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ECONOMIC DEVELOPMENT AGENCY
OF THE CITY OF SAN BERNARDINO
FROM: Maggie Pacheco, Director
Housing & Community Development
SUBJECT:
AUTHORIZATION TO PARTICIPATE
IN THE LEASE-TO-OWN
HOMEOWNERSHIP PROGRAM
DATE: December 13,1999
ORIGINAL
Synopsis of Previous Commission/Council/Committee Action(s):
On April 19, 1999, the 1999-2000 City's Consolidated Plan was approved by the Mayor and Common Council. The
Plan identified creating programs to increase homeownership opportunities for City residents as a priority.
Recommended Motion(s):
(Mavor and Common Council)
MOTION:
RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF
SAN BERNARDINO APPROVING THE JOINT EXERCISE OF POWERS
AGREEMENT CREATING THE RIVERSIDE-SAN BERNARDINO HOUSING
AND FINANCE AUTHORITY AND AUTHORIZATION TO PARTICIPATE IN
THE LEASE-TO-OWN PROGRAM.
Contact Person(s): G. Van OsdellM. PachecolM. Arogundade
Project Area(s)
Phone:
5081
Ward(s):
1-7
Supporting Data Attached: ItIStaffReport ItI Resolution(s) ItI Agreement(s)/Contract(s) 0 Map(s) 0 LetterIMemo
Riverside-SB Hsg & Finance Authority
FUNDING REQUIREMENTS Amount: $
N/A
Source:
SIGNATURE:
N/A
7n.t?~
Maggie Pacheco, Director
Housing & Community Development
Commission/Council Notes:
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GVO:MP:MA:lag:99-11-15 RivSB Hsg Finance Auth
COMMISSION MEETING AGENDA
Meeting Date: 12120/1999
Agenda Item Number: RLJI
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ECONOMIC DEVELOPMENT AGENCY
STAFF REPORT
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Joint Exercise of Powers Ae:reement Creatine: the Riverside-San Bernardino Housine: and
Finance Ae:ency and Authorization to Participate in the Lease-To-Own Proe:ram
CURRENT ISSUE:
The Riverside-San Bernardino Housing and Finance Authority (RISF A) is an authority proposed to be
created for the issuance of tax exempt bonds of which the proceeds will be used to purchase homes in
both counties that will be leased to eligible households with an opportunity to buy after three (3) years
(the "Program"). The City has the option of participating in the lease to own program in order to increase
homeownership opportunities. The City may participate as a voting member or as an associate member
which does not have a voting right and accepts the decisions made by the RISF A, but with limited
financial exposure. The key elements of the Program are as follows:
. The program is available to a broad range of individuals including existing homeowners and families
earning up to 140% of median income (i.e., for a household off our (4); income is $66,080 to buy a
home with a purchase price up to $221,000).
. Program participants can lease a home for up to three (3) years anywhere in the City and assume a 30
year mortgage (i.e., take ownership of a home with 3 years worth of equity built up). (See attached
Program description, Exhibit A for further details).
. Tax Exempt Bonds are issued by the RISF A to generate revenue for the Program and will be repaid
solely from insured lease revenues. There is no indebtedness or cost to the City or Agency. Chilton
& Associates will serve as investment banker to the RISFA. The City's bond allocation will be based
on demand expressed by local lenders.
. The City will have access to all documents, books, and records in order to facilitate any audit of the
Program, if necessary.
. The RISF A will set aside funds for administration and contract for property management; legal fees,
bond issuance costs, insurance fees, and other costs will be paid out of bond proceeds and fees paid
by Program participants.
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GVO:MP:MA:lag:99-11-15 RivSB Hsg Finance Auth
COMMISSION MEETING AGENDA
Meeting Date: 12120/1999
Agenda Item Number: -A.Y..l-
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Economic Development Agency Staff Report
SB Joint Exercise Powers Authority
November I, 1999
Page Number -2-
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. The RlSF A, acting as Program Administrator, will organize, advertising and conduct outreach
efforts in the community, Le., hold Lenders' meetings, real estate brokers' meetings, and home buyer
education in order to market the Program.
. The RlSF A will be a joint powers authority that is comprised of Voting Members and Associate
Members. Associate Members do not vote, they merely authorize the Program implementation in
order to facilitate loans within their City for home purchase.
Consequently, staff is requesting authorization to participate in the RlSFA as an Associate Member, in
order to make the Program available to City residents. The Program will be attractive to renters with
established credit histories but are having difficulty saving for down payment and closing costs. This
Program offers an opportunity to turn renters into homeowners, which will in turn stabilize our
neighborhoods.
