Travis County Commssioners Court
October 1, 2002
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Housing Finance Corporation
Let's call to order the Travis County housing finance corporation. Let's take them number 3, approve minutes for board of directors meetings for July 16th, July 30th, September 10th, 2002.>> move approval.
>> second.
>> all in favor. That passes by unanimous vote.
>> where is he? I guess we need somebody to give mr. Davis a call just in case he -- he is busily working on other county matters. [ laughter ]
>> there he is.
>> there he is, yea. Do we need council review on number 1.
>> yes, i believe we do. The developer planning to come at 1:30.
>> oh. Quorum of this board on -- at 1:30 --
>> okay. Well, i think -- i think certainly the board could approve this resolution without council -- you know, rather than not have the meeting. I'm sorry i didn't --
>> it's just like that -- it's like we are ready to get this locked down and leave.
>> right.
>> anybody have any issues with one?
>> no.
>> i don't know that i do.
>> no. 1. Approve resolution authorizing the issuance, sale and delivery of multifamily housing revenue bonds (heatherwilde villas apartments project) series 2002a and multifamily housing mortgage revenue bonds (heatherwilde villas apartments) series 2002b; approving the form and substance of and authorizing the execution and delivery of documents and instruments necessary to carry out the financing of such multifamily rental residential development; and containing other provisions relating to the subject, take appropriate action. I'm sure that the documents are the same as -- or similar to the ones that we have executed many, many times before.
>> uh-huh.
>> yes, sir, i do know that in working with cliff and lad that this project is -- is going along smoothly. And i feel comfortable in tell the board that lad would recommend to the board that they approve this action.
>> since this is a precinct 2 project i would like to move approval of item no. 1 in its entirety.
>> second.
>> if there's any problem, let us know, we will have it on next week. Any more discussion? All in favor? That passes by unanimous vote. 2. Recieve report regarding status of single family mortgage programs and take appropriate action to adopt resolution authorizing the filing of an application to obtain an allocation of the state ceiling for single family mortgage revenue bonds for 2002 and/or 2003 with the Texas bond review board. This is for us basically to file an application to get an allocation, which we have to do, to be considered.
>> yes. I believe the -- the fee is -- is going to be $500. And the -- that we would file to get into the -- get in line for -- for this year probably we would not make it with -- with, you know, the way the -- the allocation will go. I don't think they would make it -- make it to Travis County. But then that application would be able to carry over to the next year. So that's -- that's kind of the second part of this agenda item. I would like to make a little bit of a presentation on the first part of that if that's okay.
>> now is a good time to make it.
>> okay.
>> okay, normally mark o'brien comes and makes these presentations to update the board on the single family bond issue. He -- he was not -- he just had a child.
>> oh, really?!!
>> last Thursday, so he was not able to attend. Lad and cliff and i had discussions with them about the current program and possible -- possibly initiating a new single family program. If you will recall in April of 2001, we got new money, nearly $11 million in new money and had a program, that program was for $13,595,000. The difference between the 11 and the 13,595 was recycling money that we rolled into this program. The interest rate on this program was 6.89% with 4% down payment assistance. The initial period was for 12 months. After the 12-month period, we had not used all of the allocation and so if you will recall, the board -- the board agreed to extend it for another five months, and that -- that period ended in the middle of September. So this -- this tax exempt program has ended. We -- we made mortgage -- we use about 8.2 million of the 13,595 of the money. So this program was unlike almost all of the prior programs where we used 100% of the -- of the money, almost every time. This program was not quite as successful as some of the other programs. I think -- and some of the reasons, which are enumerated in this -- in this backup that you have received was -- was that the interest rate moved somewhat against the -- the -- you know the market has gone down, so the interest rate has moved somewhat against the program. We had a couple of lenders that -- that -- although they purchase an allocation, they did not really work with the program. We had some competition with the state, with other programs being -- coming on board after ours and having a better interest rate. And so some of the lenders then went with those other programs instead of the Travis County program. I think -- one of the big factors has always been the -- the purchase price limits that were -- that were set by internal revenue service for these programs. Where a new house could not cost more than $125,000, and use one a little over $100,000, which in the Austin market was really a -- a detrimental factor. So in this memo that mark has, he says well, the board, we could do -- what should we do now? One thing that we could do is nothing. We could -- we could wait until possibly getting an allocation from the state. I think the main -- the main problem with doing nothing is that -- that the way the aloe -- the state allocates money now is if you don't use what they gave you the prior time, then they penalize you the next time. Well, we used 8 of the $11 million and so when our turn comes again, we would only get approximately 80% of the allocation. And of course we want to -- to get our fair share. We want to get 100%, there's plenty of need here. So right now we have about $17 million in recycling money, plus unused money in the current program that could be used to start a new program, where the earliest time period maybe would be in December. And what we would like the board to -- concurrence with is that it's -- is that lad and cliff and mark and myself work and come up with a proposal to initiate a new bond program later this year. We -- the -- the -- what mark is recommending, some of the features, preliminary features would be that it would be a two year program, so it would be a little bit longer than the old program. It would be initiated in one to two million-dollar lots. This -- the main reason for this is because the negative arbitrage situation that we have where we would be issuing bonds and paying interest of -- of four or 5%, but we would only get one, one and a half, two percent on our money, so this negative arbitrage, if we wanted to initiate a whole bond program now, the -- the corporation would have to come up with maybe a couple hundred thousand dollars to fund the negative arbitrage. So the commitment mods were alto not have the negative arbitrage and the corporation would not have to put in new money for the program. The down side might be that -- that because interest rates are so low, where we couldn't lock in that low interest rate, but so we have a lot of -- a -- a lot, say, it goes for six months and then when -- when we have another $2 million lot, for example, then the interest rate might have been -- might be higher and we would have a higher interest rate in the program. You know, to me it's kind of a -- it kind of is more of an advantage in that it's -- the rate of the mortgage are always going to be competitive, because it's going to be -- the money will move up and down with the market whereas now when we -- like with the current -- with the prior program, we initiate it and then the interest rates went down. So it -- it hurt the program. Just because of the market situation.
