HomeMy WebLinkAbout1985 122 CC RESO1985 122 CC RESO ;¢fì ù ß
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RESOLUTION NO- 85- 122
A RESOLUTION OF THE CITY COUNCIL OF THE CITY
OF BALDWIN PARK APPROVING THE HOUSING POLICY
REPORT OF THE BALDWIN PARK REDEVELOPMENT AGENCY
UNDER INTERNAL REVENUE CODE SECTION 103A AND
DIRECTING ITS PUBLICATION
RESOLVED, by the City Council of the City of Baldwin Park,
California as follows:
WHEREAS, Section 103A(j)(5) of the Internal Revenue Code
of 1954, as amended, as implemented by proposed and temporary
regulations of the Department of the Treasury, Section 6a.103A-2(1),
requires the applicable elected representative of an issuer of
qualified mortgage subsidy bonds to publish, after public hearing,
a housing policy report? and
WHEREAS, this Council is the applicable elected
representative of the Baldwin Park Redevelopment Agency which Agency
proposes to issue in 1986 qualified mortgage subsidy bonds; and
WHEREAS, this Council has received a draft housing policy
report dated October 31, 1985, and has reviewed each and every part
thereof and this Council has conducted a duly noticed public hearing;
and
WHEREAS, it is in the public interest and for the public
benefit that said housing policy report be approved and published.
NOW, THEREFORE, it is hereby ORDERED and DETERMINED as
follows:
SECTION 1. The report of the Baldwin Park Redevelopment
Agency entitled, Policy Report Under Section 103A," and dated
October 31, 1985 is hereby approved with the inclusion of said summary
of comments.
SECTION 2. The Mayor of the City, as a member of this
Council, is hereby authorized and directed to execute said report
on behalf of this Council as the duly elected representative of
the Agency.
SECTION 3. This Council does hereby publish the Report
by authorizing and directing the City Clerk, and the City Clerk
is hereby so authorized and directed, to make said Report available
in the Office of the City Clerk for distribution to the public.
SECTION 4. The City Clerk of the City is hereby authorized
and directed to file the Report with the Internal Revenue Service
at the Internal Revenue Service Center, Philadelphia, Pennsylvania
19255.
APPROVED AND ADOPTED this 18th day ofB^cember, 1985.
/1^4^^/Jf
OR
ATTEST:
y
t' T M^-^_____
LI^DA L. CSA^R, CITY CLERK
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RESOLUTION NO. 85-122
PAGE TWO
STATE OF CALIFORNIA
COUNTY OF LOS ANGELES) ss.
CITY OF BALDWIN PARK
I, LINDA L. GAIR, City Clerk of the City of Baldwin
Park, do hereby certify that the foregoing Resolution was regularly
approved and passed at a REGULAR MEETING AND PUBLIC HEARING of
the Baldwin Park City Council on the 18th day of December, 1985,
by the following vote:
AYES;
NOES:
COUNCILMEN MCNEILL, KING, IZELL AND MAYOR WHITE
COUNCILMEN NONE
ABSENT: COUNCILMEN GIBSON
tNDA L. GT^R, CITY CLERK
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BALDWIN PARK REDEVELOPMENT AGENCY
Employer Identification Number
95-3094797
POLICY REPORT UNDER SECTION 103A
October 31,1985
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TABLE OF CONTENTS
I. Requirements
A. Content
II. Policies and Goals
A. Housing Policies and Goals
1. Use of Proceeds
2. Targeting of Proceeds to Housing Type
3. Determination of need for Targeting
4. Method of Targeting Proceeds
5. Other Pertinent Information
6. Related Policies
B. Development Policies and Goals
1. Targeting of Proceeds to Areas
2. Description of Target Areas
3. Selection of Target Areas
4. Use of Targeted Proceeds
5. Other Pertinent Information
6. Related Policies
C. Low-Income Housing Assistance Policies and Goals
1. Targeting of Proceeds According to Income
2. Method of Targeting Proceeds
3. Other Pertinent Information
4. Related Policies
III. Compliance with Previous Report
A. Summary of 1985 bond Program
1. Method of Distributing 1985 Bond Proceeds
2. Income Levels
3. Assistance to Lower-Income Families
IV. Compliance with Intent of Congress
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BALDWIN PARK REDEVELOPMENT AGENCY
HOUSING POLICY REPORT
I. REQUIREMENTS
The Tax Reform Act of 1984 has added a new paragraph, Section 611, to the
Housing Tax Law", Section 103A of the Internal Revenue^ Code of 1954. The new
legislation requires any City or Redevelopment Agency wishing to issue Mortgage
Revenue Bonds during 1985 or thereafter, must first adopt a Housing Policies Report
during the year preceding issuance of the bonds. The content of the Report is
summarized as follows.
