Council approves Forest City refinancing despite split over affordable-housing term

The Los Angeles City Council voted to accept Forest City Enterprises' counterproposal to refinance the Metropolitan Apartments project, approving the refunding package after lengthy debate about how long units would remain affordable.

Councilmember Pacheco moved to accept Forest City's counterproposal; the motion passed on a recorded voice roll of 10 ayes and 3 noes. The Community Redevelopment Agency (CRA) and developer negotiated a structure in which affordability restrictions would remain in effect for the life of the housing revenue bonds and for up to five years beyond the termination of those bonds. If the bonds remained in place through their planned term (to 2025 as discussed), the affordability period would extend through about 2030, CRA staff said. The developer declined to accept a fixed 30-year affordability obligation and instead sought a five-year extension beyond bond termination.

Don Spivak of the Community Redevelopment Agency told the council that the developer had "expressed a great deal of concern about being obligated to a 30 year horizon on the affordable housing units" and was "willing to go with 5 years beyond the life of the bonds." Councilmembers pressed staff about credit risk and recourse: the CRA explained the proposed 28,400,000 housing revenue bond would be a project-payable revenue bond supported by a Forest City corporate guarantee, not a secured letter-of-credit arrangement; staff said there would be no recourse to the city or CRA for debt service if Forest City failed to pay.

Opponents argued the shorter extension would set a damaging precedent and risk losing long-term affordability. Councilmember Holden said the city had "15,000,000 of taxpayers' dollars already invested" and that the council should not be "subsidizing the rich over and over again at the expense of the disadvantaged." Supporters, led by Pacheco, said accepting the counterproposal offered the best chance to protect existing affordable units through 2010 and to provide "an opportunity to recoup the 15,000,000" of CRA funds, which could be reinvested in other affordable-housing projects.

Council staff clarified financial details during debate: the developer would pay transaction costs and a $50,000 administrative fee; no new CRA cash or general-fund subsidy would be added to the refunding package. CRA staff also noted that if the proposed 30-year requirement were imposed and the developer chose not to proceed, the agency's roughly $15 million investment from the 1980s could be at risk.

The council instructed staff to proceed forthwith on the approved refinancing terms. The motion left the precise legal and contractual documents to be completed by staff and counsel as required to implement the refunding.