The Program is designed so that there are no program or fmancialliabilities to the City or
Redevelopment Agency. The only liability that may potentially occur is when the RlSFA ceases to exist.
At that time, there may be the customary cost of conducting the IRS required audit to close-out the
RlSF A books. A provision to cover this cost has been included in the RlSF A budget, thereby decreasing
the financial exposure to Associate Members. This cost may become a liability to Associate Members
only if there are no funds left in the RlSF A budget and all participating members would pay a pro-rata
share of the cost, which is expected to be very minimal. This is one of the principal reasons why staff is
proposing to be an Associate Member, as opposed to being a Voting Member, in order to minimize the
City's financial exposure.
The proposed Joint Exercise of Power Agreement has been executed by other jurisdictions such as: the
County of Riverside, the cities of Highland, Colton, Riverside and Moreno Valley. It is anticipated that
the first bond issuance by the RlSF A will occur in April 2000 for $70 million. The Program will be
available to all local lenders and realtors within the participating cities.
FISCAL IMPACT
There is no budget impact to the Agency or the City as a result of Participating in this Program other than
as described above.
RECOMMENDA nON
That the Mayor and Common Council adopt the attached Resolution.
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Maggie eco, DIrector
Housing & Community Development
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GVO:MP:MA:lag:99-11-15 RivSB Hsg Finance Auth
COMMISSION MEETING AGENDA
Meeting Date: 12120/1999
Agenda Item Number: ..8!I.L
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(G(Q)[P))f
RESOLUTION NO.
RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE
CITY OF SAN BERNARDINO APPROVING THE JOINT EXERCISE OF
POWERS_ AGREEMENT CREATING THE RIVERSIDE-SAN
BERNARDINO HOUSING AND FINANCE AGENCY AND
AUTHORIZATION TO PARTICIPATE IN THE LEASE-TO-OWN
PROGRAM.
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WHEREAS, the City of San Bernardino seeks to promote home ownership to improve
the City's housing stock and to further economic development for the welfare of its residents;
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and
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WHEREAS, the City of San Bernardino has adopted the promotion of home ownership
programs as one of its priority goals in both the Housing Element of the General Plan and the
Consolidated Plan; and
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WHEREAS, there is growing need for cities to fmd new and cooperative ways to develop
programs that will increase home ownership and improve community life; and
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WHEREAS, the Riverside-San Bernardino Housing & Finance Agency (RISF A) is a
cooperative approach among cities that will increase home ownership and thereby improve the
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quality of community life for those cities participating in the RISF A; and
WHEREAS, the City of San Bernardino will further its adopted goal of promoting home
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ownership within the community through membership in the RISF A; and
WHEREAS, the RISF A provides for home ownership programs individually tailored for
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each member city;
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NOW, THEREFORE BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF
SAN BERNARDINO AS FOLLOWS:
S~. The Mayor and Common Council hereby approve the "Joint Exercise 0
Powers Agreement Creating the Riverside-San Bernardino Housing & Finance Agency" (th
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"Agreement") in substantially the form attached hereto.
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Section 2.
The Mayor, as presiding officer, is hereby authorized to execute th
o 2 Agreement on behalf of the City as an Associate Member and this resolution signifying it
3 adoption by the City Council of the City of San Bernardino and the City Clerk duly appointed, i
4 directed to attest thereto:
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8 Council Members:
9 ESTRADA
LIEN
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MCGINNIS
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SCHNETZ
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SUAREZ
13 ANDERSON
014 MILLER
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RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE
CITY OF SAN BERNARDINO APPROVING THE JOINT EXERCISE OF
POWERS AGREEMENT CREATING THE RIVERSIDE-SAN
BERNARDINO HOUSING AND FINANCE AGENCY AND
AUTHORIZATION TO PARTICIPATE IN THE LEASE-TO-OWN
PROGRAM.
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I HEREBY CERTIFY that the foregoing Resolution was duly adopted by the Mayor and
6 Common Council of the City of San Bernardino at a
meeting thereof, held on the
, 1999, by the following vote to wit:
Ayes
Nays
Abstain
Absent
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City Clerk
18 The foregoing resolution is hereby approved this
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day of
,1999.