A. Contents
Section 103A(j)(5) of the Act states that the Housing Policies Report shall
include:
i) a statement of policies and goals with respect to housing, development,
and low-income housing assistance;
ii) an assessment of compliance with the prior year's report;
iii) an assessment of compliance with Congressional intent; and
IL POLICIES AND GOALS
B. Housing Policies and Goals
The California State Legislature has found and declared that:
it is necessary and essential that redevelopment agencies be authorized to
make long-term, low-interest loans through qualified mortgage lenders to
finance residential construction in order to encourage investment and
upgrade redevelopment project areas and increase the supply of housing.
Unless redevelopment agencies intervene to generate mortgage funds and
to provide some form of assistance to finance residential construction,
many redevelopment areas will stagnate and deteriorate because owners
and investors are not able to obtain loans from private sources.
California Health and Safety Code Section 33750.)
The California State Legislature has additionally found and declared that:
A program to provide residential construction financing would
accomplish the following:
facilitate increasing the supply of urban housing and ease the housing
shortage that exists in many parts of the state.
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reduce pressures for suburbanization and thereby mitigate many of
the problems caused by urban migration, including inefficient use of
scarce energy resources and urban sprawl.
stimulate urban building and construction activity and thereby
increase urban employment and improve the urban tax base.
California Health and Safety Code Section 33751.)
It is the intent of the Legislature, in enacting this chapter, to strengthen
the vitality and promote the completion of urban redevelopment for the
general public benefit. California Health and Safety Code Section
33752.)
The Baldwin Park Redevelopment Agency plans to issue qualified single family
mortgage bonds the Bonds") in 1985 in furtherance of the above-stated policies of
the California State Legislature and in conformance to the following policies and
goals.
1. Use of Proceeds
The proceeds of the Bonds will be used to finance the acquisition of newly
constructed single-family residences.
2. Targeting of Proceeds to Housing Type
The proceeds of the Bonds will be targeted to newly constructed single-family
housing.
3. Determination of Need for Targeting
An estimate of the need for new housing in the City of Baldwin Park was
established by the Southern California Association of Governments SCAG),
which it states:
The estimate of future need during the 1983 to 1988 planning period
is based on projections of population, household formation, demand
created by employment growth and vacancy rate. The estimated
additional housing need for 1988 is 597 units. Of this housing need,
approximately 23.1%, or 138, units should be affordable to
households making 80% to 120% of median income.
4. Method of Targeting Proceeds
The method used to target the Bond proceeds toward the purchase of newly
constructed single-family housing will be the structuring of the Bond Program
as stated in the Commitment Contracts to be entered into with the
participating developers, pursuant to which the Developer will commit to the
construction of a particular project, and will be charged a participation fee.
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5. Other Pertinent Information
Policies and goals related to Housing included as part of the City of Baldwin
Park Housing Element of the General Plan, adopted in April of 1980 include
the following:
* Address and, where appropriate and legally possible, remove
governmental constraints to the maintenance, improvement, and
development of housing.
* Promote housing opportunities for all persons regardless of race, religion,
sex, marital status, ancestry, national origin or color.
