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HomeMy WebLinkAbout1980 03 13 CC MIN JM1980 03 13 CC MIN JM;¢f4ÇžMINUTE INDEX COUNCIL/REDEVELOPMENT AGENCY ADJOURNED JOINT MEETING MARCH 13, 1980 7:00 P.M. Page Roll Call Staff and Consultants 1 SB 99 Bond Issue 1 AGENCY WARRANT REGISTER NO. 47 APPROVED 1 AGENCY RES. NO. 85 AUTHORIZE INVESTMENT OF MONIES 1 IN LOCAL AGENCY INVESTMENT FUNDS ADOPTED Mr. De Dios Federal Bond Issue W. Ramona Project 1&2 Mr. Chi1 ton Financing W. Ramona Project 2 Mr. Hall Mortgage Revenue Bonds W. Ramona Project 3-4&5 SB 99 Agency Action 4/18/79 3 Agency Res. No. 86 Purpose 3 Agency Res. No. 87 Purpose 3&4 Council Res. No. 80-18 Purpose 4 Legal review of Documents 4 Loan Approval/Denial procedure Council Rights 4 11% Rate proposed 5 Compliance with Lending Regulations 5 Affordable Housing 5 Purpose of SB 99 5 AGENCY RES. NO. 86 AUTHORIZE ISSUANCE RESIDENT MORTGAGE 6 REVENUE BONDS W. RAMONA ADOPTED AGENCY RES. NO. 87 APPROVE RULES/REGULATIONS RE MORTGAGE 6 PROGRAM ADOPTED Affidavits Secretary of Treasury File 6 AUTHORIZE DIRECTOR NEGOTIATE FOR W. RAMONA PROPERTY 6 ADVERTISE, SET PUBLIC HEARING COUNCIL RES. NO. 80-18 APPROVE AGENCY ISSUANCE OF BONDS 6 1980 ISSUE $2,245,000. W. RAMONA ADOPTED 7:52 P.M. ADJOURNMENT 6 BIB] 37656-U01 1980-U02 03-U02 13-U02 CC-U02 MIN-U02 JM-U02 LI1-U03 FO9591-U03 FO9592-U03 DO9651-U03 C4-U03 MINUTES1-U03 2/4/2003-U04 ROBIN-U04 JOINT-U05 SESSION-U05 CITY-U06 COUNCIL-U06 REDEVELOPMENT-U06 AGENCY-U06 1980 03 13 CC MIN JM;¢f4ÇžUNOFFICIAL UNTIL APPROVED ADJOURNED REGULAR MEETING OF THE CITY COUNCIL OF THE CITY OF BALDWIN PARK, CITY HALL, 14403 E. Pacific Avenue THURSDAY, MARCH 13, 1980 AT 7:30 P.M. AND ADJOURNED REGULAR MEETING OF THE BOARD OF DIRECTORS, BALDWIN PARK REDEVELOPMENT AGENCY. 00- An invocation was given by Councilman Izetl. Councilman McNei'11 led the salute to the flag. Roil Call: CITY COUNCIL AND REDEVELOPMENT AGENCY DIRECTORS: Present: AGUILAR, IZELL, KING, MCNEILL AND MAYOR WHITE Also Present: CITY MANAGER SEXTON EXECUTIVE DIR.OF CRA) CITY ATTORNEY FLANDRICK, ADM. ASSISTANT RAPHIEL AND CITY CLERK BALKUS And: MANNY DE DIOS, BOND COUNSEL, MUNICIPAL SERVICES INC.; JIM CHILTON, MUNICIPAL FINANCIAL CONSULTANT, SHEARSON, LOEB & RHOADS INC.; ANDY HALL, BOND COUNSEL, JONES, HALL, HILL & WHITE; PAUL JULIAN, PURCHASER OF BOND, CITIZEN SAVINGS & LOAN; TONY SNODGRASS, HANES & MILLER, TAX CONSULTANTS & UNDERWRITERS FOR SHEARSON, LOEB & RHOADS, INC. Mayor White said that staff members not present had been excused by City Manager Sexton. He said this Joint adjourned regular meeting of the City Council and the Redevelopment Agency would include discussion of the SB 99 Bond issue. 00- APPROVE AND PAY WARRANT REGISTER NO. 47 IN THE AMOUNT OF $3,204.65. M/S/C: AGUILAR/IZELL. There were no objections. 00- Mr. Sexton read by Title Agency Resolution No. 85 A RESOLUTION OF THE BALDWIN PARK REDEVELOPMENT AGENCY OF THE CITY OF BALDWIN PARK AUTHORIZING INVESTMENT OF BALDWIN PARK REDEVELOPMENT AGENCY MONIES IN LOCAL AGENCY INVESTMENT FUND WAIVE FURTHER READING AND ADOPT RESOLUTION NO. 85. M/S/C: IZELL/KING. There were no objections. 00- Mr. Sexton said that Mr. De Dios would explain the details of the Federal Bond Issue. Continued INVOCATION FLAG SALUTE ROLL CALL STAFF MEMBERS EXCUSED SB 99 BOND ISSUE AGENCY WARRANT REGISTER NO. 47 APPROVED AGENCY RES. NO. 85 AUTHORIZE INVESTMENT OF MONIES IN LOCAL AGCY INVEST. FUNDS RES. NO. 85 ADOPTED BIB] 37656-U01 1980-U02 03-U02 13-U02 CC-U02 MIN-U02 JM-U02 LI1-U03 FO9591-U03 FO9592-U03 DO9651-U03 C4-U03 MINUTES1-U03 2/4/2003-U04 ROBIN-U04 JOINT-U05 SESSION-U05 CITY-U06 COUNCIL-U06 REDEVELOPMENT-U06 AGENCY-U06 1980 03 13 CC MIN JM;¢f4ÇžAdjourned Regular Meeting of the City Council of the City of Baldwin Park March 13, 1980 Page 2 Mr. De Dios