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HomeMy WebLinkAbout1989-3206 HOME OWNERSHIP PROGRAM LINES OF CREDIT r CITY OF YAKIMA WASHINGTON IIP HOME OWNERSHIP PROJECT LINES OF CREDIT ORDINANCE NO. 32 32 06 AN ORDINANCE OF THE COUNCIL OF THE CITY OF YAKIMA, WASHINGTON, PROVIDING FOR THE ESTABLISHMENT OF LINES OF CREDIT FOR THE PURPOSE OF FUNDING OF A HOME OWNERSHIP PROGRAM; AUTHORIZING THE EXECUTION OF NOTES OF THE CITY IN THE PRINCIPAL AMOUNT OF NOT TO EXCEED $500,000; PROVIDING FOR THE DISPOSITION OF THE PROCEEDS OF SUCH LINE OF CREDIT; FIXING THE FORM, MAXIMUM INTEREST RATE, TERMS, MATURITY AND COVENANTS OF SUCH LINES OF CREDIT; AND CREATING A FUND FROM WHICH THE PRINCIPAL OF AND INTEREST ON SUCH NOTES SHALL BE PAID. PASSED , 1989 Prepared by: PRESTON, THORGRIMSON, ELLIS & HOLMAN 5400 Columbia Seafirst Center 701 Fifth Avenue Seattle, Washington 98104 -7011 41, TABLE OF CONTENTS` Page Recitals 1 SECTION 1. Definitions 1 SECTION 2. Issuance of Notes 2 SECTION 4. Request for Draw 4 SECTION 5. Note Redemption Fund 4 SECTION 6. Payment Prior to Maturity 5 SECTION 7. Application of the Proceeds of Sale of the Note 5 SECTION 8. Form of the Note 5 SECTION 9. Execution of the Notes 8 SECTION 10. Delivery of the Notes 8 4110 SECTION 12. Notes Designated °Qualified Tax - Exempt Obligations.° 8 SECTION 13. Lost or Destroyed Notes . . . . . . . . . . . . 8 SECTION 14. The Program 8 SECTION 15. Severability 10 SECTION 16. Effective Date 10 This Table of Contents and the preceding cover page are not part of the ordinance. They are provided for convenience of the reader only. ORDINANCE NO.' 3 2 u 6 AN ORDINANCE OF THE COUNCIL OF THE CITY OF YAKIMA, WASHINGTON, PROVIDING FOR THE ESTABLISHMENT OF LINES OF CREDIT FOR THE PURPOSE OF FUNDING OF A HOME OWNERSHIP PROGRAM; AUTHORIZING THE EXECUTION OF NOTES OF THE CITY IN THE PRINCIPAL AMOUNT OF NOT TO EXCEED $500,000; PROVIDING FOR THE DISPOSITION OF THE PROCEEDS OF SUCH LINES OF CREDIT; FIXING THE FORM, MAXIMUM INTEREST RATE, TERMS, MATURITY AND COVENANTS OF SUCH LINES OF CREDIT; AND CREATING A FUND FROM WHICH THE PRINCIPAL OF AND INTEREST ON SUCH NOTES 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; WHEREAS RCW 39.46.050 authorizes the City to establish lines of credit with any qualified public depository to be drawn upon in exchange for its notes or other obligations, the interest rates on which may be a fixed rate or rates set periodically or a variable rate or rates determined by agreement of the parties; and WHEREAS, in order to borrow funds 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 establish lines of credit with certain qualified public depositories secured by the issuance of its limited tax general obligation notes in the principal amount of not to exceed $500,000, pursuant to RCW 39.46.050; and WHEREAS, the City has sought indications of interest from various qualified public depositories for the establishment of a line of credit with each such depository through the purchase of the City's limited tax general obligation notes; NOW, THEREFORE, BE IT ORDAINED BY THE CITY OF YAKIMA, AS fia 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) "Banks" means the qualified public depositories listed on Exhibit A, attached hereto and incorporated by reference herein. (b) "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. (c) "Code" means the federal Internal Revenue Code of 1986, as amended. 41111 (d) 'Council' means the Council of the City as the same shall be duly and regularly constituted from time to time. (e) '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. (f) 'Interest Rate' means the per annum rate of interest on the Note to be determined by resolution of the Council pursuant to Section 2 of this ordinance. (g) 'Notes' means the limited tax general obligation notes of the City in the aggregate principal amount of $500,000 to be issued pursuant to this ordinance to the Banks in the respective amounts set forth on Exhibit A. (h) 'Note Fund' means the 'City of Yakima Housing Note Redemption Fund,' created by Section 5 of this ordinance. (i) 'Outstanding Principal Balance' means the aggregate of the funds that the City has drawn from any Bank pursuant to a Note less the aggregate of all principal payments on such Note made by the City. (j) 'Program' means the home ownership demonstration project set forth in Section 14 of this ordinance. (k) 'Request for Draw° means an oral or written request by an authorized representative of the City for a draw from the lines of credit authorized to be established pursuant to this ordinance (in substantially the form set forth in Exhibit B). SECTION 2. Issuance of Notes. The City shall, for the purpose of funding the Program, issue its Notes to the Banks in the principal amounts set forth in Exhibit A. Said Notes shall be designated the 'City of Yakima, Washington, Limited Tax General Obligation Notes, 1989," shall be dated the date of their delivery to the respective Banks, shall be issued in 1989 in fully registered form, and shall mature on December 31, 2009. The Notes shall secure lines of credit established by the City with any one or more of the Banks. The Finance Director is hereby authorized and directed to determine the amount of credit to be utilized by the City pursuant to a line of credit established with any Bank. The Finance Director is authorized to establish such line of credit with any Bank or Banks subject to the provisions of this ordinance. Each Bank shall execute an 'Agreement to Establish a Line of Credit,' in substantially the form attached as Exhibit C, and deliver the same to the Finance