* To assist the private sector in meeting the projected housing needs of
owner and renter households in the moderate, above-moderate and upper
income groups.
* Encourage neighborhood conservation and preservation programs.
6. Related Policies
The overall Housing policy of the Redevelopment Agency is to encourage
housing development within the Redevelopment Project Areas. This goal
facilitates the City's Development policies which identify persons needing
assistance and locations where development should occur.
Relationships to Low-Income Housing Assistance policies in the
Redevelopment Project Areas affects low and moderate income housing in less
direct ways. As assessed values in redevelopment project areas rise, so do the
tax increments which How to the City. State law requires that 20% of the tax
increments that flow to redevelopment agencies must be set aside for uses
assisting low and moderate income housing. These funds can thus, in ways not
restricted to newly constructed housing sales, assist an even lower income
group them that expected to be able to purchase a home.
B. Development Policies and Goals
The California State Legislature has found and declared that:
It is necessary and essential that redevelopment agencies be authorized to
make long-term, low-interest loans through qualified mortgage lenders to
finance residential construction in order to encourage investment and
upgrade redevelopment project areas and increase the supply of housing.
Unless redevelopment agencies intervene to generate mortgage funds and
to provide some form of assistance to finance residential construction,
many redevelopment areas will stagnate and deteriorate because owners
and investors are not able to obtain loans from private sources.
The Legislature futher finds and declares that financing of rehabilitation,
as provided in this chapter, serves an essential public purpose for the
economic renewal of our cities.
California Health and Safety Code Section 33750.)
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The California State Legislature has additionally found and declared that:
A program to provide residential construction financing would
accomplish the following:
facilitate increasing the supply of urban housing and ease the housing
shortage that exists in many parts of the state.
reduce pressures for suburbanization and thereby mitigate many of
the problems caused by urban migration, including inefficient use of
scarce energy resources and urban sprawl.
stimulate urban building and construction activity and thereby
increase urban employment and improve the urban tax base.
California Health and Safety Code Section 33751.)
It is the intent of the Legislature, in enacting this chapter, to strengthen
the vitality and promote the completion of urban redevelopment for the
general public benefit. California Health and Safety Code Section
33752.)
The Baldwin Park Redevelopment Agency plans to issue qualified single family
mortgage bonds the Bonds") in 1986 in furtherance of the above-stated policies of
the California State Legislature and in conformanee to the following policies and
goals:
1. Targeting of Proceeds to Areas
Presently, the need exists to channel funds into redevelopment project areas in
order to assist in the elimination of prevalent blighting conditions. This
investment into redevelopment areas increases the tax increment available to
the Agency, 20% of which is in turn placed in a low and moderate income
housing fund to be used specifically for lower income households. Therefore the
Redevelopment Project areas, specifically the Central Busines District
Redevelopment Project, which contains areas planned for single family
residential uses, will be the area targeted for use of bond proceeds.
Bond proceeds will be targeted to specific projects identified within one of the
Agency's five redevelopment projects, for which Commitment Contracts must
be entered into by the Developers to construct the project. There are not any
targeted areas" under Section 103A within the City of Baldwin Park,
therefore none of the proceeds are required to go to these areas.
2. Description of Target Areas
All of the bond proceeds will be utilized by developers yet to be selected. The
developers will construct new single family housing on sites under their
control, however, sites are required to be located within one of the
redevelopment projects and be appropriate for single family residential land
use.
The Central Business District Redevelopment Project is an area of
approximately 130 acres and contains both residential and commercial uses,
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including the City's central business district. The Agency is undertaking
acquisition and relocation activities to promote the development of new
housing for low and moderate income households.
3. Selection of Target Areas
Sites will be selected based upon those developers who agree to comply with the
City's Housing Guidelines and the bond program restrictions and reserve funds
for that purpose pursuant to the State of California Mortgage Bond Allocation
statutes. Sites are required to be located within one of the redevelopment
projects and be appropriate for single family residential land use.
