HomeMy WebLinkAboutRESO 5821,.
JHHW:K IJ:pt
. RESOlUT ION NO. 5821
A RESOLUTION AUTHORIZING A SERIES Of 8011> ISSUES
TO FINANCE l«>USING F<R PERSONS ANJ FAMILIES
OF LOW AND MOOEAATE INCCJltE AND i
APPOINTING BONO COUNSEL
RESOLVED, by the Council of the City of Palo Alto. that
06/20/BO
ORIGINAL
WHEREAS, the City of Palo Alto 1s authorized, pursuant to Part 5
(cornnencing with Section 52000) Division 31 of the Health and Safety Code (the
11 Act") to issue revem!e bonds to finance residences for persons and families
of low and imderate income;
WHEREAS, the City is also authorized pursur~t to the Marks·Foran
Residential Rehabilitation Act of 1973 (the "Rehabilitation Act") to provide
financing for residential rehabilitation within and without residential
rehabilitation areas of the City;
'fiEREAS, the City has forR1Jlated a program to finance such residences
and has also formulated a program to finance residential rehabilitation and
has determined to implement such programs through the issuance of ( i) mortgage
revenue boods (the "Mortgage Revenue Bonds 11 ) pursuant ta the Act: and (ii)
residential rehabilitation !lllrtgage revenue bonds (the "Rehabilitation Boncts•)
pursuant to the Rehabilitation Act; and
WHEREAS. the City wishes to provide for the implementation of such
programs and to authorize the issuance of-: one or more issues of Mortgage •
Revenue Bonds and Rehabilitation· Bonds for the purpose of paying the cost of
each of such programst respectively, upon such tenns and conditions as A'llY
then be established by th City;
NOW, THEREF<RE, it is ORDERED as follows:
1. The Council hereby determines . to 1•1tlllftt its program to ftn1nce
residences, including both single famlly and multif•ily residences. through
the issuance t in one or •re series, oi Mortgage Revenue Bonds pursuant to the
Act in the est1mted principal amunt of $200,000,000 (w1th suitable
resolutions of the Council at a meeting or mee!ings to be held for such
purposes.
6. The C1ty Manager 1s authorized to take all action necessary to carry
uut the authority conferred by this Resolution and to execute and deliver all
documents necessary to carry out that authority or to evidence the exercise
thereof.
7. The issuance of the Bonds pursuant to each of the aforementioned
programs is subject in all respects to the approval by the Council, acting fo
9ood fa1tht of all agreements and other docu1Tents reasonably necessary to
cCJnplete such issuance.
* * * * * * * * * *
I hereby cerU fy that the fore going is a f u 11 i true and correct copy of
a resolution duly passed and adopted by the Counci 1 of the City of Palo Al to9
California, at a meeting thereof held on the 21 day of July 9 1980,
by the fol lowing vote of the meft'bers thereof: -· -
AYfS, and in favor thereof, Councilmenmers: Eyerly, Fazzino, Fletcher1 Henderson, Renzel, Sher, Witherspoon
NOES, Councilmembers: None
A3SENT, Councilmenmers: Brenner
NOT PARTICIPATING: Levy
APPROVED:
APPROVED:
.. ...
a o A to
3
CAllFOlll lflA 14 fit~ off alo }llto
94~01
Office of the City Council May 20~ 1980
TO: Colleagues
FROM: Councilmember Eyerly
SUBJECT: Single family Residential Mortgage Revenue Bonds
Housing Revenue Bonds have been of interest to me for some time. but I
have not previously agendized the topic because of the collapse of the
municipal bond market earlier this year and the uncertainty of limiting
federal legislation.
For your infonnation I have enclosed a question and answers paper of the
Smith Barney, Harris Upham & Co. which our staff has provided me.
It is my belief that such revenue bonds could be a viable way to provide tower cost mortgage money for purchase of single family residential homes
in Palo Alto for people of low and moderate incomes.
The bond market indicates enough strength at this time that I feel the )
Council sho~ld become knowledgeable. I will propose a staff report to
indicate feasibi11t.t .,;,.i'n::, to provide general infcnnation and suggestions,.
and to indicate the steps necessary to enter this bOnd market.
FRED
Attachment
·--· -·
SMITH BARNEY. HARRIS UPHAM & CO.
lMCOrt.POl'AT&D
gUESTIONS AND ANSWERS
350 CAUFORNiA SlllEET
SAN flVl.NCISCO, CALlf. 94104
(Al5) 9SS· l500
Some of th~ most cOllltlonly a~ked questions and answers concern-
ing singie-fanuly residential mortgage revenue bonds follow:
•
l. Who are the principal parties involved in a transaction
in which bonds for single-family residential mortgages
are issued? '
The principal parties in a transaction are: (1) The City
which issues the bonda: (2) the financial organization
whi.ch originates and services mortgages: (3; the devel-
_opers or homebuilders: and (4) the undei:w:citer of the
bonde.
2s l• The City liable on the bonds, legally or otherwise?
3.
The bonds are special revenue bonds and, as such, The City
ia not liable on the reveuue-bonds except from the
•pacified source of revenues, which in this case is the
•ortgage loans and various reserve funds. The City is
not liable for bond ·~ayments frou;i any other source of
funds. · . ; . ~. . . . "; . .-· .. "-.
Ia the aervic:er li~ie · o°n-·tJie bonds?
The •ervicer is not liable on the bonds~ The servicer is
obligated to originate· _quality mortgages and to service
t.hoae mortgages pursuant to the mortgage-purchase and
••rvicing agreements. .. The servicer is not required to
make advances to prevent 4efault on the bonds.
'.
4. What i• the public purpose for the issuance of the bonds?
There are several public purposes served by the issuance
of the bonds. First and foremost is that by issuing the
IM>nda, The City ma~e• .. ·home mort9a9e loans available at
:
.. .
·-· ..
. . . . . .· ~; ·.• • . . . . ..
• • • T •• . . . ._ .. : ... . .. .;
...
•
an interest rate of approximately 2% less th~n the
conventional mortgage rate. This enables more people to
purch~se hanes at less cost, particularly persons in the
lower income brackets, primarily because of the signifi-
cantly lower monthly mortgage payments. Moreover, there
is a stimulntion effect on the local economy because of
the increased activities generated by the acquisition of
a signi.f icant nwnber of homes;. ·. · .-·. v ~
5. What are the permissible incomes of the persons who can
par~icipate in thi~ ~ype of proqram?
There are no inc9ine restrictions.
6. What is the servicer'• compensation in this type of
financing?
The servicer normally receives compensation for carrying
out its two principal activities of originating and
servicing the mortgage loans. Typically, the amount of
compensation is essentially what the servicer would
realize if it were originating and servicing mortgage
loans for any t:'.{Pe of secondary mortgage market maker,
such aa the Federal National Mortgage Association. the
Government National Mortgage Association or state housing
authorities.. The financial institution will receive from
one to two percent o£·the loan amount for originating a
mortgage. and a service ·fee (including an administration
fee for the extra servicing duties) of 3/8 to 5/9 of 1%
of ~e annual average outstanding principal amount of
each mortgage loan. · · : . ·
. . .-···".
