HomeMy WebLinkAbout1999-09-21; City Council; 15403; Lease To Own Housing Program.
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CITY OF CARLSBAD - AGENDA BILL
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VITG. %!I 0 f 9 AUTHORIZATION TO PARTICIPATE IN SAN DIEGO
AREA HOUSING AND FINANCE AGENCY’S LEASE-TO-
OWN HOUSING PROGRAM 3EPT. H/RED
RECOMMENDED ACTION:
That the City Council ADOPT Resolution No. %f-33dAPPROVlNG the agreement by and between the
City of Carlsbad and the San Diego Area Housing and Finance Agency, a Joint Powers Authority, for the
purpose of creating a Lease-to-Own Housing Program as recommended for approval by the Housing
Commission.
ITEM EXPLANATION
General Overview
The City of Carlsbad has been invited to participate in the San Diego Area Housing and Finance Agency’s
proposed residential Lease-to-Own Program. This Program is in the process of being created to assist
those home buyers who are able to make monthly house payments but are unable to save enough money
for the required down payment and closing costs associated with the purchase of a home. The program
will provide the down payment and closing costs for eligible Participants.The San Diego Area Housing and
Finance Agency will be established as a Joint Powers Authority (JPA) that will provide a pool of money for
home-buying opportunities for households earning up to a maximum income equal to or less than 140% of
the Area Median Income (AMI). The pool of money to fund the Program will be created through the
issuance of tax exempt bonds. The JPA will be entirely responsible for repayment of the bonds and full
administration of the Program. The City will have no financial obligation or out-of-pocket expenses related
to operation of the Program.
How Does the Proqram Work?
Operation of the Program will follow the typical real estate transaction process. A Program participant will
make an offer on a home, qualify for a loan and continue through the escrow process similar to a typical
purchase transaction. The project differs from the standard transaction in that, at the close of escrow, the
JPA will own the home/property and initially assume the 30-year mortgage on the property. For the first
three years, the qualified Program Participant will lease the property from the JPA at a lease payment
equal to the monthly mortgage payment. Upon completion of the lease period, the Participant’s credit
worthiness will be re-evaluated and, if satisfactory, the Participant will assume the mortgage from the JPA
for the remaining 27-year term of the loan and become a home owner.
As stated above, the Participants must be Ye-qualified” by the lender immediately prior to assumption of
the mortgage. This is to ensure that the Participant continues to meet the lender’s creditworthiness
standards at the end of the lease period. The lender will typically charge a mortgage assumption fee of
approximately $250 and process the assumption agreement. If the Participant does not continue to qualify
at the end of the three year lease period, the lease arrangement can be extended in order to allow the
Participant the opportunity to correct those items that caused the disqualification. It is important to also
note that the Participant can be removed from the property if he/she fails to meet the conditions of the
lease or is unable to demonstrate the ability to make the required housing payments. In order to enhance
success rates for conversion of renters to home owners, all Participants will be required to complete a
home ownership education program.
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Elinibilitv for the Prooram
The Program is not limited to first-time home buyers. The Program will be available to home buyers in all
participating jurisdictions. To date, the Cities of El Cajon, National City, Santee, Vista and the County of
San Diego have approved the concept and formation of the JPA to implement the subject Program. In the
upcoming month, the Cities of Escondido, Poway and San Diego will also consider participation in the
Program. At this time, staff is requesting that the City Council take action to authorize the City’s
participation in the subject Program and related JPA in order to make potential home buyers in Carlsbad
eligible for participation in the Program.
As the Program is currently recommended for approval, the potential home buyer must have a household
income which does not exceed 140% of the AMI and must be able to qualify for a loan to purchase the
desired home/property. In addition, the purchase price of the desired home may not exceed a maximum of
$240,000. The Program requires Participants to pay a participation fee equal to 2% of the sales price of
the home. A maximum of 50% of the participation fee may come from a gift or grant.
Housinn Commission Recommendation
At their meeting on August 12, 1999, the Housing Commission recommended (4-O) that the City Council
approve the City’s participation in the subject Program and the related Joint Powers Agreement. Although
staff recommended that participation in the Program be limited to households with incomes which do not
exceed 120% of the AMI, it is the Commission’s recommendation that the Program be available to
households earning up to 140% of AMI as originally proposed by the San Diego Area Housing and Finance
Agency. It was the Commission’s consensus that the higher income limit will maximize the Program’s
effectiveness in Carlsbad.
FISCAL IMPACT:
The financial impact to the City related to participation in the subject program will be minimal. The
proceeds of the bond issuance will pay for all costs associated with the formation and implementation of
the Program by the JPA. The Program will require a limited amount of City staff time in the form of
answering questions from the public and attendance at occasional Program meetings. Participation in the
Program may also require a Councilmember to attend JPA meetings. However, it is anticipated that once
the Program is fully operational, there will no more than two to four annual meetings of the JPA members.
EXHIBITS:
1. City Council Resolution No. 39 -3’6 approving the agreement by and between the City of Carlsbad
and the San Diego Area Housing and Finance Agency to implement a residential lease-to-own
program.
