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Tax-exempt mortgage revenue bonds are a form of government-backed real estate loan used for the financing of multifamily rental projects at more beneficial terms than other forms of commercially available loans.
Federal, state, and local legislation authorizes the issuance of mortgage revenue bonds by local governments to finance the development, acquisition, construction and rehabilitation of multifamily housing rental projects by a private property owner/developer. The interest on the bonds is exempt from federal and state taxation. As a result, bonds provide below market financing for qualified multifamily rental projects.
The security for repayment of the bonds is limited to project revenue and other sources specified in the documentation for the financing of the project. Project loans are, in most cases, structured as a real estate loan, with the obligation to repay the bonds secured by a first deed of trust on the bond-financed property. The program is self-supporting with the owner responsible for the payment of all costs of issuance and other costs and repayment of the obligations.
The goals of the Bond financing program include:
• Preserving and increasing availability of quality affordable rental housing;
• Encouraging economic integration within residential neighborhoods; and
• Maintaining and enhancing a quality living environment for residents of affordable housing communities and the surrounding properties.
Source: Chula Vista Housing Authority
