HomeMy WebLinkAbout1991-3402 Limited tax general obligation bonds .l
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CITY OF YAKIMA
WASHINGTON
HOME PRESERVATION PROJECT
ORDINANCE NO
3402
AN ORDINANCE OF THE COUNCIL OF THE CITY OF YAKIMA,
WASHINGTON, PROVIDING FOR THE ISSUANCE, SALE AND
DELIVERY OF LIMITED TAX GENERAL OBLIGATION BONDS
FOR THE PURPOSE OF FUNDING A PROGRAM FOR
111/1 REHABILITATION OF SINGLE- FAMILY OWNER- OCCUPIED
RESIDENCES; AUTHORIZING THE EXECUTION OF BONDS OF
THE CITY IN THE PRINCIPAL AMOUNT OF NOT TO EXCEED
$400,000; PROVIDING FOR THE DISPOSITION OF THE
PROCEEDS OF SUCH BONDS; FIXING THE FORM, INTEREST
RATE, TERMS, MATURITY AND COVENANTS OF SUCH BONDS;
AND CREATING A FUND FROM WHICH THE PRINCIPAL OF
AND INTEREST ON SUCH BONDS SHALL BE PAID.
PASSED September , 1991
Prepared by
PRESTON THORGRIMSON
SHIDLER GATES & ELLIS
5400 Columbia Seafirst Center
701 Fifth Avenue
Seattle, Washington 98104 -7011
Jill
TABLE OF CONTENTS
a e
Recitals 1
SECTION 1. Definitions . . . . . . . . . . . . . . 1
SECTION 2. Issuance of Bonds 3
SECTION 3. Tax Covenants 3
SECTION 4. Bond Redemption Fund 4
SECTION 5 Payment Prior to Maturity 4
SECTION 6 Application of the Proceeds of Sale of
the Bond 4
SECTION 7. Proposal of Repayment of Loans . . . . 4
,SECTION 8 Form of the Bonds 4
SECTION 8 Execution of the Bonds . 7
SECTION 9 Delivery of the Bonds • • 7
SECTION 10 Authorization to Officials and Agents;
Ratification of Prior Actions • • . . . 7
SECTION 11 Bonds Not Designated "Qualified Tax -
Exempt Obligations " . . . 7
SECTION 12 Lost or Destroyed Bonds • • • . 7
SECTION 13 The Program 7
SECTION 14 Arbitrage Rebate 8
SECTION 15. Severability . . . . . . . . 9
SECTION 16 Effective Date 9
Alt This Table of Contents and the preceding cover page are
no part of the ordinance. They are provided for convenience of
the reader only
1 - 00476 91/09/17 "'
1110 ORDINANCE NO.d 4 0 2
AN ORDINANCE OF THE COUNCIL OF THE CITY OF YAKIMA,
WASHINGTON, PROVIDING FOR THE ISSUANCE, SALE AND
DELIVERY OF LIMITED TAX GENERAL OBLIGATION BONDS
FOR THE PURPOSE OF FUNDING A PROGRAM FOR
REHABILITATION OF SINGLE- FAMILY OWNER - OCCUPIED
RESIDENCES; AUTHORIZING THE EXECUTION OF BONDS OF
THE CITY IN THE PRINCIPAL AMOUNT OF NOT TO EXCEED
$400,000; PROVIDING FOR THE. DISPOSITION OF THE
PROCEEDS OF SUCH BONDS; FIXING THE FORM, INTEREST
RATE, TERMS, MATURITY AND COVENANTS OF SUCH BONDS;
AND CREATING A FUND FROM WHICH THE PRINCIPAL OF
AND INTEREST ON SUCH BONDS SHALL BE PAID.
WHEREAS, the City of Yakima (the "City ") is a city of the
first class of the State of Washington; and
WHEREAS, RCW 35 21.685 authorizes cities to assist in the
development or preservation of publicly or privately owned
housing for persons of low income by providing loans to the
owners or developers of housing for such persons; and
WHEREAS RCW 39.36.020(2) authorizes the City to borrow up to
three - fourths of one percent of the value of the taxable property
within the City without a vote of the people; and
WHEREAS, in order to borrow money to fund a program of loans
for the purposes authorized by RCW 35 21 685 at a favorable rate
of interest, the City deems it advisable to issue its limited tax
general obligation bonds in the principal amount of not to exceed
$400,000; and
WHEREAS, the City has received an offer to purchase its
bonds from Pioneer National Bank which offer is acceptable to the
City Council;
NOW, THEREFORE, BE IT ORDAINED BY THE CITY OF YAKIMA, AS
FOLLOWS
SECTION 1. Definitions As used in this ordinance, the
following words shall have the following meanings, unless a
different meaning clearly appears from the context:
(a) "Bonds" means the limited tax general obligation Bonds
of the City in the aggregate principal amount of $400,000 to be
issued pursuant to this ordinance.
(b) "Bond Fund" means the "City of Yakima Low Income
Housing Bond Redemption Fund," created by Section 4 of this
ordinance
(c) "Bond Year" means each one year period that ends at the
close of business on December 31.
(d) "City" means the City of Yakima, Washington, a
municipal corporation duly organized and existing under and by
virtue of the Constitution and laws of the State of Washington
(e) "Code" means the federal Internal Revenue Code of 1986,
as amended
dtk
111 (f) "Council" means the Council of the City as the same
s hall be duly and regularly constituted from time to time.
(g) "Final Computation Date" means the date that the last
Bond is discharged A Bond is discharged on the date that all
amounts due under the terms of the Bond are actually and
unconditionally due if cash is available at the place of payment
and no interest accrues with respect to the Bond after such date
(h) "Finance Director" means the Director of Finance and
Budget of the City, or any successor to the functions and duties
of such Director of Finance and Budget
(i) "Installment Computation Date" means the last year of
the fifth Bond Year and of each succeeding fifth Bond Year.