2. Lease-To- Own Program Summary
3. Draft Joint Powers Agreement
4. Housing Commission Staff Reports dated July 8, 1999 and August 12, 1999.
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CITY COUNCIL RESOLUTION NO. 98-J-z
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
CAIUSBAD, CALIFORNIA, AUTHOIUZJNG THE CITY OF
CARLSBAD’S PARTICIPATION IN THE SAN DIEGO AREA
HOUSING AND FINANCE AGENCY’S LEASE-TO-OWN
HOUSING PROGRAM, AND APPROVAL OF THE
EXECUTION OF THE RELATED JOINT POWERS
AUTHORITY AGREEMENT
WHEREAS, the City of Carlsbad seeks to promote home ownership to improve the City’s
housing stock and to further economic development for the welfare of its residents; and
WHEREAS, the Housing Element seeks to provide a variety of housing opportunities for
households of all income levels; and
WHEREAS, there is a growing need for the City to find new cooperative ways to develop
programs that will increase home ownership opportunities and improve community life; and
WHEREAS, the San Diego Area Housing & Finance Agency is a cooperative approach
between cities that will increase home ownership and thereby improve the quality of community life
for those cities participating in the Agency; and
WHEREAS, the City of Carlsbad will further its goal of home ownership within the
community through membership in the San Diego Area Housing and Finance Agency; and
WHEREAS, on July 8, 1999 and August 12, 1999, the Housing Commission held a public
meeting to consider City participation in said Lease-to-Own Housing Program; and
WHEREAS, at said public meeting on August 12, 1999, upon hearing and considering all
testimony, if any, of all persons desiring to be heard, the Housing Commission recommended that the
City Council approve participation in said Lease-to-Own Housing Program with participation in
said Program limited to households with incomes which do not exceed 140% of the Area
Median Income.
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CC Resolution No.-
Page 2
NOW, THEREFORE, BE IT HEREBY RESOLVED by the City Council of the City of
Carlsbad, California, as follows:
1. The above recitations are true and correct.
2. The Program is consistent with the goals and objectives of the City of Carlsbad’s Housing
Element, the Consolidated Plan, and the Carlsbad General Plan in that it will provide home
buyer assistance for moderate and upper income households within the City of Carlsbad.
3. As recommended by the Housing Commission, the project will provide home buying
opportunities to households earning up to 140% of the Area Median Income. The Program,
therefore, has the ability to effectively serve the City’s housing needs as expressed in the
Housing Element.
4. That the City Council hereby approves the City of Carlsbad’s participation in the San Diego
Area Housing and Finance Agency’s residential Lease-to-Own Program, and approves the
agreement for membership of the City of Carlsbad in the related Joint Powers Authority for
implementation purposes, in substantially the form presented and subject to final approval by
the City Attorney.
5. That the City Council hereby authorizes the City Manager or assigned designee to execute all
documents required for participation in said residential Lease-to-Own Program, including but
not limited to the Joint Exercise of Powers Agreement which creates the San Diego Area
Housing and Finance Agency, in substantially the form presented and subject to review and
final approval by the City Attorney.
PASSED, APPROVED, AND ADOPTED at a regular meeting of the City Council of
the City of Carlsbad, California, held on the 21 st dayof September , 1999 by the following
vote, to wit:
AYES: Council Members Lewis, Nygaard, Finnila, Hall & Kulchin
NOES: None
ABSENT: None
ABSTAIN: None
ATTEST:
KAREN R. KUNDTZ, Assistant City Clerk
(SEAL)
J. K. C .- :LTON
&
ASSOCIA%, INd%HIBIT 2
MEMBERNASD INVESTMENTBANKERS
Executive Summary
Lease Purchase Affordable Housing Program
Housing affordability is often identified as the number one barrier to home-ownership. Lack
of an adequate dowi payment is second. According to a LU 8: H Sept. 1997 TAC Report. 6870 of
San Diego‘s population cannot afford the median priced home ($232.000) in the tit\.. Because of the
high price. lack of adequate down pal;ment funds (Y&20%) for traditional mortgage requirements
is also a significant barrier to homeovnership. For bu>.ers making 110% of median income or abo1.e.
the TAC Report indicates there is a severe shortage of home purchase financing assistance
programs.
The Chilton lease purchase affordable housing program now provides that missing
opportuni~. The most attractive public benefits of this program include a one percent do\\n
payment feature. qualifying household income up to 140% of the count?- median (apps. $73.000).
and the ability to accept less than perfect credit from applicants.
Here is a brief program summar)-:
l Freddie Mat makes a commitment to purchase all mortgages originated by the program. . A joint powers authority from participating governments is created which issues tax esempt bonds. that
traditiona@ have been rated &iA.
. The bonds are not a municipal obligation. Bonding is not subject to the State Bond Allocation
Committee approval.
. No tip personnel will staff the JPA. No financial contribution is required by local governments to join
the JPA. Bond proceeds are reserved from the issuance for operation. sting. marketing and management of the JPA.
l Eligible housing may be new or existing. single family or condominiums. and must be onner-occupied.
In 1998. more than 18.000 units qualified in San Diego for this program.
l Lease purchase buyers find a home working with a Realtor or on their onn. They are underwitten b!
the lender and JPA staff using Freddie Mat guidelines. . An offer is made and traditional escrow closing occurs. Operationally. the JPA purchases the home and
takes title using bond funds. The JPA then esecutes a lease option to the consumer concurrent with the
close of e&crow for three years with lessees paying one percent of the purchase price down. Month&
lease payments cover PITI on the mortgage also.
l Participating lenders provide take-out financing as long term mortgages to the JPA to repay the bond
moneys used. The lenders then sell these mortgages to Freddie Mat. . At the conclusion of the three year lease the JPA transfers title to the lessee. after they are re-
underwritten. who then becomes the owner of record and assumes the 27 year balance of the fixed rate
mortgage from the JPA.
To date. two other JPA‘s are active including 26 cities in California. All startup costs for
this program are privately funded by the bond undenv-riters. legal team. lenders and insurers. Their
espenses are recovered at the bond sale.
