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HomeMy WebLinkAboutNB 3 O.C. HOME MTG FIN 06-07-82DATE: June 7, 1982 NEW BUSINESS Inter-Corn TO: FROM: SU6JECT: Honorable Mayor & City Council Community Development Department Participation in Orange County Home Mortgage Finance Program BACKGROUNO & DISCUSSION In February, 1982, Orange County began planning for a mortgage revenue bond issue, pursuant to the federal Mortgage Subsidy Bond Tax Act of 1980 and California's Costa-Marks Act. The County program included the opportunity for cities to participate in the program, and the Robert P. Warmington Conq~any had indicated an interest in reserving bond proceeds for use on the Mission Villas project which will be located at the southerly terminus of Newport Avenue. Since then, the Robert P. Warmington Company has decided not to enter the program and Mark Ainslee has indicated an interest in obtaining the money for his project on San Juan. Orange County plans to issue up to $76 million in mortgage revenue bonds prior to August 19, 1982. The target dates for marketing the bonds are from May 26 to June 7, 1982. The proceeds from these bonds will be used for mortgage subsidies in unincorporated areas of the County and in participating cities. It is anticipated that 30-year, fixed rate mortgages will be used, and that, with private mortgage insurance, the rate to the borrower will be approximately 14%. This program is being actively pursued by other cities in Orange County to include Santa Aha, Fountain Valley, Irvine, Garden Grove, Huntington Beach, and Stanton. All of the responsibilities for administering the bond sale and disbursement of the proceeds will be borne by the County of Orange. There will be no city program administration requirements. For city projects, state law limits the qualifying income for participating households to 120% of the county median income. This is consistent with the definition of moderate income in Tustin's Housing Element. Affordable prices for the units are defined as those which qualified households can afford using FHLMC lending standards assuming a 10% down payment and including principal, interest, property taxes, insurance (including private mortgage insurance) and homeowner association dues. The standards are flexible, and allow payments ranging from 28% to 33% of monthly income. Mayor & City Council June 7, 1982 Page 2 The Orange County Home Mortgage Finance Program presents an opportunity to make affordable units with low-cost financing available in Tustin, with no administrative burden on the City. This project is strictly to provide mortgages (money) for people who wish to gain entry into the housing market. ISSUES 1. Should the City of Tustin enter into a cooperative agreement with Orange County to participate in the Home Mortgage Finance Program? 2. Should Mark Ainslee's project at 1082-1102 San Juan be approved for financing through this program? RECOI~NI)EI) ACTION If both issues are answered in the affirmative, then it is appropriate to: 1. Adopt Resolution 82-42 which adopts the Home Mortgage Program in cooperation with the County of Orange. 2. Authorize Mayor to execute a cooperative agreement between the County of Orange and City of Tustin, subject to City Attorney approval. MAC:jh 6-1-82 1 2 3 4 5 6 7 8 9 lO 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 RESOLUTION NO. 82-42 A RESOLUTION OF THE CITY COUNCIL OF ll~E CITY OF TUSTIN, ADOPTING A HOME MORTGAGE FINANCE PROGRAM IN COOPERATION WITH THE COUNTY OF ORANGE 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 persons in the lower end of the purchasing spectrum, and a consequent need to encourage the construction, purchase and rehabilitation 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 resolved to engage in a home mortgage finance program (the "Program") pursuant to Part $ of Division 31 of the Health and Safety Code of the State of California (the "Act") for persons and families within the income limits established by the Act and has determined to issue revenue bonds pursuant to the Act to provide funds for the Program; and WHEREAS, this City Council finds and determines that it is in the best interest of the City to adopt the Program and to consent to the implementation of the Program by the County within the geographic boundaries of the City pursuant to the Act; NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF TUSTIN DOES HEREBY RESOLVE AS FOLLOWS: SECTION 1. The City hereby adopts the Program for the purpose of increasing the housing supply in the County and in the City and consents to the i~lementation of the Program by the County with respect to all property located within the geographical boundaries of the City. SECTION 2. The cooperative agreement, dated as of · between the County and the City (the "Agreement"), in substantially the form submitted to this meeting, is hereby approved; and the Mayor of the City is hereby authorized and directed to execute and deliver said Agreement, for and in the name and on behalf of the City, and to approve any additions to or changes in said form of the Agreement, which he may deem necessary or advisable, his approval of such additions or changes to be conclusively evidenced by his execution of said Agreement as so added to or changed. The Mayor of the City is further authorized to enter into such additional agreements with the County, execute such other documents and take such other actions as he may deem necessary or appropriate to carry out the purpose and intent of the Agreement or to cooperate in the implementation of the Program. 