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HomeMy WebLinkAboutCOUNCIL - AGENDA ITEM - 09/04/2001 - RESOLUTION 2001-113 AUTHORIZING ASSIGNMENT TO THE AGENDA ITEM SUMMARY ITEM NUMBER: 26 FORT COLLINS CITY COUNCIL DATE: September 4, 2001 STAFF: Alan Krcmarik/ Maurice Head SUBJECT: Resolution 2001-113 Authorizing Assignment to the Colorado Housing and Finance Authority of a Private Activity Bond Allocation of the City of Fort Collins Pursuant to the Colorado Private Activity Bond Ceiling Act. RECOMMENDATION: Staff recommends adoption of the Resolution. FINANCIAL IMPACT: The mortgage revenue bonds that will be issued by the Authority will provide source funding for low interest rate mortgages for qualified persons and families. The mortgages will be limited to low and moderate-income households. The program will be administered by the Authority. The bonds and mortgages do not constitute a liability or debt of the City of Fort Collins. EXECUTIVE SUMMARY: The Colorado Housing and. inance Authority is planning a fall 2001 single-family mortgage bond program. The program will provide financing for below-market mortgages for families that meet low- and moderate-income guidelines. The Authority has invited the City of Fort Collins to participate in the program. The Authority is requesting that the City assign the remainder of its 2001 private activity bond allocation to the Authority. The remaining amount of the 2001 allocation is $2,368,375. In today's local housing market, this amount may support 15 to 20 mortgages. By working cooperatively with CHFA, the City will be able to apply its 2001 private activity bond allocation to its highest priority for such funding. The CHFA bond issue will be about $45 million statewide. Mortgage program money should become available in late October or early November of 2001. However, the City has the option to time City participation in the mortgage program with anticipated housing developments such as Rigden Farms. Staff will also have the ability to target mortgages to specific census tracts and will get AEB input prior to participating in any Bond issue. OCKGROUND: Since 1978, cities, counties, and housing finance authorities have issued mortgage revenue bonds to provide lower than market interest rate mortgages for qualified low and moderate-income DATE: September 4,2001 2 ITEM NUMBER: 26 persons and families. These programs have also allowed the "targeting" of revenue bond proceeds for census tracts. The federal tax law provides that annually each state receive "Private Activity Bond Cap" based on state population. The state of Colorado received $268,828,813 for allocation by the Colorado Department of Local Affairs to state and local issuing authorities. In the past, Fort Collins participated in a local mortgage bond programs sponsored by other jurisdictions. By working with other entities, a larger mortgage pool is created and lower administrative costs are achieved. In 2001, the City assigned a portion ($1,178,750) of its total private activity bond allocation to the City of Loveland. In 2000, Loveland assisted Fort Collins by assigning its allocation to the Residence at Oakridge Project, an assisted living project. The City has not received any housing bond applications in 2001. Anheuser-Busch requested and the City awarded the remaining 2001 allocation ($2,368,375) to a pollution control revenue bond project, but this project did not receive enough matching allocation from the state to be viable. During the week of August 20, 2001, the Authority contacted City staff to see if the City would like to participate in a Fall, 2001, single-family home mortgage bond program. If the 2001 allocation is not used, it will revert to the Statewide balance and will be awarded to another project. Staff believes that some of the City's low- to moderate-income persons and families could benefit from this program and recommends that the City participate in the CHFA program. By adopting Resolution 2001-113, the City will assign the remaining portion of the 2001 allocation to CHFA. In recent years, the City has used the private activity to support rental housing projects. Because the City did not receive any proposals for rental housing, a shift in use of PABs from rental housing construction to first mortgages for homeownership may be justified for the short term. CHFA has a single-family mortgage program that can be used by the City for any assigned PAB. Some major elements of the CHFA single-family mortgage program are as follows: 1. The mortgage money is approximately 50 basis points below market rate financing. 2. CHFA provides$3,000 cash assistance at closing to the borrower at for closing cost and down payment assistance. 3. Borrowers are required to make a minimum of$1,000 financial contributions. 4. Mortgages must have a 30-year term, fixed rate of interest and be fully amortizing. 5. Provides for a maximum income of $56,695 for households of 3 or more (can be modified by jurisdiction). 