Director as a condition precedent to the establishment of a line of credit with such Bank. The City hereby appoints the Finance Director as the Note registrar. The City shall cause a Note register to be maintained by the Note registrar. So long as any Notes remain outstanding, the Note registrar shall make all necessary provisions to permit the exchange or registration or transfer of the Notes at its office. The Notes shall be transferable only upon the Note register by the registered owner thereof in person or by his attorney duly authorized in writing, upon surrender thereof, -2- FWW008 89/08/08 0 together with a written instrument of transfer satisfactory to the Note registrar duly executed by the registered owner or his duly authorized attorney. Upon the transfer of a Note, the Note - registrar shall issue in the name of the transferee, a new Note in the same denomination. Each Note shall bear interest on the Outstanding Principal Balance at a rate not to exceed 9 %, as hereafter fixed by resolution of the City Council (the "Interest Rate"), except as expressly provided in Section 3 of this Ordinance. The principal of and interest on the Note shall be payable as follows: Upon each Request for Draw, a portion of the Outstanding Principal Balance equal to such Request for Draw, and the interest thereon, shall be payable in level monthly payments of principal and interest sufficient to amortize such draw at the Interest Rate over the period of time remaining until maturity of the Note. This period shall be determined from the date of the advance of Note proceeds to the City pursuant to the Request for Draw by which the City drew that principal amount from the Bank. Such level payments of principal of and interest on the Note with respect to each such Request for Draw shall be payable on the tenth day of each month beginning with the month next following the month in which the City makes such Request for Draw. Final payment of the principal of and interest on the Notes shall ., nonetheless be due on December 31, 2009. Payments of the principal of and interest on the Note corresponding to each and every Request for Draw shall be aggregated into a single monthly payment. Both principal of and interest on the Notes shall be payable in lawful money of the United States of America. Principal. of and interest on the Notes shall be paid by check or draft mailed to the registered owners or assigns at the address appearing on the Note 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 Notes 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 Notes from federal income taxation. 411111 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 Notes 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 Notes provided, however, that the City does not represent, warrant, covenant or agree that 'interest on the Notes 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 Notes. Without limiting the generality of the foregoing, the City covenants that it will not take any action or fail to take any -3- FWW008 89/08/08 action with respect to the investment of the proceeds of any line of credit secured by any Note, or other funds, which would result in constituting a Note 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, 143 and 148 of the Code applicable to the Notes. The City will comply with the requirements of Sections 103, 143 and 148 of the Code (or any successor provision thereof applicable to the Notes) and the applicable Regulations thereunder throughout the term of the Notes. The City further covenants that it will not take any action or permit any action to be taken that would cause the Notes to constitute 'private activity bonds" under Section 141 of the Code. 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 Notes will be used for local governmental activities of the City. SECTION 4. Request for Draw. A Request for Draw pursuant to a Note may be made by the City either orally or in writing at any time on or before October 1, 1990. Oral Requests for Draw may include requests by telephone, telegraph, telex or any other means of communication by an authorized representative of the City. The Director of Finance and Budget is hereby authorized to determine the amount of credit to be extended and to make written or oral Requests for Draw pursuant to this Ordinance. Promptly following each Request for Draw the Director of Finance and Budget shall send by registered or certified mail, a confirmation of the Request for Draw, substantially in the form of Exhibit B attached hereto and incorporated by reference herein. The Bank shall incur no liability to the City or to any other person in acting upon any oral or written notice or other communication which the Bank believes in good faith to have been given by an official or other person authorized to borrow on behalf of the City, or in otherwise acting in good faith in making advances pursuant to this Ordinance. SECTION 5. Note Redemption Fund. A special fund of the City to be known as the "City of Yakima Housing Note Fund," (the "Note Fund ") is hereby authorized to be created by the Finance Director. The Note Fund shall be drawn upon for the sole purpose of paying the principal of and interest on the Notes. Moneys on deposit in the Note 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 Note Fund. Any moneys remaining in the Note Fund after payment in full of the principal of and interest on the Notes may be transferred to the General Fund of the City, and the Note Fund shall be closed. The City covenants and agrees that for as long as the Notes 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 