Resolution 2002-21

REQUEST FOR COUNCIL ACTION

RESOLUTION: 2002-21

SUBJECT: Approval of a Resolution assigning and transferring to the City and County of Denver, Colorado, a portion of the City of Lakewood's 2002 allocation from the state ceiling for private activity bonds to finance residential housing facilities for low- and middle-income persons and families within the City and certain other cities and counties in the State of Colorado; authorizing the delegation to the City and County of Denver, Colorado of the authority of Lakewood with respect to the issuance of Single Family Home Mortgage Revenue Bonds (the "Bonds") to finance residential housing facilities for low- and middle-income persons and families within the City and certain other cities and counties in the State of Colorado; approving such Bonds and the Single Family Mortgage Loan program; and authorizing the execution and delivery of a delegation agreement, an assignment agreement and other documents in connection therewith.

RECOMMENDATION: Approval of the Resolution as drafted will provide the City of Lakewood with an opportunity to participate in a cooperative effort between the City and County of Denver and other cities and counties in utilizing current private activity bond allocations to assist low to moderate income home buyers in purchasing homes and to continue to work together on affordable housing in the State of Colorado. Staff recommends approval.

SUMMARY AND BACKGROUND OF SUBJECT MATTER:

State statute established the State of Colorado's Private Activity Bond (PAB) allocation program (24-32-1701 et seq., C.R.S.) to provide for the allocation of the State's PAB ceiling under the Federal Tax Reform Act of 1986. Fifty percent (50%) of the state ceiling is allocated to local governments throughout the State of Colorado. Cities that warrant allocations of $1,000,000 or more receive direct allocations. The City of Lakewood's PAB for 2002 is a total of $5,404,725. In addition to the City allocation, there is a statewide balance that can be used for approved projects throughout the State of Colorado.

The Metro Mayor's Caucus Regional Housing Alliance (Alliance) is a voluntary body that has been convened by the Caucus to work on the issue of affordable housing. Through the effort of the Alliance, a number of strategies have been developed to increase the stock of affordable housing in the region. Among those strategies developed was the potential of applying for PAB allocation from the non-entitlement cities (those warranting less than $1,000,000) and pooling those funds with those of participating entitlement cities for a metro-wide single-family mortgage revenue bond issue. Allocations from the statewide pool and the other member cities (e.g., Denver, Aurora, Arvada, and Littleton, and Lakewood) will be assigned to the City and County of Denver on behalf of the Alliance. The City of Lakewood will be assigning $2,000,000 of our 2002 allocation through this Resolution.

Program Statistics - Lakewood (2001)

¨ 6 loans
¨ Total loan amount in excess of $700,000
¨ Average income of the families assisted was $41,664
¨ Average loan amount was $117,316
¨ Average borrower was 30 years of age

The City and County of Denver will be the entity issuing the bonds and managing the loan program. The program will be available to low to moderate income homebuyers meeting established criteria (e.g., low- to moderate-income levels and purchase price). It is anticipated that the loans will be made at an interest rate that is below the market interest rates.

Each entitlement city assigning their allocation will have an amount equal to or greater than the value of the assignment dedicated to loans within the city for a period of one hundred eighty (180) days after the bonds are issued. After that period of time, applications will be made to the pool and will be approved based on a variety of factors.

Approval of the attached Resolution will delegate authority to the City and County of Denver to act on the City's behalf to issue the bonds and to take action on behalf of Lakewood with respect to the Single Family Mortgage Loan Program.

Nothing in the Resolution constitutes a debt, indebtedness, or multiple year fiscal obligation of the City of Lakewood.

The Attached outline provides a brief description of the Metro Mayors Caucus, program statistics, restrictions and limitations.

RESOLUTION ADOPTION DATE: April 8, 2002

ATTACHMENTS: Resolution 2002-21, Assignment Agreement, and Delegation and Participation Agreement, PowerPoint Outline

ORIGINATED BY: Larry Dorr, Financial Analyst

STAFF PERSON RESPONSIBLE: Larry Dorr, Financial Analyst, 303-987-7668

SUBMITTED BY:
Jacque Wedding-Scott, Finance Director

REVIEWED BY:
Joni Inman, Director Mayor and City Manager's Office
Mike Rock, City Manager

ASSIGNMENT AGREEMENT

This Assignment Agreement (the "Assignment") dated the ______ day of ______________, 2002, is between the CITY OF LAKEWOOD, COLORADO, a home rule city and municipal corporation of the State of Colorado (the "Assignor") and the CITY AND COUNTY OF DENVER, COLORADO, a home rule city, a municipal corporation and a political subdivision of the State of Colorado (the "Assignee").

RECITALS

WHEREAS, the Assignor has been awarded approximately $5,404,725 (the "2002 Allocation") of the bond ceiling for the State of Colorado and its issuing authorities (the "State Ceiling") computed under Section 146(d) of the Internal Revenue Code of 1986, as amended (the "Code"), under the Colorado Private Activity Bond Ceiling Allocation Act, constituting Part 17 of Article 32 of Title 24, Colorado Revised Statutes, as amended (the "Allocation Act"), for use in the issuance of private activity bonds; and

WHEREAS, subject to the terms and conditions set forth herein, the Assignor desires to assign and transfer to the Assignee, and the Assignee desires to accept, a portion of the Assignor's 2002 Allocation in an amount equal to $2,000,000, which the Assignor agrees to commit and reserve for the issuance of such private activity bonds; and

WHEREAS, the private activity bonds will be issued by the Assignee pursuant to the County and Municipality Development Revenue Bond Act, constituting Article 3 of Title 29, Colorado Revised Statutes, as amended (the "Act"), and such bonds will be used for a purpose which qualifies as a "project" as described in the Act.

