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HomeMy WebLinkAbout97-152 Revised Resolution No. 97-152 RESOLUTION EVIDENCING THE INTENTION OF THE CITY OF ELGIN, ILLINOIS, TO ISSUE SINGLE FAMILY MORTGAGE REVENUE BONDS AND RELATED MATTERS WHEREAS, the City of Elgin, Kane and Cook Counties, Illinois (the "Issuer" ) is a municipality and a home rule unit of government under Section 6 (a) of Article VII of the 1970 Constitution of the State of Illinois; and WHEREAS, the availability of decent, safe and sanitary housing that most people can afford is essential to retain and increase industrial and commercial activities and relieve conditions of unemployment in the City of Elgin, Illinois; and WHEREAS, the shortage of decent, safe and sanitary housing that most people can afford is not transitory and self-curing; the cost of financing such housing is a major and substantial factor affecting the supply and cost of decent, safety and sanitary housing built by private enterprise; and the revenue bonds provided for in this resolution will substantially lower the cost of such financing; and WHEREAS, pursuant to the Constitution and laws of the State of Illinois, and particularly Section 6 (a) of Article VII of the 1970 Constitution of the State of Illinois, the City Council of the Issuer has the power to issue its revenue bonds to aid in financing the cost of mortgage loans for one to four family residences in the City of Elgin, Illinois; and WHEREAS, it is now considered to be necessary and desirable and in the public interest of the residents of the City of Elgin, Illinois, for the Issuer to issue its revenue bonds in an amount not to exceed $30, 000, 000, for the purpose of financing mortgage loans to low and moderate income persons for one to four family residences in the City of Elgin, Illinois; and WHEREAS, pursuant to the Constitution and laws of the State of Illinois, and particularly Section 10 of Article VII of the 1970 Constitution of the State of Illinois and 5 Illinois Compiled Statutes 1994 , 220/1 et seq. , as supplemented and amended (the "Intergovernmental Cooperation Act" ) , home rule units of government may exercise jointly any power which they could individually exercise. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF ELGIN, ILLINOIS : Section 1 . That, in order to provide decent, safe and sanitary housing that persons of low and moderate income in the City of Elgin, Illinois, can afford, with the resulting public benefits expected to flow therefrom, it is deemed necessary and desirable for the Issuer to issue its revenue bonds in an aggregate principal amount not to exceed $30, 000, 000 (the "Bonds" ) , for the purpose of financing mortgage loans to persons of low and moderate income for single family residences located in the City of Elgin, Illinois . Section 2 . That the Issuer will issue the Bonds in an aggregate principal amount not to exceed $30, 000, 000 for the aforesaid purposes; that such Bonds shall not constitute an indebtedness, liability, general or moral obligation or a loan of credit of the Issuer, within the meaning of any constitutional or statutory provisions, but will be payable solely from the repayment of the mortgage loans; that neither the faith and credit nor the taxing power of the Issuer will be pledge to the payment of the principal of or interest on the Bonds; and that the Issuer will not have the right or authority to levy taxes to pay the principal of or interest on the Bonds . Section 3 . That pursuant to the Intergovernmental Cooperation Act, the Issuer may choose to issue the Bonds jointly with or on behalf of one or more municipalities if the Issuer so determines, or to have the Bonds issued by another municipality on behalf of the Issuer if the Issuer so determines, such determinations to be made in the best judgment of the Mayor of the Issuer that such a cooperative effort is in the best interests of the Issuer. Section 4 . That the Issuer hereby agrees to work with Bigelow & Company, Gates Capital Corporation and Dougherty Dawkins, Inc . to underwrite the Bonds and with Chapman and Cutler, as Bond Counsel, in connection with the issuance of the Bonds during calendar year 1997 . Section 5 . That the Mayor and City Clerk and all their proper officers, officials, agents and employees of the Issuer are hereby authorized, empowered and directed to do all such acts and things and to execute all such documents and certificates as may be necessary to further the