7. What are the initial ~os~~.to the homeowner-mortqaqor?
Tho casts to the homeowner are the same costs that he
would incur if he borrowed money at the conventional
interest rate under a·typical mortgage loan. He has to
pay tho same closing costs and approximately the same
points as charged. in ·the·. conventional market, and on a
monthly basis, he must pay the escrow amounts for property
taxes. hazard insurance. mortgage insurance and ·his
mortgage amortization.
B. What are the documents involved in a typical family
mortgage revenue bond financing?
• ..
..
. . . -.... ~ : . -.
. ..
.~
9.
The principal docum···nts involved are: (1) The City's
charter; (2) the mortgage purchase and servicing agree-
menln between The City and the servicer, which sets forth
the requirements fo~ originating and servicing mortgage
loans: (3) a resolu~ion of The City administered by a
trustee. which, among other things, sets forth the terms
and conditions of the bonds, prescribes the flow of funds
and provides for the redemption provisions of the bonds;
and (4) an official stateinent which is used by the
underwriter to sell the bonds and describes the essential
facts relating.to the transactions.
What if there are defaults on the mortgages?
It is expected that there will be some defaults on the
mortgage loans. The as&UJl\Ption as to the number of
defaults is based on the historical experiences of the
serv1ccr participating in the program. Normally, mortgage
loans are insured by either a private mortgage insurer,
the Federal Housing ~dministration or the Veteran•s Admin-
istration. The net effect of this insurance is that even
though there are mortgage defaults, the loss~s resulting
from such defaults will be minimal.
10. What if delinquencies occur on mortgage loan payments?
It is anticipated that delinquencies will occur on the
mortgage loans. just as it is anticipated that defaults
will occur. Simlarly, the e~rience of the servicer is
tho basis for the determination of the assumption with
respect to the amount of delinquencies. The transaction
is typically structured so that even if a delinquency
rate \llrOuld be experienced comparable to that experienced
in the depression of the l930's, there would be sufficient
cash flov to pay the debt s~rvice on the bonds. Theoreti-
cally. delinquencies on mortgage loan payments which
would result in an insufficient amount of mortgage loan
payments to service the bonds would be cured by a withdrawal
fran the mortgage reserve fund.
11. What types of insurances ·are involved in the program?
All mortgages will bo covered by standard and hazard
insurances, paid by the homeowner. special hazard insurance
(in an amount equal to 1% of the original principal amount
of all the mortgage loans made) paid from program reven~es.
:
. . .·
I
,/
·' I " I
12.
and an errors and omissions insuranC'c, pa\.d by the financial
institution. Tha mortgage loan will also he insured by
the FedE!'ral Hour.ing Administration, the Veteran's Adminis-
tration or a private mortgage insurer.
What types of .reserve fund• are generally provided for in
the financing documents?
At least three types of reserve funds arc generally provided
for in this type of financing: (1) a mortgage reserve fund
(wh~ch is used to pay principal and interest on the bonds
and to make up any dcf iciencies in ca::oh flow from mortgage
payments) gc:mcnllly fund~d in an amount equal to a small
percentage of the mortgage loans made: (2) a debt service
reservr-fund (which is used only to pay principal an<'1
interest on the bonds) generally in an amount equal to
approximately 150<~ of any future yearly amortization on
the bondE. whjch is funded from bond proceeds: and (3) an
accumulation reserve fund (which is used to pay principal
and interest. or, the bonds and to make up any deficiencies
in cash flow from mortgage payments) generally in an amount
equal to approximately 3/4 of 1% of the original principal
amount of the bonds, which is funded from excess revenues
generato<l by the program.
1.3. What if the servicer cannot originate all of the mortgage
loans?
Gen~rally, the amount of the bonds is restricted to the
amount of rnortqage lo~ns the servicer can eA~cct to
originate.within one to two years to protect against
significant market interest rate variations. If it is
not possible to make all° the: mortgage loans, there are
certain provisions that may be built into the financing
documents permitting the investment of the unused· moneys
in securities or other obligation~ yielding an amount
suf ficienL to pay debt service on the bonds {although
there ir. no assurance ·that such investments could neces-
sarily be made). The. inability to originate all the
1DOrt9a9e loans is· a rislt·that ia borne by the bondholders.
·.
JONES II.ALL IIILL & WHITE
ATTORNEYS AT LAW
KENNETH l. JONES
A"MDREW C. HALl.,JR.
ROllERT J. HILL
SHARON STANTON WHITE
ROBERT O. AUWBREY
CHA.BL.ES F. ADAMS
S'fEPRl!:N R. CASALEOOIO
Mr. John Horan
Housing/Transportation Specialist
Department of Planning and
COffllllnity Environment
City of Palo Alto
250 Hamilton Avenue
May 6, 1980
22r50 UNION BANK BUILDlNO
r50 CALIFOHNIA STR.1'.BT
SAN l"RANCISCO B41l1
( 41~) 391 • :\780
'<Ee ... f/Vf ,~
' I~· () \J ., c
•_,I I I:::,,,
Dll//S1011 Of r .. , , .,,_,u
0 M H ln4,,.~'ti•1,)' ear r • or an : · "r/J,/{;/ f/();.,r
Palo Alto, California 94301
Pursuant to our recent telephone conversations I am returning the form
of resolution provided by E.F. Hutton regarding single family mortgage revenue
bond financing. Apparently their transmission of this resolution is based on
Washingtoo scuttle butt that the transition date may be changed by the Senate
from April 24, 1979 to some later date.
As I indicated to you on the telephone, Senator Long, Chairman of the
Senate Finance Comnittee, has ind1cated that he proposes to "sit on 11 the
Ullman Bil 1 passed by the House, unti 1 Congress or the adminis tr at ion does
scmethihg about housing. In the meantime he has encouraged issuers to proceed
with the issuance of nortgage revenue bonds assuring him that he wi 11 "protect
them". I am not quite sure what he means by th is nor how he proposes to go
about his protection program but I think it is an area in which conservatism
should be the order of the day.
In MY event there can be no harm in the City's adopting a resolution
indicating an intent to proceed, ass1.111ing of course that such intent in fact
exists. Also assuming that the so-called transition rules as adopted by the
House will continue to be controlling, the resolution should meet the
•official action" requirement of these rules. Basically the rule is that the
governing body of the ooit having authority to issue the bonds must have taken
"official action" with respect to the bonds, indicating an intent to issue the
bonds. The intent must be to a.c:.;ually issue that particular bond issue prior
t~ trfhich the issuing authority flltSt have formJlated a bond issue proposal.
The report indicates that official action would include the adoption of
a resolution authorizing the hiring of bond tounsel, bond underwriters, market
analysts, or other persons to take steps {such as the preparation of
documents) necessary for the issuance of a particular tax exempt bond issue.
Thus the requirements could be satisfied by ttn~ hiring of the mentioned
consultants not only underwriters.
