Travis County Commissioners Court
July 6, 2004
Item 2
Number two is a public hearing to discuss issuance of bonds by strategic housing finance corporation of Travis County to provide funds to finance the purchase of mortgage loans, the proceeds of which will be used for the corporation's acquisition of single-family homes located within Travis County that will be leased to qualified tenants of low and moderate income as part of the corporation's lease-purchase program.
>> move the public hearing be opened.
>> second.
>> all in favor? That passes by unanimous vote.
>> good morning. Just the published last Friday in the "austin required by local government code. And this is a public hearing that's required byent code concerning housing finance corporation owning property. It needs to have a public hearing by the governing body and then approval which I believe is on as an action item later. Just briefly, this is the program by the new strategic housing finance corporation to do a lease-purchase program for qualified tenants in Travis County to promote home ownership and allow folks that normally don't have access to the type of financing needed for single-family homes to bridge that gap for Travis County residents. And there's keith hoffpower and wiley hawkins who are in this program and are here if you have any questions.
>> I have a few questions. I don't know, maybe someone in the audience, since it is posted --
>> if you have questions now, let's get them.
>> good morning.
>> again, i'd like to is salute the corporation for what you're doing. I still have a concern about the outreach portion of this. For those folks that may not be aware of this particularly unique program, how are we going about this and to let folks know that this is for used and also new homes for lease-purchase opportunity. What are we doing to let the folks know about this in terms of Travis County?
>> at this point most of our efforts have gone towards educating lenders in the market, mortgage companies and realtors. We are in the process of -- I'm in the process of beginning to do -- set up some outreach meetings with community organizations. My goal is to have some preliminary meetings, and then once our program administrator is put in place, we should be done relatively shortly to start making introductions because that is the person that will be putting on trainings in local community settings and working with faith-based communities. I am in the process of trying to get a meeting set with reverend joe parker of david chapel. I have scheduled a meeting with sarah reams of the capitol city african-american chamber of commerce for next week, so that we can hopefully utilize their network as this program is rolled out. I have conducted specific training or information and training on the program to the national association of real estate brokers for the Austin chapter. And we have had -- we intend to utilize the public access channel that you've been gracious enough to encourage us to utilize. So there will be several marketing activities on a lot of fronts. And at this point we're in the preliminary stages of doing that. Our program director is the person who would be charged with doing the lion's share of thatçó work, and in the meantime I'm going through the process now of trying to get the feelers out to organizations that I think can certainly benefit us in making the program available to as many people as possible.
>> and I guess the bond issuance part of this, the amount of bond that we're looking to issue we're looking to to, aóút(j as you issuing to the different corporations, is that sufficient? How is that done? You have a lot of folks out there that are in need of this particular type of setting to acquire a home. Is the amount of money that's been set as far as the issuance of the bonds that have been set, how is it equated to the need I guess is what I'm trying to get down to? In other words, so there won't be a shortage of money maybe as far as trying to address the people that are in need. In need of a home.
>> I think the way reviewed this program since the beginning has been to do it in a size of issuance that will show that we can make a difference in the community, with a program like this, but not to start with an issuance that is so large that it would be unmanageable for us or could pose problems for us from an administrator standpoint. As you know, this is the first time that an organization has brought this type of a program to the state. At the state level it's a county program, but this is the first time the state is on. So I can tell you that even a at an issuance of 35 million, almost every lender we talked to wanted to know why it wasn't more. I can tell you that I have probably been averaging three to four phone calls a day from different realtors or mortgage companies for the last two or three months. They want to know how much -- is there any more available, when is the next training? So my feeling is based on what we have seen so far, there is going to be significantly more demand than we have funds for in this initial issue; however, if this issue goes as well as we anticipate that it will, because of the infrastructure that you have -- you all have helped us in playing down, we'll be able to come out with accident issues -- subsequent issues and continue to serve that need.
>> the nice things about these programs is they do not need an allocation from the bond review board. So as there's demand, if this program goes well, there will be no legal impediment to going forward and doing a program right behind it.