6. Provides for a maximum purchase price of $151,600 for existing housing and up to $169,830 for new construction. DATE: September 4, 2001 3 ITEM NUMBER: 26 Consistency with Council Goals Supporting affordable housing has been and continues to be one of the City Council's highest ranked goals. In the affordable housing plan, use of the private activity bond financing tool has been identified as one of the techniques by which to support affordable housing. Council established Affordable Housing as the top-ranked use of the 2001 private activity bond allocation by adoption of Resolution 2000-150. Administration of the Program Staff from the Authority will be responsible for the operation of the program. Local lenders may participate in the program without having to qualify or pay up-front fees to receive a mortgage pool allocation. In past programs, only a few local lenders were selected to participate in the program. Remaining. Timeline for the Program August and September: CHFA staff to secure delegation agreements from local participants. September: Determine estimated size and financial structure of the mortgage revenue bonds. Late September and October: Finalize structure of the bonds, price and sell bonds. October and November or a later date determined by the City: Issue bonds, take applications for loans, and place loans. Recommendation Affordable housing in Fort Collins is becoming increasingly difficult to attain. Through the single-family mortgage bond program, qualified Fort Collins residents may be able to achieve home ownership. This program supports the Council's affordable housing goals. Staff recommends adoption of this Resolution. I RESOLUTION 2001-113 OF THE COUNCIL OF THE CITY OF FORT COLLINS AUTHORIZING ASSIGNMENT TO THE COLORADO HOUSING AND FINANCE AUTHORITY OF A PRIVATE ACTIVITY BOND ALLOCATION OF THE CITY OF FORT COLLINS PURSUANT TO THE COLORADO PRIVATE ACTIVITY BOND CEILING ACT WHEREAS,the City ofFort Collins is authorized and empowered underthe laws of the State of Colorado(the"State")to issue revenue bonds forthe purpose ofproviding single-family mortgage loans to low-and moderate-income persons and families; and WHEREAS, the Internal Revenue Code of 1986, as amended (the "Code"), restricts the amount of tax-exempt bonds("Private Activity Bonds")which may be issued in the State to provide such mortgage loans and for certain other purposes; and WHEREAS, pursuant to the Code, the Colorado legislature adopted the Colorado Private Activity Bond Ceiling Allocation Act, Part 17 of Article 32 of Title 24, Colorado Revised Statutes (the"Allocation Act"),providing forthe allocation of the State Ceiling among the Colorado Housing and Finance Authority (the "Authority") and other governmental units in the State; and WHEREAS, Section 24-32-1706(2), C.R.S., authorizes the assignment of such allocations from such other governmental units to the Authority; and WHEREAS, Section 24-32-1706(l)establishes a formula by which the City of Fort Collins will receive an allocation of the 2001 State Ceiling permitting issuance of a specified principal amount of Private Activity Bonds prior to September 15, 2001 (the "2001 Allocation"); and WHEREAS,the Council has determined that the 2001 Allocation,or a portion thereof,can be utilized most efficiently by assigning it to the Authority to issue Private Activity Bonds for the purpose of providing single-family mortgage loans to low- and moderate-income persons and families; and WHEREAS, the Council has determined to assign a portion of its 2001 Allocation to the Authority, which assignment is to be evidenced by an Assignment of Allocation between the City of Fort Collins and the Authority attached hereto as Exhibit"A" (the Assignment of Allocation"). NOW, THEREFORE, BE IT RESOLVED by the City of Fort Collins as follows: Section 1. The assignment to the Authority of TWO MILLION THREE HUNDRED SIXTY-EIGHT THOUSAND THREE HUNDRED SEVENTY-FIVE DOLLARS ($2,368,375)of the City of Fort Collins' 2001 Allocation is hereby approved. Section 2. The form and substance of the Assignment of Allocation attached hereto as Exhibit"A,"are hereby approved;provided,however,that the Mayor,upon the recommendation of the City Manager in consultation with the City Attorney,is hereby authorized to make such technical variations, additional or deletions in or to such Assignment of Allocation as shall be deemed necessary or appropriate and not inconsistent with the approval of this Resolution. Section 3. The Mayor is hereby further authorized to execute and deliver the Assignment of Allocation on behalf of the City of Fort Collins and to take such other steps or actions upon the recommendation of the City Manager in consultation with the City Attorney, as may be necessary, useful, or convenient to effect the aforesaid assignment in accordance with the intent of the Resolution. Section 4. If any section,paragraph,clause,or provision of this resolution shall for any reason be held to be invalid or unenforceable, the invalidity or unenforceability