Note as the same shall become due and payable. Such taxes and other monies so pledged shall be paid directly into the Note Fund in amounts sufficient to pay the principal of and interest on the -4- FWW008 89/08/08 Notes, and none of the money in such Fund shall be used for any other purpose than the payment of the principal of and interest 11. on the Notes. The full faith, credit and resources of the City are hereby pledged for the prompt payment of the principal of and interest on the Notes as the same shall become due. SECTION 6. Payment Prior to Maturity. Any Note may be redeemed in advance of its scheduled maturity at any time without premium or penalty upon thirty days' written notice to the registered owner at par plus accrued interest to the date of redemption. SECTION 7. Application of the Proceeds of Sale of the Notes. Immediately upon receipt of a Request for Draw, the amount requested shall be deposited by the Bank in the City of Yakima General Fund held by the Finance Director and may be used by the City to pay the cost and expenses of the Program. SECTION 8. Form of the Notes. The Notes shall be in substantially the following form: UNITED STATES OF AMERICA NO. STATE OF WASHINGTON YAKIMA COUNTY CITY OF YAKIMA LIMITED TAX GENERAL OBLIGATION NOTE 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 acknowl- edges itself to owe and for value received promises to pay to the Registered Owner identified above no later than solely from the sources hereinafter mentioned, the Outstanding Principal Balance (as defined below) of this note at the times hereinafter specified with interest thereon provided until such principal sum is paid. This note is issued pursuant to duly adopted ordinances and resolutions of the City, including Ordinance No. adopted on (the "Note Ordinance"), for the purpose of financing a City of Yakima home ownership program, all in conformity with the Constitution and laws of the State of Washington and the ordinances of the City. This note bears interest at the rate of % (the "Interest Rate") on the Outstanding Principal Balance of this note (as defined in the Note Ordinance), except as expressly provided in the Note Ordinance. The principal of and interest on the Note shall be payable as follows: Upon each Request for Draw, a portion of the Outstanding Principal Balance equal to such Request for Draw, and the interest thereon, shall be payable in level monthly payments of principal and interest sufficient to amortize such draw at the Interest Rate over a period of months. This month period shall be determined from the date of the advance of Note proceeds pursuant to the Request for Draw -5- FWW008 89/08/08 41111 by which the City drew that principal amount from the Bank. Such level payments of principal and interest on the Note with respect to such Request for Draw "shall be payable on the tenth day of each month beginning with the month next following the month in which the City makes such Request for Draw. Final payment of the principal of and interest on the Note shall nonetheless be due on . Payments of the principal of and interest on the Note corresponding to each and every Request for Draw shall be aggregated into a single monthly payment. The City hereby covenants and agrees with the registered owner of this note that it will keep and perform all of the covenants of this note of the Note Ordinance. Both the principal of and interest on this note are payable in lawful money of the United States of America by check or draft mailed to the registered owner or assigns at the address appearing on the Note register on the 15th day of the month preceding the interest payment date. The final payment of principal of and interest on the Note 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 this note at any time 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 note as the same shall become due and shall deposit such funds into the City of Yakima Housing Note Fund authorized to be maintained by the Note Ordinance. The full faith, credit and resources of the City are hereby irrevocably pledged for the prompt payment of such principal and interest. This note shall not be valid or become obligatory for any purpose or be entitled to any security or benefit under the Note Ordinance until the Certificate of Authentication thereon shall have been manually signed by the Note Registrar. It is hereby certified and declared that this note 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 note 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 -6- FWWOOB 89/08/08 impressed or imprinted hereon, all as of this day of , 1989. CITY OF YAKIMA, YAKIMA COUNTY By Jsj manual or facsimile signature Mayor ATTEST: at or f.c.i'le si. ature City Clerk CERTIFICATE OF AUTHENTICATION This note is one of the notes described in the within - mentioned Note Ordinance of the City of Yakima, Washington, dated , 1989. DIRECTOR OF FINANCE AND BUDGET, CITY OF YAKIMA Note Registrar By Authorized Officer ASSIGNMENT FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto (name and address of assignee) the within note and does irrevocably constitute and appoint the Note registrar to transfer said note on the books kept for registration thereof with full power of substitution in the premises. Date: NOTE: The signature of thij 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. Promptly following each Request for Draw, the Note shall have endorsed thereon by the registered owner the following certification: - FWW008 89/08/08 41111 PRINCIPAL AND INTEREST PAYMENTS UPON UAW Monthly First Lest Signature