This is a niche program designed for the 120%140% of median population and
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EXHIBIT 3 1
JOINT EXERCISE OF POWERS AGREEMENT
CREATING THE SAN DIEGO AREA HOUSING & FINANCE AGENCY
Dated as of March 1,1999
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JOINT EXERCISE OF POWERS AGREEMENT
CREATING THE SAN DIEGO AREA HOUSING & FINANCE AGENCY
This Joint Exercise of Powers Agreement (the “Agreement”), dated for convenience as
March 1, 1999, is made and entered into by the signatories hereto, each a public entity duly
organ&d and existing under the Constitution and laws of the State of California (each a
“Member” or a “City” or “County” and, collectively, the “Members”).
RECITALS
WHEREAS, the Members are each authorized and empowered to provide home mortgage
loans to qualified persons and families; finance the construction, rehabilitation, acquisition, lease,
and sale of housing; promote economic development; finance other capital improvements; and
issue revenue bonds to provide the fknds’therefor; and
WHEREAS, Chapter 5 of Division 7 of Title 1 of the California Government Code
(commencing at Section 6500) (the “Act”) provides that two or more public agencies may by
agreement jointly exercise any powers common to the parties to the agreement and may by that
agreement create an entity which is separate from the parties to the agreement; and
WHEREAS, the parties to this agreement have each determined (1) that the public
interest and economy will be served by, and require, the joint exercise of their common powers
and (2) that a separate agency shall be created which shall have and exercise those powers
common to the Members;
NOW, THEREFORE, for and in consideration of the mutual benefits and premises
contained herein, the Members agree as follows:
> ARTICLE 1
DEFINITIONS AN-D INTERPRETATION
Section 1 .Ol . Definitions. Unless the context otherwise requires, the terms defined in
this Section shall have the meanings herein specified for all purposes of this Agreement.
Agencv
The term “Agency” shall mean the San Diego Area Housing & Finance Agency created
by this Agreement.
Agreement
The term “Agreement” shall mean this Joint Exercise of Powers Agreement as it now
exists or as it may from time to time be amended, supplemented or modified by the addition of
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signatory parties or by any supplemental agreement or amendment entered into pursuant to the
provisions hereof.
Associate Member
The term “Associate Member” shall mean those Members identified as such in Section
3.03, and which shall not be entitled to appoint a representative to serve on the Board.
Board
The term “Board” shall mean the governing board of directors of the Agency as described
in Article 8 hereof.
Bonds
The term “Bonds” shall mean revenue bonds, notes, certificates of participation, or other
evidences of indebtedness of the Agency, authorized and issued pursuant to law.
Members
The term “Members” shall mean the governmental entities jointly exercising power
through, and which are signatory to, this Agreement, and shall include both Voting Members and
Associate Members. The Members may also be referred to as the “Cities” or “Counties”.
Program
The term “Program” shall mean the Agency’s activity of furthering home ownership in
the geographical area of the Members signatory to this Agreement and of financing other capital
improvements, through the sale of revenue bonds, the purchase, construction or rehabilitation of
housing or other capital improvements, the entering into of leases, the_ sale of housing, the
provision of low-down-payment mortgages for buyers, and the exercise of any other powers
available to the Agency under Article 2 or Article 4 of the Act.
Voting Members
The term “Voting Members” shall mean those Members identified in Section 3.02 as
such, and which shall be entitled to appoint a representative to serve on the Board as a voting
member.
Section 1.02. Cantions and Headings. Captions and headings used herein are for
convenience of reference only, do not define or limit the scope of any provision hereof, and are
not to be considered in construing this Agreement.
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ARTICLE 2
PURPOSE
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Section 2.01. Purooses of Aareement and Agency. This Agreement is made pursuant to
the Act for the joint exercise of certain powers common to the Members. The Members are
empowered by the laws of the State of California to exercise powers as specified in the Recitals.
It is also the purpose of this Agreement to provide for the inclusion at a subsequent date of such
additional Members as may desire to become signatories to this Agreement and members of the
Agency. The purpose of the Agency is to carry out the Program for the public good and for the
residents who will benefit from the increased availability of housing affordable for purchase by
them.
ARTICLE 3
MEMBERSHIP; WITHDRAWAL
Section 3.01. Contract With All Other Members. Each Member certifies that it intends
to and does contract with all other Members which are signatories to this Agreement and with
such other Members as may later be added as signatories to this Agreement. Each Member also
certifies that the deletion of any Member as a party to this Agreement, except as a joint effort to
terminate the Agreement pursuant to Section 7, shall affect neither this Agreement nor its intent
to contract with the remaining Members to carry out the purpose of this Agreement. All
Members to this Agreement acknowledge and agree that additional parties may become
Members to this Agreement without formal amendment hereof, by the execution of a counterpart
signature page.
Section 3.02. Voting Members. The Voting Members of the Agency are listed on
Exhibit A, attached hereto, and shall be entitled to appoint a City Councilmember, a member of
the Board of Supervisors or a staff member to serve on the Board.
‘Section 3.03. Associate Members. The Associate Members of the Agency are listed on
Exhibit B, attached hereto, and shallnot be entitled to appoint a City Councilmember, a member
of the Board of Supervisors or a staff member to serve on the Board, and shall not have voting
power on such Board.
Section 3.04. Withdrawal. Members of the Agency may withdraw from membership in
the Agency at any time upon thirty (30) days’ advance written notice, subject to the following
exceptions:
(a) the restriction on withdrawal contained in Section 7.01 hereof; and
0) a Member may not withdraw for so long as bonds or other obligations of
the Authority issued pursuant to and under the Program are outstanding, but only if the proceeds
of such bonds or other obligations were used to make loans or finance a project within the
jurisdiction of such Member.
ARTICLE 4
CREATION OF THE AGENCY
Section 4.01. Creation of the Agency. There is hereby created a joint exercise of powers
authority to be known as the San Diego Area Housing & Finance Agency. The Agency shall be
a public entity separate from the Members. The debts, liabilities, and obligations of the Agency
shall not constitute debts, liabilities, or obligations of any Member.
