Prop. W Would Revise Housing Bonds : Also Allows the Issuance of Short-Term Revenue Notes by L.A.

For years, the city treasurer of Los Angeles has spent hours at a time sitting at a printing machine affixing his signature to stacks of municipal housing bonds to be sold to investors.

Although a special duplicating machine can extend one stroke of the pen to 20 pieces of paper, some housing issues consist of piles of documents in the tens of millions of dollars. It all adds up to some writer’s cramp, added expenses if the bond printer is in another city and a lot of tedium.

In order to lighten the load, city officials have placed Proposition W on the Nov. 4 ballot.

The Charter amendment, if passed by voters, would revise the provisions under which the city issues revenue bonds to finance residential housing. In addition to bonds, it would permit the city to issue short-term revenue notes and “other evidences of indebtedness” in the housing field. The measure would also change the signature requirements for the bonds and notes.

Original Signature

Currently, the Charter mandates that each housing bond carry an original signature, which city officials say is not required in other city revenue bond issues and only adds to delays and costs. The measure would allow the city the choice of affixing original or facsimile signatures to the financing documents.

“All we are trying to do is to clarify and give options to the City Council that more clearly reflect today’s financing,” said Craig Avery, director of housing for the Community Development Department.

Last year, the department was involved in 10 bond issues totaling $336 million. The revenue bonds helped finance the purchase, development, construction and rehabilitation of single-family and multifamily housing.

Although the new federal tax bill limits the amount of housing bond issues to no more than $40 million, Avery said the revisions are still needed to streamline the process.

Provide Choice

In addition to the changes in the signature requirements, the measure would give the City Council and mayor the choice of allowing the proceeds from bond or note sales to be deposited directly with the trustee who handles the transaction or the city treasurer.

Currently, the funds flow through city accounts because the Charter requires that they be deposited first in the city treasury. The problem is that proceeds from bond sales in another city, such as New York, are sent to Los Angeles by the trustee, Avery said, and a check must then be written or money wired from the city account back to the same trustee.

“This takes time and the wires may be misplaced,” Avery said. “We also run into interest charges that are not contemplated or needed in the transaction.”

The ballot measure is supported by City Treasurer Robert Odell and former Councilman Dave Cunningham, who was chairman of the Grants, Housing and Community Development Committee before resigning from the council. There is no organized opposition to the measure.