(j) "Interest Rate" means the per annum rate of interest on
the Bonds pursuant to Section 2 of this ordinance.
(k) "Nonpurpose Payments" means, in general, any payment
with respect to an investment allocated to the Bonds. The
following types of payments are specifically included:
(i) Direct Payments. The amount of gross
proceeds of the Bond directly used to purchase the
investment. Direct payments do not include brokerage
commissions, administrative expenses or similar
expenses
(ii) Constructive Payments The fair market value
(as of the date of allocation to the Bonds) of any
investment that was not directly purchased with gross
proceeds of the Bonds, but which is allocated to the
Bonds
(iii) Payments of Rebatable Arbitrage. Any payment
•
of Rebatable Arbitrage if such payment is made no later
than the due date for such payment
(1) "Nonpurpose Receipts° means, in general, any receipt
with respect to an investment allocated to the Bonds. The
following types of receipts are specifically included:
(i) Actual Receipts Any amount actually or
constructively received with respect to an investment
Actual receipts may not be reduced by selling
commissions, administrative expenses or similar
expenses
(ii) Disposition Receipts. An amount determined
by treating an investment that ceases to be allocated
to the Bonds (other than by reason of a sale or
retirement) as if sold for fair market value on the
date that the investment ceases to be allocated to the
Bonds
(iii) Installment Date Receipts. The fair market
value (or, for fixed rate investments, present value)
of all investments allocated to the Bonds at the close
of business on any Computation Date.
(iv) Imputed Receipts. Any receipts that are
required to be imputed and taken into account pursuant
to Section 1.148 -5T of the Temporary Income Tax
Regulations or any successor Temporary or Final Income
Tax Regulations
(m) "Program" means the program established by the City to
assist persons of low income in financing the rehabilitation and
•
preservation of their owner occupied residences
-2- LNC476 91/09/17
` a
(n) "Rebate Computation Certificate" means the certificate
executed by the Finance Director setting forth the methodology
for computation of Rebatable Arbitrage.
SECTION 2. Issuance of Bonds. The City shall, for the
purpose of funding the Program, issue its Bonds in the aggregate
principal amount of $400,000. The Bonds shall'be designated the
"City of Yakima, Washington, Limited Tax General Obligation
Bonds, 1991," shall be dated the date of their delivery to the
Purchaser, shall be in fully registered form, in denominations of
September $5,000 or any integral multiple thereof, shall. mature on
6otobow 1, 2001, and shall bear interest payable semiannually on
1k.5 the first day of each October and March commencing March 1, 1992,
at a rate if 8.625 percent per annum calculated on a basis of
365/366 days as the case may be.
The City hereby appoints the Finance Director as the Bond
registrar The City shall cause a Bond register to be maintained
by the Bond registrar So long as any Bonds remain outstanding,
the Bond registrar shall make all necessary provisions to permit
the exchange or registration or transfer of the Bonds at its
office The Bonds shall be transferable only upon the Bond
register by the registered owner thereof in person or by his
attorney duly authorized in writing, upon surrender thereof,
together with a written instrument of transfer satisfactory to
the Bond registrar duly executed by the registered owner or his
duly authorized attorney. Upon the transfer of a Bond, the Bond
registrar shall issue in the name of the transferee, a new Bond
in the same denomination.
Both principal of and interest on the Bonds shall be payable
in lawful money of the United States of America Interest on the
• Bonds shall be paid by check or draft mailed on the day interest
is due to the registered owners or assigns at the address
appearing on the Bond register on the 15th day of the month
preceding the principal and interest payment date. The final
payment of principal of and interest on the Bonds shall be
payable upon presentation and surrender thereof by the registered
owners at the office of the Finance Director
SECTION 3. Tax Covenants. The City shall comply with the
provisions of this section unless, in the written opinion of
nationally- recognized bond counsel to the City, such compliance
is not required in order to maintain the exemption of the
interest on the Bonds from federal income taxation
The City covenants that it will not take or permit to be
taken on its behalf any action which would adversely affect the
exemption from federal income taxation of the interest or
discount, if any, on the Bonds and will take or require to be
taken such acts as may reasonably be within its ability and as
may from time to time be required under applicable law to
continue the exemption from federal income taxation of the
interest and discount, if any, on the Bonds provided, however,
that the City does not represent, warrant, covenant or agree that
interest on the Bonds will not be taken into account for purposes
of computing the corporate or individual alternative minimum tax
under Section 55 of the Code, or for purposes of computing the
environmental tax on corporations under Section 59A of the Code
or under any other similar treatment of interest on the Bonds.
Without limiting the generality of the foregoing, the City
covenants that it will not take any action or fail to take any
action with respect to the investment of the proceeds of any line
of credit secured by any Bond, or other funds, which would result
in constituting a Bond to be an "arbitrage bond" within the
meaning of such term as used in Sections 103 and 148 of the Code
or which would violate Treasury Regulations under Sections 103,
Corrected by Resolution No D- 6018 -3- L$C476 91/09/17
143 and 148 of the Code applicable to the Bonds The City will
comply with the requirements of Sections 103, 143 and 148 of the
Code (or any successor provision thereof applicable to the Bonds)
and the applicable Regulations thereunder throughout the term of
the Bonds
The Council hereby finds and declares, with respect to
Section 148(f)(4)(C) of the Code, that ninety -five percent or
more of the net proceeds of the Bonds will be used for local
governmental activities of the City
SECTION 4. Bond Redemption Fund A special fund of the
City to be known as the "City of Yakima Low Income Housing Bond
Redemption Fund," (the "Bond Fund ") is hereby authorized to be
created by the Finance Director The Bond Fund shall be drawn
upon for the sole purpose of paying the principal of and interest
on the Bonds Moneys on deposit in the Bond Fund not immediately
needed to pay such interest or principal may temporarily be
deposited in such institutions or invested in such obligations as
are legal investments for City funds Any interest or profit
from the investment of such moneys shall be deposited in the Bond
Fund Any moneys remaining in the Bond Fund after payment in
full of the principal of and interest on the Bonds shall be
transferred to the Community Development Block Grant Fund of the
City, and the Bond Fund shall be closed.
