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HomeMy WebLinkAboutS9-91 (2) ORDINANCE NO. s9-91 AN ORDINANCE PRELIMINARILY APPROVING THE ISSUANCE OF QUALIFIED MORTGAGE BONDS OR MORTGAGE CREDIT CERTIFICATES WHEREAS, Section 6 (a) of Article VII of the 1970 Constitution of Illinois provides that "any municipality which has a population of more than 25, 000 . . . ( is a) home rule unit" and the City of Elgin , Kane and Cook County, Illinois ( the "Municipality" ) , has a population of more than 25, 000 and is therefore a home rule unit and may, under the power granted by said Section 6(a) of Article VII of said Constitution of 1970 exercise any power and perform any function pertaining to its government and affairs; and WHEREAS, there exists within the borders of the Mu nicipality a recognized need for decent, safe, sanitary and well-constructed and maintained housing which persons of moderate income can afford; and WHEREAS, it is necessary and desirable that the Municipality issue either qualified mortgage bonds pursuant to Section 143(a) of the Internal Revenue Code of 1986 ( the "Code" ) or mortgage credit certificates pursuant to Section 25 of the Code in order to reduce the cost of financing for the acquisition of housing located in or near the Municipality for qualifying persons ; -1- WHEREAS, it is necessary and desirable that the Municipality apply for an allocation of 1991 "volume cap" under the Illinois Private Activity Bond Allocation Act to be used for the issuance of qualified mortgage bonds or mortgage credit certificates. NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF ELGIN , KANE AND COOK COUNTY, ILLINOIS, as follows : Section 1. Home Rule Authority. The Municipality is a home rule unit under the provisions of the 1970 Constitution of Illinois, and as a home rule unit may, under the powers granted by Section 6 (a) of Article VII thereof, "exercise any power and perform any function pertaining to its government and affairs, " and this Ordinance is adopted pursuant to the Municipality ' s home rule powers, any provisions contained in any other Municipality ordinance or resolution or in Illinois law to the contrary not- withstanding. Section 2. Declaration of Public Purpose. It is here- by found, determined and declared that the purpose of this Ordi- nance is to take steps designed to reduce the cost of financing for the acquisition of principal residence housing located in or near the Municipality in order to provide decent, safe and sanitary housing for qualifying persons of moderate income. It is further hereby found, determined and declared that this will provide for and promote the public health, safety, morals and welfare, maintain and foster the increase of industrial and -2- commercial activity and economic development , and preserve and increase the ad valorem tax base of the Municipality and its environs . The foregoing are hereby declared and determined to be public purposes and functions pertaining to the government and affairs of the Municipality. Section 3 . Preliminary Authorization for Issuance of Qualified Mortgage Bonds or Mortgage Credit Certificates . The Mayor, City Clerk and other officers of the Municipality are hereby authorized to take such steps as are necessary to provide for the issuance by the City, subject to City Council approval of the final terms of all instruments and agreements to be entered into in connection therewith, of its qualified mortgage bonds or , in lieu thereof, mortgage credit certificates. Such qualified mortgage bonds shall be issued in one or more series in a principal amount not to exceed the "volume cap" approved by the State of Illinois as approved pursuant to Section 4 hereof. If mortgage credit certificates are issued in lieu of qualified mortgage bonds, the Municipality shall elect not to issue qualified mortgage bonds in an amount not to exceed the amount set forth in the preceding sentence. Section 4 . 