ARTICLE 5
POWERS OF THE AGENCY; RESTRICTION UPON EXERCISE
Section 5.01. Powers of the Agencv. The Agency shall have all powers common to the
Members and is hereby author&d to do all acts necessary for the exercise of said common
powers, including, but not limited to, the following:
(a) the power to make and enter into contracts;
(b) the power to accept the assignment of contracts which relate to the
purposes of the Agency and which were entered into by the Members prior to formation
of the Agency;
(4 the power to incur debts, liabilities, or other obligations which are not
debts, liabilities or obligations of the Members, or any of them;
(d) the power to employ agents and employees;
(4 the power to acquire, construct, manage, maintain, and operate any
“building, works or improvements;
0 the power to-acquire, hold, lease (as lessor or lessee), or dispose of
property, including property subject to home mortgages;
k) the power to sue and be sued in its own name;
(h) the power to incur debts, liabilities or other obligations to finance the
Program and any other powers available to the Agency under Article 2 or Article 4 of the
Act; and
(0 all powers necessary and proper to carry out the terms and provisions of
this Agreement, or otherwise author&d by law.
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Section 5.02. Membershin Agreements. The Agency shall have the power to enter into
membership agreements with any public agency upon the approval of the Board.
Section 5.03. Other Powers. Each Member agrees that:
(4 all of its powers to acquire, construct, rehabilitate, finance, lease, or
dispose of property may be exercised by the Agency;
(b) the Agency may originate or acquire home mortgages with respect to
properties within its geographical boundaries to further the Agency’s Program; and
(c) its grant of power to the Agency is to further the purposes of the Agency
and this Agreement and shall not be deemed to limit its power to act independently of the
Agency.
Section 5.04. Restrictions. The powers of the Agency shall be exercised subject only
to the restrictions upon the manner of exercising such powers as are imposed upon the City of
) California, as provided in Section 6509 of the Act.
Section 5.05. Investments. Subject to the applicable provisions of any indenture or
resolution providing for the investment of moneys held thereunder, the Agency shall have the
power to invest any money in the treasury that is not required for the immediate necessities of the
Agency, as the Agency determines is advisable, in the same manner as local agencies pursuant to
California Government Code Sections 53601 et seq.
ARTICLE 6
COOPERATION
Section 6.01. Additional Proceedings and Actions. Each Member agrees to undertake
such additional proceedings or actions as may be necessary in order to carry out the terms and the
intent of this Agreement. w
Section 6.02. Actions Affecting Ratings. Each Member further agrees to refkin from
taking any actions which would, to its knowledge, tend to adversely affect the rating on any
Bonds sold or to be sold to further the Program of the Agency. The exercise by any Member of
its independent power to issue bonds or other indebtedness shall not be within the restrictions of
the preceding sentence.
ARTICLE 7
TERMINATION OF POWERS; DISTRIBUTION OF ASSETS
Section 7.01. Termination. The Agency shall continue to exercise the powers herein
conferred upon it until the earlier of March 1, 2049 or such time as all Members shall have
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mutually agreed to terminate this Agreement. However, if any Bonds shall have been issued and
are outstanding, then neither this Agreement nor the powers granted hereunder shall terminate,
and Members benefiting from such Bonds, directly or indirectly, shall not withdraw from the
Agency, until all such Bonds and the interest thereon shall have been paid or provision for such
payment shall have been made.
Section 7.02. Distribution of Assets.
(a) In the event that Bonds are not issued, upon termination of this Agreement, all
assets of the Agency shall be distributed to the respective grantors or assignors in proportion to
their respective contributions.
@O In the event that Bonds are issued and following payment of all principal and
interest on the Bonds, or following the provision therefor, upon termination of this Agreement,
one half of all assets of the Agency shall be divided equally among the Voting Members, and the
other half of the Agency’s assets shall be divided pro rata among all Members, based on
participation in the Program.
Section 7.03. Continued Existence of Aaencv. Upon termination, this Agreement and
the Agency shall continue to exist for the limited purpose of distributing the assets of the Agency
and all other functions necessary to close out the affairs of the Agency.
ARTICLE 8
GOVERNING BOARD
Section 8.01. Board of Directors. The Agency shall be governed by a Board of
Directors consisting of one City Council member, member of the Board of Supervisors or staff
member (each, a “Director,” and collectively, the “Board”) from each of the Voting Members.
Each of the initial Directors shall be approved by their respective city councils forthwith upon
approval of this Agreement, and each shall serve at the pleasure of his or her respective city
council or board of supervisors. -
Section 8.02. Alternates. The city council or board of supervisors of each Voting
Member shall appoint one alternate to the Board of Directors, who shall be a member of the city
council or the board of supervisors or of the staff of such city or county. When the Director from
any Voting Member is not present at a Board meeting, the alternate director appointed by such
Voting Member may serve in his place with the same authority as a Director.
Section 8.03. Comnensation and Exnenses. Directors may receive compensation for
their services pursuant to an author-king resolution of the Board providing therefor. Each
member may be reimbursed for actual expenses, including travel incident to service as a
Director, pursuant to an author-king resolution of the Board.
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ARTICLE 9
MEETINGS OF THE BOARD
Section 9.01. Regular Meetings. The Board shall hold at least one regular meeting each
fiscal year and, by resolution, may provide for the holding of regular meetings at more frequent
intervals. The regular meetings of the Board shall be held in the offices of one of the Voting
Members or at such other place and upon a date and hour as may be fixed from time to time by
resolution of the Board.
Section 9.02. Snecial Meetings. Special meetings of the Board may be called in
accordance with the provisions of California Government Code Sections 54950 et seq. All
meetings of the Board shall be called, noticed, held and conducted subject to the provisions of
the Ralph M. Brown Act, being Sections 54950 et seq. of the California Government Code.
