HomeMy WebLinkAbout1995-07-11; City Council; 13236; RESERVATION OF FUNDS FOR AFFORDABLE HOUSING_, .
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i! 9 I/ I Chy OF CARLSBAD - AGEND BILL
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CITY MGR. 4 DEPT. FINANCE
CITY Am. c (2 FOR AFFORDABLE HOUSING MTG. 07/11 /95
DEPT. HD? 1. TITLE:
RESERVATION OF FUNDS
RECOMMENDED ACTION:
Adopt Resolution No. ‘3 5 -1 q? directing staff to reserve the money received from the
defeasance of the 1983 Mortgage Revenue bonds for future affordable housing
projects.
ITEM EXPLANATION:
On September 6, 1994, City Council authorized staff to sell the mortgages securing the
outstanding 1983 single family residential mortgage revenue bonds and to use the
proceeds of the sale to redeem the bonds. At the same meeting, staff indicated that
upon successful completion of the transactions, we would report back to Council to
obtain direction as to the use of the proceeds.
The sale of the mortgages was successfully completed on September 9, 1994 and the
bonds were redeemed as of the October 1 payment date. As a result of the
transaction, the City has received a net of $524,000 which is slightly higher than the
original estimate of $490,000. The final accounting of the transaction is attached as
Exhibit 2.
There are no restrictions on the use of these proceeds. They may be used for any
lawful purpose as directed by the City Council. Thus, assuming the City has no
immediate need for these funds, the Council has the following options:
1. Set UD reserve in qeneral fund for affordable housina Droiects: As the funds were
generated through an affordable housing program, Council may wish to keep them
in the general fund but reserve them for future affordable housing projects. In this
manner Council can keep the funds segregated until an appropriate use for them
is determined. This manner of segregating the funds also gives the Council the
most flexibility over the ultimate use of the money.
2. Deposit funds into the City’s Housinq Trust Fund: The Housing Trust Fund was set
up to receive all housing in-lieu and impact fees and other housing-related receipts.
The Trust Fund can only be used for the purpose of providing funding assistance
for the provision of affordable housing units .consistent with the policies and
programs contained in the Housing Element of the General Plan and the
lnclusionary Housing Ordinance. The deposit of the proceeds into this fund would
insure that the funds were spent for affordable housing needs; however, it is more
restrictive in its allowable use of the funds than a reservation of the general fund.
Also, the nature of the money would become mixed with all funds provided by the
housing in-lieu program.
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Page 2 of Agenda Bill No. / 3,236
3. Deposit the funds into the General fund without reservinq them: This would increase
the available General fund balance by $524,000 in 1994-95. These funds could then
be designated for use by Council at any time in the future for any legal use.
Staff is recommending Option 1 because it gives the Council the most flexibility in the
use of the money while earmarking it for affordable housing which was the program
wLh generaled the funds.
This additional revenue could be used in a variety of programs which would assist in the
production of affordable housing in the City, particularly homeownership programs.
Since the funds were generated through use of an affordable housing financing tool that
promoted homeownership, staff believes it would be appropriate for the City to recycle
these funds into similar programs.
FISCAL IMPACT:
The defeasance of the 1983 single family mortgage revenue bonds resulted in net
revenues to the City of $524,000. Exhibit 2 shows the details of the transaction.
As the money was received in 1994-95, it will be reflected in the revenues of the General
fund for that year. Under Option 1, the funds will be shown as a "reserve" of the General
fund balance in 1994-95 and thereafter until the money is spent. Option 2 would also
show the funds as reserved in 1994-95 and then a transfer would be made in 1995-96
to the Affordable Housing Trust fund. For Option 3, the unreserved fund balance of the
General fund would be increased by the $524,000 in 1994-95 which would carry over into
1995-96.
EXHIBITS:
1. Resolution No. 9 4 - 19 3 directing staff to reserve the money received from the
defeasance of the 1983 Mortgage Revenue bonds for future affordable housing
projects.
2. 1983 Single Family Mortgage Revenue Bonds - Final Accounting
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RESOLUTION NO. 95-197
RESOLUTION OF THE CITY COUNCIL OF THE
CITY OF CARLSBAD, CALIFORNIA, AUTHORIZING
THE RESERVATION OF $524,000 FOR AFFORDABLE
HOUSING PROGRAMS
WHEREAS, on September 6, 1994, City Council authorized the sale of the
mortgages securing the outstanding 1983 single family residential mortgage revenue
bonds and the redemption of these bonds with the proceeds; and
WHEREAS, the sale of the mortgages was successfully completed on
September 9,1994 and the bonds were redeemed as of the October 1 payment date; and
WHEREAS, as a result of the transaction, the City has received approxjmately
$524,000; and
WHEREAS, the proceeds may be used for any lawful purpose as directed
by the City Council.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of
Carlsbad, California as follows:
1. That the above recitations are true and correct.
2. That the City Council does hereby reserve the proceeds from the
defeasance of the 1983 Single Family Mortgage Revenue Bonds in the amount of
$524,000 for affordable housing purposes.
PASSED, APPROVED AND ADOPTED at a regular meeting of the City
Council on the J&h day of JULY , 1995, by the following vote, to wit:
AYES: Council Members Lewis, Kulchin, Finnila, Hall
NOES: None
ABSENT: Council Member Nyga
ATTEST:
ALETHA L RAUTEN
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ALETHA L RAUTEN
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(SEAL)
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* a City of Carlsbad EXHIBIT 2
1983 Single Family Mortgage Revenue Bonds
Final Accounting
Par amount of mortgages as of August 19, 1994 71 2,955
Bid Amount 93.63% Net price 007J47
Plus: Accrued interest 7,701
Total due from purchaser
Plus: Amounts held by Trustee
Total Available
Less:
Payment to escrow (call bonds)
Payment of legal counsel and financial advisor
Payment of trustee fees and expenses
675,248
29,898
705,146
(1 17,987)
(60,000)
(2,483)
Balance to City 524,676
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