HomeMy WebLinkAbout0440.093August 5, 1~93
HONORABLE CITY COUNCIL
Palo Alto, California
Adoption of Re~olution and Cooperative Agreement For
Participation in Santa Clara County~s Mortgage CLedit
~tificate Prggram (Meel
Members of the Council;
REPORT IN BRIEF
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The attached resolution authorizes the City to enter into a
Cooper3tive Agreement with Santa Clara County to participate in
the Mortgage Credit Certificate {MCC) program for first-time home
buyers. Palo Alto has participated in the MCC Program since its
inception in 1988. The Program primarily serves buyers of units
in the City's Below Market Rate (BMR) housing program.
SAClCGROOIID
The Mortgage Credit Certificate {MCC} Program is a federal income
tax benefit which makes home ownership more affordable for first
time buyers~ Eligible buyers ~~st be of moderate income
(currently limited to $5~,300 for households of one to twe
persons and $68/425 for larger households) and must buy a
residence ot modest value ($250,QOO maximum for new, $220~OOO for
existing). ~e buyer receives the right to an ongoing, annual
tax credit which is equal to 20 percen~ of their mortgage
interest payments. Since a tax credit is a dOllar-for-dollar
reduction of their income tax, it is more advantageous than an
itemized deduction. They continue to deduct the remaining ao
percent of tbeir interest as an i ter.nized deduction. The MCC has
another benefit of roaking it easier to qualify for home
financing. since the lenders consider the monthly tax savings in
det.enuining t:he size of the loan the buyer can afford.
The City of Palo Alto baa participated in the MCC program since
its ~cepticn in 1988. It is administered by the Housing Bond
Coordinator Of Santa Clara Cour~_y in accordance witb Internal
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Revenue Service regulations. The last allocation of MCC
authority~ which was received by the County in April 1992, is
virtually exhausted. Palo Alto" s 1992 MCC set-aside has beell
used, and some additional MCCs have been issued in Palo ~to with
unused authn,..i roy f?:~ cth<::o:-e..i-.;CLt:i. wring 1992. a total of 11
MCCs were issued in Palo ~to; the average purchase price was
$153~227 and the average income of the buyers was $43,241. Most
of the MCCs were utili~ed by home buyers of the BMR units l both
new and resale units.
C\lRRENT MCC APPLICATION
It is anticipated that ~he MCC program will be re-authorized by
Congress during August as part of President Clinton~s tax
package. The County will be submitting an application for 1993
MCC authority to the State (the California Debt Limit Allocation
Coamittee (CDLAC)) for their September 14th agenda. The County
is recommending that Palo Alto request a MCC a]location of $2
million which will assist about 40 home buyers. The 1993 MCC
allocation will be available for home purchases through December
31, 1995. Since Congress is only extending the period for
localities to obtain new allocations until June 30, 1994 1 the
County is ~~9gesting that we seek as large an allocation as
possible at the present time. Any unused allocation can be
transferred, at a later date, to other cities, if it cannot be
used within in Palo Alto.
MCC TARGBTING
In order to ensure that there are sufficient MCCs for home buyers
of the City's BMR unies, portions of the ~993 allocation are to
be targeted to lower income buyers and lower priced properties.
Forty percent of the allocation (al:xY.Jt Hi MCCs) will be Bet aside
for buyers with incomes under $47 r 440 (80 percent of the County
median income). Sixty percent of the allocation (about 24 MCCs)
will be set aside for use with lower priced properties.
Prqperties priced under $187,000 for resale and under $220,000
for new will qualify for the set aSide. All BMR properties will
qualify for the purchase price targeting with many transactions
also meeting the income targeting. In addition, 10 pe~cent of
the allocation will be set aside for new units. A given
transaction can be used to meet more than one target.
PERFORMANCE ORPQSIT
CDLAC, as part of the application package, requires that a
performance deposit certification be executed as a gOOd faith
guarantee to ensure that the City will implement the MCC program.
