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AGENCY'.RCu!ST FOR o..lSSION/COUNClL A~ION
. From: Glenda Saul, Executive Director
Ct:
Subject: 1985 SINGLE FAMILY MORTGAGE
REVENUE BOND
Redevelopment Agency
Da~: December 13, 1985
Synopsis of Previous Commission/Council ection:
12-17-84 Resolution 84-552 authorized submission of an application to the Mortgage
Bond Allocation Committee for Single Family Bonds in 1985.
09-85 Notified by the State that San Bernardino had been allocated $36 million
for the issuance of Single Family Bonds in 1985.
11-04-85 First reading of the Ordinance.
11-04-85 Approved current structure of the proposed 1985 issue.
11-18-85 Adopted Ordinance MC 483 establishing a Home Mortgage Finance Program.
,,-o2-Rc; Atinptfl!d RpAnlution SA-4gB annrovinR e~rt8..i.n docnm_nts And actions.
Recommended motion: MAYOR AND COMMON COUNCIL or COMMUNITY DEVELOPMENT COMMISSION
AC
Authorize Redevelopment Agency to enter into a developers agreement in a $6,500,000
blind pool to be ueed for new construction housing development with homes priced in
the $100,000-$120,000 range; or
B.
No~ approve the Agency entering into a developers agreement in a $6,500,000 blind pool
to be used for new construction housing development with homes priced in the
$100,000-$120,000 range.
~M7
Signature
Contact penon:
GLENDA SAUL
FUNDING REQUIREMENTS:
Amount: $
NIA
Phons: 383-5081
N/A
Ward:
Project : N/A
Da~: December 16, 1985
Supporting data attached:
YES
No edverse Impact on City:
9"""1cil Notes:
'-
\
15SG/EB
Agenda Item NO.P5 -I
, CI~ OF SAN BERNARDlio - REQUiT FOR COUNCIL AC~ON
,",,""
STAFF REPORT
........
On previous report, staff has presented the proposed 1985 Single-Family
Mortgage Revenue Bond issue. The proposed issue totaled $31,260,000. The
proposed issue is presented below:
SINGLE FAMILY 1985
Developer
Amount # of Units Location Price Range
$ 5,000,000 86 Pepper & Randal $73,990-93,990
Rialto
1. Willow Woods
2. Shadow Meadows $ 500,000
137
SW corner of $81,900-93,900
Olive and
Irvington, S.B.
9th & Del Rosa
San Bernardino
$55,500-64,500
$81,900-95,900
$75,000
W. Loyola &
Windsor, S.B.
Barton &
Waterman
$89,900-108,900
Enterprise Zone
City Wide
Existing
When staff and financial consultant met with developers on December 3, 1985,
two projects withdrew their participation: Shadow Meadows and Security
Pacific. This left the bond issue at $30,400,000.
The remaining developers were requested to submit their developer agreements
and fees to the Agency on December 10, 1985.
75-0264
/
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On December 10, 1985, the remaining three (3) developers either withdrew or
greatly reduced their participation in the bond.
$30,400,000
a)
Nutech withdrew completely
- 8,400,000
$22,000,000
b)
Willow Woods withdrew
(remained with $1,000,000)
- 4.000.000
$18,000,000
c)
Southpointe withdrew completely
- 5,000,000
$13,000,000
The developers believe that interest rates will come down in 1986 and that the
bond dollars will not be as competitive as they appeared to be in 1985. The
mortgage interest under the bond will be 9.8%. The financial consultant has
advised staff that they believe these rates will be very competitive in 1986
and 1987. -
In order to do a single-family bond in 1985, the Agency would enter into a
developer's agreement for a blind pool of $6.5 million. This would be used
for mortgages on newly constructed homes in the city in the 100,000 to 120,000
range. However, there is risk involved with the Agency obtaining this blind
pool. There are "upfront" developer fees which the Agency would have to pay.
The developer fees are: 4.75% rate for cash
5.55% for a Letter of Credit
In dollars this means:
$6,500,000 x 4.75% . $308,750 for cash payment.
$6,500,000 x 5.55% - $360,750 for Letter of Credit.
There is also the risk that no developers would buy these mortgages from the
Agency. The bond is in force for a minimum of two (2) years and can be
extended for a third year. The mortgage money could be available for three
(3) years at the current 9.8% interest rate. There is also a possibility the
bond could be extended to a fourth year, but bond counsel would need to make
that determination. If the Agency is unable to sell the bond mortgages during
the next two (2) to three (3) years, the Agency would not recoup the
developer's fees. In other words, the Agency could lose the $300,000 fee.
The new bond issue would have the following structure:
Infill
Rehab
Existing
Blind Pool
$ 2,000,000
2,000,000
7,000,000
6,500,000
$17,500,000
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The allocation for existing housing was reduced to meet the 40% requirement.
Only 40% of the bond may be used for existing housing.
Maximum household income: $47,625.00 Iyear
Maximum House prices:
For new housing including infillsl
a) $128,810 or up to $140,520 if located within a target area.
For existing housing:
b) $118,690 or up to $129,480 if located within a target area.
Rehabilitation:
c) $86,000
The blind pool would contain mortgage money for approximately sixty (60)
homes. The market feasibility study confirms that there will be a demand for
this number of new homes during the next two (2) years.
If the Council chooses not to take the risk with the blind pool, no single
family bond would be issued during 1985. However, there currently are 71
cities on the State's allocation list for 1986. The earliest possible date
for another Single Family Mortgage Revenue Bond would be 1987.
Representatives from Miller & Shroeder, Tim Sabo, and Dr. Joe Jansyck will be
available to answer any questions you may have.
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