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Judith Valles, Mayor
City of San Bernardino
22 Approved as to form and Legal (;;ontent:
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James F. Penman
City Attorney
By: ~~ t. ~
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EXHIBIT" A n
J. K. CHILTON & ASSOCIATES, INC.
MEMBER NASD INVESTMENT BANKERS
Lease-to-Own Prol!ram Description
Promoting Home Ownership is Good Public Policy
There is a strong correlation between good citizenship and home ownership. Neighborhoods tend
to be more stable and suffer less crime when people own their own homes and have a vital stake
in their community. Therefore, most cities promote home ownership when possible and when
resources are available. The lease-to-own program concentrates on making the dream of home
ownership possible for families who have sufficient income to make mortgage payments but who
have not been able to save enough money to aftord conventional down payment and closing
costs.
In a lease-to-own program, private industry and a joint powers authority work together to offer
new opportunities to a wide range of citizens. The cost of the management of the joint powers
authority is covered by the fee paid by the participant. Thus, the home ownership program places
no fiscal or administrative burden on city officials. A city joining a joint powers authority could
customize the focus and application of the program within the city by communicating the city's
program criteria and priorities to the administmtor of the joint powers authority dedicated to the
implementation of the program.
The program could function separately from existing housing programs or be used as a tool to
enhance or expand those programs. Since a lease-to-own program is self-financing, it increases
city resources. The program is free of restrictive low and moderate income provisions or first-
time home buyer requirements and is open to all those with incomes up to 140% of median
income. The lack of regulatory restriction allows a city the flexibility to tailor lease-to-own
criteria to fit its needs and policy goals. A city's use of the program could make possible any
combination of the following:
. the purchase of any new or existing house by anv person meeting city criteria;
· the purchase of any new or existing house by municipal employees;
· a renter's purchase of a home from an absentee landlord; and,
. the purchase and substantial rehabilitation of a house.
Although the financing of the program incorporates the use of tax exempt bonds, there is
absolutely no fiscal obligation and no indebtedness on the part of any city incurred as a result of
the bond financing. In a worst case scenario in which there are no participants, or all participants
fail to meet their obligations, the program will remain solvent and the bond holders will receive
100% of their interest and principal.
1236 SOUTH CAMDEN DRIVE. LOS ANGELES. CALIFORNIA 90035 . 310-277-4037 . FAX 310-277-2833
17500 WEST CHILTON ROAD. BOX 423 . ARIVACA. ARIZONA 85601 . 520.398.9194 . FAX 520-398.3324
Member of the National Association of Securities Dealers., Municipal Securities Rulemaking Board and the Securities Investor Protection Corporation
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How the Program Works
After signing a three-year lease, the home purchaser makes monthly payments to the program's
non-profit corporation which holds title to the home. After three years, lease payments cease to
be paid to the non-profit and mortgage payments are paid directly to the mortgage company. The
lease-to-own conversion takes place without increases in monthly payments. All lease payments
would reflect the monthly payments under a traditional 30-year conventional fixed rate mortgage
established at the time the lease-purchaser commits to the house.
Since the home purchaser never pays down payment or closing costs. the home buyer receives. in
effect, an outright grant of the down payment and closing costs (approximately 8% of the
purchase price of the house) in exchange for paying the 1% of program costs. Other down
payment assistance programs simply increase mortgage amounts to decrease up front costs. In
contrast, the lease-to-own program saves the buyer about 7% up front on the price of the house,
including closing costs, as demonstrated by the following chart:
I Lease-to-own Home Purchase
I Unassisted Home Purchase
Price of House $150,000 Price of House $150,000
Mortgage $145,500 MortgalZe $145,500
Down Payment $0 Down Payment (3%) $4,500
Closing Costs $0 Closing Costs $7,500
Prollram fee (I %) $1,500
Total Cost to Bu er
$157,500
$147,000 Total Cost to Bu er
During the lease period, the purchaser pays down the mortgage. Both principal and interest are
paid on the loan so a lease-to-own program truly reduces the effective price of the house and the
initial down payment and closing cost barrier to home ownership. Upon conversion to home
ownership status, the home owner would make the monthly mortgage payments for the
remaining 27 years (30 years minus the 3-year lease period). Thus, the renter has a real
opportunity to create equity and a great incentive to become a homeowner.
As with any commitment to purchase a home, the buyer chooses more responsibility in order to
reap the potential benefits of home ownership. In order to enhance success rates, purchasers will
be required to complete home ownership education. 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.
J. K. CHILTON & ASSOCIATES, INC.
MEMBER NASD INVESTMENT BANKERS
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The home purchaser and substantial rehabilitation
The lease-to-own program can assist both in the purchase of a house and in the financing of
substantial rehabilitation. In this manner, the program can help upgrade a community and arrest
neighborhood deterioration.
