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HomeMy WebLinkAboutAgenda Statement 1983/12/20 Item 14 COUNCIL AGENDA STATEMENT Item 14 Meeting Date 12/20/83 ITEM TITLE: Resolution 1/4 :4./Authorizing submission to State of Application for Single-Family Mortgage Revenue Bond Allocation, Notice of Intended Sale, and Certification of Fee Deposit SUBMITTED BY: Community Development Directo 4k5ths Vote: Yes No X ) t1' REVIEWED BY: City Manage In conformance with the Housing Element of the General Plan, the City is making available in 1983 below-market interest rate mortgages to first-time homebuyers in Chula Vista through the issuance of tax-exempt single-family mortgage revenue bonds. The Agency facilitated the provision of these mortgages by advancing the required participation fee on $6 million of the bond issue on the expectation that developers would purchase the mortgage commitments at a later date and reimburse the City' s expenditure from the Low Income Housing Fund. A similar process is proposed for 1984, and the Redevelopment Agency appropriated $55,000 on December 15 to post the necessary participation fees to request an allocation from the State. The deadline for submissions to the State is December 31 , 1983. RECOMMENDATION: That the Council adopt the resolution authorizing submission to the State of an Application for Single-Family Mortgage Revenue Bond Allocation for 1984, a Notice of Intended Sale, and a Certificate of Fee Deposit. BOARDS/COMMISSIONS RECOMMENDATION: On January 12, 1983, the Human Relations Commission recommended the issuance of Single-Family Mortgage Revenue Bonds as a tool for enhancing the affordability of housing in Chula Vista. DISCUSSION: As the Agency was informed on December 15, the issuance of Single-Family Mortgage Revenue Bonds in the State of California is limited by a monetary cap and controlled by the State Mortgage Bond Allocation Committee. The Committee accepts requests for allocations from jurisdictions on a first-serve basis and moves down the list until the statewide allocation is exhausted. To receive an allocation from the State Mortgage Bond Allocation Committee for 1984, the City needs to make a submission to the Committee by December 31 , 1983. That submission must include a certificate identifying the requested amount of allocation and stating that participation fees have been deposited with the City for that amount, a Notification of Intended Sale, and a Bond 14 Page 2, Item Meeting Date 12/20/83 Allocation Application. Submission of these documents will place the City on a waiting list to receive an allocation from the pool allocated by the State. Given the current status of the list, it appears that Chula Vista could expect an allocation in September or October of 1984. The successful structuring of the 1983 issue recommends a repeat effort in 1984. There has not been time for formal solicitation of developers, but several developers have expressed interest in participating for 1984. Although it might be possible to structure a $20 million issue for 1984, it is felt that a $10 million issue would respond adequately to the need and interest in Chula Vista. It should be recognized that a $10 million allocation would again require the formation of a joint powers authority to achieve a marketably-sized issue. After submitting an allocation request to the State, the Mortgage Bond Allocation Committee's activities will be monitored. At the point at which we can predict receiving an allocation in a particular month, but substantially before the actual allocation, a recommendation will be made to the Council to select the bond issue team--underwriter, bond counsel , feasibility consultant. Immediately after selecting the bond issue team, formal solicitation of participating developers will begin. The City will then "sell" participation to selected developers, collecting the $55,000 put up by the Agency as participation fees. The Agency item of December 15 regarding fees included a summary sheet of program aspects. In brief summary, mortgages would be provided at approximately 2.5% below market rates to first-time homebuyers. The mortgages would be 30-year fixed mortgages at level amortization. Maximum sales prices would be adjusted appropriately from the 1983 level of $137,916; and maximum qualifying incomes would be adjusted from the 1983 level of $44,429. This action involves no jeopardy to the Agency funds and no irrevocable commitment by the City Council. It is an opportunity to make this form of housing subsidy to low- and moderate-income homebuyers possible in 1984 if financial and development indications are positive. FISCAL IMPACT: The proposed action involves only a small amount of Community Development staff time, which is funded by the Low Income Housing Fund as general administrative costs for housing programs. DKG:nr WPC 0697X by the C_ —_— Ci�u;a CZrriia Dated s/: e—//erg''