1991 Volume Cap. The Mayor and other officials of the Issuer are hereby authorized to take such actions as are necessary under the Illinois Private Activity Bond Allocation Act to obtain up to $ 7,000,000 of "volume cap" as defined therein for the calendar year 1991 for purposes of the -3- 1 ii issuance of either qualified mortgage bonds or mortgage credit certificates as described herein. Section 5 . Approval of Further Actions . From and after the adoption of this Ordinance, the proper officials, agents and employees of the Municipality are hereby authorized, empowered and directed to do all such acts and things and to execute all such documents as may be necessary to carry out and comply with the provisions of this Ordinance or to effectuate the purposes hereof. Section 6 . Repeal of Conflicting Actions. All ordinances, resolutions, orders or parts thereof, in conflict with the provisions of this Ordinance are, to the extent of such conflict , hereby repealed. Section 7 . Effective Date. This Ordinance shall be in full force and effect upon its passage and approval. -4- t PRESENTED, PASSED, APPROVED AND RECORDED by the City of Elgin , Kane & Cook County, Illinois, a home rule unit of government, this 12th day of June ► 1991 . APPROVED: MAYOR, ty of Elgin , Kane & Cook County, Illinois Attest: City Clerk, City of Elgin Kane & Cook County, Illinois (SEAL) Recorded in the records of the City the l2thday of June , 1991. -5- TELEPHONE 708/695-6500 C - FAX 708/695-9038 Direct Line 931-5660 Etc Fax 931-5665 ti f 1 CITY OF ELGIN 150 DEXTER COURT ELGIN, ILLINOIS 60120-5555 4/ $RATED FC61 June 18, 1991 Ms . Jami Owens Office of the Governor Room 107 Stratton Building Springfield, IL 62706 Re: Mortgage Bonds or Mortgage Credit Certificates Dear Ms . Owens : A certified copy of Ordinance No. S9-91, passed by the Elgin City Council on June 12, 1991, preliminarily approving the issuance of qualified mortgage bonds or mortgage credit certificates is enclosed. Very truly yours, Dolonna "Loni" Mecum, PLS City Clerk dkm Enclosure CERTIFIED MAIL bcc: James Bolerjack Jr. .- k • Elm lli , ' ' _; ,4OF etc �--y, Agenda Item No. 3.". 0 g) Vb./ y p9po�. ��,�p�' 0 0 Aq![D FE61 June 6, 1991 TO: Mayor and Members of the City Council FROM: Larry L. Rice, City Manager SUBJECT: Second Phase Request for Low Interest Bond Loan Program Several weeks ago the City Council approved Elgin's participation in the Home Mortgage Revenue Bond Program, in coordination with a number of other communities in Illinois. The total issuing was handled by George K. Baum & Company. At that time, Baum representatives mentioned that a subse- quent bonding would be available later on in the spring - and that they would be back to us for further authority at that time. The attached proposal from Baum & Company asks for Coun- cil concurrence of an additional $7 million to $9 million offering. Although we don't know what the participation will be on the first round of bonding, these additional funds will probably be utilized by first time home buyers. We will keep the Council informed as the program begins to develop. RECOMMENDATION The City Council is asked to approve the City' s partici- pation in the additional bonding phase of the Home Mortgage Revenue Bond Program. C Lar . Ri , 'ty Manager LLR:amp Attachment a George K. Baum & Company INVESTMENT BANKERS 54 WEST HUBBARD STREET MEMBER OF SUITE 403 NEW YORK STOCK EXCHANGE.INC. MIDWEST STOCK EXCHANGE Cf11CAG0.ILLINOIS 80610 TELEPHONE 13121 645-9497 May 24, 1991 Mr. Tarry Rice Manager . `,,, %Ip �,'� City of Elgin 150 Dexter Court J/ ` 7 0 I — 660 317 177\" r Elgin, Illinois 60120-5557 7�077 .o0 Dear Mr. Rice: dam ? � Q�.c. ,. t ve,71:�-z Even though you are part of the home rule government's low interest mortgage bond program, we have a suggestion to allow possible expansion of that program to meet the demand in your community. When soliciting lenders, we had bids in excess of funds available. Thus, it is safe to assume as the money becomes available in June, it will be lent quickly. In order to meet all the needs George K. Baum & Company and Chapman & Cutler would like to suggest you seek additional private activity bond authority from the governor's office. There is no cost nor risk to taking this action. • One option is to issue, with another community or two, a bond for low interest mortgages that would be available in September to cover you as the current bond funds are used. A second option is to establish a 50% mortgage credit certificate (MCC) program which does not require a bond issue and will allow you to benefit homebuyers until December 31, 1992. However, in order to even consider either program you must file the enclosed request for private activity bond cap with the governor's office on Monday, June 3, 1991. You cannot file earlier, but must file June 3rd since the governor's allocation is on a first come, first serve basis. By making the request you are under no obligation to institute either program. Filing the request simply