purposes and intent of this resolution, including without limitation to obtain an allocation of unified volume cap. Section 6 . That the provisions of this resolution are hereby declared to be separable, and if any section, phrase or provision of this resolution shall for any reason be declared to be invalid, such declaration shall not affect the remainder of the sections, phrases and provisions of this resolution. Section 7 . That all ordinances, resolutions or orders, or parts thereof, in conflict herewith are, to the extent of such conflict, hereby superseded; and that this resolution shall be in full force and effect upon its adoption and approval . s/ Kevin Kelly Kevin Kelly, Mayor Presented: May 28, 1997 Adopted: May 28, 1997 Omnibus Vote: Yeas 7 Nays 0 Attest: s/ Dolonna Mecum Dolonna Mecum, City Clerk el, OFE 1 City of Elgin Memorandum n Anotov "1 7 lr „1,,:-, ,1„.„ , a �`�- ,_ _, -,._.„ , „ May 27 , 1997 �� .^„-._<_,L1 — / j c ,,-112 g/1\ TO: Robert O. Malm, Chief Operating Officer/ �..,. -L iQ--�Q . Qv�. Interim City Manager 4 I FROM: James R. Nowicki, Finance Director / o SUBJECT: Single Family Mortgage Revenue Bonds Stuart Wasilowski from Neighborhood Housing Services informed me that NHS would like to take advantage of a program that issues the State' s Private Activity Bond ( Industrial Revenue Bonds ) authority to fund low interest mortgage loans for first-time home buyers . Due to the fact that the City must act as a conduit for the transaction, NHS is requesting we pass a resolution evidencing our intent to issue these Single Family Mortgage Revenue Bonds . There would be no liability or cost for the City because we would be using the State' s bonding authority. Incidentally, it appears that Urbana, Aurora, Peoria and several other cities will be participating in this program as well . In order for the project to move forward, the Governor' s office needs to receive the resolution prior to June 1, 1997 . I have been associated with the issuance of these bonds in the past . They provide an opportunity for first-time single family home buyers to take advantage of lower mortgage inter- est rates . Local institutions are utilized as the "servicing agency" and receive compensation for doing so. 9r---4, 1:—e-i:/LIA::?1 R. Nowicki /fares RN/skg Attachment NHS Memorandum TO: Jim Nowicki FROM: Stuart Wasilowski DATE: May 27, 1997 RE: Private Bond Authority Background As you know, the City of Elgin has utilized its bonding authority to promote commercial development in the community. You and I have discussed on several occassions the opportunity to utilize bonding authority for a first time buyer mortgage program. To my knowledge, this has not been done in Elgin simply because the authority was wisely exercised for commercial purposes. As outlined in the attached memorandum from David Rasch of Gates Capital, there is an opportunity for Elgin to request, along with several other urban communities, additional bonding authority employing the unused authority of other communities throughout the state. This additional bonding will provide capital to fund a first time buyer program in Elgin. With the low level of owner-occupancy within many of our problematic neighborhoods anything the community can do to encourage home ownership will be beneficial. The program offers a unique down payment assistance component that will enable more opportunity for ownership. There is apparently little to risk in requesting the authority. The State has the option to allow the sale of bonds depending on what other needs are yet unmet. There is little doubt that a request of$30 million will be approved but whatever may be approved will be allocated between the various communities participating in the request. I have spoken with several members of the NHS Board, local lending community as well as a lender that has been very involved with the program. The local lending community is less familiar with the program because it has never been initiated here. The lender that I spoke to regarding his involvement spoke very highly of the program. Recommendation NHS Staff recommends that the City of Elgin pass the attached resolution authorizing a request of supplemental authority for the purpose of establishing the home ownership program outlined in the materials. , GATES • CAPITAL CORPORATION Government . & Tax Exempt Securities I4$ / May 22, 1997 Mr. James R. Nowicki Finance Director City of Elgin 150 Dexter Court Elgin, Illinois 60120-5555 Re: