HomeMy WebLinkAboutRDA MTG CREDIT CTFS 08-01-94RDA NO. 3
8-~-94
DATE: AUGUST 1, 1994
Inter-Com
TO:
FROM:
SUBJECT:
WILLIAM A. HUSTON, CITY MANAGER AND EXECUTIVE DIRECTOR
COM/~IINITY DEVELOPMENT DEPARTMENT
APPLICATION FOR ALLOCATION OF MORTGAGE CREDIT CERTIFICATES
RECOMMENDATION
It is recommended that the City Council:
Adopt the attached Resolution No. 94-94 adopting a
Mortgage Credit Certificate Program in cooperation with
the County of Orange; and
It is recommended that the Redevelopment Agency:
Appropriate the following Town Center Project Area and
South Central Project Area Housing Set-aside funds as
part of the 1994-95 budget:
$4,500 in administrative costs for the Mortgage
Credit Certificate Program to be assigned to the
Town Center Project and $4,500 to be assigned to
the South Central Project Area;
bo
$10,000 in potential penalty charges to be assigned
to the Town Center Project Area and $10,000 to be
assigned to the South Central Project Area.
Pursuant to the requirements of the California Debt
Limit Advisory Committee (CDLAC), the Finance
Director shall deposit said amounts in a
trust/security account.
FISCAL IMPACT
Cost to the Community Redevelopment Agency for the administration
of the two-year program through the County of Orange is estimated
at $15,000. $6,000 has already been allocated. This action
requires an additional $9,000 be allocated. The Redevelopment
Agency also is required to encumber 1% of the requested allocation,
or $20,000, as a potential penalty if the allocation is not used.
Ail costs will be allocated from accumulated Housing Set-aside
Funds for the Town Center and South Central Project Areas.
City Council Report
Application for Allocation of
Mortgage Credit Certificates
August 1, 1994
Page 2
This application will provide an additional $2,000,000 in mortgage
credit certificate authority for use by first time homebuyers in
the City.
BACKGROUND
Under the mortgage credit certificate program, first time
homebuyers who qualify by income and by the price of the unit they
purchase, receive a certificate authorizing them to receive a tax
credit of 20% of their annual interest payment. This is in
addition to the standard deduction for home mortgage interest
rates. They receive this 20% tax credit each year that they have
the original mortgage and live in the unit they purchased.
The Federal Government allocates a set amount of mortgage
authorization for each state. California, in turn, sub-allocates
this authority to local jurisdictions. The application, which the
County is filing, is to the California Debt Limit Advisory
Committee (CDLAC), who has the authority in California to allocate
this State's share of mortgage amounts to local agencies.
In September, 1993, the City of Tustin joined other cities and the
County in receiving an allocation of $25,000,000 for the program;
$3,000,000 of thi~ was allocated to Tustin. The other cities are
Anaheim, Brea, Buena Park, Fullerton, Garden Grove, Santa Ana and
Yorba Linda, along with the County. The County offers the program
through their own allocation in the unincorporated areas and in the
cities of Cypress, Dana Point, Laguna Niguel, La Palma, Mission
Viejo, Placentia, San Clemente, San Juan Capistrano and Seal Beach.
The $25,000,000 in allocation is almost totally used and the County
is now preparing an application for a new allocation.
To date, six Tustin residents have used approximately $840,000 in
allocation. The City continues to have $2,160,000 allocation
remaining. Based on the City's current rate of usage, the Staff is
recommending an additional $2,000,000 be sought. This will be
added to the remaining $2,160,000 for a total allocation of
$4,160,000.
PROGRAM ADMINISTRATION
The certificates can be used by purchasers of both existing homes
and new homes, providing the value of the home is less than
$239,310 for new homes and $225,900 for existing homes. The program
has a maximum income level of between $56,500 for a one or two
person household and $64,975 for a household of three or more persons.
City Council Report
Application for Allocation of
Mortgage Credit Certificates
August 1, 1994
Page 3
The primary responsibility for program administration is the
County's, for which the County is reimbursed by the cities. Other
than marketing the program, providing applications with a
preapplication and issuing letters referring applicants to the
lending institutions, the City has no other administrative
obligations under the program.