Mr. John Horan
May 6, 19lJJ
Page Two
The action mJSt also meet the sizing require1t2nts of the interim
regulations. Generally, these requirements are that there must be
docull'entation from which the intended size of the issue can be determined, and
the issue cannot exceed the intended size. Presumably the simplest method of
meeting th1s requirement is for the official action resolution to set forth
the particular amooot of honds, 1·ecognizing that this amount becomes a
1 imitation. Under the present rules the entire aioount rust be issued as a
single issue because, according to the staff report, "only one issue of bonds
r.an be issued for My one official action".
If the Council does intend to ; ssue mortgage revenue bonds and if the
Councir-wishes to identify unde~writers at this time, the Hutton resoluflon is
adequate. As mentioned above, the sarr) result could be obtained by employing
bond counsel, market analysts or other persons as well as underwriters.
I would be glad to provide any other information or assistance that you
might need.
KIJ: pl
Encl.
Very truly yours,
P.S. I am enclosin~ a copy of the transition rules under ttie Ullman Bill as
they na.1 exist. Please bear in mind ttlat these are House version only and we
sti 11 have no indication as to the Senate.
" .. ~
·memorandum •
'a" TO FROM i.l •· · Board of Supervisors Ma:-y Davey
!4'.-. SUBJECTRESOLU'ffifNor TNiENTTO-THPLEMENT ·A-------··---=o,.....~--T=E----------. ............ ~ .:. r . ~ MORTGAGE BOND PROGRAM -
.'f,· \ ? n~ ·., -·-,, r-:i rj \-\q \?. [ill~
· . ·. !. 1" ~ U I
JAl~ ~ ,11980
Prepared by Mary Davey
Reviewed by Bob Hilton
Submitted by Hary Davey
..... '!U-.T p· PLr1·: :-,1~ for Bill Siegel
Recomnended Action .... PAli~ i1-r1f' I l! j· · V '' •
The County Housing Advisor recommends that the Board of Supervisors adopt
the attached:
~
~esolutlon of Intent to lmpleme~t ~ ~~r;!,9age Bond Progra"!_ for the
purpose of assisting persons (w1th1n tfie 80t2fo 120% of County median
income) to purchase or rehabllitate single family homes.
Fiscal Impact: There is no cost attached to the recommended action.
Reasons for Reconmendation
The Board of Supervisors• stated position of wfdening opportunities for home
ownership and home rehabilitation among persons of moderate income (80% to
120% of County median Income) fs recorded in a va1iety of places. (See **HEMO.)
WJth this program, S & L1 s and banks designated by the County will qualify
applicants for loans of +9%. well belo\>1 present market rate mortgage loans,
thereby providing home purchase and rehabilitation opportunities for residents
othen.,.fse unable to qualify.
This program meets a documented need among County residents. According to
Jay Jar.is, Cha!r of the Federal Home Loan Bank Board, only l5t of potential
homebuyars can meet today's monthly ~~rtgage payments. This program will
offer them an opportunity for lower monthly payments and Increase the mortgage
money s.;pply.
!•ckground
..
Californla Assembly 8il1 1355 was approved by the Governor on September 27, 1979.
It authorizes all cities and counties to conduct a pr~gram of housing finance.
for the purpose of mortgage loans to finance home purchase and home rehabilitation.
It requires each city or county to establish certain criteria for the qualtffcattons
of persons or families eligible for such assistar.ce (80% to 120% of County median
income). This bfJI is specfficaJly designed to permit single family revenue
bond financing used by cities and counties in other state~ of the nation.
At present, there Is federal legislation (H.R. 3712, the "Ullman Bill") before
Congress to remove the tax exempt status of these bonds on all issues not
authorized before April 24, 1979. Jn effect, this federal legislation will
kill the program in California and all over the country unless the tax exemption
provision ts kept.
'"· •U• C'"el flllo. tiJ'H't .~ ..
Board of Supervisors
page 2
12/6/79
' .
The County has heard form E.F. Hutton that there Is a possibi.lity the Senate
may amend the cut-off date to December 3~ 1979. Should th1s turn out to
be the case, the County will be able to participate ln this important program
by passing the Resolution of Intent during 1979.
Consequences of Negative Action
The County may mtss an opportunity to participate in a Ho:ne Hortgage Bond
Program by not acting before the end of 1979.
Steps Following Approval
'
cas
Reseonsible
Clerk of the Board
Action
Obtain Chair's Signature Dec. 18,. 1979
,,
~------------------------------..:--~---·--·-----~-
• 1
)
December 6, 1979 **PLANN iHG MEHO
TO:
FR.OM:
Mary Davey
Housing Advisor
Toby Kramer
Associate Planner
SUBJECT: Tax Exempt Revenue Bonds
This comptlatton ls Intended to respond to your request for information on~
previous poslttons taken by County Governmental bodies on mortgage f inanclng.
Santa Clara County h~s for some time sought means to foster the develop-
ment of more housing affordable to low and moderate income households. Both
the adopted Housing Element of Santa Clara County and the reports of the Housing
Task Force. the Industry a~i Housing Management Task Force, and the adopted
1979 Urban County HCD ~·~~; recognize and respond to this need.
1) Th9 Housing Element of Santa Clara County (adopted October, 1973)
11The County of Santa Clara strongly supports the creation of a
State Housing Finance Agency to help assure mortgage financing for
both subsidized and market rate home loans and construction loans and
will support 1egrslation to establish such an agency'.
11The County of Santa Clara supports the creation of a State Housing
Finance agency and recommends that this agency be impowered and
adequ•itely funded to provide financing for rehabilitation as well as
new eonstructions and to r.~ke direct mortgage loans to purchasers
of rehabilitated hous tng and housing In older ne lghborhoods11 •
2) 1977 -Housing: A Ca11 for Action --Santa Clara County Housing
Task Force
Adopted Policies:
"Local governments should pennft and assist the private sector to
provide most of the needed housing in appropriate locations and to
provide greater privat.e financing for a wtder variety of housing for a
fu I l range of i ncames".
91A11 levels of government should collectively provide substantial
public funds to provide shelter for persons whose housing needs r,e
ignored or unmet by the private sector11 •
Recommended Actions:
11. 83 The. GovvmOll. .6/iout:d be UJi.ged .to p.'l.ov.i.de. t.eadeJtAltip .bt 4ecwting
pa.&.6age 06 gettM.al obUga:Uon bond.6 .to 6.lmtnce. acU.va.iu 06
tile. CHFA (CaU.60·'UUa Hou~.ing F.inance Agency).
When general obligation bonds were on the ballot in 2976,
the Governor never spoke to the issue during the campaign.
The state provides no subsidies for housing and the direct
le"ding program of the CHFA does not directly address the
needs of low or moderate Jncome persons because construction
costs for new building are not lowered enough by present
Interest rates. General obligation bonds have been authorized
'
by the legf slature and would help lower the cost of new construc-
tion. They have not yet been approved by the electorate.
fV .A 1 Tile. County .&houtd act M a. 6ac.a.a.a:toll 601t. :tile .U.&uance. o~
IJaltlu-FoJtan bond& 6oJr. a joi.nt. ei.J:.yjc.oun:ty ptogJtam. The.&e
bond& (iJOul.d make mon~y ava.ilabte. 601r. low .inteJte.6-t: hou&.ln.9
1teha~~n loan.!.