The City covenants and agrees that for as long as the Bonds
are outstanding and unpaid it will include in its budget and make
annual levies of ad valorem taxes, within and as a part of the
tax levy permitted to cities without a vote of the people, upon
all taxable property within the City subject to taxation in
amounts that, with other monies legally available therefor, will
be sufficient to pay the principal of and interest on the Bond as
•
the same shall become due and payable Such taxes and other
monies so pledged shall be paid directly into the Bond Fund in
amounts sufficient to pay the principal of and interest on the
Bonds, and none of the money in such Fund shall be used for any
other purpose than the payment of the principal of and interest
on the Bonds The full faith, credit and resources of the City
are hereby pledged for the prompt payment of the principal of and
interest on the Bonds as the same shall become due
SECTION 5. Payment Prior to Maturity The Bonds may be
September redeemed in whole or in part in advpnce of their scheduled
maturity at any time on or after Octobcr 1, 1994, without premium
1 1 - S or penalty upon thirty days' written notice (which may be by
first class mail sent to the address on the Bond Register to the
registered owner(s)) at par plus accrued interest to the date of
redemption.
SECTION 6. Application of the Proceeds of Sale of the
Bonds Proceeds of the Bonds shall be deposited in the City of
Yakima Community Development Block Grant Fund held by the Finance
Director and used by the City to pay the cost and expenses of the
Program and costs incidental to the issuance of the Bonds.
SECTION 7. Repayment of Loans. Proceeds received from the
repayment of loans made to carry out the Program shall be
deposited in the Community Development Block Grant Fund of the
City and used for any lawful purposes of the City, including the
payment of principal and interest on the Bonds.
SECTION 8. Form of the Bonds The Bonds shall be in
substantially the following form
•
- Corrected by Resolution No D 6018 -4- LNC476 91/09/18
UNITED STATES OF AMERICA
NO $
STATE OF WASHINGTON
YAKIMA COUNTY
CITY OF YAKIMA
LIMITED TAX GENERAL OBLIGATION BOND
Principal Interest Maturity Date: CUSIP No.
Amount: Rate:
Registered Owner
City of Yakima, Washington (the 'City"), a municipal
corporation organized and existing under and by virtue of the
laws and Constitution of the State of Washington, hereby
acknowledges itself to owe and for value received promises to pay
to the Registered Owner identified above or registered assigns on
*Septembereeteber• 1, 2001, solely from the sources hereinafter mentioned,
the Principal Amount identified above with interest thereon until '
such principal sum is paid.
This Bond bears interest at the Interest Rate identified
above on the Principal Amount identified above payable semi-
annually commencing on the first day of March 1992 and on the
*oeptember first day of each March and -Auer thereafter until the Bonds
are paid
This Bond is issued pursuant to duly adopted ordinances and
resolutions of the City, including Ordinance No. adopted on
(the "Bond Ordinance "), for the purpose of
financing a City of Yakima home preservation program, all in
conformity with the Constitution and laws of the State of
Washington and the ordinances of the City.
The City hereby covenants and agrees with the registered
owner of this Bond that it will keep and perform all of the
covenants of this Bond and the Bond Ordinance.
Interest on this Bond is payable in lawful money of the
United States of America by check or draft mailed on the day
Interest is due to the registered owner or assigns at the address
appearing on the Bond register on the 15th day of the month
preceding the interest payment date The final payment of
principal of and interest on the Bond shall be payable upon
presentation and surrender hereof by the registered owner at the
office of the Director of Finance and Budget
The City has reserved the right to redeem the Bonds of this
issue in whole or in part at any time on or after October 1, 1994
without premium or penalty on thirty days' written notice to the
registered owner hereof at par plus accrued interest to the date
of redemption.
The City hereby irrevocably covenants that it will include
in its budget and levy ad valorem taxes within and as a part of
the tax levy permitted to cities without a vote of the people,
upon all the taxable property with the City subject to taxation,
in amounts sufficient, with other monies legally available
therefor, to pay the principal of and interest due on this Bond
as the same shall become due and shall deposit such funds into
the City of Yakima Low Income Housing Bond Redemption Fund
authorized to be maintained by the Bond Ordinance.
*Corrected by Resolution No, D -6018
- LMC476 91/09/17
The full faith, credit and resources of the City, are hereby
irrevocably pledged for the prompt payment of such principal and
interest
This Bond shall not be valid or become obligatory for any
purpose or be entitled to any security or benefit under the Bond
Ordinance until the Certificate of Authentication thereon shall
have been manually signed by the Bond Registrar.
