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HomeMy WebLinkAboutAgenda Statement 1985/02/26 Item 5 COUNCIL AGENDA STATEMENT Item 5 Meeting Date 2/26/85 ITEM TITLE: Public Hearing - Housing Policies Report for mortgage revenue bonds r a . Resolution 1/90 Approving Housing Policies Report under Internal Revenue Code Section 103A and directing its publication SUBMITTED BY: Community Development Directo (4/5ths Vote: Yes No x ) REVIEWED BY: City Managers i The Tax Reform Act of 1984 imposes a new requirement on jurisdictions issuing tax exempt single-family mortgage revenue bonds. In the year preceding a bond issue a jurisdiction must publish a report which sets forth the housing policies that will apply to the bond issue and which assesses the City's single-family bond activity for the previous 12 months. The report must be considered in a public hearing. The City Council held a public hearing on such a report on December 11 , 1984, and approved the report. However, the report was written based on the language of the Tax Act prior to the issuance of Treasury regulations in order to make the December 31 , 1984, submittal deadline. Subsequent to the public hearing, the Treasury regulations came out, requiring substantially more in the report than anticipated and granting a deadline extension to March 11 , 1985, so that cities might be able to do their reports over again to comply with the new regulations. Therefore, the report has been rewritten and this public hearing scheduled. RECOMI€NDATION: That the Council approve the resolution adopting the Housing Policies Report and directing its publication. BOARDS/COMMISSIONS RECO!4ENDATION: The Human Relations Commission sup- ported the 1983 Single-Family Band Issue, which was based on the policies stated in the subject report. DISCUSSION: The 1985 Single-Family Mortgage Revenue Bond of $10 million is being structured by the bond team selected by the City Council on February 5, 1985. The public hearing must be held and the subject report must be submitted to the U.S. Treasury by March 11 , or the planned bond cannot be issued. L 9.7t, r - 2,--- .‹.2--‘ - r r Page 2, Item 5 Meeting Date ' f2b/8b The revised report responds to published Treasury regulations with greater detail than the first report without significant change in substance. With some redundancy required by Treasury regulations, the report now contains six main sections as follows: 1 . Housing Policies 2. Development Policies 3. Low-Income Housing Assistance Policies 4. Assessment of Compliance with Prior Report 5. Assessment of Compliance with Intent of Congress 6. Public Comments The Housing, Development, and Low-Income Housing Assistance Policies are substantially the same as the policies in the December 11 report. The only significant addition is the discussion of Target Areas required by Treasury regulations regardless of their inclusion in the discussion in the report. No prior report existed to be complied with. The section on Compliance with the Intent of Congress to assist low and moderate-income households first remains unchanged. Public comments will be added after the public hearing. FISCAL IMPACT: Minor staff and publishing costs are associated with this action. The action will result in the City having the authority to issue $10 million in Single- Family Mortgage Revenue Bonds at no cost to the City. DKG:as WPC 1425H 'yea HOUSING POLICIES REPORT CITY OF CHULA VISTA February 26, 1985 The City of Chula Vista is contemplating the issuance of mortgage subsidy bonds to promote affordable homeownership in 1985. This report has been compiled in response to changes made by the Tax Reform Act of 1984 in the Housing Tax Law (Section 103A) governing the issuance of those bonds. The report will state the policies which will be followed in making the contemplated issue and assess the City 's mortgage subsidy bond performance for the year preceding the report. I. HOUSING POLICIES AND GOALS PERTAINING TO THE 1985 SINGLE-FAMILY MORTGAGE REVENUE BOND ISSUE A. The City will pursue the provisions of decent housing in well-planned neighborhoods for low, moderate, middle, and upper i ncome househol ds. B. The City will pursue the provision of adequate housing for the elderly, handicapped, large families, and households of low or moderate income. C. The City will make the availability of the resultant below-market interest rate mortgage commitments known to as many providers of local ownership housing as feasible and will provide for the competitive evaluation of all commitment proposals. D. The City will select bond commitment proposals based on the balancing of the following considerations: 1 . The maximization of the issue's investment-quality rating to yield the lowest interest rate. - 2. The maximization of homeownership opportunities for lower income households. 3. The maximization of the quality and balance of Chula Vista's housing stock and residential environment. 