introduced the Consultants who were present. He said the project involves the first phase of the West Ramona Redevelopment Project adopted this past summer. They had hoped the project could be grandfathered under the transitional rules, referred to as the Utiman Bill, WEST RAMONA modified by HR 5741. He said they had exerted every PROJECT. effort to grandfather the entire project but were unsuccessful. But, with the cooperation of the under- writers and Mr. Halt they had found a way that allows us to issue the 2.245 million, which is basically based upon the City population as of the 1976 Census. This will get us started and give us an opportunity to go back into the market place. He said this financing is tremendous and compares favorably with recent issues which involved Lancaster. Lancasters average was 10.29% v/s our 9.8%. He thanked Mr. Chitton and Mr. Julian and said our reinvestment rate was 14.9% as compared to Lancasters 11.8%. The Agency can afford the ultimate homeowner a mortgage rate as tow as 10^% as compared with other projects currently negotiating a loan rate of 15^%. He said they felt we should use the 11% which was promised to the developer previously. He asked Mr. Chit ton to comment as to negotiations with Citizens and about the financial package itself. 00- Mr. Chilton said the staff and the financing team MR. CHILTON consultants have put together a financing package that FINANCING will benefit homeowners in the project area immensely. With current mortgage rates at 15% to 16% we wilt be able to offer a 11% mortgage rate on 28 to 32 houses. He said this can only be done because of their success in working with Citizen Savings & Loan Association of which Paul Julian is Vice President in charge of Community Development. He said he and their underwriters counsel went through model after model to the computer trying to figure a way to do this project successfully as most projects are larger than 2,245 million. This was negotiated underwriting, a process where his firm purchases the bonds and resells them through their stock brokerage offices to individual investors. Due to the small size of the issue, every time they ran the numbers through the computer they came up with mortgage rates of 12 to 12^%. He talked to Mr. De Dios about the possibility of privately placing bonds with an institution. Mr. De Dios indicated that if it would drive the mortgage rate down to proceed after they talked to Mr. Sexton. Mr. Chilton proposed that Paul Julian finance the project by purchasing a bond. Mr. Julian was interested and they were able to negotiate a coupon rate of 9.8. Comparing with other issues at 10 3/8 this is an excellent rate and allows the 11% mortgage rate. The difference between 9,8 and the 11% mortgage rate will pay servicing and bond trustees fees and partially cover issuance expenses within that spread. Borrowing at 9.8% and investing at 14.956% results in arbitrage earnings which helps pay for the cost of issuance. He said the issuance was designed so that if no homes are ever built and therefore no mortgages ever purchased the Agency can call and pay off the bonds based on the spread Continued BIB] 37656-U01 1980-U02 03-U02 13-U02 CC-U02 MIN-U02 JM-U02 LI1-U03 FO9591-U03 FO9592-U03 DO9651-U03 C4-U03 MINUTES1-U03 2/4/2003-U04 ROBIN-U04 JOINT-U05 SESSION-U05 CITY-U06 COUNCIL-U06 REDEVELOPMENT-U06 AGENCY-U06 1980 03 13 CC MIN JM;¢f4ÇžAdjourned Regular Meeting of the City Council of the City of Baldwin Park March 13, 1980 Page 3 between the earnings on the investment rate and the coupon rates. Also, he said, the issue is designed so prepayments of loans can be 3 times greater than the normal historical average. An agency safeguard is homeowner hazard isurance and private mortgage insurance. Mr. Chitton said