4. Use of Targeted Proceeds
The proceeds of the Bonds will be targeted to the areas as described above and
will be used to finance newly constructed single family homes.
5. Other Pertinent Information
Policies and goals related to Development adopted as part of the City of
Baldwin Park Housing Element of the General Plan and utilized by the
Redevelopment Agency include the following:
* Encourage the development of new housing units to meet the housing
needs of all economic segments of the community.
* Encourage the. development of new housing for senior citizens, the
handicapped and large families in new construction.
* Encourage higher density residential development in appropriate
locations based on the City's ability to properly provide utilities, street
capacities, outdoor space for recreation and other normal public services.
* Encourage development of lots which are either under-utilized or passed
over in the development process.
* Increase the potential housing supply by encouraging more efficient
utilization of deep lots".
6. Related Policies
The Development policies identify persons needing assistance and locations
where development should occur. These Development policies and goals are
related to the City's housing goals of utilizing bond programs and other means
of financial assistance to improve housing resources and expand the range of
homeownership opportunities through the common goal of providing needed
housing. The overall Housing policy of the Redevelopment Agency identifies
the location where some of these housing needs can be met. Low-Income
Housing Assistance policies and goals identify those persons requiring
assistance that the bousing programs should be targeted to.
C. Low-Income Housing Assistance Policies and Goals
The California State Legislature has found and declared that:
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a program to provide residential construction financing would encourage
Californians of all social and economic positions to reinhabit urban areas,
thereby rendering these areas more socially balanced and economically
self-sufficient. California Health and Safety Code Section 33751.)
The construction of federally assisted housing for low- and moderate-
income households is not a primary purpose of this chapter. However,
nothing in this chapter shall be deemed to prohibit financing of federally
assisted housing for low- and moderate-income households when such
housing is consistent with the redevelopment plan and the loan is directly
or indirectly insured. California Health and Safety Code Section 33752.)
In order to issue qualified single family mortgage revenue bonds, the City must
apply to the California Mortgage Bond Allocation Committee CMBAC) for an
entitlement and/or supplementary allocation. Once an allocation is received, the
City authorizes the Redevelopment Agency to issue bonds with the allocation. The
entitlement allocation cannot exceed $20,000,000 per year and imposes no income
restrictions on prospective mortgagees. The City is anticipating receipt of a
$20,000,000 entitlement allocation, however, as the City also intends to issue
mortgage bonds in 1986, the Agency will receive an undetermined portion of the
$20,000,000.
The Baldwin Park Redevelopment Agency plans to issue qualified single family
mortgage bonds the Bonds") in 1986 in furtherance of the above-stated policies of
the California State Legislature, with an allocation of entitlement funds and in
conformance to the following policies and goals:
1. Targeting of Proceeds According to Income
The proceeds of the Bonds will be targeted to moderate-income families defined
as families earning between 80% and 120% of median income. Median annual
income as estimated for the State of California in 1985 is $32,700.
2. Method of Targeting Proceeds
The method by which the bond proceeds will be targeted will be through the
sales price of the housing to be funded, which cannot exceed 110% of the area
median purchase price for new housing, which currently is $134,800. The units
must be owner-occupied for the entire term of the mortgage thus eliminating
the use of the bond program for income property. The units will also be
targeted to first-time home buyers, who are typically in the lower spectrum of
income ranges and have little equity with which to purchase a home. Ninety
percent of all loans must be for first-time buyers.
3. Other Pertinent Information
Through the use of mortgage revenue bonds a redevelopment agency can
subsidize first-time homebuyers by lowering the monthly cost of buying a
home, in turn making the house more affordable.
Policies and goals related to Low-Income Housing Assistance adopted as part of
the City of Baldwin Park Housing Element of the General Plan and utilized by
the Redevelopment Agency include the following:
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* Conserve and improve the condition of the existing affordable housing
stock.
* Assist in the development of adequate housing to meet the needs of low-
and moderate-income households.