ASSIGNMENT

In exchange for the agreements set forth herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

1. In accordance with action taken by the governing body of the Assignor on April 8, 2002, the Assignor hereby assigns and transfers to the Assignee, a portion of the Assignor's 2002 Allocation from the State Ceiling for private activity bonds in an amount equal to $2,000,000 (the "Assigned Amount"). In addition, the Assignor hereby consents to the election by the Assignee, if the Assignee in its discretion so decides, to treat the Assigned Amount as an allocation for a project with a carry forward purpose and/or to make a mortgage credit certification election, thus avoiding reversion of the Assigned Amount to the statewide balance under the Allocation Act.

2. The Assignor represents that is has received no monetary consideration for the assignment set forth above.

3. The Assignee hereby:
(a) Accepts the assignment of a portion of the Assignor's 2002 Allocation from the State Ceiling described above;
(b) Agrees to make available to the Assignor no less than $2,000,000 of the proceeds of certain single family home mortgage revenue bonds to be issued by the Assignor for the origination of home mortgages within the Assignor's boundaries; and
(c) Agrees to abide by each of the terms and conditions of this Assignment in connection with the use of a portion of the Assignor's 2002 Allocation.

IN WITNESS WHEREOF, the Assignor and the Assignee have caused this instrument to be executed to be effective as of the date and year first written above.

[SEAL] CITY OF LAKEWOOD, COLORADO

By
Steve Burkholder, Mayor

Attest:
By
City Clerk

[SEAL] CITY AND COUNTY OF DENVER, COLORADO, as Issuer

By
Wellington Webb, Mayor

Attest:
By
Clerk and Recorder

Approved as to form:
City Attorney

Countersigned:
Auditor

DELEGATION AND PARTICIPATION AGREEMENT

THIS DELEGATION AND PARTICIPATION AGREEMENT (this "Delegation and Participation Agreement") is between the CITY OF LAKEWOOD, COLORADO, a home rule city, a municipal corporation and a political subdivision of the State of Colorado (the "City"), and the CITY AND COUNTY OF DENVER, COLORADO, a home rule city, a municipal corporation and a political subdivision of the State of Colorado (the "Issuer").

R E C I T A L S:

WHEREAS, the City and the Issuer are each authorized by the County and Municipality Development Revenue Bond Act, constituting article 3 of title 29, Colorado Revised Statutes, as amended (the "Act"), to finance projects as defined in the Act, including residential housing facilities for low- and middle-income persons and families; and

WHEREAS, Section 29-3-104(2) of the Act provides that a county or municipality may delegate by resolution or ordinance, as the case may be, to any other county or municipality authority to act on its behalf in the financing of projects under the Act and that any such delegation may be general or limited in scope and time and may be irrevocable for the term or terms of any financing agreement or bond issue, all as provided in such resolution or ordinance; and

WHEREAS, pursuant to an Assignment Agreement dated the date hereof (the "Assignment"), the City is assigning and transferring to the Issuer $2,000,000 of the City's 2002 bond ceiling for the State of Colorado and its issuing authorities computed under Section 146(d) of the Internal Revenue Code of 1986, as amended, under the Colorado Private Activity Bond Ceiling Allocation Act, constituting Part 17 of Article 32 of Title 24, Colorado Revised Statutes, as amended, for use in the issuance of private activity bonds; and

WHEREAS, the Issuer proposes to issue single family home mortgage revenue bonds pursuant to the Act (the "Bonds") to finance residential housing facilities for low- and middle-income persons and families within the City and other cities and counties in the State of Colorado (the "Single Family Mortgage Loan Program"); and

WHEREAS, the City wishes to participate in the Single Family Mortgage Loan Program; and

WHEREAS, the City desires to delegate to the Issuer the authority of the City to finance and otherwise take action and exercise power under the Act on behalf of the City with respect to the Single Family Mortgage Loan Program within the City.

NOW THEREFORE, in consideration of the mutual covenants and undertakings set forth herein, the City and the Issuer hereby agree as follows:

Section 1. The City hereby delegates to the Issuer the authority of the City to finance and otherwise take action and exercise power under the Act on behalf of the City with respect to the Single Family Mortgage Loan Program within the City.

Section 2. The Issuer hereby accepts the delegation of authority from the City pursuant to Section 1 hereof and agrees to abide by each of the terms and conditions of this Delegation and Participation Agreement in connection with the use of such delegation. The Issuer agrees to make available to the City no less than $2,000,000 of the proceeds of the Bonds for the origination of home mortgages within the City's boundaries.

IN WITNESS WHEREOF, the City and the Issuer have caused this Delegation and Participation Agreement to be executed to be effective as of _______________ ___, 2002.