that houses have to be committed for by individual home purchasers by January 1st in order to meet the deadline set forth in the report of the U11 man Committee. And, as long as the houses are built by Mr. Krasik, the developer, and are committed for by January 1st, then mortgages can dose escrow in April, May or June. If houses are not sold before January 1st, by virtue of the rules and committees report in the Ullman Committee, bonds for the amount not committed would have to be called. He expressed thanks for the opportunity of working on the project on which he has had the opportunity to enjoy such a successful financing. 00- Mr. Halt said the bond rate on this issue is excellent and Citizen Savings & Loan is to be applauded. He said that shortly after the Ultman Bill was introduced his firm was contacted by the Agency and asked if there was any way they could issue mortgage revenue bonds to finance the project. The agency staff went through the files and it wasn't very hopeful. Fortunately the $50.00 per Capita Transition Rule came out. They took another look and discovered a reference to SB 99 findings for this project and that the Redevelopment Agency had taken official action on April 18, 1979. He said that as long as something was done by April 24, 1979 the Agency had something going. He said, as timely action expressing an intent to establish a program was taken the Agency can issue mortgage revenue bonds in an amount equal to $50.00 per capita bond on the population for purposes of the 1976 Census revenue sharing program. He believed this to be the first use of the $50.00 per Capita Transition Rule. He stated that it would be necessary that Council/Agency sign affidavits prior to March 17th that it was their intent when they took that official action to establish such a program. The affidavits wi11 be filed with the Secretary of the Treasury in Washington D.C. Mr. Halt said that Agency Resolution No. 86 authorizes issuance of bonds, awards bonds to Citizen Savinas & Loan after they've established it in their purchase agreement. The Resolution structures financing, establishes a Trustee and provides how the Trustee is to purchase mortgage loans. The Trustee is Security Pacific Bank. It establishes how the mortgage lender is to provisionate loans, the documen- tation needed to present to the Trustee. The originator is Roger Post & Co. It contains a11 the rules with respect to default, what the Trustee is supposed to do and the basic structure of bond financing. Mr. Halt said that Agency Resolution No. 87 establishes rules and regulations for the program as required by SB 99. An important part is that it requires the person who purchases, to take advantage of this low interest rate, must be owner occupants and must file affidavits to that effect. Continued MR. HALL MORTGAGE REVENUE BONDS SB 99 AGENCY ACTION 4-18-79 AGENCY RES. NO. 86 PURPOSE AGENCY RES. NO. 87 PURPOSE BIB] 37656-U01 1980-U02 03-U02 13-U02 CC-U02 MIN-U02 JM-U02 LI1-U03 FO9591-U03 FO9592-U03 DO9651-U03 C4-U03 MINUTES1-U03 2/4/2003-U04 ROBIN-U04 JOINT-U05 SESSION-U05 CITY-U06 COUNCIL-U06 REDEVELOPMENT-U06 AGENCY-U06 1980 03 13 CC MIN JM;¢f4ÇžAdjourned Regular Meeting of the City Council March 13, 1980 of the City of Baldwin Park Page 4 He said the Resolution also approves 3 agreements: 1. Commitment Contract and Reservation of Funds. An agreement between developers, Mr. Krasik and the Agency. 2. Mortgage and Purchase agreement. An agreement between the Agency and the mortgage lender. The Agency acting again through the Trustee pursuant to which the mortgage lender agrees to follow a11 the rules and outlining the Agencies obligations. 3. Servicing agreement, Between the mortgage lender and the Trustee of the Agency. Mr. Hail said two other documents approved by the Resolution are: 1. Sellers Guide An aid to the mortgage lender. 