>> okay. And actually, the influence of having these particular homes that will be purchased can be within the city limits of Austin, but also out in the county. And my question is is that applicable to any incorporated city in Travis County or just the city of Austin as far as the purchase?
>> it's anywhere in Travis County.
>> anywhere in Travis County regardless of what -- okay. That answers it. I want to make sure that folks understand that. Okay. Thank you very much.
>> thank you.
>> I we want the commitment to not issue additional bonds until we're sure that this first alotment is successful. I'm right on that.
>> yes, sir. And additionally, any additional issuances in the future would have to come back for approval also.
>> we anyone like to give testimony during this public hearing? If so, please come forward.
>> I have a question.
>> anybody have comments here?
>> I'm melvin rent, I'm i'm a Travis County housing Commissioner. We have taken great pains to assure that we followed all of the guidelines of Travis County. The program is -- we are very much involved with it as Commissioners. We have gone through and asked questions and attempted to do -- staff has attempted to do all the due diligence that is possible. We want to make sure that this program moves forward, but at the same time we would like to continue to gather the Commissioner's court's input and understanding of the program to make sure that it is as we have stated over and over again, a lease-purchase program, with the sole design to help people who may not have as good a credit rating as others, and that can be for a lot of different reasons, end up purchasing a home. So it's not a lease program, it's not a lease to rental program, it's a lease-purchase program with a lot of training, a lot of involvement of the persons, and a real commitment on those that you have appointed as Commissioners to Travis County housing. So I think we can -- we're going to continue to work with you. I can assure you that we're recovering to the extent possible to make sure it's equitable, make sure it's fair, make sure it's open to all, and make sure that we stay committed and continue to look at the bottom line. And we have good staff, we have good legal advice, we have good financial advisor, and I think that the combination of all these things coming together, along with the presentation on the part of those and the financial beneficiaries, I think that has helped us in moving this along and I can only thank each and every one of you for moving it to this point and allowing this program to get where it is today and hope that you will pass it and we can move forward with the implementation.
>> thank you, mayor.
>> anybody else to give comments during the public hearing? Commissioner Daugherty?
>> cliff or whoever wants to answer this. Is harvey on vacation or is he just not down here? Oh, there he is. Harvey, you slumped down in the seat back there. [ laughter ] and harvey, not that you have to answer this, but whoever wants to, what is the liability, what is the exposure, if any, to the county if you wish bonds -- if you issue bonds if you don't have enough people qualified to use these dollars, what do you do with those? Do you just say we put those back or we send them back? I don't really know how --
>> if at the end of the origination period that we've only used 10 million out of the 35, there would be a non-origination call and those bonds would be paid off. The money would be held by the trustee during the interim. So they're covered and they'll just be repaid. And then that provision is in the indentures in that document that that's what happens to it.
>> so other than the fact that we have some fees attached to that, I mean, that's the liability, I suppose. You've spent a little bit of money for the issuance of the bonds. So if this thing just got to the point where we couldn't qualify people -- when you're reading the negative responses from these programs, you know, as we all have, it frightens you a little bit given that what we try to do here, number one, you have to have a great manager to do this. I think we've all been convinced that I think lower rin da johnson is going to be highly involved with us in this program. She's got a good track record. Whereas if you go to the other sheets there are a couple of things that frighten you, three participating lenders, but only one remained active in the program. Very few qualified. The lease payments are too high and the lease periods too long. It has been more work than they expected. A lot of applicants were unhappy because they had unrealistic expectations. They've only closed 34 34 leases out of 2.6 million bond, only closed on one loan, and it was later foreclosed on. So you have ground to be a littlener nervous about the -- to be a little nervous about the program. Granted, I don't think that she was associated with any of these and I think we identified early on when we were talking about this thing six weeks ago or something, that I recall that she was a great selling point for this in understanding the program. And we all know there are people out there who have gotten upside down creditwise and they're looking for lease-ownership capabilities. But those are always challenging at best as well. Not to say that somebody shouldn't be given a second chance or however many chances they need. What would your response be to the negative? Are those isolated? Are we going to work to -- not that we're not going to have some of those, but that just goes along with the program? What's the response?