It is hereby certified and declared that this Bond is issued
pursuant to and in strict compliance with the constitution and
laws of the State of Washington, the charter of the City, and
duly adopted ordinances of the City, and that all acts,
conditions and things required to have happened, been done and
performed precedent to and in the issuance hereof have happened,
been done, and performed
IN WITNESS WHEREOF, the City of Yakima, Washington, has
caused this Bond to be signed with the manual or facsimile
signature of the Mayor, to be attested by the manual or facsimile
signature of the City Clerk, and the seal of the City to be
impressed or imprinted hereon, all as of this 1st day of October,
1991
CITY OF YAKIMA, YAKIMA COUNTY
By /s/ manual or facsimile signature
Mayor
ATTEST
/s/ manual or facsimile signature
City Clerk
CERTIFICATE OF AUTHENTICATION
This Bond is one of the Bonds described in the within -
mentioned Bond Ordinance of the City of Yakima, Washington and is
dated October 1, 1991
DIRECTOR OF FINANCE AND BUDGET,
CITY OF YAKIMA
Bond Registrar
By
Authorized Officer
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns
and transfers unto
(name and address of assignee)
the within Bond and does irrevocably constitute and appoint the
Bond registrar to transfer said Bond on the books kept for
r
-6- LMC476 91/09/17
F i t i
I
registration thereof with full power of substitution in the
premises
Date
NOTE: The signature of this
Assignment must correspond with the
name of the registered owner as it
appears upon the face of the within
bond in every particular, without
alteration or enlargement or any
change whatever.
SECTION 8 Execution of the Bonds. The Bonds shall be
executed on behalf of the City by the manual or facsimile
signature of the Mayor, shall be attested by the manual or
facsimile signature of the Clerk of the Council and shall have
the corporate seal of the City impressed or imprinted thereon
SECTION 9. Delivery of the Bonds. The delivery of the
Bonds to the Purchaser pursuant to the proposal (a copy of which
is attached hereto) is hereby approved and confirmed Such
proposal is hereby accepted on the terms and conditions set forth
therein and herein
SECTION 10. Authorization to Officials and Agents;
Ratification of Prior Actions. The appropriate City officials,
agents and representatives are hereby authorized and directed to
do everything necessary including holding the public hearing
required by Section 147 of the Code prior to issuance of the
Bonds for the prompt issuance, execution and delivery of the
Bonds, and for the proper use and application of the proceeds of
the Bonds as provided in this ordinance
All actions heretofore taken by the City's officials, agents
and representatives in connection with the issuance of the Bonds
and in connection with the City's request for proposals to extend
the lines of credit provided for herein are hereby ratified,
approved and confirmed.
SECTION 11. Bonds Not Designated " Oualified Tax - Exempt
Obliaations " The Bonds are not designated as "qualified tax -
exempt obligations" as defined in Section 265(b) of the Code
because they are qualified mortgage bonds which do not qualify
under § 265(b) of the Code
SECTION 12. Lost or Destroyed Bonds. In case a Bond shall
be lost, stolen or destroyed, the Bond registrar may execute and
deliver a new Bond of like amount, date, and tenor to the
registered owner thereof upon the owner's paying the expenses and
charges of the City an the Bond registrar in connection therewith
and upon his filing with the Bond registrar evidence satisfactory
to said Bond registrar that such Bond was actually lost, stolen
or destroyed and of his /her ownership thereof, and upon
furnishing the City with indemnity satisfactory to the Bond
registrar
SECTION 13. The Program. In order to conserve the supply
® of decent, safe and sanitary housing within the City, the city
hereby establishes the Program to provide below - market rate
financing for the preservation of single family residential
property by persons or families of low- income.
- 1MC476 91/09/17
The proceeds of the Bonds shall be utilized to make loans to
homeowners within the City who qualify as persons of low income
Such loans will be made pursuant to the Program The Program
shall, in all respects, comply with the provisions of
Section 143(k)(4) or (5) (as the case may be) of the Code.
Eligibility guidelines for the Loan In order to be
eligible for funding under the Program, each loan must meet the
requirements of Section 143 particularly including
Section 143(k)(4) or (5) of the Code for maintaining the tax -
exempt status of the Bonds. Each loan must meet other standards
to be established by the City with respect to the eligibility of
the property to be acquired, the borrower, the deed of trust or
mortgage, and the terms and conditions of the deed of trust or
mortgage securing the loan by the City to the borrower.
Properties. Each property to be acquired must be located
within the City, be a permanent structure used primarily for
year -round residential use or the principal residence of the
borrower, and contain no more than four dwelling units.
Borrowers Each borrower must meet eligibility requirements
established or to be established by the City including having an
annual income below eighty percent (80 %) of median income, for
the standard metropolitan statistical area in which the City is
located, adjusted for family size in accordance with standards to
be established by the City
These income limits may hereafter be changed by the City,
subject to compliance with Section 143 of the Code and state law
Loan Terms and Conditions The maximum amount of a loan
will be in accordance with Section 143(k)(4) or (5) of the Code,
as the case may be
All loans, regardless of amount, must be secured by a
recorded security instrument, which may be a junior lien upon the
property.
Loan Origination and Approval The City of Yakima, Office
of Housing and Neighborhood Conservation is hereby delegated the
authority to establish and publish a Program Handbook containing
eligibility guidelines consistent with the provisions of this
Ordinance, shall be responsible for receiving applications for
the loans, reviewing the applications for loans for completeness
and compliance with program eligibility requirements, making
credit determinations, approving the loans, closing the loans and
disbursing loan proceeds Independent escrow companies may be
used for loan closing Such office will not charge the borrowers
for application fees or costs of originating, processing and
closing the Loans, but will charge for actual recording fees and
title insurance charges incorporated in the closing costs.
,SECTION 14. Arbitrage Rebate.
(a) General Rule The City will pay to the United
States of America in accordance with the provisions of this
section (i) at least 90 percent of the Rebatable Arbitrage with
respect to the Bonds as of each Installment Computation Date,
(ii) 100 percent of the Rebatable Arbitrage with respect to the
Bonds as of the Final Computation Date and (iii) any income
attributable to such Rebatable Arbitrage
(b) Computation of Rebatable Arbitrage The Rebatable
Arbitrage with respect to the Bonds computed in accordance with
the Rebate Computation Certificate and, as of each Computation
Date, will be the excess of:
- 8 - LMC476 91/09/17
u ., a
(i) The future value of all Nonpurpose
Receipts with respect to the Bonds; over
(ii) The future value of all Nonpurpose
Payments with respect to the Bonds
The future value will be computed as of each Computation Date.