2. Services Guide Direction to the mortgage lender in collecting monthly payments, etc. Mr. Hall explained that Council Resolution No. 80-18, is required by the Redevelopment Agency Law, by which the City Council approves the issuance by the Agency of the $2,245,000 principal on the Mortgage Revenue Bonds, 00- COUNCIL RES. NO. 80-18 PURPOSE In answer to Councilman McNeitI, Mr. Ftandrick said that LEGAL REVIEW all intents of the documents had been taken care of legally, OF DOCUMENTS 00- Councitman Aguilar asked, when an applicant comes in for a LOAN APPROVAL loan who wilt approve the application The Savings and Loan DENIAL PROCEDURE or the Agency? AND CITY COUNCIL RIGHTS Mr. De Dios said there will be two mechanisms after the builder and the buyer have gone through the escrow process the package will then be reviewed by Roger Post and then by M.S.I. If they comply they will be approved and forwarded to the Trustee, Security Bank, which will then purchase the loans on the Citys behalf. Councilman Aguilar asked if the Agency had the power to overrule their judgement. Mr. Hall said that if the mortgage lender made a mistake and approved a loan which did not meet the regulations, the Agency had the power to deny that loan. There would have to be a clear violation otherwise there would be problems. In a case where the lender denied the application, then it would become a question of whether or not the person did comply. Guide- lines cannot be changed and certain credit tests must be met. If the mortgage tender says this person is not going to be an owner/occupant and the buyer gives an affidavit to that effect, that would be a situation where the mortgage lender could be overruled. 00- Continued BIB] 37656-U01 1980-U02 03-U02 13-U02 CC-U02 MIN-U02 JM-U02 LI1-U03 FO9591-U03 FO9592-U03 DO9651-U03 C4-U03 MINUTES1-U03 2/4/2003-U04 ROBIN-U04 JOINT-U05 SESSION-U05 CITY-U06 COUNCIL-U06 REDEVELOPMENT-U06 AGENCY-U06 1980 03 13 CC MIN JM;¢f4ÇžAdjourned Regular Meeting of the City Council of the City of Baldwin Park March 13, 1980 Page 5 Councilman King said the owner would have two benefits the 10.5% interest rate and that this is not a sliding scale on the mortgage so therefore it is fixed, Mr. De Dios said the Agency can reduce the mortgage rate to lO^ and the entire financing wilt stilt work, but they were opting to using the 11% rate which is good for a11 the houses that are to be sold. 00- Mayor White said approving and denying loans is well established and anything denied here would be denied under this kind of financing. Mr. Hall said he would think so. Citizens will be reviewing the loans. They are simply supplying the money for purchasing the bonds. The Underwriters of the loans will be Roger Post Co. who have to comply with a11 the fair lending regulations the same as Citizen Savings does. They are not exempt from any state or federal regulations. 00- Councitman McNeill said the townhouse development will not be low cost housing because they will be $75,000 and up. People who do not qualify for a loan cannot buy one of the houses. Mayor White said the word would be affordable" and $75,000 at a 10% rate is affordable on the open market. He said SB 99 was a bill intended to provide affordable housing and that took advantage of certain types of rates and bond issuance so that interest rates would be held down. He questioned the reason why Congress did not want any more SB type Bonds issued. Mr. Hall said that the purpose of SB 99 is to provide a means for Redevelopment Agencies to provide long term low interest loans to attract persons of all incomes into redevelopment areas to make it their home. He said that something unfortunate happened to Redevelopment