>> I think one response in terms of the way the transaction has been structured and the demand from the lending community, the participating lenders have been required to put up one percentage point to participate in this program, and so a good portion of the cost of issuance are being paid by that payment from the lenders. So they're actually putting up money to participate in the program, which is similar to how we do Travis County housing finance corporation, a similar entity that you have, the single-family programs, and so presumably by putting up real money from businesses, they have bought into the program and are going to help push it along. I think there's one factor that helps, and I'm not sure in those previous ones that programs around the country that have not gone well, exactly -- I don't know which ones-- owe where you're reading from and how we were structured, but often times by having the lenders buy into the program, they have a real incentive to get money moved and to make that money back.
>> that makes sense. I think that's a good selling point. Harvey, bottom line, what do you -- let's get an in-- does this get an endorsement from you, this program?
>> well, I certainly hope this program is successful and will do -- we'll do anything in my capacity to assist this program in its success. You know, when I -- it's been a little bit of time since I had really looked in detail and did this survey of other programs. I do know that this will be a lot of work and a big challenge for the people that will be managing this program. And I do concur with you that the person that is to administer this program, it has a successful program -- when I talked to her was very enthusiastic, very knowledgeable, very committed to this is -- the type of a program that can succeed. And so I'm certainly hopeful that with her being over this program that it will be a success.
>> are we setting up any sort of a time line as to what we would like to see happen? Again, I'm not overly nervous about this. There's not a lot of exposure, a lot of liability from our side. It's just -- it's another way of trying to qualify people to own a home. I think that's advantageous.
>> Commissioner, let me speak as a Commissioner. I'm not -- in other words, typically Commissioners, we're not down in the details as much as the staff, so they're here and can back me up. As a Commissioner we have looked at to the great extent those parameters like harvey when he pointed that out and we've taken that input, so you've had -- one is the issuance, the size is large, but not too large, so it's much larger than many of the things that were created in the past. It encompasses the entire county. It allows for persons that have credit issues who may be persons that are above the threshold of what one would consider low to moderate income to participate, but at the same time we've set the internal goal structure so that we want to have persons that are in our domain be the ones that as this program matures to go through the system. In order, we want to eventually be able to say that someone who came into Travis County as a homeless person ends up somewhere down the line in a home that's going to be their own. That means you have to have credit counseling, that means you have to have self-sufficiency programs like we have within the Travis County. It means you have to have networks and those kind of things that can support the persons that are going to be participating. So we've tried to the extent possible -- it is an ongoing process. Keith has asked a lot of questions and the other Commissioners have asked a ton of questions to try to get to a point where we are today. We are moving forward cautiously, judiciously with the objective of making this a very successful program. I think I asked keith yesterday, if the event that something would happen to this person, we've looked at and forgotten, what are we doing? I can tell you that he has spent a lot of time back and forth on the phone. He spent a lot of time massaging this, and he can answer anything that you may want someone to answer based upon the fact that we're relying upon keith and wiley and the other staff and we feel that they've done a great job in moving this to the point to address those various concerns that you have. Those concerns are our concerns, and I really appreciate the fact that you have put them out here because it reinforces us who aren't working with you on a daily basis and feel that we are moving in the right direction.
>> I know in terms of public outreach, which I think is absolutely critical, we're good to reask the questions. Learning from other people's successes and mistakes, but every suggestion i've given, you all have embraced like the urban league, getting the word out to some of the small chambers. I think it's great. I hope we can continue to repeat the success and move through the mistakes that others have had.
>> I will plan to call up item number 33, the action item on this, after the consent items. Move that the public hearing be closed. All in favor? That passes by unanimous vote.
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Last Modified:
Friday, October 28, 2005 9:44 AM