4. The minimization of concentration of low and moderate-income housing in any one area of the City. E. The proceeds of the bond issue will be used to provide financing for the acquisition of single-family residences in the City of Chula Vista. F. The proceeds will be targeted to purchase of new residences. However, pursuant to Federal law, 20% of the bond issue will be reserved for 12 months after issuance for purchase of new or existing residences in Treasury-designated target areas in Chula Vista. gay G. Targeting of proceeds will be a function of the process of solicitation of issue participants. Both developers of new housing and the local Board of Realtors will be solicited. H. The bond proceeds will be targeted by providing take-out commitments to the new housing developers who have submitted participation fees and who best satisfy the City's housing, development, and low-income housing assistance policies. I. The City's housing policies in some cases include and in all cases coordinate with the City's development policies and low-income housing assistance policies. II. DEVELOPMENT POLICIES AND GOALS A. Twenty percent of the bond proceeds will be targeted for the first 12 months after bond sale to the Treasury-designated target areas in Chula Vista. The balance of the issue and any of the targeted funds remaining unused after the 12-month period will not be targeted to specific areas. However, concentration of new low and moderate income residences will be avoided through the project selection process. B. The three Treasury-designated target areas are approximately: 1. Seavale Street on the north, Broadway on the east, H Street on the south, San Diego Bay on the west. 2. E Street on the north, Del Mar Avenue on the east, G Street on the south to Third Avenue, then Parkway on the south, Fourth Avenue on the west to F Street, then Garrett Avenue on the west. 3. Kennedy Street on the north to Second Avenue, then Palomar on the north, First Avenue on the east to Quintard Street, then Second Avenue on the east, Orange Avenue on the south, Third Avenue on the west. C. The target areas were selected by the U.S. Treasury. D. Funds targeted to these areas will be used for new housing and resale housing without distinction. E. The development policies of this section which address target areas are consistent with the City's housing goals and low-income housing assistance goals. Although balance and disbursement are pursued as housing goals, the reservation of 20% of bond proceeds for target neighborhoods does not hinder the pursuit of balance and disbursement. Low-income housing assistance goals will likely be most accomplishable in the target areas. - 2 - III. LOW-INCOME HOUSING ASSISTANCE POLICIES AND GOALS A. The City does not anticipate the opportunity to assist families below 50% of median income to purchase a home under the bond program. A project of that cost is not perceived to be accomplishable in the Chula Vista market. The City will attempt to maximize the ownership opportunities for families between 50% and 120% of median income, while responding as well to the goals of maximized bond rating, maximized quality and balance of the residential environment, and maximum disbursement of low and moderate-income housing throughout the City. B. Low and moderate-income family benefit will be maximized through the project selection process. Projects desiring bond issue participation will be selected on the basis of their affordability to low and moderate-income households if those projects are not found unresponsive to the other criteria of Section ID. C. In cases where the City requires low-income housing affordability performance of housing developers or participates in the delivery of affordable housing projects, proposals for bond issuance participation by those developers and projects will be given priority. D. The City does not intend to establish a mortgage credit certificate program because the same would, by necessity, be directed to higher-income persons than a housing bond program. E. The goals of this section are consistent with those for housing and for development. Affordable low-income housing will not be pursued in cases where it is clearly detrimental to the City's housing policies. However, where projects are not detrimental to those policies, low-income housing assistance will be maximized. IV. ASSESSMENT OF COMPLIANCE WITH PRIOR REPORT The City did not publish a Housing Policies Report in 1983. V. ASSESSMENT OF COMPLIANCE WITH INTENT OF CONGRESS In December of 1983, the City of Chula Vista participated in the Chula Vista El Dorado-Livermore-Menlo Park Housing Finance Agency Home Mortgage Revenue Bond Issue. Of that $20,600,000 issue, the City was allocated $10 million. The City received two applications for mortgage commitments for the 1983 bond issue, after solicitation of numerous developers, all property owners having approved tentative maps and the local realty board. The two applicants received their full requests for mortgage commitments: $5.2 million to a 110-unit manufactured housing subdivision with a - 3 -