* To explore feasible methods of addressing the projected housing needs of
very Low- and low-income households.
In addition to the single family mortgage revenue bond program proposed by
the Redevelopment Agency, the City of Baldwin Park anticipates participation
in additional bond programs to assist in the provision of low and moderate
income housing. These include the single family mortgage revenue program
under AB 1355", which carries with it maximum income restrictions of 150
percent of the median income for purchasers of a newly constructed home.
The City of Baldwin Park has the following programs assisting low- and moderate-
income households currently underway.
* A City funded Housing Rehabilitation Loan Program.
HUD Section 8 Rehabilitation Program and rental assistance for existing
housing and newly constructed housing.
Community Development Block Grant program for public housing.
HUD Section 202 housing assistance for elderly households.
4. Related Policies
The bond program proposed will assist in providing Low-Income Housing
assistance through the more general provision of funds to the Redevelopment
Agency through tax increment revenue, which can in turn be spent on
additional housing assistance through the Agency's Low and Moderate Income
Housing Fund. Development in the redevelopment project areas in turn
promotes additional development in these areas through upgrading of the
general environment and through the elimination of blighting conditions.
These impacts assist both the Development and the Housing policies previously
stated through the resultant development of housing in general.
III. COMPLIANCE WITH PREVIOUS REPORT
A. Summary of the 1985 bond Program
On December 31,1984, the Baldwin Park Redevelopment Agency issued its 1984
Single Family Mortgage Revenue Bonds in the aggregate principal amount of
$7,000,000 1985 Bonds") in an effort to assist lower-income families to afford home
ownership. They are referred to as the 1985 Bonds, as they were primarily available
for use during the 1985 year. The following information is provided with respect the
1985 Bonds:
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This report is submitted by the undersigned elected representative of the City of
Baldwin Park.
/s/ Jack B. White
Mayor, City of Baldwin Park
ATTEST:
City plerk
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Under the Bond Program, the Agency set aside funds to provide permanent
financing for single family condominium units the Project") within the Central
Business Redevelopment Project which were newly constructed and not been
previously occupied.
1. Method of Distributing 1985 Bond Proceeds
The method the Agency used to target the proceeds of the Bonds was the
restriction of the use of the proceeds to the Central Busness District
Redevelopment Project. Bond money is distributed through a lender by the
purchase of the mortgage loan originated on the housing unit sold. The
program mortgage rate is a fixed 10.9%, approximately 2.5 percentage points
less than the rate for a conventional loan at that time.
2. Income Levels
There were no maximum income restrictions in the Bond Program, however,
due to the sales price of the units, the requirement for owner occupants, and the
limitation to 90% first-time homebuyers, the proceeds primarily are being used
for low- and moderate income persons.
3. Assistance to Lower-Income Families
The proceeds of the 1985 Bonds assisted lower-income families before assisting
higher-income families by limiting 90% of the participants to first-time
homebuyers, all of the buyers to owner occupants, and the sales price to 110%
percent of the average area purchase price. The units sold were actually much
less than the maximum allowed, and ranged between $65,900 to $90,000. In
addition, the program offers a graduated payment buydown option whereby the
buyer can qualify at a mortgage interest rate of 7.65%, with payments
increasing over the 2nd through 6th years of the program, further allowing
assistance to lower income families.
IV. COMPLIANCE WITH INTENT OF CONGRESS
The intent of Congress is that:
local governments are expected to use their authority to issue qualified
mortgage bonds to the greatest extent feasible to assist lower income
families to afford home ownership before assisting higher income families."
The Baldwin Park Redevelopment Agency feels the summarized program under
Section ffl and the program proposed for next year pursuant to this report, complies
with the intent of Congress to assist lower income families to afford home ownership
before assisting higher income families, by establising a financing program making
available mortgage loans subsidized with an interest rate below that of the
conventional market to households having low or moderate income, and by limiting
the type of housing allowed under the program to that priced for low and moderate
income families.
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