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HomeMy WebLinkAboutMINUTES - 06251996 - C70 �jc 70 rev - Contra TO: BOARD OF SUPERVISORS Costa FROM: Harvey E. Bragdon J' County Director of Community Development U14 DATE: June 25, 1996 SUBJECT: Lease Purchase Mortgage Program SPECIFIC REQUEST(S) OR RECOMMENDATIONS(S) & BACKGROUND AND JUSTIFICATION RECOMMENDATIONS ADOPT RESOLUTION APPROVING AND AUTHORIZING the Chair, Vice Chair, the Director of Community Development, or the Deputy Director - Redevelopment to execute a Joint Powers Agreement ("Agreement")with the California Rural Home Mortgage Finance Authority for its Lease Purchase Mortgage Program, subject to limitations and conditions expressed herein; and AUTHORIZING the Deputy Director - Redevelopment to negotiate terms and conditions of the Agreement consistent with this action. FISCAL IMPACT The County will incur no costs relative to this program. All administrative costs are incurred by the California Rural Home Mortgage Finance Authority. BACKGROUND/REASONS FOR RECOMMENDATIONS The California Rural Home Mortgage Finance Authority, created in 1993, is a joint powers authority whose members are 28 primarily rural California Counties, and two rural cities. The Authority was created to provide financing for the construction, acquisition, and rehabilitation of homes. The Authority is governed by a Board .consisting of a representative of each of its members. CONTINUED ON ATTACHMENT: XX YES SIGNATURE: RECOMMENDATION OF COUNTY ADMINISTRATOR E 6mMENDA ON OF BO D COMMITTEE APPROVE OTHER SIGNATURE(S): ACTION OF BOARD ON ' S117 7 14 APPROVED AS RECOMMENDED/ OTHER i VOTE OF SUPERVISORS / I HEREBY CERTIFY THAT THIS IS A ✓ UNANIMOUS (ABSENT ) TRUE AND CORRECT COPY OF AN AYES: NOES: ACTION TAKEN AND ENTERED.ON THE ABSENT: ABSTAIN: MINUTES OF THE BOARD OF SUPERVISORS ON THE DATE SHOWN. Source: Jim Kennedy 335-1255 cc: Community Development ATTESTED aS County Administrator PHIL BATC LOR, CLE K OF County Counsel THE BOARD OF SUPERVISORS Housing Authority AND COUNTY ADMINISTRATOR via Community Development Dept. California Rural Home Mortgage Finance Authority BY , DEPUTY JK:Ih sra73/crWabos �7D In early 1996, the Authority authorized $65.5 million in bonds to finance a lease-to-own homeownership program. The lease-to-own program is a down payment assistance program where the public agency - the Authority - does not come out of pocket for the assistance costs. Funds for the assistance costs are paid by arbitraging proceeds of short term (5 year) tax exempt bonds while the homebuyer is leasing the home. When the lease period terminates, the homebuyer must secure a permanent mortgage (market rate, not tax exempt) and purchases the home. The transaction is complex, and the Authority assumes the obligation of owning and leasing the homes. The 1996 Lease-to-Own Program of the Authority is being offered to buyers of homes of a single developer - Kaufman & Broad, whose captive mortgage company has assumed certain financial risks. Homes subject to this financing are owned by a public agency - the Authority. When the bonds are outstanding, they are considered to be Governmental Purpose Bonds, not Private Activity Bonds. Governmental Purpose Bonds are not subject to the Private Activity Bond volume caps (therefore no scarce allocation authority from the California Debt Limit Allocation Committee is required), and loans made are not subject to federal income, purchase price limits, or prior ownership restrictions. The ultimate mortgage rate to the buyer, once they convert from leasing to owning, is a market rate mortgage. The Lease-to-Own reduces the upfront costs to homebuyers, a problem common for first-time homebuyers. Lease-to-Own programs are unlikely to achieve the income targeting and enhanced affordability aspects of traditional mortgage credit certificates or mortgage revenue bond programs where a below market rate mortgage is accomplished. Middle income buyers with little or no cash are the expected beneficiaries. The authorization to participate is recommended to be limited in the following ways: 1. Authorization for the program to operate in Contra Costa County shall be limited to proceeds derived from the Authority's March, 1996 issuance of bonds; 2.. The maximum amount of proceeds of the Authority's said 1996 issuance to be used in this County is limited to $5 million because only Kaufman & Broad product