Travis County Commissioners Court
October 4, 2005
Housing Finance Corporation
However, we do need the Travis County housing finance corporation which I call to order at this time. Number 1 is a public hearing regarding issuance of Travis County housing finance corporation multi-family housing mortgage revenue bonds, Tuesday ka knee village apartments.
>> I just want to state that notice of this public hearing was published in the statesman 14 days ago. And I think harvey Davis has some things he wanted to mention.
>> good afternoon, harvey Davis manager for the corporation, and I知 here with cliffton phillips representing unified housing foundation who is -- would be the owner of this project that's located in northeast Travis County and if it's okay with you, judge, he will give a brief explanation of the project.
>> that's okay with me as president of the corporation.
>> thank you very much. I致e given you just a quick presentation which I won't go through the whole thing. Basically it's 232 units. It's on the southeast corner approximately of samsung boulevard and parmer lane. It's going to be a family deal. It's one, two and three bedroom units all at 100% at 60% of the median area income. It's going to have all the typical amenities, a clubhouse and pool and we're going to have a library and barbecue grills and picnic tables, et cetera. Carports and garages. The rent structure, which is in the packet, there's going to be 96 one bedrooms at 665. 92 two bedrooms at 808. And 43 bedrooms at 938. I guess that's pretty much it unless you have specific questions.
>> will you have similar situations such as you mentioned to us today in other locations in the state?
>> yes, sir.
>> could you just tell me a little something about them?
>> we have 186-unit project in tarrant county that is -- actually we just found out the other day was completely taxed out, 100% leased on the initial round of tax credits. The other project that unified has is a seniors project in plano, Texas, that's just now under construction. They've pretty much completed the dirt work and they are starting on the slabs. It's 240 units of senior independent living. And those are the two low-income housing tax credit deals that unified owns at the current time.
>> this is a chdo?
>> yes, it is. And we will be going in for the 50% abatement. Offered to the chdos which we discussed.
>> and what conversations have you had with mr. Davis related to how important it is to be paying up your fees for the housing finance corporation in lieu of getting your chdo status and the benefits that come? Which fees in particular? I知 sorry.
>> related to the -- there would be an annual fee.
>> yes. He has brought that up and made it very clear. Then and where we stand on that and we will honor that obligation.
>> I think I mentioned in my memo that when I talked to southeast Texas housing finance corporation, the executive director did bring up some concern about receiving timely payment of the annual fee on projects that they are -- a project that they financed several years ago. And in talking to the unified housing people, the executive director and with cliffton the explanation was that there was some miscommunication between the trustee and unified housing in southeast Texas. Perhaps southeast Texas was not timely in submitting invoices, which I can represent to the board that we are timely in presenting invoices to our people.
>> my understanding is that since that time we paid when we received the invoice, it was the understanding that the trustee was paying it on behalf and that was not in fact the case. But we have corrected that.
>> and have you had conversations with the manor independent school district so that if indeed you do build there they are aware of [inaudible] that may be coming [inaudible].
>> we haven't at this point. We've notified them, but we can finish --
>> [indiscernible] to make sure their facilities are aware of [inaudible] even if it's in the planning stages.
>> we will try to set up a meeting with manor i.s.d.
>> what will be some of the benefits -- I know this will have some diversity, the persons occupying these particular housing, what are some of the benefits if you just briefly can mention a couple of them maybe the citizens can look forward to, or the residents, that will be occupying this after construction?
>> okay. Well, aside from the normal amenities at the project level, unified housing has a whole list of social programs and typically we cater it on a project by project basis. Two of the major programs are a financial stones program and a seniors program. And we implement those across the projects. We also then tailor -- we try to have a couple usually that lives on the property that designs all the social functions around that particular property. They get a free apartment and then they get a budget from unified and each month they have a calendar of different activities. In a situation where they can't get a free apartment, we still subsidize it in some way so that they can perform or we get someone that would like to volunteer. We have that at almost every project. And each community is different. We have e.s.l., computer classes at some, we have -- depending on what residents want, one is even a bible study group. We have pot luck dinners. It just kind of runs the gamut of what people want at that particular project. And that we really try and get through these teams because they know the residents and that's kind of their goal is know every resident and know when they move in and try and create a sense of community and they sent those up to the unified level. Unified has a full-time social service person that works with these individuals and couples and designs programs that would -- that, you know, would meet their needs.
>> at the apartment that I -- I went to see one of the apartments they had in Austin, limestone canyon, and they had a budget of $3,800 a month for the social services. This is for a 260-unit apartment, and that works out to be about $15 a unit per month. I think that if this project were to go forward, we might negotiate with them a -- perhaps a larger budget than this per month for the social services and perhaps that could be part of the regulatory agreement.
>> well, I壇 like to see that, I guess, but not only that, I guess from today's activity on this particular subject matter, when would turn key completion of such a project take place? In other words, from the day -- from the beginning to the end where persons would be actually be realizing the living situation here at this particular tuscany villa, as far as balance park? It would be end of November, early December close on the financing. At that point it would be a 16-month construction time. The clubhouse would turn typically in eight to nine months with the first units going every two to three weeks per building thereafter. So tenants could probably realistically start to move in around month 9 to 10 and it would complete in 16.
>> I知 sorry, what did you say?
>> it would be just about a year from now when the first units come online.