~ye~pm~n~ ~rogram~// Manager Assistant City Manager
RZ IMMER~MORTCRED\ 8194 CC. RPT
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RESOLUTION NO. 94-94
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
TUSTIN, CALIFORNIA, ADOPTING A MORTGAGE CREDIT
CERTIFICATE PROGRAM IN COOPER3tTION WITH THE COUNTY
OF OR3LNGE
The City Council of the City of Tustin does hereby resolve as
follows:
WHEREAS, there is a shortage in the County of Orange (the
"County") and in the City of Tustin (the "City") of decent,
safe and sanitary housing, particularly of housing affordable
by first-time home buyers, and a consequent need to encourage
the availability of homes affordable by such persons and
otherwise to increase the housing supply in the City and in
the County for such persons; and
WHEREAS, the Board of Supervisors of the County has
established a mortgage credit certificate program (the
"Program") pursuant to Part 5 of Division 31 of the Health and
Safety Code of the State of California (the "Act") for the
purpose of issuing mortgage credit certificates pursuant to
the Act; and
WHEREAS, the City has previously found and determined
that it is in the best interest of the City to participate in
the Program and to consent to the operation of the Program by
the County within the geographic boundaries of the City
pursuant ~o the Act; and
WHEREAS, the City has previously entered into a
Cooperative Agreement with the County to permit the operation
of the Program within the boundaries of the City; and
WHEREAS, Section 146 of the Internal Revenue Code of
1986, as amended (the "Code"), limits the amount of mortgage
credit certificates that may be issued in any calendar year by
entities within a state and authorizes the governor or the
legislature of such state to provide the method of allocation
within such state; and
WHEREAS, Chapter 11.8 of Division 1 of Title 2 of the
Government Code of the State of California (the "Government
Code") governs the allocation of the state ceiling (as that
term is defined in the Code) among governmental units in the
State of California (the "State") having the authority to
issue mortgage credit certificates; and
WHEREAS, Section 8869.85 of the Government Code requires
a local agency to file an application for a portion of the
state ceiling with or upon the direction of the California
Debt Limit Allocation Committee ("CDLAC") prior to the
issuance of mortgage credit certificates; and
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Resolution No. 94-94
Page 2
WHEREAS, the City desires that the County file an
application with CDLAC on behalf of the City for an allocation
of authority to issue mortgage credit certificates and elects
tO transfer to the County pursuant to Section 8869.85(d) of
the Government Code, the total amount, if any, of such
authority allocated to the City; and
WHEREAS, one percent of the amount of the allocation to
be requested on behalf of the City is to be held in an account
established by the City pursuant to Section 8869.84 of the
Government Code and the Regulations of the CDLAC;
NOW, THEREFORE, the City Council of the City of Tustin
resolves as follows:
Section 1. Each of the foregoing recitals is true and
correct.
Section 2. The City Manager,. or his designee, is
authorized, on behalf of the City, to take such steps and
execute such documents as are necessary for the submission of
an application to CDLAC on behalf of the City for an
allocation in the amount of $2,000,000 for application to the
issuance of mortgage credit certificates by the County. The
City Manager, or his designee, is also authorized to certify
to CDLAC that an amount equal to 1% of the allocation
requested is on deposit in an account established by the City.
Section 3. The City agrees to pay to the County the
City's proportionate share (based upon the number of
participants in the Program) of administration costs
applicable to the allocation received from CDLAC, which share
is estimated not to exceed $15,000.
Section 4. The City hereby authorizes the transfer to
the County of the total principal amount, if any, of the
authority to issue mortgage credit certificates allocated to
the City by CDLAC. The City Manager or his designee, on
behalf of the City, is authorized and directed to take such
steps and execute such documents as are necessary to effect
the transfer of such allocation to the County solely for
application to the issuance of mortgage credit certificates,
which are to be used to induce the origination of home
mortgage loans to qualifying persons.
Section 5. The officers and employees of the City are
authorized and directed, jointly and severally, to do any and
all things necessary or advisable in order to effectuate the
purposes of this resolution or the issuance of the mortgage
credit certificates by the County, and all actions previously
taken by such officers and employees in connection with the
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Resolution No. 94-94
Page 3
application for the allocation authorized to be requested are
ratified and approved.
Section 6. This resolution shall take effect immediately
upon its adoption by the City Council, and the City Clerk
shall certify the vote adopting this resolution.
PASSED AND ADOPTED at a regular meeting of the Tustin City
Council, held on the 1st day of August, 1994.
THOMAS R. SALTARELLI
Mayor
Mary E. Wynn,
City Clerk
STATE OF CALIFORNIA )
COUNTY OF ORANGE )
CITY OF TUSTIN )
SS
CERTIFICATION FOR RESOLUTION NO. 94-94
M3~RY E. W-YN-N, City Clerk and ex-officio Clerk of the City
Council of the City of Tustin, California, does hereby certify
that the whole number of the members of the City Council of
the City of Tustin is 5; that the above and foregoing
Resolution No. 94-94 was duly and regularly introduced,
passed, and adopted at a regular meeting of the Tustin City
Council, held on the 1st day of August, 1994.
COUNCILMEMBER AYES:
COUNCILMEMBER NOES:
COLrNCILMEMBER A~STAINED:
COLrNCILMEMBER:ABSENT:
MARY E. WYNN
City Clerk