Loading...
HomeMy WebLinkAboutAgenda Statement 1985/04/09 Item 18 COUNCIL AGENDA STATEMENT Item 18 Meeting Date 4/9/85 ITEM TITLE: Resolution /,",IY Approving Joint Powers Agreement for the purpose of financing home mortgages SUBMITTED BY: Community Development Directo REVIEWED BY: City Manager? (4/5ths Vote: Yes No X ) On February 5, 1985, the City Council approved the selection of a bond team to structure the City's $10 million single-family mortgage revenue bond issue. Developer commitments have been received and the bond issue is being structured. The underwriter has proposed the creation of a Joint Powers Authority with the City of Escondido, which will be operated by the Housing Finance Agency (Agency) , in order to reduce issuance costs and enhance the bond rating. RECOMMENDATION: That the Council approve the resolution approving the Joint Powers Agreement with the City of Escondido and select two members of the City Council to serve on that Agency. BOARDS/COMMISSIONS RECOMMENDATION: The issuance of single-family mortgage revenue bonds has been endorsed by the Human Relations Commission. DISCUSSION: The Need for a Housing Finance Agency The City has received a $10 million allocation for 1985 single-family mortgage revenue bonds from the State Mortgage Bond Allocation Committee. Although a successful issue could be done at that allocation level , increasing the size of the issue through a Joint Powers Agreement with another jurisdiction would both strengthen the bond rating, thus reducing the mortgage rate due to enhanced product diversity, and create the opportunity to share certain fixed issuance costs with another jurisdiction. It is difficult to get really favorable bond ratings on issuance amounts less than $20 million. The City's underwriter, Miller & Schroeder Municipals, has proposed a Joint Powers Agreement with the City of Escondido, which holds a $15 million allocation from the Mortgage Bond Allocation Committee and has three developer participants. The proposed Joint Powers Agency could then make a varied single-family mortgage revenue bond issue of $25 million. Summary of Joint Powers Agreement The Agreement creates a Housing Finance Agency with Escondido which would be composed of four members, two City Councilmembers from each jurisdiction appointed by that jurisdiction. Members would be compensated for all out-of-pocket expenses and would receive $50 for each meeting attended. The Page 2, Item 18 Meeting Date 4/9/85 Secretary of the Agency would be the City Clerk of Escondido and the Treasurer/Auditor would be the Chula Vista Finance Director. The Treasurer/Auditor would be responsible for overseeing the Agency' s annual audit. The underwriter informs that the proposed Joint Powers Agreement will be substantially less complicated than the 1983 Joint Powers Authority with Menlo Park, Livermore, and El Dorado County, principally due to having fewer players and very similar issue structures for each jurisdiction. In this case, there is one underwriter, one feasibility consultant and two bond counsels. Also, physical proximity makes the process more convenient. The underwriter estimates that two Agency meetings will be required prior to issuance and just one meeting per year thereafter. In executing this agreement, the City Council will be empowering the Agency to proceed with the bond issue without further City Council action. If matters proceed on schedule, the bond issue mortgages should be available to Chula Vista homebuyers starting the first week of June and remaining available for three years. Details of the Chula Vista Bond Issue The City has received allocation requests from three developers totalling $18,790,000. Given the $10 million allocation, the feasibility consultant has recommended roughly halving the developer's request. A copy of the feasibility study, a lengthy document, is available in the Community Development Department. The candidate projects are as follows: 1 . The Housing Opportunities Inc. project at East Orange Avenue and Oleander Avenue being 168 condominiums with an average sales price of $78,000. 2. McMillin's Windjammer Project at Terra Nova Subdivision being 100 condominiums with an average sales price of $108,470. 3. Lane-Cuhn Pacific Development Company's Cottages Project at EastLake being a 95-unit detached single family project with an average sales price of $89,000. The proposed bond issue would provide mortgages at an estimated 10.5 percent interest rate for 127 units with an overall average sales price of $91 ,883, making those units available to households of an average annual income of $33,500. Without the bond issue, the average income required to purchase those same units would be approximately $40,000. FISCAL IMPACT: No City funds are i nvol v —in—the .propnsecl.-b.,on . or the creation of the Housing Finance Agency.. All associated costs are paid for from bond sale proceeds. i/ WPC 1078X 21ay 6 , 1985 Gene Ervin City Manager' s Assistant City Hall 100 Valley Boulevard Escondido, CA 92025 You will find enclosed three copies of the resolution (No. 11988) on the joint powers agreemet for the financing of home mortgages . ?lease have your :layor sign all three copies with the City Clerk attesting. Keep one copy and send me hack the original and one copy. thank you \ / /4- Jenpie—M. rulasz, CMC City Clerk Reso.11988 (3 copies)