The performance depoSit. in an amount equal to 1 percent of the
mortgage bond allocation ($4 ndllion x 1 percent = $40,000 for
this application), stays with the City and is only payable to
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CDLAC if no MCC is issued in the entire County. This is not a
problem. since there is a large waiting list for MCCs and ~y
will b~ issued as soon as the county resumes processing
a~ications. Fund~ that ~v~ ~e~ ~et ~eid~ f~~ ct~~= F~rpo=~=.
8Uch as the Housing In-Lieu ~~nd. may be considered as the source
of tbe deposit. The attached deposit certification form will be
completed by the City Manager. In the unlikely event that
diSbursement of these funds is required. Council will be
informed.
RBCOMMBNDATION
Staff recommends that the City Council adopt the attached
Resolution and Cooperative Agreement and authorize the City
Manager to execute the Deposit Certification Form.
Respectfully submitted,
&.-. ~ CA~IBGEI; ~
Sanior Planner
~~
City Manager
Attachments:
i:~Md/:f: -/Jud~
KENNETH R. SCHRBIBBR
Director of Plannin~ and
Community Environment
1) Cooperative Agreement Between the county of Santa Clara
and City of Palo ~to
2} Resolut.ion
3) Deposit Certification Form
cc: Marlene Prendergast. Executive Director, Palo Al.to Housing
CorporatioD, 540 Cowper Street, Suite G, Palo Alto.
CA 94301
Tracy Cunningham-Kozinets, MCC program, Office of the County
Executive, County Government Center, 70 West Bedding
st., San Jose, CA 95110
8/5/93
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COOPERATIVE AGREEME.>IT BETWEEN TIlE COUNTY OF SANTA CLARA AND
TIiE CITY OF PAI,Q AI.TO
THIS COOPERATIVE AGREEMENT (<1'", "Cooperative Agreement") is made and entered inlo
as of . 1993. by and between the COUNTY OF SJ.NTA CURA •• legal .ubellvision
and body corporate and politic of <be Slate of California (the "County"), and <he City of Palo AlIo, •
municipal corpo<aIion of the SIBle of California (the "City").
WITNESSETH:
WHEREAS. <be Tax Refonn Aclof 1984 estahlishe<l !lie Mortg.ge Credit CertifICate Program
(bereinafte. referred 10 as "MCC Program') as • means of assisting qualified ind; vidual. with the
acquisiooo of DeW and existing single fllmn y llousing; and
WHEREAS. the County and <be City have herelofore.determined 10 engage in an MCC Program
pursuant 10 Chaplets 1399, SIOlUIeS of 1985 Sectioo 50197, et seq of the Health and Safety Code of the
State of California (the • Act') in order 10 assist individual home purchasers in the County 10 affonl both
It4;W and exi.~g h.omes wilhin the statuto!)' limits as provided. for in said Ac~ and
WHEREAS, in furtherance of the MCC ProglilJD.. the City Council may. fro."1l time tc! time,
.Lllhorize the Coonty 10 apply to the State ofCalifomia Debt Limit ADocation Committee (CDLAC) in """
name of the City of Palo Allo foc • mortgage bond alloc.tion. The amount c[ which can be ""ded for
aulhority to issue Mortgage Credit Certi.flCates in a (ace amounL eqaaJ to one quarter me value of the
Cities bond allocation ;and
WHEREAS, the County Housing Bond Coordinator is administer'.ng a County-wide MCC
Program; and
WHEREAS, the City and the COtlJIty wisb to cooperate with one another pursuant 10 the Act In
the e.acise of their powers under" the Act for the purposes of the MCC Program;
WHEREAS, <be County will be operating an MCC Program in the County, and !he City desires
that the Program be applicable to otherwise eligible real property in the City;
NOW, TIffiREFORE, in consideration of the covenants hereinafter provided, !he parties hereto
agree as fonows:
SECTION I. The words and phrases of !hi, :ooperative Agreement shall, for all purposes
hercofunIess otherwise defmed herein, have the meanings as.signed to such 'Words and phrases in the
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SECTION 2. The City represents and warrants to the County that: (i) the City has heretofore
. adopted • general plan for the CiJy in confonn"""e with the provisions of the Planning and Zoning Law
of the Stale of California (Government Code Sections 65000 et seq.). (ill S<lid general plan includes •
land ...., element and a housing element as roquired by Government Code Section 6:5302, and (iii) the
Program complies with S<lid land use eIemen, and oousing elemenl
SECTION 3. The County lIhall continue to staff. program for the eff""tiv. admir.istraticn of the
MCC program within the geograpbical ooundAries of l~e County. The County shall continue its
cooperation wilh ioca1 real estate and len ding institutions in order to maintain their participation in
securing applications from eligible applicants for review and approval by County representatives on
behalf of the County and the City.