..
Because of the complicatjons and duplication of setting up
many individual Marks-Foran funded programs, the County should
enter Jnto agreement with the cities to prepare the ~roundwork
for a joint effort in all cities and the unincorporated areas
of the county. The County will assigR the necessary persons
to the task ~f setting up the program, working with local
lending institutions on the bonds and/or notes, deve1opfng
agreenents with the cities, and coordin~ting the administrative
structure with the CDBG program. The final result will be
to authorize the issuance of Marks-Forman bonds by the County
Supervisors after the city/County agreements have been finalized.
3) September 1979 -Urban County HCO Plan
Comprehensive Needs, Priorities and Strategics Statement
Goal A -Housing Supply (first prlor;ty)
'!6A -The Urban County should consider investigating the use of
resources other than CDBG to provide new 1ow income housing.
Staff will review tHFA's Holti-Famtly Housing Construction
Program, and the sale of tax-exempt muntctpal revenue bonds for
low cost housing, and determine their potential use In Santa
Clara County'.
Goal H -Housing Deterioration
6H -Attempts should be made to expand the Caltfornla Housing FlnancP.
Agency• s (CHFA) Heme Cft.mership-Home Improvement (HOH I) program
no.~ operating in Campbell, GJlroy and Horgan Hill (and San
Jose) to other cities to provide mortgage assistance and additional
rehabilitation opportunities,
2
t,
7H -The Urban County staff should work with the cities to determine
resources tdentifted ln the Hefghborhood Conservation Resources
Handbook may be appropriate for use ln Santa Clara County.
Resources and programs found to have city support will be lncor-·
porated Jnto the comprehensive neighborhood revltalizatton program.
These resources Include the Marks-Foran Housing Rehabilitation
Program financed with local revenue bonds and the Section 8
Substantial Rehabilitation Program.
4) November 1979 -living Within Our Llmlts Santa Clara County
Industry and Housing Hanagenent""""l'i"sk Force
Objective #3:
Increase and preserve the supply of affordable housing, especially
In areas where there !s an excess of jobs.
Action RecanmendatJons:
Expand exlst Ing programs and develop new financing tec.hn iques to help
lowimoderate and middle income households obtain affordable houslng.
(fmplernentors: Pub) le and Private Lenders)
Sunmary: The proposed resolution for Santa Clara tounty to Issue tax-exempt
mortgage revenue bonds to assist fn finar.cing low-interest rate single family
home Joans 1s total Jy consistent with past pol ides and recommended actions of
the County to make housing more affordable. Financing is a key Ingredient
in making units more affordable for low and moderate income families. The
option to Issue locally controlled revenue bonds must b't kept open If the
County and cities expect to play a major role in providing the needed housing.
3
...
A, RESOLUTION OF ll'ITENT ,A ~ TO IHPLEHEHT A MORTGAGE BOHO PROGRN'I .,..,
\IHfREAS. tne County of Santa Clara (the u tssuer") pursuant to Part 5,
(tomr1tenclng ~Ith Section 52000), Division JI of the K~lth ar.d Safety tode
(ttle "ACT''). Is authorized to lnue revenue borv;ls to finance single fMlly
residences> and
WfffREAS, the County of SantG Clara has fcnnulated a program to finance
~lng1e fa111lly residences and has determined to lmplem~nt such program through
the luuance of single faml !y l!!Ortgage revenue bonds (the "Bond,i;") > and
WHEREAS, the County of Santa Clara wishes to provide for the Implementation
of 1tich a program and wishes to authorize tlte Issuance of one or lllOre hsues of
Bonds for the purpose of paylna the cost of such program, U?On such term$ and
conditions as llNIY then be agreed upon by the County of Santa Clara.
NOW, THEkEFORE, BE IT RESOLVED by the Board of Supervisors of the County
of Santa t!arto:
Sect Ion 1. E. F. Hutton t Company, Inc. ("E. F. Hutton") or s tml lar qua Hf led
underwriter is hereby •Uthorlzed to assist th~ County of Santa Clero In the lmple-
Mentatlon of the County's progr.in to fln1nce single family resldent!al l&.)rtgages
to be originated by any ffnanctal instftutlon doing business fn the County of
S1nta Ciera.
Section 2. The County of S1nta Cl~ra doe! hereby authorize t.;c fssuance •~d ~ale o1 the Bonds, In one or mc>re series, in such an amount necessary to
i>et the cost of financing the slngte family resldl!lltlal program, up to an ftl)JC)Unt
of $250JY.)0,000.00, the first of such serl~s lo an amount not to exceed
$2~1000,000.00 upon such terms and eor.ditlgns as may be mutualty agreed upon
by the County and E.F. Hutton, or a slmilar qualified underwriter. the issuonce
and sale or the Bands to be autnorl~ed by resolution or resolutions ~f the Board
af Supervisors at the meeting or meetings to be he)d for such r1urposns.
Section J. The County Board ~f Supervisors is authorized lo take all
•ct Ion necessary to c•rrv c;;.it the authorl!y .conferred by this Resolutfon and to
eic:ecute an(! del Iver al i docur.ients necessary to ci'rry out that a11thorlty or to
evident~ tl;e eX\.rclse thereof.
Section~. The ls1uance of the Bond~ pursuant to the aforemL-nttoned ~rogram
ls subject In atl respec~s to the approval oy the County of Santa Clara. ~ct Ing
In good faith, of all o11greemenu and other document5 reasnr.ably necessary to
COl!lptete such f ssuance.
Se,tlon ~. This Resolution sh21l bec:ome effective hmiedlately upon lts
adoption and approval.
this
PASSEO AtlD APPROVFO by the Board of Supervisors of the Co~nty of Sanla Clara,
---------day of -----------• 1979.
' t,.
COUNTY Of SANTA CLARA
Oominfc Cortese
Cha I rperson
County Board of ~upervl!iOrS
I ;, ~ -, .. ·1 , • 11" •.:. ffi le of ofFTCTir~--....... ""· ----
! . ' .,.
.._ ....