of such section, paragraph,clause,or provisions shall not affect any of the remaining provisions of this Resolution. Section 5. This resolution shall be in full force and effect upon its passage and approval. Passed and adopted at a regular meeting of City Council held this 4th day of September,A.D. 2001. Mayor ATTEST: City Clerk EXHIBIT 'A" ASSIGNMENT OF ALLOCATION This Assignment of Allocation (the "Assignment"), dated this day of September, 2001, is between the City of Fort Collins (the "Assignor") and the Colorado Housing and Finance Authority (the "Assignee"). WITNESSETH: WHEREAS, the Assignor and the Assignee are authorized and empowered under the laws of the State of Colorado (the "State") to issue revenue bonds for the purpose of providing single-family mortgage loans to low- and moderate-income persons and families; and WHEREAS, the Internal Revenue Code of 1986, as amended (the "Code"), restricts the amount of tax-exempt bonds ("Private Activity Bonds") which may be issued in the State to provide such mortgage loans and for certain other purposes (the "State Ceiling"); and WHEREAS, pursuant to the Code, the Colorado legislature adopted the Colorado Private Activity Bond Ceiling Allocation Act, Part 17 of Article 32 of Title 24, Colorado Revised Statutes (the "Allocation Act"), providing for the allocation of the State Ceiling among the Assignee and other governmental units in the State, and further providing for the assignment of allocations from such other governmental units to the Assignee; and WHEREAS, pursuant to an allocation under Section 24-32-1706 of the Allocation Act, the Assignor has an allocation of the 2001 State Ceiling for the issuance of a specified principal amount of Private Activity Bonds prior to September 15, 2001 (the "2001 Allocation"); and WHEREAS, the Assignor has determined that, in order to increase the availability of adequate affordable housing for low- and moderate-income persons and families within the City of Fort Collins and elsewhere in the State, it is necessary or desirable to provide for the utilization of all or a portion of the 2001 Allocation; and WHEREAS, the Assignor has determined that the 2001 Allocation, or a portion thereof, can be utilized most efficiently by assigning it to the Assignee to issue Private Activity Bonds for the purpose of providing single-family mortgage loans to low- and moderate-income persons and families ('Revenue Bonds"), and the Assignee has expressed its willingness to attempt to issue Revenue Bonds with respect to the 2001 Allocation; and t WHEREAS, the Council of the City of Fort Collins of the Assignor has determined to assign to the Assignee $2,368,375 of its 2001 Allocation, and the Assignee has agreed to accept such assignment,which is to be evidenced by this Assignment. NOW, THEREFORE, in consideration of the premises and the mutual promises hereinafter set forth,the parties hereto agree as follows: 1. The Assignor hereby assigns to the Assignee $2,368,375 of its 2001 Allocation, subject to the terms and conditions contained herein. The Assignor represents that it has received no monetary consideration for said assignment. 2. The Assignee hereby accepts the assignment to it by the Assignor of $2,368,375 of Assignor's 2001 Allocation, subject to the terms and conditions contained herein. The Assignee agrees to use its best efforts to issue and sell Revenue Bonds, in one or more series, and to make proceeds of such Revenue Bonds available from time to time during the period of two (2) years from the date of this Assignment for the purchase of mortgage loans in at least the aggregate amount of$2,368,375 to finance single-family housing facilities located in City of Fort Collins. Unless otherwise agreed to in writing, the mortgage loans will be subject to all applicable current requirements of Assignee's mortgage revenue bond program, including Assignee's income and purchase price limits. 3. The Assignor hereby consents to the election by the Assignee, if the Assignee in its discretion so decides, to treat all or any portion of the assignment set forth herein as an allocation for a project with a carryforward purpose. 4. The Assignor and Assignee each agree that it will take such further action and adopt such further proceedings as may be required to implement the terms of this Assignment. 5. Nothing contained in this Assignment shall obligate the Assignee to finance mortgage loans in any particular amount or at any particular interest rate or to use any particular percentage of the proceeds of its Revenue Bonds to provide mortgage loans to finance single-family housing facilities located in City of Fort Collins. 6. This Assignment is effective upon execution and is irrevocable. 2 IN WITNESS WHEREOF, the parties hereto have duly executed this Assignment on the date first written above. City of Fort Collins, Colorado [SEAL] By: Mayor ATTEST: By: City Clerk COLORADO HOUSING AND FINANCE AUTHORITY [SEAL] By: Executive Director ATTEST: By: Assistant Secretary 3