OCEANSIDE — The City Council recently approved a financing plan that would issue up to $75 million in state bonds to the developer of the Olive Park Apartments project, a 100% affordable housing development with 199 rental units.
The project previously received council approval last May for a site at the western end of Olive Drive near the College Boulevard Sprinter Station. The apartments will offer one- to three-bedroom units for households earning between 30% and 80% of the area median income, with 31% of the units reserved for very low-income households.
The total project cost is estimated at $144 million, or approximately $723,618 per unit. Of that amount, 88% would be financed through bonds and tax credits.
The council has also previously awarded $6 million in housing funds to the project, along with 40 Housing Choice Project-Based Vouchers and 15 U.S. Department of Housing and Urban Development Veterans Affairs Supportive Housing (VASH) vouchers to help close the funding gap.
A Jan. 14 public hearing for the additional bond financing was required under the Tax and Equity Fiscal Responsibility Act. The developer applied for $75 million in revenue bond financing through the California Municipal Finance Authority, a joint exercise of powers authority and public entity for the state, to serve as the conduit issuer of the bonds.
Proceeds from the bonds will be used to finance or refinance the acquisition, construction, development and equipping of the project. While the authority issues the bonds, the city must approve them in order for the bonds to qualify as tax-exempt.
Repayment of the bond debt is the responsibility of the borrower — in this case, the developer. The city is not fiscally responsible for the bond debt, and its previous financial commitment is contingent on the successful issuance of both the revenue bonds and Low-Income Housing Tax Credits, which are expected to fund the majority of the project.
The council approved the financing by a 4-1 vote, with Mayor Esther Sanchez opposed. Sanchez also voted against the project last year, citing concerns about increased traffic on College Boulevard between Olive Drive and Oceanside Boulevard.
During public comment, Sandra Martinez questioned why the project was being “refinanced” and expressed skepticism over the per-unit construction cost.
“How could it possibly cost $700,000 per unit? That seems ridiculous to me,” she said. “That means if you’re actually retailing it, you’d be retailing for $1.4 million. I don’t believe it. Some of that money is going somewhere that doesn’t make any sense. You’re doing multi-story units, very compact — there’s no way it costs that amount.”
Housing and Neighborhood Services Director Leilani Hines said the project was not actually being refinanced, explaining that the terminology was technical in nature and required under TEFRA and the Internal Revenue Code.
“In practicality, the bond issuance is for the financing of the new construction project and not refinancing,” Hines said.
She also pointed to California’s high construction costs.
“Unfortunately, in Southern California as a whole, the cost of constructing housing is very high,” she said. “The cost of this project is fairly consistent with any of the other projects brought before you and in the region as a whole.”
Hines added that the project requires prevailing wages during construction, which further increases costs, and that its additional layers of “complicated financing” also result in higher legal expenses.
“Affordable housing can be a little bit more difficult to produce,” she said.