~ A RESOLUTION SUPPORTING~
REVENUE BONDS FOR HOHE KORTGAGES
WHEREAS, the Santa CJara County Board uf Supervisors
has passed a Resolution of Intent to Implement a Hortgage Bond
Program; and
WHEREAS, the use of revenue bonds would substantially
reduce down payments, allowing families otherwise foreclosed
from home ownership to purchase homes; and
WHEREAS, monthly mortgage payments would be brought
within reach of average family budgets through lower Interest
rates; and
WHEREAS, additional funds would be made available for
lending, thus red~cing conventional housing interest rates and
help stabilize the housing market; and
WHEREAS, local tax bases wou1d be enhanced; and
WHEREAS, existing neighborhoods would be rehabilitated;
and
WHEREAS, no n~w or continuing bureaucracies would be
required, rather private financial institutions with skill and
experience tn making and s~rvlclng mortgage loans would be
util rzed within policy guidelines set by responsibie local
government; end
WHEREAS, the loss of any revenue to the Department of
Treasury because of the bonds 1 tax emempt status is overrldden
by the compelling need to provide housing opportunities for
people of moderate income (80% to 120% of area median fncome);
BE IT HEREBY RESOLVED, that the County of Santa Clara
fully supports the use of tax exempt obligations for the purposes
stated above; that such uses be restricted to low and moderate~
income families; that local government be allowed to continue to
develop this alternative source of revenue for the purpose of
attaining balanced communities and viable housing options for
all segments cf our commJnity.
PASSED ANO APPROVED by the S3nta Clara County Board
os Supervisors. this day of
1980.
COUNTY OF SANTA CLARP
Dan HcCorquodale
Chaf rper1on
County Board of Supervisors
. ---···-----------~--------------------------.
BRINGING A BOND ISSUE TO MARKET
BJWIOIIG 1 BOtm ISSUE TO MlRIBT
Rot until all the .. jor program dec1aiona have been ... de can tbe
lead Resolution, the Otf'ioial Statement or tbe terma of tbe bond iaaue be
finalised. TbouCh tbll prograa iaauea ahould btt oont'ronted first, aome of
Ute wol'k on the progru. IUld on the bond 1asue dooUMnt.a can be done
1mltueou•l1.
In the Pf'Oll"U dff•lopment pbaae, the County, with the ad'fice or
its 1.nftatMnt banker and other' advisors, will bave, among other tbing:s:
o l'faluated the eoonollio teu1bilitJ ot tbe proposed
progra;
o Deterained the eligibility requireaenta tor program
part.!oipanta;
o :Piaouaaed the program with eligible lending
inst1tutiona; and
o nNtted tbe prog.Nll doouaenta.
To ool!plete tb• prooeas ot preparing and bringing a Mlnioipal
Bond Iuue to ..,.ket, the atepa enumerated in the bypothetical tiae
sobedule that t'ollovs mat be acoompliabed..
Tiii STBPS IECESSARY TO BRDO A BORD ISSUE TO MlRD'1'
Daya rroa
Date ot Ite•
!ale luaber
·20/..JtO
-20/-40 2.
-20/..110 3 ••
••
•20/-30 5.
PllPil:lTIOI AID REVIBV OF BORl' BISOLUTIOI -
Prepar'ed by Bond Counsel and approved by Issuer,
Underwriter, and ~nderwr1terst Counsel.
ISTABLISBMllT or TEHTATIVE 111Um or ISSUE -
Deterllined bf Issuer, Counsel, and Managing
Und~1ter. This include prelim1nary •turity
aobedule, call features, eta.
PP.BPlUTtClf OJ) RBVDV or OPFICUL ST.lTIMIRT -
Prepared by Underwriters' Counsel and reviewed by
Iaauer, Underwriter, and Bond Counael •
PRDTIIG r6 BOID USOLtn'IOI DD PRILIMDfA'R? tlticm smw -
OMlered after oompletion or review.
MIBTI1IG VITB RATING AGDCY -
Would inolude Underwriter, Iaauer, Bond oDunael,
and Ondervritera' Counael.
riars rroe
Dlt• ot It.ea
Sal• !fuaber -6.
1.
-15/-20 a.
• 101-12 9 •
-10/-12 10.
11.
12.
Prepartld by Underwriters' Counsel and rniewd by
Bond Cwnael, Isa\19rt ancS Manasinl Underwriter.
Prepared by 1Jn4Mrwriters• Crunsel and mined bJ
Ma.naging Underwriter.
ILUI Sit SURVEY AID LEGAL tnESTMB!IT MEMOUIDOM ..
UauallJ handled by a law tirll speoi&Usinl 1n
Blue Sq tregistration.
IWVITITIOR TO PROSPECTIVE UIDBRWIITIBS dD
tifftilitiTf OR or bOCtJABTs -
Sent by Managing Underwriter after consultation
with, and approval by, Iaauer. Docuaenta
diatributed 1nolude PreliainarJ Ott1c1al
statement and proposed Unde:rwriters documenta.
DISTRIBUTION 01 PRELIMIH.UI OFFICIAL STATIMBRT TO
ii§fifbffout DVt.ftOR! -
Handled by Manaaina Underwriter.
IJIPORMlTlOH MllTI1'GS WITH UIDEllWRITDS -
•ld in those cities vb.eroe there is a auttioient
number ot potential underwriters. The Mlnagil'Jg
TJndervl"iter, Issuer, Bond Counsel, and
Underwriters' Counsel attend these 11Htinga.
Held 1n tboae oi t.iea vbere there 1a a auttioient
nUllber or potential institutional buyers. The
MuaciDC Underwriter, Issuer, Bond Couuel, and
Underwriter•' Counael attend thue .. t1ngs.
..
·Days From
Date or Ito•
Sale 11\mber
-0
-0
13.
• 14
15.
TDTATm PRICB or ISSUE AD SOLICIT.&TI<ll at ril:ntl Dlfl'HDTtOUL m1w m "'!tllcitlttOR ot aw FOi tBtJS¥Em -blPOSitOIY m rltlid
ICDC'f... -
Handled by tbe Muw.png Underwl"iUH't but with
additional aolicitatioaa by tbe other ltlllbera ot
the Underwriting Account.. In all stasu, tbe
Issuer ia kept advised of price tb1n1cing, preaent
ind1oationa of iuti tutional int•Nst, market
conditions, etc •
After ocnsultation with, and prelia1nary approval
by, Issuer, handled by the Manqing Underwriter
at a ... ting of tbe Undervri ting &oocunt. 11"1 th
verbal aoceptanoe or rejection by the Mmbera or
the Aooount.
Si&Ded aare-ent among Underwriters received fJ-Oll
eaob ..-.r or the Underwriting Croup by the
Manaaing UD4•1'V1"1ter, stating tbat tb,,-will
participate in tbe underwriting.
16. SUBMISSICll rl PROPOSAL TO PURCBASl.TO THI ISSUIR -
llandled bJ' tbe Managing llndetwiter in penon at
a ... ting ot the Board or th• issuing apnoy.
Meeting uually takes plaoe 1n the 90!"Dins-10:00
a.a. -11 :00 a .a.-vitb the ialecliate acceptance
or rejection ot the proposal bf the Iaauer.
11.
18 ..
m.un B! TILIOJWI TO THI UIDllnITDO Accomrt --~
Sent bJ the Manqing UndeMriter to tbe Mllbera
ot the UnderwritiDg Group, 00Drir111D& final
pricing, coupon rat.e, undeMll"iteN' spread, ......-at tees, Uld other term ot tbe otteriag.