will let you explore the programs and in the event your request is granted in July move forward. Should you choose not to institute either program, you can withdraw the request or return the allocation with no penalty. We have included the necessary documents. If you have a council meeting prior to May 31st the council could approve the resolution. If not, the request can be filed with the Mayor's signature and without council action. The council can approve the resolution later. Both programs, if implemented in your community, are done at no cost nor risk. The MCC basically passes tax exempt status, without bonds being issued, onto first time home buyers. By using the MCC the homebuyer is able to receive an annual federal income tax refund for 50% of the interest paid on their mortgage up to $2000 annually for as long as they live in the home. You could establish an effective MCC in your community with $7,000,000 to $9,000,000 in authority. This would benefit 50 to 70 first time homebuyers. Once established the program operates until the end of 1992 or until the authority is utilized. ,' 1 G. K. Baum&Company • INVESTMENT BANKERS Private Activity Bond Cap Page 2 Should you opt for a low interest single family mortgage program, we would join your new authority together with another town or two to create a bond funded mortgage pool with interest rates between 8% and 8.25%. Again, the city has no costs nor risk with such a revenue bond. We are the most experienced firms in Illinois to implement either program. However, before you can even consider either option you need to request the bond authority from the governor's office. We will assist you in filing. If you have any questions call my colleague, Bruce Ring or me at (312) 645-9497 or Matt Lewin at Chapman & Cutler at (312) 645-3000. Si erel , /7. 7 t/ZZ-V-k illr�m . Morris end. cc: Matt Lewin, Chapman & Cutler c � ORDINANCE NO. AN ORDINANCE PRELIMINARILY APPROVING THE ISSUANCE OF QUALIFIED MORTGAGE BONDS OR MORTGAGE CREDIT CERTIFICATES WHEREAS, Section 6(a) of Article VII of the 1970 Constitution of Illinois provides that "any municipality which has a population of more than 25,000. . . (is a) home rule unit" and the City of Elgin , Kane and Cook County, Illinois ( the "Municipality" ) , has a population of more than 25,000 and is therefore a home rule unit and may, under the power granted by said Section 6(a) of Article VII of said Constitution of 1970 exercise any power and perform any function pertaining to its government and affairs; and WHEREAS, there exists within the borders of the Municipality a recognized need for decent, safe, sanitary and well-constructed and maintained housing which persons of moderate income can afford; and WHEREAS, it is necessary and desirable that the Municipality issue either qualified mortgage bonds pursuant to Section 143(a) of the Internal Revenue Code of 1986 (the "Code") or mortgage credit certificates pursuant to Section 25 of the Code in order to reduce the cost of financing for the acquisition of housing located in or near the Municipality for qualifying persons; -1- George K. Baum & Company INVESTMENT BANKERS 54 WEST HUBBARD STREET MEMBER OF SUITE 403 NEW YORK STOCK EXCHANGE INC CHICAGO.ILLINOIS 60610 MIDWEST STOCK EXCHANGE TELEPHONE 13121 645-9497 City of Elgin Low Interest Mortgage Program - 1991 A Comparison Home Rule Communities Independent Issue (George K. Baum & Company) (Raymond James) Availability of Mortgages Week of May 6, 1991 Unknown may be July or August Mortgage Rate 7 . 8% to 8 . 25% Unknown, will depend on market this summer (Current market rate for mortgages is 9 . 4% to 9 . 5%) Total Mortgage Funds Available in Elgin A minimum of $3 , 503 , 120 $3 , 503 , 120 plus funds from other participants if funds in those communities are not lent on December 31 which could increase Elgin's allocation to $5 million or more Mortgage Loan Structure VA/FHA VA/FHA G. K. Baum & Company INVESTMENT BANKERS Issuing Bonds DeKalb will issue Does not have an issuing city, Elgin may have to issue Fee for Underwriting Bonds Not to exceed 1 . 5% Not to exceed 2 . 