(c) payment Procedure.
(i) The payment of Rebatable Arbitrage due
as of each Installment Computation Date will be paid no
later than the date that is 60 days after the
Installment Computation Date
(ii) The payment of Rebatable Arbitrage due
as of the Final Computation Date will be paid no later
than the latest of (a) the date that is 60 days after
the Final Computation Date, (b) the date that is 8
months after the date of issuance of the Bonds, or (c)
the date 60 days after the earlier of the date that the
City no longer expects to spend gross proceeds of the
Bonds within 6 months of the date of issuance of the
Bonds or 12 months after the date of issuance of the
Bonds
(iii) Each payment of Rebatable Arbitrage will
be made to the Internal Revenue Service Center,
Philadelphia, Pennsylvania 19255 and will be
accompanied by IRS Form 8038 -T.
(d) Other Methodolocty Notwithstanding this
Section 14, payments of Rebatable Arbitrage will be made in
accordance with instructions provided by Preston Thorgrimson
Shidier Gates & Ellis if necessary to maintain the Federal income
tax exemption for interest payments made on the Bonds
SECTION 15. Severabilitv If any one or more of the
covenants or agreements provided in this ordinance to be
performed on the part of the City shall be declared by any court
of competent jurisdiction to be contrary to law, then such
covenant or covenants, agreement or agreements, shall be null and
void and shall be deemed separable from the remaining covenants
and agreements of this ordinance and shall in no way affect the
validity of the other provisions of this ordinance or of the
Bonds
SECTION 16. Affective Date This ordinance shall be in
full force and effect from and after thirty (30) days after the
date of its publication, adoption and approval as required by
law
ADOPTED by the City Council of City f Yakima, as ing on,
at a regular meeting thereof held this,.�2f day of ,
1991 -
CITY OF YAKIMA,
YAKIMA COUNTY, WASHINGTON
MA
Mayor
• ATTEST
City Clerk
-9- LMC476 91/09/17
• CLERK'S CERTIFICATE
I, the undersigned, the duly chosen, qualified and acting
City Clerk of the City of Yakima, Washington (the "City "), and
keeper of the records of the City Council (,herein called the
"Council "), DO HEREBY CERTIFY:
1. That the attached ordinance (herein called the
"Ordinance ") is a true and correct copy of Ordinance No. of
the City, as finally adopted at a meeting of the
Council held on the day of , 1991, and duly
recorded in the offices of the City.
2. That said meeting was duly convened and held in all
respects in accordance with law, and, to the extent required by
law, due and proper notice of such meeting was given; that a
quorum was present throughout the meeting and a legally
sufficient number of the members of the City voted in the proper
manner for the adoption of the Ordinance; that all other
requirements and proceedings incident to the proper adoption of
the Ordinance have been duly fulfilled, carried out and otherwise
observed; and that I am authorized to execute this certificate
IN WITNESS WHEREOF, I have hereunto set my hand and affixed
the official seal of the City this day of
1991
City Clerk
•
[S E A L]
•
YAKIMA, WASHINGTON
AGENDA STATEMENT
ITEM NO ' 6
FOR MEETING OF November 20. 1990
ITEM TITLE. Presentation of Revised 5 -YR Financial Plan for CDBG Program
SUBMITTED BY. Glenn K. Rice, Director of Community & Economic Development
CONTACT PERSON/TELEPHON Dixie acht . ck Grant Manager
575 -6101
SUMMARY EXPLANATION
The attached Five Year Financial Plan is a renewal of the Council's approved Community
Development Block Grant Program's prior Financial Plan passed In 1985
This Financial Plan extends the financial stability of the Community Development Block Grant
Housing Program from 1990 through 1995.
The primary objective of this Plan is the continuance of resources for community housing
assistance programs The secondary benefit resulting from this Financial Plan is the
refinance of existing long term debt into a comprehensive ten -year obligation
40 The Program's continuance formated by the Financial Plan proposes to borrow $200,000
from the City's Equipment Rental Fund with a repayment plus interest in 1991 and a one
million dollar loan from a. Private lender at a discounted interest rate
The results of this proposed Five Year Financial Plan will assist the City's housing programs
weather the current housing legislation action that was passed by Congress
EXHIBITS
X Resolutions Ordinance Contract Minutes Plan /Map
—
Notification List X Other (S ecify) Five Year Financial Plan
APPROVAL FOR SUBMITTAL
CITY MANAGER
STAFF RECOMMENDATION
1 ) Approve the Resolution authorizing the Interfund Loan.
2.) Accept the Financial Plan to support Housing Services Center Program and Operations
and authorize appropriate legislation be prepared for future action.
BOARD /COMMISSION RECOMMENDATION.
COUNCIL ACTION 1) ri - ,r$4(,,-
,)
0
RESOLUTION NOD 5 8 4 6
A RESOLUTION authorizing an Interfund Loan from 551 - Equipment
Rental Fund to the 124- Housing Fund, and pro-
viding for repayment.
WHEREAS, 551 - Equipment Rental Fund has sufficient re-
sources available for investment to make the Interfund Loan
authorized by this resolution; and
WHEREAS, funds must be loaned to the 124- Housing Fund in
order to provide sufficient resources for the programs admin-
istered by the Office of Housing and Neighborhood Conserva-
tion; and
HIII:RE.AS, the Citl Council deems it to be in the best
interest of the City to make the Interfund Loan provided for
herein, now, therefore,
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF YAKIMA•
The amount of $200,000 is hereby transferred and loaned
from tli� 551 - Equipment Rental Fund; which loan, together with
interest at the rate of 8.5% per annum, is to be repaid from
the 124- Housing Fund to the 551 - Equipment Rental Fund on or
b&f()re October 31, 1991. The Director of Finance and Budget
is hereby directed to make the necessary transfer to accom-
plish the loan authorized by this resolution.
