market demands a ‘‘limited backstop’’ from the Bloom Family Foundation for bond buyers, but said the city itself would not be liable for the bonds. City bond counsel Cyrus Tarabi (outside counsel) confirmed the TEFRA process is a federal tax‑exempt bond hearing that does not create city liability; the TEFRA hearing was scheduled for Feb. 4.

Ending: Council asked staff and counsel to continue reviewing bond documents and the PILOT language; the council did not vote on bond issuance at the meeting. The project proponents said they would work with the city attorney’s office to clarify PILOT language before the TEFRA hearing.