>> let me ask you one question. With this new program approach on the recycled money, the $17 million which you indicated before, is there any indication -- i remember when we did this before with the down payment assistance and a whole lot of other amenities, we actually looked at the -- the public looked -- is there an opportunity for us to make sure that the viewing public know about this program? Because i would like to ensure that we exhaust all that, the money that's available, let's use it all up for the purpose of that. Then as far as down payment assistance on new [inaudible] is there any way that we can attribute the marketing aspect of letting folks know about these programs how they were handled in the past, how they are handled in the future as far as marketing approach, ensuring that persons in the community know about the program?
>> well, commissioner, i certainly agree that, you know, the marking is -- marketing is very important. And perhaps we could have done a better job in marketing the prior program.
>> right.
>> you know, i personally was disappointed that we didn't have full initiation of that -- of that $13.595 million in mortgage money that was available.
>> exactly.
>> i think probably the major marketing efforts in the past has been that the mortgage companies have put up money to -- to buy allotments of the -- of the mortgage money and so i think we -- we will do some rethinking of how much to depend on the mortgage company to do the -- to do the major part of the marketing, how much maybe some other ideas of what the corporation could do to -- to better market this program to let the public know. I do know that certainly my office gets a -- lots of phone calls from people, wanting information about these programs. We do have kind of a nice network with the city and the capital area housing finance corporation to send people, get people the right people to contact of where they want to buy a home.
>> okay. I was hoping there was -- would be an that we continue -- an approach that we continue to embrace as we go forward, even in the new program, two year concept, looking at [inaudible]
>> it would be a simple thing to do to build in some marketing costs into --
>> i'm sorry, go ahead.
>> it would be a simple thing to do to build some marketing costs into the program with the intent of doing newspaper advertisements, even radio spots if we wanted to do something like that. We will ask mark o'brien to build some things in like that. When we bring the proposal.
>> okay. Thank you.
>> i move that we approve the filing of resolution authorizing the -- approve the resolution authorize filing of an application to turn in an allocation of the state -- state ceiling for single family mortgage revenue bonds for 2002 and 2003.
>> second.
>> with the Texas bond review board. That's been seconded. Any more discussion of that part? All in favor? That passes by unanimous vote. Now, i'm not sure we are posted for all of the other stuff we discussed about the current family mortgage program. However, we are posted to receive the status reported, which we have done.
>> uh-huh.
>> so let's simply give you directions to go ahead and put together a plan consistent with the recommendations that you made in your memo.
>> in your memo. Can we do that?
>> that would be fine, thank you.
>> and the big thing would be clearly explain what the interest rate would be, the allotments of more than a million bucks, would it would make sense, et cetera. You think that you can get that back to us two or three weeks from now?
>> i -- my goal would be three weeks.
>> i heard what you said, but it would help to have an -- like an outline that clearly sets it fort.
>> that's -- forth.
>> that's for sure. We can give those directions without taking formal action, but thanks for the status.
>> yes, you're welcome.
>> all right. As far as i know, no more action, we did approve -- are you here on number 1.
>> i just happened to be picking up some documents, saw harvey on tv.
>> the paperwork was all in order. That is what we assumed since we hadn't heard otherwise.
>> yes, it is. Lad is out, as last week, lad is comfortsable --
>> move adjournment.
>> second.
>> didn't you have minutes.
>> we approved those already.
>> approved it already.
>> all right. [multiple voices]
>> allocation we voted on, gave directions on putting together the new --
>> yeah.
>> all in favor? That passes by unanimous vote.
>> thanks.
Last Modified: Wednesday, April 2, 2003 10:25 AM