•DOPTED By THE CITY COUNCIL this AC day ofLarnk t - ,
l Y')U
Mayor
ATTEST
i F. ;! E i s ,_ r ' `'�".
City Clerk
lre intrfnd.jt)
0
• CITY OF YAKIMA
OFFICE OF HOUSING AND NEIGHBORHOOD CONSERVATION
NOVEMBER, 1990
RENEWAL OF FIVE YEAR FINANCIAL PLAN
Background
For over fifteen years, the Office of Housing and Neighborhood
Conservation has successfully implemented and operated a housing
program Throughout these years, the program has been supported
primarily by Community Development Block Grant (CDBG) Entitlement
Funds
Since 1975 and each year thereafter, entitlement amounts received a
steady increase up to 1980 and has been declining each year since
Without taking inflation into consideration, the present program is at a
funding level comparable to 1976 -77 The current discussions in Congress
is a 35% reduction in the Community Development Block Grant Program or
approximately $215,000 In addition to the anticipated cuts, Congress has
passed legislation eliminating the 312 Direct Loan Program, Rental
Rehabilitation Program and the Urban Homesteading, which the Housing
Office currently uses in conjunction with the Block Grant Program
Although CDBG funding has continued to decline, the need for housing
assistance has not The continual need for affordable, decent housing is
reflected in our homeless population, low vacancy rates, low tax base, and
the many numbers of families on housing agencies' waiting lists
Throughout the years, the Office of Housing and Neighborhood Conservation
has weathered this national debate on funding priorities by leveraging
other federal, state and local funding sources and applying for funds from
other like programs Although the Housing Office has successfully
accomplished both of these methods, it can only apply if there are
sufficient funds available and accessible at the appropriate time Both
have become a major problem for the operation of the program As has
been widely publicized, members of Congress are experiencing some
difficulty in deciding what will be funded and at what level Since the
federal year begins in October, this disagreement periodically freezes the
federal treasury, and our program is forced into a negative cash flow
position This is poor business, and is a concern of the state auditor It is
for these reasons that a new financing arrangement is being proposed
1
0
Proposed Financing Plan •
This Financial Plan is an extension of the Three to Five Year Financial Plan
that was approved by City Council in 1986 The earlier plan set forth
funding strategies to continue the housing program and established a long
term goal to make the housing program self sufficient without the
siependency of federal fundinq Although this is a difficult task, it can
become a short term reality to have sufficient program funds to achieve
the capital funding of both the single family and elderly programs within
six years, if administrative funding can be obtained ( See Attachment
"A ", Income and Obligations, and Attachment "B ", the Proposed Financial
Plan Budget )
Proposed Loan Repayment Plan.
a. In 1990, the Housing Division borrows $200,000 from the City
through an interdepartmental loan
b. The Housing Division would borrow one million dollars from a
local lending institution at 9% for ten years in the following
scheduled installments
$400,000 in 1991
$400,000 in 1992
$200,000 in 1993
This loan would be issued in the form of a General Obligation
Bond This would impact the City's Council -matic Bond Debt
Capacity (Existing Capacity is $7,429,516 as of December 31,
1989 )
Repayment of the one million dollar debt obligation would be
over a ten year term. The primary source of funds for
repayment is the collective program income from Single -
Family, Multi- Family, and Homeownership Program
participants The City's Housing Office loan portfolio value is
$3 million and exceeds any current outstanding indebtedness as
well as the proposed new debt.
II Use of Funds
1 In 1991, pay the $200,000 loan, plus interest, back to the
City
•
2
• 2 Payoff one homeownership loan each year through 1995
(See Attachment "C ")
3 Assist funding of the existing federal, state and local
housing rehabilitation program's with the remaining
funds
This proposal uses many assumptions based on the existing program's
history and experience to calculate this Financial Plan The assumptions
are outlined in the following narrative for each program
1 Single Family Rehabilitation /Homeownership Loans
These loans are provided to low /moderate income, owner - occupied
applicants for the rehabilitation of homes within the boundaries of
the City of Yakima and homeownership financing opportunities
a. Direct Repayment Loans - These are direct low interest loans
to families who pay a monthly payment to the bank on behalf
of the City's Housing Office There are presently 69 loans
paying monthly payments The average payment is $146 with
interest rates ranging from 0 -9 %, averaging 3 4% The present
outstanding balance due the City is $1,030,520 as of
September, 1990 The average loan is $18,701, and includes
Homeownership Program participants
This Financial Plan anticipates continued program direct
repayment loans of $250,000 annually from 1991 thru 1995
This action will increase the monthly repayment of program
income to $206,552 annually by 1995, or an increase of about
$75,000 over current repayment levels
b. Deferred Loans - These loans are issued in conjunction with
direct repayment loans, (those described above), or with other
funding resources which include private, state or other local
Housing resource bases. These loans are considered deferred
of monthly repayment, but must be repaid upon title transfer
of the property, or following repayment' of the senior
mortgages. There are presently 64 deferred loans held by the
City Housing Office The average loan value is $15,057 and an
3
0
overall value of the deferred program is $963,662 History •
indicates one or two of these loans are repaid annually These
loan repayment funds are reinvested into similar projects
The Financial Plan anticipates that this type loans will be
issued in conjunction with 312 Direct Loans from the U S
Department of Housing and Urban Development or other similar
public or private conveyances, as they become available
2 Rental Rehabilitation Loans
These loans are provided to investors to rehabilitate rental units
To make these loans affordable and retain affordable rents, public
and private funding is combined Since 1985, this program has
issued 64 loans and rehabilitated 189 rental units at a total cost of
$2,699,918 with an average of $14,285 per unit.