Section 9.03. Minutes. The Secretary of the Agency shall cause minutes of all meetings
of the Board of Directors to be kept and shall, as soon as practicable after each meeting, cause a
copy of the minutes to be distributed to each member of the Board and to each Member.
Section 9.04. Ouorum. The attendance of a majority of the Board shall constitute a
quorum for the transaction of business. A majority vote of those in attendance shall be necessary
to take Board action, except that less than a quorum may adjourn a meeting from time to time.
Section 9.05. Each member of the Board shall have one vote. Voting.
ARTICLE 10
OFFICERS; DUTIES
Section 10.01. Chairnerson, Vice-Chairnerson and Secretarv. The Board shall elect a
Chairperson, a Vice Chairperson, and a Secretary of the Agency from among its members, who
shall each serve a term of two years. w
60 The Chairperson shall preside at all meetings, sign documents as may be
necessary for the proper functioning of the Agency, and perform such other duties as may
be imposed by the Board of Directors.
(b) The Vice Chairperson shall take the place of the Chairperson in the
absence of the Chairperson and perform such other duties as may be imposed by the
Board of Directors.
Cc) The Secretary shall cause minutes to be kept of all meetings and to be
distributed to the Members and each of the members of the Board of Directors and
perform such other duties as may be imposed by the Board of Directors.
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Section 10.02. Treasurer-Controller. The Treasurer-Controller of the Agency shall be
the Treasurer of the
the Board. of, California, or such other person or entity designated by
(4 Subject to the applicable provisions of any Bond indenture or resolution
providing for a trustee or other fiscal agent, the Treasurer-Controller shall have custody
of all the money of the Agency, from whatever source, and, as such, shall have the
powers, duties and responsibilities specified in Section 6505.5 of the California
Government Code.
Co) The Treasurer-Controller of the Agency is designated as the public officer
or person who has charge of, handles, or has access to any property of the Agency, and as
such, shall file a fidelity bond with the Secretary of the Agency in an amount to be fixed
by the Board. The cost of such bond shall be a proper charge against the Agency. To the
extent permitted by an existing fidelity bond, the Treasurer-Controller may satisfy this
requirement by filing a fidelity bond obtained in connection with another public o&e, if
the amount of that bond equals or exceeds the bond amount established by the Board of
Directors.
ARTICLE 11
FISCAL YEAR
The fiscal year of the Agency shall be the period from July 1 of each year through and
including the following June 30; provided, however, that if the date of this Agreement is other
than any July 1, the first fiscal year shall be the period from the date of this Agreement through
and including the following June 30.
ARTICLE 12 z ADMINISTRATION
Section 12.01. Administrative Entitv. In accord with Section 6506 of the California
Government Code, the initial administrative entity of the Agency shall a California nonprofit
corporation established or selected for such purpose.
Section 12.02. Duties of Administrative Entitv: Delegation. The administrative entity
shall be responsible for implementation of the Program of the Agency. In carrying out its
responsibilities for administration of the Program, the administrative entity may contract with
others, deemed by it to be qualified, to perform some or all of the administrative functions
required for implementation of the program.
Section 12.03. Renlacement of Administrative Entity. The Board may change the
administrative entity at its discretion.
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Section 12.04. Annointment of Underwriter. J. K. Chilton & Associates, Inc. is hereby
appointed as underwriter of the Bonds issued by the Agency.
ARTICLE 13
BONDS
Section 13.01. Issuance of Bonds. The Agency shall have the power to issue Bonds or
other forms of indebtedness authorized by law, at any time, for the purpose of raising funds
necessary to carry out its powers and purpose under this Agreement.
ARTICLE 14
AGREEMENT NOT EXCLUSIVE
Section 14.01. Agreement Not Exclusive. This Agreement is not the exclusive means
by which the Members may perform duties relating to housing imposed by law. Each of the
Members reserves the right to carry out other housing financing programs, to issue other
obligations, and to form other joint powers authorities to perform such duties.
Section 14.02. Affect On Other Agreements. This Agreement does not alter or modify
the terms of other agreements which may exist between the Members except as expressly
provided herein.
ARTICLE 15
CONTRIBUTIONS, ADVANCES, PRIOR EXPENSES
Section 15.01. Contributions and Advances. Contributions or advances of public funds
and of personnel, services, equipment or property may be made to the Agency by any Member
for any of the purposes of this Agreement. Funds collected from participating developers,
lenders, or others may be used to defray the cost of any such contribution. An advance may be
made subject to repayment and in such case shall be repaid if subsequently approved by the
Agency. If the repayment is approved by the Agency, the manner of repayment shall be as
agreed upon by the contributing Member and the Agency at the time of the advance.
Notwithstanding any other contrary provision of this Agreement, no Member shall be obligated
to make contributions to the Agency, except as may be required pursuant to Section 16.02 or
Section 18.02 hereof.
Section 15.02. Exnenses. Expenses incurred prior to a Bond sale, such as the costs of a
Bond rating, printing an official statement and a preliminary official statement, a market study, a
feasibility study, attorneys’ fees, or other prior expense, shall be charged as costs of issuance of
the bonds, payable from the proceeds of the sale of such Bonds.
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ARTICLE 16
ACCOUNTING AND REPORTING
Section 16.01. Accounting: Insnection bv Members. The Agency shall establish and
maintain such funds and accounts as may be required by generally accepted accounting practice
and by any provision of any resolution or indenture securing the Bonds of the Agency. The
books and records of the Agency shall be open to inspection by the Members at a reasonable
times.
