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Committee advances debt-policy changes and a package of GO bonds and loan authority for affordable-housing preservation
Summary
The committee forwarded an updated debt policy allowing 40-year general obligation bonds (to match affordable-housing loan terms), and recommended the sale/appropriation of initial GO bond proceeds totaling up to $75 million and expanded authorization for up to ~$260 million for the PASS preservation program and additional AHSC grant applications.
The Budget and Finance Committee advanced multiple interrelated items that together change the city’s debt policy, authorize a first issuance of general obligation bonds, and approve loan/appropriation authority for an affordable-housing preservation program.
Anna Van Daigneghna of the Comptroller's Office described proposed updates to the city's debt policy that would allow flexibility to structure general obligation bonds with terms up to 40 years to align with the term of underlying affordable-housing loans. "This is to keep that term in line with the term of the underlying, affordable housing loans," she said.
The proposed policy also adds an appendix to consider designating bonds as green or social bonds, a marketing designation that earmarks proceeds for climate-friendly or socially beneficial projects. Van Daigneghna said designating bonds as social or green bonds could attract investors without adding cost to issuance.
Committee members asked about the fiscal tradeoffs of a longer bond term. The Comptroller's Office said extending a bond from 30 to 40 years could raise the interest rate by about 0.2 percentage points and estimated additional interest costs (if not refinanced early) of roughly $30 million for a single illustrative issuance; staff said some of those costs would be offset by loan repayments from affordable-housing sponsors.
The committee also considered Items 6–8, a package to appropriate and sell bonds for the Preservation and Seismic Safety (PASS) program and related loan authority. MOHCD and the Controller's Office said the PASS program will finance acquisition, rehabilitation, seismic strengthening and preservation of affordable housing (not new construction) through a mix of below-market and market-rate loans; loans may include terms up to 40 years. The initial issuance would provide about $71.5 million in loan proceeds from an asked $75 million sale, aimed at financing roughly $59 million in loans for an expected pipeline of ~30 projects and about 325 units.
Staff estimated the sale's debt-service impact using a conservative 5.53% taxable interest rate: an estimated $188.5 million in debt-service payments and a total interest cost of about $113.5 million over the term for the illustrative structure discussed. BLA staff noted annual issuance limits and recommended approval; the committee advanced the package to the full Board with a positive recommendation and non-substantive amendments where requested.
Separately, MOHCD sought authorization to submit three AHSC grant applications for projects at 2340 San Jose Ave (Balboa Park Upper Yard), 500 Turk St and Treasure Island Parcel C; the projects would apply jointly with the city for roughly $20 million each (split between housing loans and transportation grants) to support affordable housing and associated greenhouse-gas‑reduction transportation improvements.
The committee moved the debt-policy amendments, bond-sale resolutions and AHSC applications to the full Board with a positive recommendation, accepting clarifying, non‑substantive amendments and requests for reporting as noted.