These loans are a combination of funding from participating lending
institutions and the City's Housing Office Typically, the housing
loans reflect primarily, State DCD and CDBG Following the
satisfaction of the first mortgage private loan, the investor begins
repayment of the public loan at the same monthly payment The
public housing loans accrue at a 1% annual fee until the repayment
start date
Of the $2,699,918 loans issued, the public housing programs have
funded $1,592,153 and the balance of $1,107,765 was funded from
private resources These public housing loans are scheduled to be
paid back to the program at future periodic times There are
presently 10 loans being repaid in monthly payments of $1,315
This amount increases annually (See Attachment "A ")
The Financial Plan anticipates a continued program of issuing loans
of $125,000 in Block Grant annually, in addition to an anticipated
$75,000 from the state to match local lender funds. These new
loans will have a future repayment value not realized for a minimum
of five to ten years
•
4
0
• 3 Elderly /Handicapped Repair
Grants for home health and safety repairs to elderly /handicapped,
low /moderate income homeowners
This program has no repayment requirement. The funds available for
repairs to the homes are issued as grants Due to the small
investment and the major deterioration of the homes, no lien is
imposed
Approximately 20 to 24 homes are repaired annually and program
history reflects 265 applicants assisted
The $30,000 annual budget combines efforts with other agencies for
additional work to the home when it is available
The real economic value of this program is assisting in the
independency of the applicant so they can remain in their home and
not be placed in institutional or private care, which is very costly
for both the community and family
It is anticipated to continue the $30,000 annual funding level of this
program for the five years This should assist 20 -24 families a
year
4 Rehab /Resale
This program makes funds available for the purchase of weedy Tots
and abandoned, dangerous buildings
This program is budgeted at $25,000 to $50,000 annually and has
purchased 32 separate parcels that have had deterrent qualities
affecting both the appearance and value of neighborhoods
All parcels purchased are deeded to different entities that have
developed affordable and decent housing for low /moderate income
families
The average purchase of these lots has been $8,000 and they now
5
0
have a current average value and new tax base of a minimum of
$35,000 •
This program anticipates a $25,000 level of funding annually for
five years for the purchase of approximately 15 parcels of land
These acquisitions will compliment the new Rebound Program in the
elimination of abandoned /dangerous buildings within our
neighborhoods.
5 Operating Costs
These are required to fund necessary items to operate the
rehabilitation programs This would include title search, credit
reports, appraisals, etc , and ensure compliance with federal, state
and local program requirements, also the ability to research and
underwrite loans that provide additional private funding
alternatives
The Financial Plan anticipates that this component be funded at a
$15,000 level for each of the five years
This Five Year Financial Plan does not include construction inflation
costs If these costs increase, the number of projects that could be
completed would be reduced
6 Administration
The cost of staff and office operation to implement all of Yakima's
City housing programs This includes wages, benefits and office
operating costs
The specialization and expertise of the eight staff members is
necessary to implement the existing programs This balance of
staff operates programs equal to the sixteen member staff of 1980
Program enhancements beyond the level proposed by this Plan, or
new federal or state funded programs would require additional staff
to implement.
•
6
0
The Financial Plan base year is the 1990 budget The Five Year
• Financial Plan projects increases in administrative and program
operating costs of 5% per year
SUMMARY
This Financial Plan is adequate to balance program needs and bolster the
future financing opportunities for the local Housing Office The basic
reason for this whole proposal is to generate cash flow and continue
programs until the climate for state and federal funding turns, and /or the
City's existing housing portfolio's equity is sufficient to be self
perpetuating The Financial Plan anticipates that self sufficiency of
capital funding for programs can be achieved by the beginning of the next
decade if they continue their current and stable level of funding
The requested interdepartmental loan from the City of Yakima will be paid
back in one year and produce interest income to the City The commercial
loan (guaranteed by a limited G 0 Bond) will be secured from a local
lender at a reduced interest rate It will be secured in two parts (spring
ip and fall) for 1991 and 1992, with the 1993 loan secured in the fall These
commercial loans are scheduled in the fashion to save both interest and
repayment costs for the program, making them affordable
This Financial Plan will provide the on going funding necessary to
maintain existing programs at current levels Also, the early retirement
of the long term debt obligations of the homeownership loans are an
additional benefit (See Attachment "C ")
If additional Community Development Block Grant Entitlement Funds are
received or other resources are made available, this Plan will reduce
debts incurred earlier or enhance existing programs
Given the policy assumptions and proposed budget outlined in this
Financial Plan, it will be valid from 1990 thru 1995 Starting in 1996,
other funding options and /or alternatives must be identified or the
existing programs need to be modified, curtailed or eliminated
•
7
0
TEN l , t REVENUE VS OBLIGATIONS amity of Yakima, Office of Housing and Neighborhood Conservation
I 1930 19.1 199.2 I 1923 1E-1 10 95 1925 1997 I 1993 1909 2000
!C�rY LOAN 52:x 0
FiAtiK LOAN 1 .$45: ^r -x,ccc 52_{ 0u0 .