BClll> PRllTIIG ORDIRID -
19. PRIITillU Of TRI ntW. orncm STATW ....
D1atr1butect bJ Muqiq Underwriter to • ._rs or
VDHrwritins Aooount, iaatitutional inTeatora,
Isauer, et~.
i :! ... .._r.
~· ~ ..... ""/'. ·"''"'"
Pi
il&J& Fl"'Oll
Date ot ltea
Sal• llumber
+1 20.
21.
+15/+22 22.
+30 23.
+30
Deter.ined aDd distributed by Managing
Um:lervl-iter after tbe propoaal 1a aooepted.
111 tcmmts and ocnt1rm.t.1ana ot ord•ra are
NOe!:nd bf ~· at t!ae opn1ng ot bws~sa
the morning tollovinc the sale dat..
SIGllDIG r6 IOIM All> DBI-RUii CLOSIIG -
Signed bJ' one otticial ot the Is.suer. The --
d&J all domaenta are cbeoked b7 t.be Bond Ccunael
and Comael tor tbe VDclerwr!~~ to be oerta1n
nel"ftld.nc 1s in order.
DILnnt C6, AID P&nat POI, THE m -
PNPU"tld b7 Manacing Underwriter and dUtributed
to tbs Nabers or tbe Underwriting Account and to
the !aauer.
Prepared by lflmaging Underwriter and diatributed
t.o tbe Mlllbttra ot the Underwriting lCCGW\t and to
the Issuer.
PllPd&TI<lf OF S?IDIC!TE PJKWIT mmuz>OW -
Prepared by Mlnaging lJndvwritlir and nnt to ths
Issuer,
Satabllab 1at and llCl'litoriq or MaOlldal7 mrnt
tlwlina. Coatinuiq lnt'ormat1Clll and ~ttna
realt.s or Iuuer are prorlded to ratinc
aaenoiea, dealers, institutional ln'Yeators, •to.
e
Scbedule: Brinainl a Bond luue to Market UUU -UNDERWRITER
•U-ISSUEA
ACTIVITY
,_ ··-···. ~-~ ··---
iii. ,..,...... ....... "9l11lullllln .......... , Olttciel ........ It
CCC -BOND COUNSEL
DAYS FROM DATE OF SALE
-40 -30 -20
-uuuuuuuu ; I mu11111t1 ccccccccccc l I [ 1 uuuuuuuuw
I be::: I I I I uuuuuuuuuu l ~ I I I i -+---+-UUUUU
I 1= I t 1 ---·-uuuuu ..... cccec l I ....... --+-+--+--uuu
-10 0 +10 -t-20 +30
I I I
! I I I 1
1 I
I ! I I
i I
1
. I
I ~ '
' I i I l I I ! I .
1 I . I
! i I I 1:
1. ""'"'" ....... .,....,.,,.,naw=e \Mll1cw""" 1--+--I f uuU 1-rl I 1 I
I I l . I. .. ._..,.,.,, •......, ... un •LI ••••..,.a,.,...,_
t. 11P11n lla •-ulw .,.... • ....,., • 111111 llClll•Dnw••-
tO. ..... l!i ... of ........ Oll!leillt ltalelM!IC
,. .._. l1111JI ••n'f •
11. .... I r llUllol .. wM Ul ... M ....
1J. ........... IRMllM114'wlill ........ ... ...... ...
11. ,.... .. ,.....,i.w.•1111n1:!1n.i ,.,...... .................. ,., ........
ORlllla ................. ,, • ._.......,
14. ............................. . ........... ,.._.... .........
, ........................... u .... ...
• lilt 7 .,.....,.""s-=mb-..
"· ....... .,t1111 •••-u• .... •••11...._.
ti. .......... OIW .... 11 111
.. •• .. .. ................ o.i.-........... O:al'I H• ........................ ......,
........................
.............. ~ ...... ,., ...... . ............. ~~ .... ........
... , 0 ••••• ,...... ......... uu-: ................... ,,.u •.••
~--1--+---1-~UUU
.,...._.,__ ........ __ -t---+~+--+~+-u,
+--+--71--+--+-.rl--+--+--u
I
1'---+--+--+---.....-...... ---1~-1"-u
' +---+--t--..f--t-~i--....--t--U
I ~ ...... ~ .................. 1--....... -....--...... u
I I +-""'1---+--+--+-+--t--t-.,
+--+--+--+--t---+---1~+--u
-+--+--e--~~~~-+--a---t--,.._-+-U·
I 0
.. IU ~
I I I .
I I
I -+-~--+--t--~~-+--+--+--+-....... --+-....... --1---+-y
+-+-~1-t-+-tn-t---+--t--1-T--t-1~y
...... ~ ..... -+---t--t---+--t---+-..-.~ ...... -+~~~i---+-UL.__"!.!...au -· -· -· • •••• ••
Oak.land Hopefuls •
· 50 Win Home Loan Lottert
By .. httro/r
Fifty hopeful home buyen bit
the jackpot at i.n QUJand •vingl
and Joan lotterY yesterday. Tbey won ~ to qullfy for 1~
~t iutere!t rates OD home
~
llllltw 'l'bQ. NichOll wm1 to
die loan loUery fOI' bll dieDtl. ~ and Karell Martin-a YOUI'
wOltiDg couple bopiDI: to 1M1J
tbelr ftnt home.
Jn eulel' Umea, the ........
would have bad no JrOb1em. bay·
iq tJt;e two-bedroom. "9,0llO --
la 18 .. of ()tldMd that ii
teooftl'ID& from derUDe.
Todly, the low-inten!Pt loan
,.._ olten. their ODly ~for
....,, a hOJDe at all.
Whn the Martins' names
were ca8ed at the DOOD drawing. ~ lbouted. "My luck's going
good! rm going to Reno!"
Roberta JohDSOD. a single
motltel' ., live who lhW Oil ..
bllity paymeuta. llarleked with joy
wben she belrd Mr ume. dleD
*8d glullng at her l(M>d fOl'tUDe.
Tbe tbree-bedroolll home she
llopl!ll to buy ID Bat OUllnd -
-first -iB Mlltng for .-.000. Ber paymea'tl under the loan pro-
gram. .. aid, would be tuo per
moatll.
SUch • dell ... made pomible
... Septemmr. wbell ... city ol
()H:tand flOld ... mJllio)I WGl'tll of
tu.free DlQldclta1 bondl at . ~
percent, dis ofteHd the IDOll9Y '° local lfolta8 IDIUtutku fur die
putpOll8 crl IDlkiq the 1~ per-
centlOUt .........
At the time, 1014 pm:ent
didnl sound aD tbat pail, ~
dlllJ cwxterilll Ollll 1~
would be paced oa Ule. lliame
bQen.
Applieants qoalify fer the .
loam only if dleil' b1ctlme .. not
eaeeed tn.• 1llie7' IDUlll live bl
die bOlm they plan to •• and
.. llNll:bitUm --p1te uf tbe hollle ii $19,0Gl
ctweas S.vtqs uct Loan boaPt ...... wardl ot tlae ----· .............. ...,.. w eiBe. "becaW we '1rd&ed to
IUDIOrt die ......... aeeordbl&
.-km COUlellQI ..... Alm
W'IDcll r*7.