28 6 7 8 9 10 11' 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 1 2 3 4 5 Resolution No. 82-42 June 7, 1982 Page 2 SECTION 3. The project for Mark Ainslee located at 1082-1102 San Juan, is approved for financing through the Program. This project has previously received City approvals for subdivision, conditional use permit and site design; and can be expected to be constructed substantially as shown in such City approved documents. SECTION 4. This Resolution shall take effect immediately upon its adoption. PASSED AND ADOPTED by the City Council of the City of Tustin at a regular meeting held on the~day of , 1982. Richard B. Edgar, Mayor ATTEST: Mary Wynn City Clerk COOPERATIVE AGREEMENT BETWEEN THE COUNTY OF ORANGE AND THE CITY OF TUSTIN THIS COOPERATIVE AGREEMENT (the "Cooperative Agreement") is hereby made and entered into as of 1982, by and between the COUNTY OF ORANGE, a legal subdivision and body corporate and politic of the State of California (the "County"), and the CITY OF TUSTIN, a municipal corporation of the State of California (the "City"). W ITNESSETH: WHEREAS, the County has determined to engage in a home mortgage finance program (the "Program") pursuant to Part 5 of Division 31 of the Health and Safety Code of the State of California (the "Act") to make or acquire, directly or indirectly, long-term loans to finance the construction and acquisition of homes in the County, all as provided for in said Act; and WHEREAS, the County has determined to borrow money to finance the Program by the issuance of revenue bonds (the "Bonds") as authorized by the Act and by the provisions of the Costa-Marks Housing Bond Allocation Act of 1981 (the "Costa-Marks Act"); and HOW, THEREFORE, in consideration of the mutual covenants hereinafter provided, the parties hereto agree as follows: SECTION 1. The words and phrases of this Cooperative Agreement shall, for all purposes hereof unless otherwise defined herein, have the meanings assigned to such words and phrases in the Act and in the Costa-Marks Act. SECTION 2. The County agrees to use its best efforts to undertake the Program and to issue the Bonds therefor pursuant to the Act as soon as the County determines the same to be necessary and advisable. SECTION 3. The City represents and warrants to the County that: (i) the City has heretofore adopted a general plan for the City in conformance with the provisions of the Planning and Zoning Law of the State of California (Government Code Section 65000 et. seq.), (ii) said general plan includes a land use element and a housing element as required by Government Code Section 65302, and (iii) the Program complies with said land use element and housing element. SECTION 4. The City agrees that the County may make or acquire home mortgages under the Program, all as more specifically set forth in the Act, with respect to property located within the geographic boundaries of the City and that any and all of its powers for the purpose of financing home mortgages pursuant to the Act with respect to such property shall be exercised by the County; and the City hereby assigns to the County the City's entitlement allocation pursuant to the Costa-Marks Act for calendar year 1982; provided, however, such assignment shall be effective soley for use by the County to provide financing for properties located within the City (including a proportionate share of the costs of issuance, underwriters' discount, capitalized interest, reserve funds, and similar expenses associated with the Bonds), and the amount of the City's entitlement allocation so assigned shall be determined by the County and notice thereof shall be given to the City within thirty (30) days after the issuance of the Bonds, and notwithstanding the foregoing, such assignment shall not be deemed ineffective if, after the issuance of the Bonds and for reasons beyond the control of the County, the County is unable to use all or any portion of the City's entitlement allocation assigned hereby-to provide financing for properties located within the City and the same is used instead to redeem Bonds or to provide financing for properties located elsewhere in the County. However, no financing pursuant to the Program shall be made available for a home which is constructed within the City subsequent to the date hereof without the City Council's prior approval of the use of such financing for the development within which such home is to be constructed. SECTION 5. The City agrees to refrain from participation in a home mortgage finance program from which bonds proceeds would be made available to provide financing for homes in projects with respect to which the City Council has approved the use of financing from the Program pursuant to Section 4 hereof. In addition, in recognition of the transfer of jurisdiction effected by the provisions of Section 4 hereof, the City agrees not to issue any qualified mortgage bonds during calendar year 1982 the principal amount of which, when added to the principal amount of the Bonds deemed hereunder to have been issued for the benefit of property within the City, will exceed any limit established by the Costa-Marks Act. SECTION 6. The City Agrees to undertake such further proceedings or actions as may be necessary in order to carry out the terms and the intent of this Cooperative Agreement; and the City further agrees to refrain from taking any action which would to its knowledge tend to adversely affect the rating on the Bonds. SECTION 7. Nothing in this Cooperative Agreement shall prevent the County from entering into one or more agreements with other municipal corporations within the County, if deemed necessary and advisable to do so by the County. -2- SECTION 8. This Cooperative Agreement may be amended by one or more supplemental agreements executed by the County and the City at any time, except that no such amendment or supplement shall be made which adversely affect the rights of the holders of the Bonds. SECTION 9. This Cooperative Agreement shall expire and be of no further force and effect if no portion of the Bonds are deemed to have been issued for the benefit of property within the City. IN WITNESS WHEREOF, the parties hereto have caused this Cooperative Agreement to be executed and attested by their proper officers thereunto duly authorized, and their official seals to be hereto affixed, all as of the day first written above. COUNTY OF ORANGE ATTEST: BY Chairman of the Board of Supervisors Clerk of the Board of Supervisors APPROVED AS TO FORM: County Counsel CITY OF TUSTIN ATTEST: BY Mayor city Clerk APPROVED AS TO FORM: City Attorney -3-