1
REVENUE I I I I I 1. 1 I
1 1 1 I I 11 1 1 1 ' 1
_X:ST1N•3 SF LOANS I $132,00 514: E.33 1 5165 276 $161,914 ` 52:5 552 I S223,'90I $239 E25 I $256,466 $273,104 $2 °9 742
EY:STING MF LOANS I 515 7E3 523 192 I 539 0 050 5-41,624 557,603 1 553,333 I 5 ,712 I $131,32-3 $149 436 5172,33
1 1 1 1 1
S:ETOTAL 5147,78? I 5171,530 I $2 S223 32 I $254 155 ' $25.2 493 5325,5 -3 $35 I $4 2 L
1 I 1 I 1 1 1
OBLIGATION 1 1 1 1 1 1 1 1 1 I
HO LOANSANKS 1 573,047 I $89 138 555159 561,110 I S57,291. 553,792 543,493 567,735 556,928 5^.3 920
CITY LOAN 5n,327 1 1 1
SANK LOAN I 533 591,2051 5121,508 $1520101 $152,010 5152,010 $152,13101 . 5152,010 I 5152,010` 5152,0
1 1 1 1 1 11 1 1
SUBTOTAL S312,776 $15:),34-1 5 $213,120 $210 001 I 520E:3:2 52^1,503 $219 715 5219 93 $215 930
Et A LA NCE (516..552)1 $11,45. 517,559I SIC 418I 55 I 577,691 5125,037 $768,01.4 5203,574 52.6192
1 H 1 1
The deficit amount in 1991 f& 9Cts the repay.; eit of the 1930 Ci'y deparmen; Ican.
1 I I 1 1 I . 1 I
0 ATTACH :T 'A"
_ •
Ala
FIVE Y UDGET -
.B City of Yakima, Office of Housing , eighborhood Conservation Illr -
1990 19 1992 1993 1954 1995 1996 I_ 1997 1958 1999 2000
REVENUE I - .
',A RY F0R'fVAP,0 550,000 5131,650 5374,774 5438,221 5217,589 5_;e 129 (5104 425) (5234,780) (5342,178) (5435,203) _
;06G $575,000 $.575,000 5575 TO 5575 000 $575 0(0 5575 000 5575,000 5575 000 $575 000 $575,000
'TATS OCO $75 000 575 000 575 000 $75,000 $75,000 575 000 575 000 $75,000 575,000 575.000
.(STING ST LOANS $132,000 $1 635 5165,276 5181 914 $20€,552 $ 5239,828 $256,4.66 $273,104 $2°5 742
;E'✓✓ ST LOANS 1 516,638 $16,638 $16,638 516 638 $16 636 $16 636 $16,638 5.6636 516,6.55 516.635
X T1NG V.f LOANS $15,788 $23192 539 050 541,624 $57,603 $60,503 $56,712 $131, 5149,44)8 5172,300
t ric LOAN $200,000 1
=:,NK IGAN 5 -0,000 $- 00 000 $200 000 I a
SUBTOTAL 5200.000 51,264,426 51,370,118 51,44 5,738 51,298,397 51,1 5100 5558752 $819667 5746,972 5893,557
,
OBLIGATIONS
1 S1 LOANS 5250 000 - 5250,000 5250,000 5250,000 5250 000 5250,000 $250,000 $250,000 $250 000 5250,000
wf LOANS x200,000 ' 5273,000 52C0 000 5200,000 5200 004 5200 0001 5200 000 5200 000 5200,000 $200,000
ILDERLY $30 000. $.30,000 533 COO 530 000 ' 000 530 000 530,000 530 000 530,000 530,000 F
REN:3.'RESALE $25,000 5.25,000 525,000 525,000 5.25,000 $25,000 525,000 $25.000 525 u00 525,000
OPERATING 515,000 $15,000 5 000 $15,003 515 000 515,000 1 515,000 515,000 515,000
4.J $300000 ' $315,000 $330750 5347,288 $364,652. $382,864 $ 5422,130 $443,237 $2.35,396
i0 L0A.ti'5AWS 573,047 569,138 565,159 561,110 557,991 $53,792 $49,4g3 $67,705 566,928 553,920
Ti'Y LOAN $2:)9,327
3J.*K LOAN 5304.02 $91,2% 5121,608 5i52,010 $152.010 $152,010 5152,010 5152,010 $152,010 5t52.010
SUS1OTAL _ _ $150,000 51.132,776 - 5995,3 51,037,517 51,080 408 S1,054,653 51,108,686 51, 51,161,845 51,182,175 5
I - I 1 104 423 5234,750) (53 ($4,.5,203) (.507,771)
�?J; ANCE $sooOO 5131,6 $i74,774 $- -0x.221 sz17,9E9 554. 25 li ) t
, ATTACHMENT 'B'
TEN YR., NPREPAYMENT City of Yakima. Office of Housing a► 4eighborhood Conservation ( ,
PAYOFF LOAN FROM AMOUNT FULL TERM EARLY PAYOFF$ PROGRAM , •
DATE INTEREST INTEREST SAVINGS
Jan -91 PIONEER NATIONAL BANK $30,000 $64,625 35 $29,397 83 $35,227 52
Jan -91 YAKIMA VALLEY BANK $30,000 $64,625 35 $28,779.32 $35,846 03
Jan -93 YAKIMA FEDERAL S 8 L $30,000 $64,625 35 1 $28,110 34 $36,515 01
Jan -94 WASHINGTON MUTUAL $30,000 1 $64,625 35 1 $27,371 06 $37,254 29
Jan -95 BENJAMIN FRANKLIN 1 $30,000 1 $64,625 35 $26,562 43 $38,062 92
Jan -96 1ST INTERSTATE 1 $30,000 1 $64,625 35 $25,677 93 $38,947.42
Jan -97 FIRST FEDERAL $30,000 $64,625 35 $24,717 20 $39,908 15
Jan -98 U S BANK $65,000 $140,357 25 $51,388 94 $88,968 31
Jan -99 SECURITY PACIFIC $75,000 $161,386 61 $56,208 42 $105,178 19
Jan -00 SEATTLE FIRST $90,000 $194,342 24 $63,923 95 $130,418 29
$586,326 13
0 .
ATTACHMENT 'C'
• .
11111 - 411 - ,