The lease-to-own program would provide the financing necessary to take advantage of the
Freddie Mac program which allows the house to be purchased. rehabilitated, and leased to the
program participant at a lease and mortgage rate reflecting the value of the house after
rehabilitation.
The loan originator/servicer would administer the construction and monitor costs. The program
participant would then move into a substantially improved house and pay a mortgage which
reflected the purchase price and rehabilitation costs. In this manner, the participant receives the
benefit of an improved house without oavin!! the hi!!h interest costs tyoicallv associated with a
second mort!!a!!e for home imorovement.
Forming and Financing the Lease-to-Own Program
Lease-to-Own program participants find an existing home or a newly constructed home they
would like to purchase. The Authority, through its non-profit corporation, purchases and holds
title to the homes purchased on behalf of the program participants. In order to finance the
purchase of the homes, the Authority sells Lease-Revenue Certificates of Participation.
These Certificates of Participation with five-year maturities are a debt of the Authority only and
are payable solely from the lease revenues. Member cities incur !!Q debt. The program uses the
proceeds of a Series A bond issue to purchase the house. The Series B bond issue proceeds then
provide both the down payment and the closing costs.
The basic bond program meets all state and federal tax law requirements in the opinions of
nationally recognized bond counsel, tax counsel, and underwriter's counsel. Moreover, a certified
public accounting firm would review the bond program and verify all numbers. Team members
have arranged for mortgage pool insurance, lenders, investment agreements, forward purchase
contracts, and other critical elements of the program. It is expected that bond insurance will be
purchased resulting in the Bonds being rated AAA by Standard & Poors.
J. K. CHILTON & ASSOCIATES. INC.
MEMBER NASD INVESTMENT BANKERS
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84 Opinion
DaiIv Bulletin, TV.ldIY. Dec.mber 8. 1998
Helpful boost for home ownership
One of the biggest obstacles
to home ownership for mid-
dle- and low-income fami-
lies always has been the down
payment.
It's difficult for families who
want to purchase a home to raise
5 percent to 10 percent of the pur-
chase cost, and still have enough
money for closing costs, moving
expenses and all the other little
things that always seem to arise.
That's why a new program
involving 10 communities -
including two right here in the
Inland Valley - is an important
step in the right direction.
Upland and Rancho Cucamonga
are among those cities taking part
in the newly created California
Cities Home Ownership Author-
ity, which will allow middle- and
low-income renters to become
home buyers for much less than
would otherwise be required.
CCHOA makes the down pay-
ment and covers the closing costs,
and the would-be homeowner then
leases the property for three
years. At the end of that time, th@
lease is converted to a 30-year,
fixed-rate mortgage.
Buyers in San Bernardino
County will be eligible with
incomes up to $65,100. They'!: be
asked to pay 1 percent of the prop-
erty's market value asa par.icipa-
tion fee and to make the fint
month's lease payment in
advance.
While this hardly makes home
ownership a reality for eve:yone,
it certainly turns it into a possibil-
ity for many people who co.uJd not
otherwise dream of having their
own homes.
This is a good thing, not only for
them but for their communities.
Homeowners are good citizens.
people with a vested interest in
the future of the cities in which
they live.
Anything that encourages that
vested interest at very little finan.
cial risk to taxpayers is an
extremely positive step.
INLAND VAllEY ~
Daily Bulletin
Michael R. Ferguson Publisher
MichaelJ. Brossart......... ........... Edilor Maura~l1an........ -.' BlISiM.ssM~=~
Pem del 101'0 . . . . . . . . . . . Adwrrisin, Director James M. Mlssea.. . . . . . . . . . ProdtlctlDtl D~
. Edwin E. Parker. . . . . . .. .. CircuJtlliDII Dirt:clor ~lioa. ADdorko.. . .. . HIIIMII ReSDllrrtl D~~:O~
:.EmilyBiI1in;s............. PromoriOtl Dir<<tor Richard L Nqey ..... ... ...... . MIS D, lCO
. A LOCAllY OPERATED MEMBER OF THE IQII
DONREY MEDIA GROUP l!.I
DONAlD W. REYNOLDS. FOUNDER
Please Note!: This editorial is for another Joint Powers Authority which limited membership to
only 10 cities in southern California and which operates the same way PHF A
would operate in your City.
