Monday’s Orange County Register posted a story (Doomed redevelopment agencies leave debt of $30 billion) warning that the Successor Agencies to the 25 RDAs in Orange County will inherit $29.8 billion in unpaid long-term debt (their emphasis). First, of course it is unpaid, otherwise it wouldn’t be a debt. The story goes on to summarize recent events and state that there is much confusion in the air over what will happen to the employees and assets (financial and real estate) of dissolving RDA’s after February 1.

But nowhere is the “risk” of existing RDA bonds addressed after the first paragraph. To be clear, there is always a repayment risk when money is being loaned, even to bond investors. But as to the risk of RDA-issued bonds, a key provision of the RDA dissolution law is that debt service for any bonds issued by the RDA will be paid before property tax revenue is distributed to the other agencies (school districts, city general funds, etc.) in the line. Fitch and Moody’s have both commented negatively on the credit quality of California RDA bonds (Fitch here, Moody’s here), as the dissolution process is moving too quickly for anyone to know what will happen on the other side of February 1st.

But it sure is making it fun!

Century is proud to announce that we have closed a $300,000 predevelopment loan to Operation SafeHouse, for the creation of Roy’s Place, a new supportive housing project to be built in Thousand Palms. Construction is expected to start in February and completed before the end of 2012. Roy’s Place will provide homes for runaway, homeless, and emancipated youth, and will connect them with the other services Operation SafeHouse provides to their clients. (more…)

The California Supreme Court’s ruling in CRA v Matosantos has been widely reported and is beginning to be digested by the more than 400 redevelopment agencies (RDAs) and cities that have to begin unwinding their agencies, accounting for all of the funds on hand, projects in progress, debts owed (mostly bonds), and determine the best course for their city (or county). There are, of course, several emergency legislative efforts underway to delay and/or soften the blow from dissolving every RDA in California, especially with the potentially huge impact on affordable apartment development. But there doesn’t seem to be serious effort to reverse the decision, which is wise – the Senate and Assembly votes to end redevelopment agencies are on record, very difficult to walk those back (from David Smith’s learned Affordable Housing Institute blog).

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Well, unfortunately, our prognistication (or at least alertness to the possibility) was correct – the CA Supreme Court split the baby and ruled to kill RDA’s without allowing a quick-and-easy means for their rising from their own ashes (does Phoenix have a redevelopment agency? Phoenix Lake doesn’t.). The reaction by many parties will be to try and reestablish the status quo – is this a good thing? I think that there is an opportunity here for a new and more effective use of affordable housing subsidy funding, as was debated at the May 2011 California Housing Consortium Policy Forum. It seemed very hypothetical at the time, concentrating funding decisions at the state level, but that may be the outcome of this ruling. Much more to come….

Ed Pinto thinks so.  Ed Pinto is a scholar at the American Enterprise Institute, a conservative think tank in Washington, DC, who writes on housing issues.  In a recent op-ed published by Bloomberg, Mr. Pinto observes that:

Twice in the last 20 years we have seen spectacular failures of U.S. housing finance, each at enormous cost to taxpayers. Both the savings and loan crisis, and the Fannie-Freddie bailouts can be traced to congressional support for, and subsidization of, the 30-year fixed-rate mortgage.

But is it clear that the pattern of 30-year, fixed-rate mortgages is unsustainable?  (more…)

This past Wednesday, December 14th, Century celebrated the spirit of the season with Los Angeles based clients and partners at the Hotel Wilshire in Mid-City’s Miracle Mile neighborhood.  Reveling in 2011’s achievements and awaiting the upcoming year’s infinite possibilities, attendees enjoyed 360-degree views spanning the L.A. skyline and Hollywood Hills while feasting on the innovative cuisine of Chef Eric Greenspan.

Photos from the event after the jump!
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Today’s headline from Zillow, a well-respected online real estate marketplace with a good research arm, was:

“U.S. Homes Expected to Lose Nearly $700 Billion in Value in 2011″

That’s pretty alarming, but not much different from what others have been telling us for the past five years of so.   Everyone knows the housing bubble popped and home values across America have deflated, setting off one of the worst recessions since the 1930s.  Right?  I mean, isn’t that right?  Aren’t we all poorer and hasn’t the wealth of the nation been decimated?  (more…)

Rancho Las Brisas

In real estate, timing is everything, especially as the end of the year approaches. Century is happy to announce the closing of a $13 million bridge loan to Foundation for Affordable Housing, so that FFAH could close on the purchase of Rancho Las Brisas, 200 apartments for very-low income families in Murrieta,  a couple of weeks before they could close the sale of Claremont Villas, 154 apartments for low-income seniors in Claremont (of course). The occasionally-imprecise timing of real estate closings left a $3.9 million financing gap in FFAH’s purchase in Murrieta, with no time to spare to find more financing. (more…)

Harvard Heights, Century's first deal with American Communities

Century is pleased to announce our 8th acquisition loan  with American Communities (The Gordon closed in late October), this time for The Serrano, which will provide 44 apartments for very-low income families in Koreatown. The $1.9 million loan for The Serrano and the $1.55 million loan for The Gordon both needed to close by year-end to meet the property seller’s deadlines. American Communities has already secured tax credit awards for both developments, so construction should be starting in early 2012, creating more than 130 new construction jobs.

One of the classic apartment buildings on South Serrano Ave.

The development will be across the street from Hobart Blvd. Elementary School, and just two blocks from the first development American Communities and Century worked on, Harvard Heights Apartments. With The Serrano, American Communities will be adding to one of the most attractive blocks in Koreatown.

There has been a lot of (perhaps well-deserved) criticism of the two big Government Sponsored Enterprises (GSEs), Fannie Mae and Freddie Mac, lately.   Certainly, the housing bubble popping left Fannie and Freddie on their knees, and forced the federal government to seize them to keep the home purchase mortgage market from completely collapsing and taking most of the financial industry with them.  But lost in the mud being thrown over who to blame, and how to restructure Fannie and Freddie, there is a nugget of gleaming gold that gets overlooked.

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