Single Family Mortgage Revenue Bonds, Series 1997 to generate funds for area lenders to make residential mortgage loans for low to moderate income families to purchase one to four family homes in Elgin, Illinois through the sale of single family mortgage revenue bonds. Dear Mr. Nowicki: Attached is a form of letter required by the Governors's office which needs to be completed prior to June 1, 1997 and mailed to Springfield along with a complete copy of the City's resolution, a form of which is also attached, inducing a single family mortgage revenue bond financing. The letter, entitled "ALLOCATION REQUEST LETTER", is necessary if the City of Elgin wishes to request any additional authority from State which may be available from other home rule units which have ceded their 1997 volume cap to the State. The letter must be placed on the City's letterhead and signed by either the Mayor or City Clerk. After having the letter typed up and signed by the appropriate party, please overnight the original, along with a copy of the executed resolution, to me using our Federal Express No. 1893-8973-6. We can forward them as a group down to Springfield before month-end. Please feel free to call if you have any questions. David S. Rasch Senior Vice President 220 West Huron Street Suite 500 West Chicago, IL 60610 Tel: 312-664-5656 Fax: 312-664-5650 May 23, 1997 Office of the Governor 2'/2 Statehouse Springfield, Illinois 62706 ATTENTION: Betty Hauger RE: Issuer: City of Elgin Type: (Home-Rule) Maximum Principal Amount: $10,000,000 Bond Description: Single Family Mortgage Revenue Bonds, series 1997 to generate funds for area lenders to make residential mortgage loans for low to moderate income families to purchase one to four family homes in Elgin, Illinois through the sale of single family mortgage revenue bonds Dear Ms. Hauger In accordance with the Tax Reform Act of 1986 passed by the 99`h Congress 2nd Session(1986), as amended,and 30 ILCS 345, the City of Elgin respectfully requests an allocation for the above-captioned private activity bonds. In preparation for this bond issue to date,all applicable Federal and State requirements have been complied with. A copy of the inducement resolution or similar official action for this issue has been attached herewith. I hereby certify under penalty of perjury,that to the best of my knowledge,the issuance of the Private Activity Board was or will not be made in consideration of any bribe,gift,gratuity or direct or indirect contribution to any political campaign. Please forward the allocation approval letter to the undersigned. Sincerely, City of Elgin, Illinois Kevin B. Kelly Mayor of Elgin cc: David S. Rasch(Gates Capital) Bigelow & Company INVESTMENT BANKERS Adjustable Rate Tax-Exempt Housing Bonds Bringing Single Family Mortgage Revenue Bonds into the 90's For many first-time home buyers the lower interest rates associated with conventional adjustable rate mortgages dampen enthusiasm for a traditional tax-exempt fixed rate bond. Bigelow& Company has developed a tax-exempt bond program that includes adjustable rate loans, fixed rate loans and combination loans, as weal as down payment assistance for those home buyers needing up-front assistance rather than the interest rate advantage. The program involves the issuance of bonds that specify the rate on the adjustable rate loans based on a relationship to the one year Treasury rate and for fixed or other loans by comparison to appropriate indexes. The bonds pay interest on a monthly basis, essentially passing through to the investor the net payments on the loans. Types of Loans • One Year Adjustable Rate Loans Initial rate 60 basis points below one year treasury (5.35%). Index based on the one year Treasury plus 1.15%. Annual cap adjustment of only 1%. Lifetime cap 3.25%above initial rate (8.60%). • Fixed Rate Loans (30 Year) Rate reset for each new allotment, preserving advantage over the conventional market. Rate based on 80% of the GNN{A Index rate (6.95%). • Seven/One Loans Loan rate fixed for seven years then one year adjustable. Seven year rate reset for each new allotment,preserving advantage over the conventional market Additional Program Advantages • Negative arbitrage eliminated • Monthly payments avoid losses on float contracts. • Reduced risk of non-origination • Up to three year origination period. • Down payment assistance available. Bigelow&Company 999 Pennsylvania Kansas City,Missouri 64105 (816)842-3222 Member SIPC,NASD