Section 16.02. Annual Audit. The Agency shall be responsible for the strict
accountability of all funds and the reporting of all receipts and disbursements. Pursuant to
Section 6506 of the Act, the Agency shall cause an independent audit by a certified public
accountant to be made of its books and accounts each year. The minimum requirements of the
audit shall be those prescribed by the State Controller for special districts under Section 26909 of
the California Government Code or its successor statute and shall conform to generally accepted
auditing standards. The audit shall be provided to the Members within five months after the
close of each fiscal year. Any cost of the audit, including contracts with certified public
accountants, shall be borne by the Agency and shall be a charge against any unencumbered funds
of the Agency available for such purpose. To the extent that the Agency does not have adequate
funds to pay the cost of the audit, the Members shall bear the cost of any such deficiency equally.
Section 16.03. Insuection bv Bondholders. All the books, records, accounts and files
referred to in this Section shall be open to the inspection of holders of the Bonds to the extent
and in the manner provided in any resolution or indenture providing for the issuance of Bonds.
ARTICLE 17
DEFAULT AND REMEDIES
Section 17.01. Default. If any Member shall default on any covenant contained in this
Agreement, such default shall not excuse the defaulting Member from fulfilling its obligations
under this Agreement and all Members shall continue to be liable for the performance of all
conditions and covenants of the Agreement.
Section 17.02. Enforcement of Agreement. The Members declare that this Agreement
is entered into for the benefit of the San Diego Area Housing & Finance Agency and grant to the
Agency the right to enforce, by whatever lawful means the Agency deems appropriate, all of the
obligations of each of the Members.
Section 17.03. Remedies Cumulative. Each and all of the remedies given to the
Agency by this Agreement or by any law now or hereafter enacted are cumulative, and the
exercise of one right or remedy shall not impair the right of the Agency to exercise any or all
other remedies.
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ARTICLE 18
DEBTS AND LIABILITIES, INSURANCE AND INDEMNIFICATION
Section 18.01. Debts and Liabilities. No Member shall be liable for any indebtedness
of the Agency except that which is consented to by his or her City Council or Board of
Supervisors. All persons dealing with or having a claim against the Agency are hereby notified
that no Member is liable for the debts of the Agency.
Section 18.02. Insurance. The Board shall maintain appropriate insurance to protect the
Members from such liabilities and obligations. The cost of such insurance shall be paid by the
Agency to the extent suffkient funds are available therefor. To the extent that the Agency does
not have sufficient funds available to maintain such insurance, the cost thereof shall be borne
equally by the Members.
Section 18.03. Indemnification. Each of the Members shall defend, indemnify and hold
each of the other Members and the Agency harmless from any and all claims, losses, suits,
injuries, deaths, damages, costs and expenses (each, a “Claim”), including reasonable attorney
fees, arising from or as a result of (in whole or in part), any acts, errors or omissions of the
indemnifying Member or its offkers, agents, servants, employees or contractors during the
course of carrying out this Agreement, to the extent of such indemnifying Member’s negligence
or willful misconduct. The Agency shall defend, indemnify and hold harmless each of the
Members from any and all Claims, including reasonable attorney fees, arising from or as a result
of (in whole or in part), any acts, errors or omissions of the Agency or its officers, agents,
servants, employees or contractors, to the extent of the Agency’s negligence or willful
misconduct. The indemnities granted under this Section shall extend to the offkers, agents,
servants, employees and contractors of each indemnified party.
. .
ARTICLE 19
MISCELLANEOUS PROVISIONS
Section 19.01. Severabilitv. If any part, term, or provision of this Agreement is
determined by a court of law to be illegal or in conflict with any law of the State of California or
otherwise unenforceable, the validity of the remaining parts, terms or provisions shall not be
affected.
Section 19.02. Binding Effect. This Agreement shall be binding upon and shall inure to
the benefit of the successors of the parties.
Section 19.03. Assignment and Delegation. Except to the extent expressly provided in
this Agreement, a Member may not assign any right or delegate any obligation hereunder without
the consent of the Board.
,
Section 19.04. Amendment and Modification of the Agreement. This Agreement may
be amended by a supplemental agreement executed by all Members at any time (1) prior to the
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I
issuance of Bonds, or (2) after the issuance of Bonds but subject to the conditions and restrictions
set forth in the resolution or resolutions authorizing the issuance of Bonds and in any indenture.
Additional Members may be added as parties to this Agreement by the appropriate execution of a
signature page, and no formal amendment or modification of this Agreement shall be required to
accomplish such purpose.
Section 19.05. Annrovals. Whenever an approval is required by this Agreement, unless
the context specifies otherwise, it shall be given by resolution duly and regularly adopted by the
City or County whose consent is required. Whenever an approval is required by the Agency, it
shall be by resolution duly and regularly adopted by the Board unless such approval can be given
by the administrative entity.
Section 19.06. Governing Law. This Agreement shall be governed by, and construed
under and in accordance with, the laws of the State of California.
Section 19.07. Counterparts. This Agreement may be executed in one or more
counterparts, and such counterparts, taken together, shall constitute but one and the same
Agreement.
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IN WITNESS WHEREOF, the Members identified in Section 3.02 have caused this
Agreement to be executed as of the date set forth below by the signatures of their respective
authorized officers.
Dated:
CITY OF
City Clerk Mayor
Approved as to form:
City Attorney
-13-
IN WITNESS WHEREOF, the Members identified in Section 3.02 have caused this
Agreement to be executed as of the date set forth below by the signatures of their
respective authorized officers.
Dated:
CITY OF
, City Clerk
Approved as to form:
, Mayor
, City Attorney
IN WITNESS WHEREOF, the Members identified in Section 3.02 have caused this
Agreement to be executed as of the date set forth below by the signatures of their respective
authorized officers.
