The Los Angeles County Development Authority (LACDA) issues tax-exempt and taxable multifamily housing bonds for qualified developments located in Los Angeles County. The LACDA 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).

Tax-Exempt Private Activity Bonds

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

501(c)(3) private activity bonds
The LACDA 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 LIHTC.  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 LACDA.

Bond Rating and Credit Enhancement Requirements

The LACDA 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 LACDA.  The LACDA reserves the right to impose these minimum requirements on bond issues for which the LACDA issues bonds or the LACDA 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.