is available to be purchased; and 3. The Authority shall provide the County with lessor/mortgagor, and transaction data sufficient for the County to analyze the effectiveness of the Lease-to-Own Program in achieving targeted homebuyer assistance as compared to the County's historical approach via mortgage credit certificates, and single family mortgage revenue bonds. C , 7® COUNTY OF CONTRA COSTA RESOLUTION NO. 96/291 A RESOLUTION OF THE BOARD OF SUPERVISORS OF THE COUNTY OF CONTRA COSTA AUTHORIZING THE EXECUTION AND DELIVERY OF A JOINT EXERCISE OF POWERS AGREEMENT TO PARTICIPATE AS AN ASSOCIATE MEMBER OF THE CALIFORNIA RURAL HOME MORTGAGE FINANCE AUTHORITY IN THE RURAL CALIFORNIA GOLD LEASE-PURCHASE PROGRAM WHEREAS, the County of Contra Costa (the "County") desires to participate, as an Associate Member with other counties, pursuant to the laws of the State of California, in the California Rural Home Mortgage Finance Authority's (the"Authority"); Lease-Purchase Program; WHEREAS,there has been presented to this meeting a form of the Joint Exercise of Powers Agreement(the"Agreement"),which Agreement as amended March 1, 1995, creates and establishes the Authority; and which sets terms and conditions for Associate Membership to participate in the Lease-Purchase Program only; WHEREAS,the County may issue Bonds(as defined in the Marks-Roos Local Bond Pooling Act of 1995, being Article 4 of Chapter 5 of Division 7 of Titles 1 commencing at Section 6584 of the Government Code(the"Act"), expend bond proceeds, borrow and loan money for its corporate purposes under various provisions of law, and acquire, sell, develop, lease or administer property pursuant to various provisions of law for the benefit of the lands and inhabitants of the County; WHEREAS, the purpose of the Authority is to assist,the County and the other members of the Authority in providing for the financing, acquisition, construction and rehabilitation of homes for the benefit of the inhabitants of the County and the other Members, including but not limited to issuing bonds to encourage homeownership within the County and the boundaries of the members of the Authority. NOW, THEREFORE, BE IT RESOLVED BY THE BOARD OF SUPERVISORS (THE "BOARD") OF THE COUNTY OF CONTRA COSTA: Section 1. The Board hereby finds and declares that entering into the Agreement satisfies various public purposes, including,without limitation, encouraging homeownership within the County. With respect to the financing of the construction, acquisitions, and rehabilitation of homes, the Board declares that this Resolution is being adopted pursuant to Section 52000 of the Health and Safety Code of the State of California. Section 2. The Board finds and declares that the County desire to participate in the Authority's Lease-Purchase Program only and applies for Associate membership in the Authority for that purpose only. Section 3. The form of the Agreement, as submitted to the County and incorporated into this Resolution by reference, is hereby approved. The Chair of the Board, the Vice-Chair, the Director of the Community Development Department, or the Deputy Director- Redevelopment, are hereby authorized to execute and deliver'the Agreement in substantially said form,with such changes or additions thereto that are consistent with this Board's action, or that hereafter may become necessary in the interests of the County and the other members of the Authority and which are reviewed and approved by County Counsel, any such changes or additions to be conclusively evidenced by the execution and delivery of the Agreement. RESOLUTION NO. 96/291 Section 4. The Board acknowledges that Associate Membership in the Authority is subject to the terms and conditions of Associate Membership as set forth in the Agreement and in the By-laws, dated March 29, 1996 and by this Resolution agrees to and accepts those terms and conditions, generally, and specifically, those provisions relating to participating in the Lease-Purchase Program only. Section 5. This Resolution shall take effect from and after its adoption. ADOPTED this 25th day of June 1996 , by the following vote: AYES: Supervisors Rogers, Bishop, DeSaulnier, Torlakson, Smith NOES: None ABSENT: None C i idieloard of Supervisors ATTEST: June 25, 1996 Phil Batchelor, County Administrator and Clerk of the Board of Supervisors By: _ � Deputy ix:m sra23/crhm&res RESOLUTION NO. 96/291 2