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JOINT EXEROSE OF POWERS AGREEMENT
CREATING THE RIVERSIDE-SAN BERNARDINO HOUSING &: FINANCE AGENCY
This Joint Exercise of Powers Agreement (the "Agreement"), dated for convenience as
June 1, 1999, is made and entered into by the signatories hereto, each a public entity duly
organized 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 funds 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 AND INTERPRETATION
Section 1.01. Definitions. Unless the context otherwise requires, the terms defined in
this Section shall have the meanings herein specified for all purposes of this Agreement.
Agenc;y
The term" Agency" shall mean the Riverside-San Bernardino 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
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.
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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 exerCISmg 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.
Votin~ 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. Captions 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.
ARTICLE 2
PURPOSE
Section 2.01. PuqlOses of Agreempnt and Agenc;y. 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
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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. Votin~ 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 shall not 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
(b) 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 A~en<;y. There is hereby created a joint exercise of powers
authority to be known as the Riverside-San Bernardino 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 TIlE AGENCY; RESTRICTION UPON EXERCISE
Section 5.01. Powers of the A~en<;y. The Agency shall have all powers common to the
Members and is hereby authorized 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;
(c) the power to incur debts, liabilities, or other obligations which are not
debts, liabilities or obligations of the Members, or any of them;
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(d) the power to employ agents and employees;
(e) the power to acquire, construct, manage, maintain, and operate any
building, works or improvements;
(f) the power to acquire, hold, lease (as lessor or lessee), or dispose of
property, including property subject to home mortgages;
(g) 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
(i) all powers necessary and proper to carry out the terms and provisions of
this Agreement, or otherwise authorized by law.
Section 5.02. Membership Aifeements. 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:
(a) 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. Investmenl~. 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 ~.
ARTICLE 6
COOPERATION
Section 6.01. Additional Proceedil\~s 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.
Section 6.02. Actions Affectin~ Ratil\~. Each Member further agrees to refrain 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
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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 June 1, 2049 or such lime as all Members shall have
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.
(b) 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 Agenc;y. 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 Directors shall be approved by their respective city councils or board of supervisors
forthwith upon approval of this Agreement, and each shall serve at the pleasure of his or her
respective city councilor 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
councilor 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. Compensation and Expenses. Directors may receive compensation for
their services pursuant to an authorizing 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 authorizing resolution of the Board.
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ARTICLE 9
MEETINGS OF TIlE BOARD
Section 9.01. R~~lar 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. S.pecial 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 ~ 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. . Voting. Each member of the Board shall have one vote.
ARTICLE 10
OmCERS; DUTIES
Section 10.01. Chah:person. Vice-Chah:person and Secretaty. 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.
(a) 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.
(c) 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.
Section 10.02. Treasurer-Controller. The Treasurer-Controller of the Agency shall be
the Treasurer of the _ of . California, or such other person or entity designated by
the Board.
(a) . 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
GovemmentCode.
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(b) 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 office, 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
ADMINISlRATION
Section 12.01. . Administrative Entity. In accord with Section 6506 of the California
Government Code, the initial administrative entity of the Agency shall be a California nonprofit
corporation established or selected for such purpose, which nonproift corporation shall contract
with The City Associates Inc, for administrative services.
Section 12.02. Duties of Administrative Entity: Dele~ation. 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. RE:Placement of Administrative Entity. The Board may change the
administrative entity at its discretion.
Section 12.04. Appointment 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. A~ment 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
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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 A~reements. 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. Expenses. 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.
ARTICLE 16
ACCOUNTING AND REPORTING
Section 16.01. Accountin~: Inspection by 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. Inspection by 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.
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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 A&reement. The Members declare that this Agreement is
entered into for the benefit of the Riverside-San Bernardino 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.
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 Councilor 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 sufficient 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 officers, 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 officers, agents,
servants, employees and contractors of each indemnified party.
ARTICLE 19
MISCELLANEOUS PROVISIONS
Section 19.01. Severability. 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.
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Section 19.02. Bindin~ Effect. This Agreement shall be binding upon and shall inure to
the benefi t of the successors of the parties.
Section 19.03. Assi~ment and Dele~tion. 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 AveemPnt. This Agreement may
be amended by a supplemental agreement executed by all Members at any time (1) prior to the
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. Approvals. 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. Governinz Law. This Agreement shall be governed by, and construed
under and in accordance with, the laws of the State of California.
Section 19.07. Counteq>arts. 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:
CTIY OF
City Clerk
Mayor
Approved as to form:
,
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EXHIBIT A
Voting Members of the Agency
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EXHIBIT B
Associate Members of the Agency
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B-1