..... ---ntlS Mpra to ... att .,..,.,.,....,..
=:.r-~=-"= ......
On ...,. ' tile Jnildbalhm ..
.... It ........ -so anth•lmlll -• llilHClmev ftni-
-------------------------------·----
R.OllERTA JOHNSON ·~-" ........ Nesrly 1li8 pellOlll
weM Braed up at tile doOr .....
at:bem opened thd morning .
-We dedded a lottery would .
1111 a lot__. on eveeybody," sai!t :
W.lmtar. · ·
Aoalllel' lottery wll be ......
tldl rd, -by the -of )'811' ID lolDI will be a-nlable .,, the proera1D
18 llDdlllg IDlitutioM.
. . ' . '
Planning Magazine. May, 1980
The Chica:go Plan
By R;1.ymond T;atalovi.ch •nJ Elizabeth Warre11
Jn July 1978, the city of Chic:a~o nents made reference to the 1060s
isSUl'd SIOO million in tax-t•xcmpt precedent of using indu.;;trial revenue
bunJs to fin.1nce home morti;ages bond"' to attract indu<>trieo; to cities.
for lt'w-and middle-income hume-The program was m1t intended to
huvns~ A second i'>sue for 5150 mil-aid the very poor or the ri!:h but
lion w;:is made in March 1979. rather middle-income people. lmpli-
Tht: idN for th" mortgage bond cit in its d~ign was the assumption
issue is credited to E. f. Hutton & · tl-:at the entire city would benefit.
Cumpany, which cooper.~ted closely No neighborhood was allocated a
with the city aml with first Ftderal quota of mortgage<;, ncr were funds
S.lVings & Loan of Chicago, lllinois's to be t<:irgeted to certain areas.
L1q.i.e:c;! residential lender. As a result Monitoring was the responsibility
rf this alliance between the politic.ii of the Mortgage Revenue Bond Ad·
establishment .and the f inanci.al visory Committee, a m.i.yoral advi-
community, Chitago·s bonds earned sory group ('"(lmposcd of six fimm-
an AA+ rating from Standard & ders. The findings of this group,
Poor, and the city sold them ea-;ily. issued in reports to the city councii,
In its <;>riginal prup05al, Chicago emphasized the program's succ~ses.
set four eligibility requirements for But dissident aldermen. community
participation. A borrower·s total group:c;. and some outside observers
adjusted gross income could.not ex-wue less optimistic, charging
cet:-d $40,000 ii year, .ind the home • that too many mortgages went to
for which the loan was secur(C:.i had purchasers of condominium apart-
to be owner-occupied. Singll"-family ments in affluent neighborhol'.'ds
houses. condominium apartments, bordering Lake Michigan. Other!>
and two-to six-uriit apartment poinh::d out that the 540.000 income
buihJin~s qualified. Finally, the bor-ceiiing of the first bond issue.
rower hold to meet conventional -:oupied with high real estate prices,
mortg.-lge l't'quirements. militated against the indusion of
Chicago's program offered an in-lowl'r il"lt;ome appiicants.
terest rate of 7.99 percent, compared in fact. about a fC'urth of the par-
to market rates at the time of 9l.14 to ticipant:i in Chicago's first program
10 perunt Thus, a homebuyer could had annual irn::omes over $25,000, an
satt $30,000 over the life of a $60,000, amount e.Arned by on!r 4.U percent
29-year, tOperttnt mortgoige. of Chicago families in 1970. In the
The Chicago program included second bond issue of SlSO million.
several sufety featut~:. to ensure that the city earmarked f5 ?erce"t of the
invHhlrs would get their" money mortgages for applicants with in-
back: a SlS million reserve fund; 20 comes of $29,500 a year or less .. The
percent downpayments; and a re-rt>maining funds were available to
quirement that applic;ants take out applicants with in(;omcs up to $40,000.
twict the U$ual amnunt of mortga&e The average mortgage provided
insurance. The investment bankers under the Chicago program was
received about two percent of the $36,675-generally with• 20 percent
. bond proceeds, for designing the downp<Jyrrif!nt. Yet, in 1978, the
program. E. f. Hutton's fee for the average purchase price in the
original $100 million bond sale was Chicago area was $77,800 for a new
S2.3 million. house and $ob,OOO for an older house.
One purpose of Chica~o'-; pro-Thus, it appears th.Jt this program
JlrJm wu to Jttract suburl••rnites Jid, in tact, -;erve .t les'.i altluent
b.1d. .. lo the city and tu deter the out-public th.in the conventional murt-
mi~rahon of miJdle-class city mi-ga~ market. Cle.uly. the program
d(•nl:> to the suburbs. A long·term responded to a need. There were
rurpose W.li'i to attract industry anJ about 8.000 applk • .mb for the 2.148
• nM tu the city's t.ax ba~. Propo-m1>ttg.iges offered in the first round .
. ~=.. i.
Did the program encourage the
inmi).;ration of suburbanites to the
dty? While d.it,1 is still incomplete,
First federal S.wings & Lo.in esti-
m.Ate1 that 3o 4 percent 1:.if th'-' sellers
moved from the city to the suburbs,
whilt' only 31.6 percent of the buy-
ers mond from the suburbs to
Chicago. The rern.:linder of the buy-
ers and :>eller-.. mLwed within tht' city.
Although the program was not
targeted to specific neighborhoods,
a di.:;proportionate number of mort-
gages went to people buying homes
in a few neighborhoods. Distribu-
tion may have been affected by the
fact that applications for the loans
were processed through one savings
and loan institution, First Federal.
which does not have outlets in all
city neighborhoods. But the distri-
bution probably also reflects the
V<lrying income distribution in the
city. In some s~ctions; relatively few
families would have qualified for
loans. But the advisory committ~
applauded the fact that each zip code
area in the city received loans.
The Chicago Reporter, a publica-
tion of the Community Renewal So-
ciety, a private social service agency,
gathered data on over 1,000 of the
mortgages made under the program.
We used this data to determine the
typn of neighborhoods that attracted
homebuyers under the plan. We
found that homebu.yers tended. to
avoid areas wii:h heavy (over one--
third) concentrations of blacks,
lower {under $15,000) family in-
comes, and less valuable (under :zz: .. ccc~ !-t~--:.;.~~n;; ;~::=!:. T!-:: !:::;e,.~
o.hare of mortgages went to neigh-
borhoods with above average num-
bers of Spanish-speaking residents,
however. These neighborhooJs are
considered tr.:tnsitiona.J areas under-
going some degree of sociaJ change.
Thus, we can conclude that the
mortgage program faciUtated ethnic
integration. According to the
Chicago R~porter, a third of the
mortgages went to blacks and lati·
nos. However, the minority appli-
cants tended to buy homes outside
minority m:ig:hborhoods.