Dated:
COUNTY OF
Clerk of the Board of Supervisors
Approved as to form:
Chair
County Counsel
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EXHIBIT A
Voting Members of the Agency
sFi99070004 1
2L
EXHIBIT B
Associate Members of the Agency
sFB9070004 1
L-,:HIBIT 4 @
TIE ci’ry of CARtsbAd Housirq ANY REdEvElopMENr DEPARTMENT
A REPORT To TIE Housiy ConmissioN
STAff: CRAic, Ruiz
MANAC~~MI~T Adys~
ITEM NO. 1
DATE: JULY 8,1999
SUBJECT: LEASE-PURCHASE AFFORDABLE HOUSING PROGRAM -
RECOMMENDATION OF APPROVAL TO THE CITY COUNCIL OF THE
AGREEMENT BY AND BETWEEN THE CITY OF CARLSBAD AND THE SAN
DIEGO AREA HOUSING AND FINANCE AGENCY, A JOINT POWERS
AUTHORITY, FOR THE PURPOSE OF CREATING A LEASE-TO-OWN
AFFORDABLE HOUSING PROGRAM.
I. RECOMMENDATION
That the Housing Commission ADOPT Resolution No. 99-006, recommending
APPROVAL to the City Council of the agreement by and between the City of Carlsbad
and the San Diego Area Housing and Finance Agency, a Joint Powers Authority for the
purpose of creating a Lease-to-Own Housing Program.
IL PROJECT BACKGROUND
The City of Carlsbad has been invited to participate in the San Diego Area Housing and
Finance Agency (SDAHFA), a joint powers authority. The purpose of the Agency is to
create a residential Lease-to-Own Program (“Program”). As proposed, the agency will
create a pool of money to provide homebuying opportunities for households earning a
maximum of 140% or less than area median income (AMI). The money to purchase
homeswould be established through the issuance of tax exempt bonds. The Agency is
in the process of being formed and no bonds have yet been issued.
III. PROGRAM DESCRIPTION
The Program allows families to initially lease a house with a 2% (of the sales price)
program participation fee and then assume a conventional 30-year fixed rate mortgage
after three years in the program to purchase the home. Up to one-half of the
participation fee may come from a gift or grant. The maximum income of home buyers
would be limited to 140% of the AMI. The Program is not limited to first time home
buyers. The maximum purchase price would be limited to $240,000.
2Y
LEASE-PURCHASE AFFORDABLE HOUSING PROGRAM
JULY 8,1999
PAGE 2
The Program will be available to home buyers in participating jurisdictions. To date,
the Cities of El Cajon, National City, Santee, Vista and the County of San Diego have
approved the concept and formation of the Agency. In the upcoming month, the cities
of Escondido, Poway and San Diego will also consider participation.
IV. PROGRAM OPERATION
The Program provides down payment and closing costs for home purchasers. The
Program takes out a mortgage on behalf of the Participant at current mortgage rates,
and participants build equity in the home during a three-year lease period, then assume
the mortgage from the Program.
For the first three years, the home purchaser makes monthly lease payments to the
Program’s non-profit corporation rather than payments to a mortgage lender. After
three years, lease payments are paid directly to the mortgage company. The lease-to-
own conversion takes place without increases in monthly payments under a traditional
30-year conventional fixed rate mortgage established at the time the purchaser con-units
to the house. Upon conversion, the home owner would make the monthly mortgage
payments for the remaining 27 years.
The program will require that tenants be requalified by the lender immediately prior to
mortgage assumption to ensure the tenant continues to meet its creditworthiness
standards including credit and employment. The lender typically charges an
assumption fee of approximately $250 and process the assumption agreement. If the
tenant does not qualify, the lease can be extended in order to allow the tenant to correct
those items that caused the non-approval, or the tenant can be removed since he or she
did not continue to meet the conditions of the lease.
During the first three years, a program participant must demonstrate the ability to make
payments by meeting the home lease financial obligation. A participant who fails to do
so will be evicted and replaced by another family desiring home ownership. The new
family benefits from the program costs and amortization already met by the prior
participant. In order to enhance success rates, purchasers will be required to complete
home ownership education.
The above information states the general operating procedures of the Program.
However, the program may be designed to meet the requirements of each particular
jurisdiction. Should it choose to do so, the Housing Commission could recommend that
specific requirements be placed upon the Program for its use within the City of
Carlsbad. Examples of such requirements could include revised income requirements
(e.g. 120% of AM1 vs. 140% of AMI) or residency requirements.
25
LEASE-PURCHASE AFFORDABLE HOUSING PROGRAM
JULY 8,1999
PAGE 3
V. STAFF RECOMMENDATION
The City’s Housing Element states that the City wiIl establish programs that wiIl meet
the needs of lower and moderate income households. It is staff’s opinion that the Lease-
to-Own Program will provide valuable home ownership opportunities. Therefore, staff
recommends that the Housing Commission recommend to the City Council that the
City of Carlsbad participate in the subject program with a modification to limit
participation to households at 120% or less of AMI.
VI. EXHIBITS
1. Housing Commission Resolution No. 99-006
2. Draft Joint Exercise of Powers Agreement
TIE City of CARlSbAd Housirq md REdwE~opmv DEPARTMENT
A REPORT To TIE Housirvc, ComdssioN
STAff: CRAiq Ruiz
MANAGEMENT ANALYST I
ITEM NO. 1
DATE: AUGUST 12,1999
SUBJECT: LEASE-PURCHASE AFFORDABLE HOUSING PROGRAM -
RECOMMENDATION OF APPROVAL TO THE CITY COUNCIL OF THE
AGREEMENT BY AND BETWEEN THE CITY OF CARLSBAD AND THE SAN
DIEGO AREA HOUSING AND FINANCE AGENCY, A JOINT POWERS
AUTHORITY, FOR THE PURPOSE OF CREATING A LEASE-TO-OWN
AFFORDABLE HOUSING PROGRAM.