SI3CI10N 4. If. during the tenn of \his agreernenl the City determines tha, i, cannot utilize an of
the MCC allocation provid<d by the CDLAC. the City will have the option to assign a poniOD of the
allocation to the COUllty for redistribution among the COIln'y and OIber participating cities.
SECTION S. '!his a.greemeol. may be tenninated by either party upcn 90 days. written notice
delivered CO the other party. TIle 1erm ofLlJis agreement shall extend until such lenninatioD by written
notice.
SECTION 6. The City agrees to under..ake such further proceedings or actions as may be
necessary to cany 00' ~1e renos and intent of \his agreement .. expressed in the recitals hereto; provided,
however, that DOlhing herein !ball require the City to approprUt.e any funds to the County for scMC<£
undec thls agreement Funds for the administration of the program shall be derived by the Connty from
the application fte paid by MCC applications administered by the Coun.')'. These fees shall be co"""ted
and:etained by the County in all cases administered by the County including those where the City's
MCC aIIocaIion is debited.
SECIlON 7. Nolhing in this Cooperative As"""".nt shall prevent the Coon ty from entering
into one or more agrceIJ"rents with other municipal cOfPCJf31ions within the County. if ~med nea-.ssary
and advisable to do so by the County.
SECTION 8. This Cooperative Agreement may be amended by one or more supplemental
agreements uecuted by the County and the City at any time.
SECIlON~. t:olhinB contained herein shall be interpreled to impose • relationship of partne<S
or join! ventures bctwee.the City and the County.
SECTION hl. The County agrees to indemnify. defend and hold ,be City, its ome.rs,
attorneys. employees ""d agents hannless againsl any and all claims, damages or causes of action arising
from any sci or Omi.sslOD 00 the pan of the County. ics officers, attorneys. employees and agen~.
IN WITNESS WHEREOF, the parties hereto hav. c.used this Cooperative Agreement to be
"""",ted and atlO$led by their proper officers thereunto duly authorized, and their official seals to be
bereIo afftxed. all as of the day flISt aOOve wriUen.
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ATl'EST:
ATl'EST:
APPROVED ...s 10 roRM AND LEOAUTY:
ATl'EST:
CiryOeri<
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COUNTY OF SAm A CLARA
By _______ _
ROD Gonzales,
Chairperson of the
Board of Supervioors
AssL CleO: of the Board.
PbyUis Perez
City of Palo Alto
By
M,yor
APPROVED AS 10 FORM:
City Attorney
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RESOLUTION NO.
