HomeMy WebLinkAboutHousing Catalyst - Minutes - 12/22/1977CITY OF FORT COLLINS
MEMORANDUM
DATE: December 28, 1977
TO: Fort Collins Housing Authority
FROM: Mary Ann Kennaugh, Secretary
RE: Minutes of the December 22, 1977 Special Meeting
The special meeting of December 22, 1977 was called to discuss the various
options available for financing future Fort Collins Housing Authority projects.
I. Call to Order
The meeting was called to order at 2:30 p.m. by Chairwoman Klopfenstein
at 1715 W. Mountain Avenue.
II. Role Call
Members Present:
Mary Klopfenstein
Ken Franzen
Ray Hale
Charlie Muenzberg
Members Absent:
Pete Sanchez
Staff:
Wayne Taylor, Assistant for Housing Management
Don Young, Accounting Technician
Jim Woods, Housing Rehabilitation Director
Mary Ann Kennaugh, Secretary
Guests•
M.J. Mastilier, First Denver Mortgage Company
Bob DeMonbrun and Jim Anderson, Hanifen, Imhoff, & Sanford
Henry Burgwin, Midland Federal Savings
III. Following were points of discussion:
Mastilier indicated there are two primary sources of financing Section 8
projects:
1. Through a state agency, e.g., Colorado Housing Finance Authority.
2. Through 11(b) tax exempt financing, i.e., direct sale of revenue bonds.
To date, there has been no conventional financing of Section 8 projects in
the United States.
Fort Collins Housing Authority
Minutes of the December 22, 1977 Special Meeting
Page Two
Fort Collins is too large for Farmers Home Administration financing.
Colorado Housing Finance Authority Financing (See Exhibit "A"):
- is being used in places such as Aurora, Boulder, Grand Junction,
Fort Collins (Oakbrook Apartments), etc.
- requires an approved sponsor.
- Colorado Housing Finance Authority's most recent bond sale was $44 million
worth of bonds at an interest rate of 7;%.
Section 11(b) Tax -Exempt Financing: (See Exhibit "B"):
final regulations for this type of financing have just been published by
HUD.
- revenue bonds are sold to finance a specific project and must be sold
through a PHA or instrumentality.
- HUD Section 8 llb regulations state that bonds may be issued only through non-
profit instrumentalities.
- HUD Handbook indicated PHA or instrumentality:
1. Must show administrative capabilities to initiate and carry on
such a project;
2. Must agree to assume management of the property, if necessary;
3. Is responsible for administrative functions; and
4. Is responsible for inspections during construction.
- The bonds are sold by the instrumentality and bought by the underwriter,
who markets them at large.
- Depending on the underwriter, the bonds are not backed by the PHA, city,
state, etc.; rather, reliance is on: 1) strength of the project and 2)
security mechanism of the real estate.
- Basic security for bonds is FHA insurance.
- Economy of size is a point of consideration --- Minimum amount of bond
sale is $750,000.
Revenue from bonds sold prior to beginning of construction is held in
Fort Collins Housing thority •
Minutes of the December 22, 1977 Special Meeting
Page Three
escrow until the project is completed and approved, and is then released
for payment to the developer and/or contractor.
Mastilier recommended using FHA irregardless of the method of financing.
DeMonbrun: 11(b) financing is still worth looking into without FHA. Colorado
Housing Finance Authority financing is the best and easiest way of financing.
HUD has indicated Notice of Fund Availability for 340 units of Section 8
in metropolitan areas (this is also divided into rehabilitation).
Burgwin: Midland Federal Savings and Loan handles permanent and construction
loans, and is also a correspondnet for Colorado Housing Finance Authority.
- They can only lend 90% for Section 8 projects without FHA insurance.
- Under 11(b) tax exempt financing-, second mortgages allow cutting the
mortgage in half.
- As a non-profit agency, the PHA or instrumentality can negotiate the
sale of obligation.
- Strongly encourage FHA insurance.
Consensus of opinion was that the Fort Collins Housing Authority learn more
- about the project -and then make financing determinations. -
Regarding the problem in getting private developers to come to Fort Collins:
Mastilier: Front-end problems such as 1) low FMR's, 2) high land costs,
3) limited land available, and 4) limited availability of Section 8
funds are creating such a situation.
- Recommended that the Fort Collins Housing Authority "lay low" for
1978 and look for turnkey and existing projects.
IV. Other Business
A. Chairwoman Klopfenstein reminded the members of the joint City Council/
Housing Authority meeting on January 9, 1978 at 4:30 p.m., 1715 W.
Mountain Avenue, and urged all members to attend.
B. Don Young indicated that the Housing Authority would soon be receiving
the preliminary loan for Project COLO. 41-2, and requested some guidance
from the Housing Authority Board as to methods to acquire the land and
Fort Collins Housing Authority
Minutes of the December 22, 1977 Special Meeting
Page Four
to get the Board together to look at potential sites and approve the
options.
Muenzberg: It is our responsibility to get together to look at the
possible sites.
Hale: Perhaps we could appoint one or two members to check out the
sites. (Muenzberg indicated that Housing Authority staff should
just contact the members and it is the members' responsibility to
view the possible sites.)
Taylor: Are two sites enough for the 13 units? (All members present
indicated "yes".) (Munezberg: More than two sites are difficult
to handle.) (Hale: You may run into development problems with
three sites.)
- Taylor: There are several lots available in Andersonville and Alta
Vista; building duplexes there may be a possibility. HUD states that
a housing authority can buy land in excess of that necessary for a
specific project, but must turn around and immediately sell it.
Regarding possible sites already reviewed for the 13 units and problems
being encountered:
1. The piece of land available is too large.
2. The piece of land available is too expensive. _"-
Hale: I would like to see some units in the Northeast part of town. I
would also like to look at land in the county.
Muenzberg: Would the Housing Authority consider leasing land? The City
is currently talking with Burlington -Northern regarding some land by
the railroad tracks and a parking lot between LaPorte and Mountain
Avenues that they want to lease.
Young: What kind of commitment can the Housing Authority make on land
options? $153 per unit is the maximum option commitment the Housing
Authority can make (given the amount of monies available through the
preliminary loan). There is a six months minimum and one year maxi-
mum time period on the options. (Muenzberg: We should take what (monies)
we have and put up options. We need to sit down and start looking at
land and possible sites.)
V. Adjournment
Meeting adjourned at 4:30 p.m.
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