I.
II.
III.
Iv.
RECOMMENDATION
That the Housing Commission ADOPT ResoIution No. 99-006, recommending
APPROVAL to the City Council of the agreement by and between the City of Carlsbad
and the San Diego Area Housing and Finance Agency, a Joint Powers Authority for the
purpose of creating a Lease-to-Own Housing Program.
PROJECT BACKGROUND
This item was heard by the Housing Commission at their July 8,1999 meeting. The item
was continued so that a representative from the Lease-to-Own Housing Program could
make a presentation and address specific questions from the Commission. A handbook
regarding the program has been provided under separate cover to the Commission by
the Program’s representative.
STAFF RECOMMENDATION
The City’s Housing Element states that the City will establish programs that will meet
the needs of lower and moderate income households. It is staff’s opinion that the Lease-
to-Own Program will provide valuable home ownership opportunities. Therefore, staff
recommends that the Housing Commission recommend to the City Council that the
City of Carlsbad participate in the subject program with a modification to limit
participation to households at 120% or less of AMI.
EXHIBITS
1. Housing Commission Resolution No. 99406
.-. -
HOUSING COMMISSTON RESOLUTION NO. 99-006
A RESOLUTION OF THE HOUSING COMMISSION OF THE CITY
OF CARLSBAD, CALIFORNIA, RECOMMENDING APPROVAL TO
THE CITY COUNCIL OF THE AGREEMENT BY AND BETWEEN
THE CITY OF CARLSBAD AND THE SAN DIEGO AREA
HOUSING AND FINANCE AGENCY, A JOINT POWERS
AUTHORITY, FOR THE PURPOSE OF CREATING A LEASE-TO-
OWN AFFORDABLE HOUSING PROGRAM.
WHEREAS, the City of Carlsbad seeks to promote home ownership to improve the City’s
8 II housing stock and to further economic development for the welfare of its residents; and I
9 WHEREAS, the Housing Element seeks to provide a variety of housing opportunities for
10 households of all income levels; and
11 WHEREAS, there is growing need for the City to find new cooperative ways to develop
12 programs that will increase home ownership opportunities and improve community life; and
13 WHEREAS, the San Diego Area Housing & Finance Agency is a cooperative approach
14 between cities that will increase home ownership and thereby improve the quality of community life
15 for those cities participating in the Authority; and
16
17
WHEREAS, the City of Carlsbad will further its goal of home ownership within the I
community through membership in the San Diego Area Housing and Finance Agency; and
18
19
WHEREAS, the San Diego Area Housing and Finance Agency provides for home ownership
programs individually tailored for each member city;
20 WHEREAS, on July 8, 1999, the Housing Commission held a public meeting to consider the
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Lease-to-Own Program to provide home ownership opportunities to households earning up to 140% of
the Area Median Income in the City of Carlsbad; and
WHEREAS, at said public meeting, upon hearing and considering all testimony, if any, of all
persons desiring to be heard, said Commission considered all factors relating to the Lease-to-Own
Program, and continued the item to a future meeting
1 WHEREAS, on August 12, 1999, the Housing Commission held a public meeting to consider
2 the Lease-to-Own Program to provide home ownership opportunities to households earning up to 140% .
3 of the Area Median Income in the City of Carlsbad; and
4 WHEREAS, at said public meeting, upon hearing and considering all testimony, if any, of all
’ persons desiring to be heard, said Commission considered all factors relating to the Lease-to-Own
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Program
NOW, THEREFORE, BE IT HEREBY RESOLVED by the Housing Commission of the City of
Carlsbad, California, as follows:
1. The above recitations are true and correct.
2. The Program is consistent with the goals and objectives of the City of Carlsbad’s Housing
Element, the Consolidated Plan, the Inclusionary Housing Ordinance, and the Carlsbad
General Plan.
3. As recommended by the Commission, the project will provide a minimum of homebuying
opportunities to household earning up to 120% of the Area Median Income. The Program,
therefore, has the ability to effectively serve the City’s housing needs and priorities as
expressed in the Housing Element.
4. That based on the information provided within the Housing Commission Staff Report and
testimony presented during the public meeting of the Housing Commission on July 8, 1999,
the Housing Commission ADOPTS Resolution No. 99-006, recommending APPROVAL to
the City Council of the agreement by and between the City of Carlsbad and the San Diego
Area Housing and Finance Agency, a Joint Powers Authority for the purpose of creating a
Lease-to-Own Affordable Housing Program, with a modification to limit participation in the
Program to those households with a gross annual income equal to or less than 120% of the
Area Median Income adjusted for household size.
. . .
. . .
. . .
HCRES0.NO.W006.
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5. That the Housing Commission recommends that the City Manager or his designee be
authorized to execute all documents related to the Lease-to-Own Housing Program,
including but not limited to the Joint Exercise of Powers Agreement creating the San
Diego Area Housing and Finance Agency, subject to review and approval by the City
Attorney.
PASSED, APPROVED, AND ADOPTED at a regular meeting of the Housing Commission
If the City of Carlsbad, California, held on the 12* day of August, 1999, by the following vote, to wit:
AYES:
NOES:
ABSENT:
ABSTAIN:
ROY LATAS, CHAIRPERSON
CARLSBAD HOUSING COMMISSION
)EBORAH K. FOUNTAIN
10USING AND REDEVELOPMENT DIRECTOR
'CR&SO. NO. 99-006
AGE3
, . *.. ‘RITE IT - DON’T SAY ‘T!
Date October 14 19 99
To File 0 Reply Wanted
From Kathleen Shoup q No Reply Necessary
Per-phone conversation with Craig Ruiz/Hsg & Red on g/23/99, the final agreement will be prepared by his office. They will process the agreement for signatures, and return one original to this office for.our files.