5% Underwriting Experience Ranked 9th nationally Not ranked in top 95 Local Lenders Most likely the same for both programs GKB has sent documents and talked with the following: University Financial/First Federal -- will participate First National Bank of Elgin -- expressed interest Elgin State Bank -- not interested American National Bank of Elgin -- no decision yet First State Bank -- will participate Elgin Federal Financial -- not interested Home Federal Savings of Elgin -- not interested Larkin Bank -- no decision yet Union National Bank & Trust -- not interested Valley Bank and Trust -- very little interest Champion -- will participate Based upon conversations with the institutions by both George K. Baum & Company personnel and independent conversations by City Finance Director James Bolerjack it is clear financial institutions are prepared to take all the funds available to lend to first time homebuyers. - G. K. Baum & Company INVESTMENT BANKERS State of Illinois Guidelines Chapman & Cutler and GKB take Will u s e a liberal the conservate position that interperation and issue after the bonds should be issued and the May 31 deadline. While closed by the May 31, 1991 Governor ' s office indicates deadline set out in the state they will not challenge this, statute and the Governor' s Attorney David Wood indicated guidelines to avoid any they will not issue a written potential legal challenges. As opinion supporting such action. a result the bonds will be sold It is possible issuing past the in April so Mortgages are deadline will invite a legal available in May. challenge. Participating Governments Twenty Five have adopted None as of today ordinances, etc. as of April 10, six others have either approved participation at the staff or committee lev el due to the stated May 31 deadline and planned bond sale in late April governments will not be allowed to join after April 15. • r (( Law Offices of r CHAPMAN AND CUTLER Theodore S. Chapman 111 West Monroe Street, Chicago, Illinois 60603 2 North Central Avenue 1877-1943 Phoenix, Arizona 85004 Henry E.Cutler TWX 910-221-2103 Telex 206281 (602)256-4060 1879-1959 FAX(312)701-2361 Telephone(312)845-3000 50 South Main Street Salt Lake City,Utah 84144 May 8, 1991 , (801)533-0066 MEMORANDUM TO: Participants In City of DeKalb, Illinois Home Rule Units Single Family Mortgage Revenue Bond Program Attached is a copy of the fully executed Intergovern- mental Cooperation Agreement dated as of March 25 , 1991 ( the "Agreement" ) among the 28 Illinois home rule units ( including 27 municipalities and Cook County) listed on Exhibit A to the Agreement . Pursuant to Section 11 of the Agreement , the City of DeKalb, partially reallocated volume cap to 10 cities in the amounts set forth on the enclosed sheet ( to reflect aggregate lender commitments in each such community less than the full amount of volume cap available to be contributed by that community) . No commitments to lend were received in Freeport and, accordingly, the full amount of volume cap was reallocated by DeKalb back to Freeport. Pursuant to Section 11 of the Agreement , Freeport will not be a participant in the Program. We anticipate that the Bonds will be issued on May 29 , 1991 . Lenders may begin issuing commitments for mortgage loans in your communities on the date of closing. If you are interested in receiving further information about the lenders which have bid in your communities, please call Bill Morris or Bruce Ring of George K. Baum & Company at ( 312) 645-9497 . Also, please feel free to call Matt Lewin of Chapman and Cutler with any questions at ( 312) 845-3778. Thank you again for the high level of cooperation each of you has shown in helping put the program together . . s. Amount Reallo- Volume Volume cated to Cap Municipality C .t.p._ Municipality Contributed Aurora 4,573,978 0 4,573,978 Burbank 1,436,174 0 1,436,174 Calumet City 1,961,065 936,065 1,025,000 Cook County 6,567,811 0 6,567,811 DeKalb 1,597,254 0 1,597,254 * Dolton 1,192,797 521,297 671,500 Elgin 3,503,120 0 3,503,120 Elk Grove Village 1,668,009 153,009 1,515,000 Evergreen Park 1,033,222 0 1,033,222 Freeport 1,279,108 1,279,108 0 Galesburg 1,596,250 1,091,250 505,000 Hanover Park 1,587,218 0 1,587,218 Harvey 1,725,215 1,356,715 368,500 Highland Park 1,490,369 480,369 1,010,000 Joliet 3,740,475 0 3,740,475 Maywood 1,371,942 0 1,371,942 Mount Prospect 2,665,603 0 2,665,603 Niles 1,431,657 0 1,431,657 North Chicago 2,061,426 1,556,426 505,000 Oak Forest 1,303,194 0 1,303,194 Oak Park 2,692,199 0 2,692,199 Park Forest 1,290,147 785,147 505,000 Peoria Heights 331,193 0 331,193 Quincy 1,960,563 1,455,563 505,000 Rantoul 1,011,644 0 1,011,644 Skokie 2,939,590 2,434,590 505,000 Springfield 5,011,053 0 5,011,053 Streamwood 6,819,066 0 6,819,066 Watseka 272,983 0 272,983 * Dependent on final bond issue size.