RESOLUTION OF THIi COUNCIL OF THI! CI"l'Y OF PALO ALTO
JU>PROvnIG TKE CITY'S I'lIRnCIPATION IN THE SANTA
CLARA COUNTY MORTGAGE CREDIT CERTIF!::ATB PROGRAM
WHEREAS, Santa Clara. County ("County·) has initiated a
program to provide financial assistance to qualified firBt~time
homebuye~s through ~he issuance of MOrtgage credit Certificates;
and
WHEREAS. in order for the MOrtgage Credit Certificates to
be used for the purchase of hanes in Palo Alto. Palo Alta must
enter into a Cooperative Agreement with the County stating that the
MOrtgage credit Certificate p~ogram complies with the land use and
housing elements of Palo Alto's Comprehensive Plan; and
~~ p~o Alto would like to promote affordable home
ownership opportunities within the County, particularly for
households Ci.:. the lower end of the purchasing spectrum:
ROW, THBRBPORB, tbe Council of the City of Palo Alto does
hereby RESOLVE as follows:
SECTION l~ The City Council approves the attached
Cooperative Agreement between the County of Santa Clara and tile
City of PalQ Alto regarding the ~rtgage Credit Certificate Program
and autborizes the Mayor to execute the agreement on its behal f .
SBCTION 2. The City eouncil further authorizes ~he City
Manager~ as Chief Admdnistrative Officer, to execute the D~sit
Certification Form on behalf of the City of Palo ~to.
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SICTION 3. The Council finds that entering into t-his
agreement 1s not a project for the purposes of the California
ZOvironmental Quality Act.
IlITRODUClm AND PASSED:
AYBS,
ROBS:
ABSIIN'l',
:ABSTIlNTIONS,
ATTEST,
City Clerk.
APPROVBD AS TO FORM:
Senior Aast~ City Attorney
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APPROVED:
Mayor
City Manager
Director of Pla~~in9 and
C~nity Environment
DEPOSIT CERTIFICATION FORM
FOR AN APPLiCATION FOR 1993 ALLOCATION OF PRIVATE ACTIVITY BONDS
CalirorD~a Debt Limit Allocation Committee
91 S Capicol Mall. Room 471
Sacramcnfo. CA 9S814
(916) 653-325$
CERTIFICATION OF THE Cit" of hlp Alto (Applicant)
REGARDING AN APPLICATION FOR PRIVATE ACTIYlTY BOND ALLOCATION
la conaertion with the folloW'jD.J pt'"i'll3tc activity bond application:
APPLICANT:
lSSUDt.:
City of Palo Alto
count,. of Sal.ta Clara
AMOUNT OF ALLOCATION R.EQUESTED: 54,000,000
FRO:ECY NAMEJPROGRAMTYPE: Mo"ttKage Credh. Certificates.
tbe nudenicncd o(ficer of the ___ ~C"ilJt'lYWo"f,-,P:!!a"l"o~,,,l,,to,,--_____ (Applicant)
hereby certifies as follows:
.I~. ~1~.§~J~un~,~.~'~em~i~n~,~=~(N:.: .. :e~)..~:a::n the City ~anager (TiClc) or the :; litT Qf fa19 Altg (Applicant)., I.nd am duly authorized to make the
dcpo$it required: ~low,
2. The city Of ~ 61 co (A.p~licaDt) has collected and has placed OD
deposit ia an accodnt io a Ci.l}aocial institution. S4 Q 000 .'hieh equals onc percent
or the amQuat or privalc activitY bond allocalioQ being Tequ~sted.
3. The deposit will be held until receipt oC a writtCD; notification Crom the CaJi!\ornia Debt
Limit AJlocatioD Com;;:n;ttcc tbaf rhe depo~it ;s authorized to be reteased or forfeited. ill
whole ar in par~ pursuant to the procedu!'"~ of the Committee.
4. To the extent lbac acy portion of the d~poslt is forfeited. the applicant a.Gr~ to send the
.equ~rcd :amouDt iD a c-bcck made payable 10 the ·CI.l.iforl1ia Debt Limit Allocation
Committtc." Such check shan 'be maill:d to the Committee at the address tiOied abov!:
immediately upoa recci.,t oC the writtca :notificatioD from tbe CommiUee.