R11r;mortrl T •tlllooklt is lii>reto,. af tlw C"''" far
U.'-t f'ol1cy 01t L<l)'ola Ul'liwrsity of Chl•<ll"· Eli·
:.W.•tlt W11"<'fl i' lldjtAlfrt. ~ of rt>liti!'11I
,:a.,~....,·.,.vLo· .. u.W .
. . . '
Paragraph repeated --
typographical error.
WALL STREET JOURNAL
July 3, 1980
. . . .
# . .
•
..
-----
e . e : . • . -. .
JHCOHE 1,1u1·rs for I'/\ T.O /I. L. 'l'O U!'.Jt UOUSIHG r1:cx:RAH .
1979-80
* .f11nd ly Pd cc Rnni~C of 1111.i t
.SJ?.~: __ ·-.1·1~\..!_~S!._1.!'SE!~!.I'.-~ Ro;:...~ ..:..n;.;..<'.:d~..;;,.J~;:n;.;._,_..-.::1;;.;;2..:..0.;.:.i:_t~f('..:;..c;.:..:lipn._,___(!~!1_ }'; 80Z_!:...~_}. M x 170'
l $1S,OOO $12,000 $18,000 $22,080 to $33,120
2 $17,125. $13~700 $20,550 $25, 20S to $J7, 812
3 $19,250 $J5,400 $23,100 $28J3)6 to $42,504
4 .. $21,375 $11t100 $25,650 $31, ~6'; to-$1t7,196
. .
~ $22,750 $18s.2~0 $)3, tiCG lO $50,232
6 $24,065 $19,~50 $26,875 $35,1120 to $53, 130 .
... _"---;-__ ..... "'-------:-------------------~------~-----···-
-.~lv Sizn ltnH S1.1.e ---
1-2 1 bcdroo:a
2 bedroom
r ' 3,: '• t 5 or 6 3 bedroom
'L ).ending ln:lt f.tutlnns vJ.11, on tht; ave.rage, lo:in to liouscl1old::; if tht=ir
1nmuul J11comc eqlinls 28Z or thc:l.r houoinc costs. (Rnnr.c is 25% t:o 38%,
depC>ndint; on :f.ndividunl ctrcumst.nnccs -no. of wn&c earners, other debt,
job fll·nh.ility.) . • ···
Uoin<!o~nc.:r. tissocfr.tion d\\es include hisurnnct:! nn<t nvcr.ag.e around $60.
Lonn 1.u 12, 3/41., 90% of hou~!c V1tluca JO years .• *.
Utiliticr; not included in houuin3 cost& •. ·.
.'
Dep:irttomit af: Planninr, nmf r.omGtunity Env:J.1onmcnt
l111J.o Alto
C•cto1mr 23j J.979
. .
. ~
..
.
..
• , ,
. .
..
. . .
. .
.
* Price ranae of unit may be higher if" interest rates due to tax-free ·bonds are
lower t.lian those· in assumptiQn no. ,3, abOVE]:. •
. .
.,
"
v
.
r
.
•
Vol. It No. 1July2. 1980 the independent newspaper for Redwood C+tJ
City has shortage
.of sewage capacity . .
~ood City is pressing ~;lead with a request to
t~pand its new sewage treatment plant. now under
.'onstruction. bfeaUA when the plant ope1m in April 1!181,
ihe eity wm already be ext.'eediog its sewage limits.
· During a joint study session held oo Monday; June :W
between the City Council and the planning commission,
Director of Public Works Frank Addiego. and City
Manager Jama Fales outlined the city's sewage situation
in ~ specialty prepared report.
The city has applied for grants that would fund the
el'tp iaion of the plant in 1984-85 and give the city extra
sewage capacity, whlch would allow for increased
de\o-elopment. Redwood Shores and the Port of Redwood
City are the only areas which have excess c&J)Kity.
Overall. this means the city is in better shape L'1an any
other surrounding city, said Fales.
Fales said tbat a studt l.s now under way to determine
whether any sewer UHrs came onto the city's system
mesany in reeent years. or if any users are discharging
illegal amounta of waste into lhe system. He thints that
there may be such violators in the Fllir Oaks Area.
, BecaUR of outdated monitoring equipment wred in
the early lWO's. the city's sewa1e needa were
inaccurately calcuJated. said Addiego. The result of that
error means that the city hall will be d'8charging more
sewage into the new p1ant than it . was allocated by the
South Bay Systems Authority. the agency that controls the
plant.
"We were shorted from the ..-ery heginning." si.11d
Fales. who blamed it on the ~tate go~·ernment's "policy to
restrict growth." The new plant is bemg primarily funded
by state and federal grants, which cover more than 87
percent of the ('.OSts. The cities of Redwood City, San
Carlos. Belmont and Menlo Parle: are all sharing in the
remaining cost.
Fales said he believes "extra <'apacity could be
squeeied out" of the new plant through >tood
managerr.ent. which may alleviate the city's shortfall.
The city's sewage limits are expressed in three
categories: millions of gallons per day, pounds of
suspended solids 1TSS1. and pounds of bioch4'mical
oxygen demand <BODJ. Although the city has t.:M million
gallons per day elltra ''olume, it falls short in the other two
caleg11ries. Through some plant modific.itions rurTently
under way, and changes to the Diamond Shamrock
chemical plant. the city will break even in the BOD
cateaory but sti11 exceed its TSS limits.
Since Redwood Shores and the port are not utilizing
their full sewage capacity, the plant will be able to cope
with the city's ext.... sewage temporarily. City
administraton hope that the plant's modifi~aliom will be
made in Ume to absorb tht city's excess TSS. Good plant
management might also take care of the city, said f' ales.
by Anatule Hurld•
Council policy on housing
.)< • lb£> city may issue SUIC mi!lion in tax free a "policy statement, not a legal commitment. " The
m-enue bond!& to finance the construction ut single family. resolution hu a three year limit, arter which lime it
llnd multi-unit housing. expires.
ll)' unanimous vote, with Councilman Robert Spiller. The action was taken becauseof a pending federal bill
abeent, the Council passed the resolutioo at a special that would prohibit cities from issuing tax free revenue
meetlna on June 3U. bonds if they had not stated their intention to do so b)· July
Councllma:n William Rhodes expreued concern that 1, 1980.
the city was committing itself to such a major . City Manager James Fales c;aid the action will "buy
development or redevelopment project, especially in light the city t lme" in order to figure out whelhi:or ii w;ints to g9
of the city's limited sewage capacity. the revenue bond route to rehabilitate or dt>vf"lop new
City _Attorney Davkl Schricller said the resolution wa1 housing projects.
Trim grade. school budget passes
Though the Redwood City Elementary School District
has until July 24 to approve its budget, district trustees
cameones"'closertothat pl when they panecJa $12.7
mm~ t~latt~ bucf&et_ ~t ~June ~ board !"~~118·
Trustee Orrin Crosa questioned the s-.uo,0110 allocated
for subsUtute teachers. ooting that, "at i55 a day for ~ach
substitute. the figure providH for 12 substitute day!! for
every .tea~ in the district. 't1'1at seems h11ith to me."