Agencies and SB 99 in the process. As the financing is tax exempt there is a tower interest rate paid on the loans and the Federal Government and the Treasury collect less money. Therefore the Treasury felt they had to do something to stop the proliferation. Congressman Uttman introduced Assembly Bill 3712 which is now in committee. Then 5741 was introduced which has been before the Rules Committee. If this housing bi11 dies we should have a good chance of completing the rest of this project with SB 99 financing. The Ultman Bill carries the date of introduction as the effective date. Rejection of 5741 wi11 not put the Agency in any disadvantage in issuing the 2^ million Bond as it meets the transitional. If Uttman is passed there is evidence in the Senate that the sentiment is to liberalize the Bi11. Mr. Sexton read by Title Agency Resolution No, 86 A RESOLUTION OF THE BALDWIN PARK REDEVELOPMENT AGENCY AUTHORIZING THE ISSUANCE OF RESIDENTIAL MORTGAGE REVENUE BONDS WEST RAMONA BOULEVARD PROJECT Continued 11% RATE PROPOSED COMPLIANCE WITH LENDING REGULATIONS AFFORDABLE HOUSING PURPOSE OF SB 99 REDEVELOPMENT AGENCY RES. NO. 86 AUTHORIZE ISSUANCE RESIDENT MORTGAGE REVENUE BONDS W. RAMONA PROJECT BIB] 37656-U01 1980-U02 03-U02 13-U02 CC-U02 MIN-U02 JM-U02 LI1-U03 FO9591-U03 FO9592-U03 DO9651-U03 C4-U03 MINUTES1-U03 2/4/2003-U04 ROBIN-U04 JOINT-U05 SESSION-U05 CITY-U06 COUNCIL-U06 REDEVELOPMENT-U06 AGENCY-U06 1980 03 13 CC MIN JM;¢f4ÇžAdjourned Regular Meeting of the City Council of the City of Baldwin Park March 13, 1980 Page 6 WAIVE FURTHER READING AND ADOPT AGENCY RESOLUTION NO. 86. M/S/C: AGUILAR/KING. ROLL CALL. There were no objections. AGENCY RES. NO. 86 ADOPTED 00- Mr. Sexton read by Title Agency Resolution No. 87 A RESOLUTION OF THE BALDWIN PARK REDEVELOPMENT AGENCY APPROVING RULES AND REGULATIONS RELATING TO ITS RESIDENTIAL MORTGAGE FINANCING PROGRAM WAIVE FURTHER READING AND ADOPT AGENCY RESOLUTION NO. 87. M/S/C: AGUILAR/MCNEILL. ROLL CALL. There were no objections. 00- Mr. Sexton said he had in his possession five executed copies of the required Affidavits from each member of the City Council/Redevelopment Agency complying with the Secretary of the Treasury filing requirements. REDEVELOP AGENCY RES. NO. 87 APPROVE RULES/ REGULATIONS RE MORTGAGE PROGRAM AGENCY RES. NO. 87 ADOPTED AFFIDAVITS SECRETARY OF TREASURY AUTHORIZE THE EXECUTIVE DIRECTOR OF THE REDEVELOPMENT AGENCY TO CONTINUE NEGOTIATING FOR THE ACQUISITION OF THE PROPERTY W. RAMONA BLVD. PROJECT) AND TO SET THE PUBLIC HEARING, NECESSARY NOTICE BEING GIVEN, FOR THE CONDEMNATION RESOLUTION, SHOULD THAT BE NECESSARY. M/S/C: KING/IZELL. There were no objections. AUTHORIZE DIR. NEGOTIATE FOR W. RAMONA PROPERTY ADVERTISE SET PUBLIC HEARING 00- City Clerk Batkus read by title Council: RESOLUTION NO. 80-18 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF BALDWIN PARK APPROVING THE ISSUANCE BY THE BALDWIN PARK REDEVELOPMENT AGENCY OF RESIDENTIAL MORTGAGE REVENUE BONDS, ISSUE OF 1980, IN A PRINCIPAL AMOUNT NOT TO EXCEED $2,245,000 WEST RAMONA BOULEVARD REDEVELOPMENT PROJECT) COUNCIL RES. N0.80-16 APPROVE AGENCY ISSUANCE OF BONDS 1980 ISSUE $2,245.000 W. RAMONA WAIVE FURTHER READING AND ADOPT COUNCIL RESOLUTION NO. 80-18. M/S/C: KING/AGUILAR. ROLL CALL. There were no objections. 00- AT 7:52 P.M. THE CITY COUNCIL AND THE AGENCY MEETING ADJOURNED. M/S/C: MCNEILL/IZELL. There were no objections. RES. NO. 80-18 ADOPTED 7:52 P.M. ADJOURNMENT r rHELMA L. BALKUS, CITY CLERK————— APPROVED: 1979 Date of Distribution to Council: Date of Distribution to Departments: BIB] 37656-U01 1980-U02 03-U02 13-U02 CC-U02 MIN-U02 JM-U02 LI1-U03 FO9591-U03 FO9592-U03 DO9651-U03 C4-U03 MINUTES1-U03 2/4/2003-U04 ROBIN-U04 JOINT-U05 SESSION-U05 CITY-U06 COUNCIL-U06 REDEVELOPMENT-U06 AGENCY-U06