Deis Amount Principal and Month of Month of of Regis- • D aw • o Draw • Int; ee snt 'a t • a , =nt tared Owner • • SECTION 9. Execution of the Notes. The Notes 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 10. Delivery of the Notes. The delivery of the Notes to the Banks pursuant to their written proposals, and pursuant to this ordinance, is hereby approved and confirmed. Such proposals are hereby accepted on the terms and conditions set forth therein and herein. SECTION 11. Authorization to Officials and Accents; t'f'cat'o of •rior Act'o_s. The appropriate City officials, agents and representatives are hereby authorized and directed to do everything necessary for the prompt issuance, execution and delivery of the Notes, and for the proper use and application of the proceeds of draws thereunder as provided in this ordinance. All actions heretofore taken by the City's officials, agents and representatives in connection with the issuance of the Notes 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 12. Notes Designated "Qualified Tax - Exempt Obligations." The Notes are hereby designated as "qualified tax - exempt obligations" as defined in Section 265(b) of the Code. The City finds and declares that it does not reasonably anticipate that it will issue tax - exempt obligations (other than private activity notes) in the calendar year of 1989 in an aggregate principal amount exceeding $10,000,000. SECTION 13. Lost or Destroyed Notes. In case a Note shall be lost, stolen or destroyed, the Note registrar may execute and deliver a new Note 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 Note registrar in connection therewith and upon his filing with the Note registrar evidence satisfactory to said Note registrar that such Note was actually lost, stolen or destroyed and of his /her ownership thereof, and upon furnishing the City with indemnity satisfactory to the Note registrar. SECTION 14. 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 acquisition of residential property by persons or families of low- income. -8- FWWOOB 89/08/08 0 The proceeds of draws made by the City pursuant to the lines of credit secured by the Notes shall be utilized to make loans to home - buyers within the City. Such loans would be made pursuant to the Program as set forth in this section. The Program shall, in all respects, comply with the provisions of Section 143 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 the program handbook (the "Program Handbook')which is incorporated by reference herein and all requirements of Section 143 of the Code for maintaining the tax - exempt status of the Notes. Pursuant to the Program Handbook, x each loan must meet other standards with respect to the eligibility of the property to be acquired, the borrower, and deed of trust, and the terms and conditions of the note and deed of trust securing the loan by the City to the borrower. __Properties. Each property to be acquired must be located within a targeted area as designated by the City and included in Exhibit D, be a permanent structure used exclusively for year -round owner occupied, single family residential use only. Borrowers. Each borrower must: (a) Acquire the residence to be financed in fee simple title subject to a deed of trust in favor of the City securing the loan; (b) Occupy the property to be acquired as the principal residence of the borrower within sixty (60) days from the date of the Loan and for at least five years thereafter. (c) Have 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 the Program Handbook. 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 equal to the fair market appraisal plus closing costs. The maximum term for each loan is 30 years. All loans, regardless of amount, must be secured by a recorded security instrument, which may be a junior lien upon the property. Loan Origination. The City of Yakima, Office of Housing and Neighborhood Conservation shall be responsible for receiving applications for the loans, reviewing the applications for completeness and compliance with program eligibility requirements, making credit determinations, closing the loans and disbursing loan proceeds. Independent escrow companies may be used for loan closings. 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. -9- FWW008 89/08/08 Council ArprovAl Any loan made pursuant to the Program shall first be approved by the City Council. Such approval may be by motion or resolution. SECTION 15 Sever@tjlity. 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 Notes. SECTION 16 Effective _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 oYakima, Jashington, at a regular meeting thereof held this ]L ay of 1989. CITY OF YAKIMA, YAKIMA COUNTY, WASHINGTON . Mayor ATTEST: C ty Clerk - FWW008 89/08/08 0 ExHIBTT A Bank Principal Amount of Line of Credit Yakima Federal Savings $ 30,000 Security Pacific Bank 75,000 Benj. Franklin Federal Savings & Loan 30,000 Catholic Credit Union 30,000 Pioneer National Bank 30,000 Seattle -First National Bank 90,000 U.S. Bank 65,000 First Federal Savings Bank 30,000 Yakima Valley Bank 30,000 First Interstate Bank 30,000 Washington Mutual Savings 30,000 $ 470,000 (=:2) EXHIBIT D CITY OF YAKIMA'S DESIGNATED PROJECT'S TARGET AREA The homeownership project's target area will be designated to be all single family, owner occupied homes East of 16th Avenue, North, South and East within the City Limits of Yakima. t , r, • • CLERK'S CERTIFICATE 111111 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 , 1989, 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 1989. ty Clerk C (S E A L] -. -