.s. Tb~ uddnsigncd has read tbe proc~dures of tbe Calirornia Debt Limit AlloeatiolJ
Committee and. lludenta.nds tha.t it any portion -Gr .. a approved ~rivatc llt:tiYlty bond
:aUocatiOD is nor used f(}r the pUft)Ose for which it .... as granted, then the corresponding
portion of the DCrfonnac.cc depos.it mu.st 'be forroeitcd to the Committ-:.¢.
Rev. 12/92
Signalure/Titk
June Fleming~ City Manager
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GENERAL INSTRUCTIONS FOR DEPOSIT CERTlFlCAT!ON FORM
1. Ea.e'b a.pplicant Cor .. priva\(' .ctivit,,;, Mnd aUocatiOD must submit ~videnet to Ihe
Commj[~c: that il has on deposit in an .-.ccount in a financial insriwtion, an amount cquat to
one pel'CCDt of tbe amQu.Q.1 or private aCli-lity bon.d allocation being reQuested. 'The
Commiltee', proceduTCs provide for c-crta.iD. lltey-natives (e.g .. a leuer or crcdiO to. a dcpo.!flt in
a fillJUICial institulioD. Please COt1suit the procedures fOT lnrcrma[joD concenillg acc:cpn.ble
,lIerDa$.ive.s.
2.. The Depc$i.t CCltificuioD Form (sec otb.cr $idc) must be fH~d wilb the Committee at tbe
same tilDe the afJplicatioD iJ submiued.
3. The COlbminee .... ilI zutborizc release or r~Quirc forfeiture Q{ ~he: deposit .as follows:
L )f the: Commirtee pruyjdes no a1iocatioa, or an amou:ot lower thaI! requested by the
'&~?lia.nt.. \he CO:n:l.miltc.e 'Wilt 'u~horize rclnse of a. pr~ ra.ta. amGunt of th.e deposit so th.at
oaly one pc:r~DI of the allocation. granted is 00 depos.it;
b. U the appHca:Dt {Oor the issuer, if dif!cnDl {rOln the '2opplic'aPt) \Sse~ only a pcnion or
the .Uocation granted: to bsue bonds {or to coovert to mortgage credit c.eTli!jcate 2utliority
aDd to issue a( least one morlgage c:redir certificate)., the Committee will authorile the rcfease
or a pro rata ponioD of the deposit ud require: forfeiture of tbe remainder;
c.. If the applic;;ant (or tbe issuer. if differeDt from lhe applicant}, does tlot usc: any of the
aU0C3.tion 10 issue bonds tor to convert to mOrtgage credit certificate authority and issue at
tea.st one mort,a.I~ credit c:ertlficat~), the entire deJ)OSit will be forf~jttd~ and.
d.. If the: applicant 'Withdraws the application jp .... riting prior to Ihe Coma:l.ittcc's
comidcntion of the application, the performance dCPOiit shall 'be autornatit;:aUy released.
4+ The Committee may 'Waive the: forreiture of the performance: deposit if substantially aU
the allocation ,raDted 'Wu used for the purpose: for "Wbk.:h j! was gnntc:o or:ar tr.G failure to
issue boDd~ (or to ..;ouvert to mortgage: cred.it c:ertiHcatc au .. bority ,nd IQ issue at Ica~t onc
mortlllBC credit certifieate) can be shewn to be the result of factor.s. which could !lot have
beeD anticipated aDd .... hich wcrt outsidc t}!c control of the propo~c:d "issuer, bODd counsel.
und.erwriter(sl, credit provider, develop.:r or company, and oth.er parties l(j t"tle proposed.
i:.suan.cc:.
S. If the. appl\uat (Of tbe issuc'i if d.~fftlCU"t hom the applicant), forfeits all or 'l part o( a
deposit pursuant to the procedures of the Committee, the appHcant shall send: the: required
amOUQt co the Commitlee in a ch.eck made payable to .. he: Califoroia Debt Limit Allocation
COlDminee. Amounts n:ccjved win be d=positcd in tnc COIIUPiEtee's Fund.