>> about a year from today's date.
>> that would be correct.
>> that was the only question, judge.
>> this will be back on the court's agenda for when?
>> the structure is being completed hopefully in the next day or two and we'll get the first drafts of documents either later this week or next week. My guess this will be back on the board's agenda sometime around the first or second week in November with substantially final documents.
>> would anyone like to give testimony in this public hearing? On the proposed project, the tuscany villas apartments. And they would be over off of parmer and yeager?
>> yeah, parmer and samsung.
>> near the parmer-yeager intersection down from samsung.
>> yes.
>> move the public hearing be closed.
>> anybody to give testimony?
>> judge, can I ask --.
>> certainly.
>> harvey, in your write-up, I mean where are we with the two items of concern that you had put in here with regards to the liabilities and the negative equity? You said we were going to have -- or who is going to give us some explanation for what seems to be a pretty leveraged deal?
>> unified housing, I did ask them for their audited financial statements, as I noted in my write-up, they have grown a lot in the last couple of years. Their assets are $344 million. And they have negative equity of over $17 million. And a large current liability, $50 million, current assets of a couple million dollars. And I値l let cliffton address --
>> I can at least address some of that. The portion of the negative equity is with depreciation, and then at the time that unified housing bought some of the properties that mr. Davis is referring to, we used cash flow notes. And so -- to help finance it. So in essence dollar financing. And so those notes are accruing but don't affect the property level, and so that's why you have the negative equity showing up even though-"i mean they in essence lost that on paper, but not cash out the door. The current liability of 50 million was because four loans were becoming due. Those loans because they were within a year, they were listed as current liabilities. They've been refinanced or extended out at this point. One was a land loan that was in relation to the chase oaks project that I mentioned earlier. Three of the other ones were apartment loans through wachovia bank that have been extended out so they would not be under current liabilities is my understanding at this point.
>> and of course, this is a consolidated financial statement. Each apartment complex is a separate l.l.c. There are 24 and they sort of stand or fall on their own. And if this tuscany were to come to fruition and that it would be constructed, then it would be its own separate l.l.c. And succeed or fail within its own financial situation.
>> but having the ability to go and draw on, you know, the overall strength of the entity, I mean --
>> that's a concern.
>> that's ultimately where you are. I mean you can set all these things up, you know, each and through themselves, but when push comes to shove, as we have seen, fees are things that we seem to be down to pecking order in, and, you know, it's the reason the banks, you know, scrutinize who they lend money to. As a matter of fact, if you don't have the asset base, you don't have the collateral, I mean that's the cold, hard truth, I mean, of the world. I mean on paper, there certainly are some things that would draw attention to making, you know, the corporation a little nervous. And so I do think that that is something that maybe between now and November when we look at this, I mean we might see some new numbers if there's consolidation of properties and being put together and this shows a little bit rosier, I mean, picture of where, you know, I would like to get a little more comfortable. Can't get blood out of a turnip, I mean, so if push comes to shove, you certainly like to know where you can go and get what your fees, you know, are going to be.
>> so are you expecting to give mr. Davis a written explanation of those concerns?
>> I will, based on the financing structure too and some other issues, I will get mr. Davis that.
>> and it may be good if I attended one of their board meetings to sort of understand a little bit better what unified housing is and, you know, why they have grown so much recently. So that might be a worthwhile --
>> yes.
>> those board meetings still done in hawaii? [laughter]
>> or are they out in taylor now?
>> just in dallas.
>> when would this be expected to come back before the board? I think all of these are very legitimate concerns that have been brought up, but, you know, if we don't have the proper answers to these things, in other words, we might have to go back to get answers. So what we discussed today and what's been put on the table before us today, what would be, in your mind, a good time to come back to us?
>> I think the plan is to come back in early November.
>> early November?
>> yes, sir.
>> so that's enough time to have all of the concerns that have been addressed?
>> yes.
>> move that the public hearing be closed.
>> second.
>> discussion? All in favor? That passes by unanimous vote. Thank he very much for coming down. Number 2, consider and take appropriate action on request for the following: a, receive final report on the 2002 single-family bond program; b, review options for possible uses of the 2001-one note program; and 2 c, decide whether or not to apply for an allocation the Texas bond review board for mortgage revenue bonds or mortgage credit certificates. Thank you.
>> and mark o'brien with morgan keygan is here and elizabeth with vinson and elkins is also here to assist us on this project. And I think to start off, mark will give us a review of the 2002 single-family bond program.
>> thank you, harvey. Judge Biscoe, Commissioners, mark o'brien with morgan key company. In your book there under the table of contents we'll go over briefly the financing team for the program, our loan origination and information regarding the mortgage loans. Finally a conclusion and then also prospects for a late 2005, early 2006 program. Under tab 1, you've got your program financing listed. Cliff's firm of howell, smith and lee financial adviser, colonel pa till low who is unable to be with us today. Bond council elizabeth from vinson and he will tkeupbs. Trustee bank of new york and our servicer is city mortgage, formerly nationwide mortgage. Under tab 2, closing date of the series 2002 tax ex sepl single bond issue was December 2002. Our mortgage rates, this is before our delivery program, rather than setting the mortgage rate on the entire loan proceeds for a one or two year origination period we set it in 1 to $2 million commitment lots for separate four month origination loan periods. There's a number of reasons to do that but main reasons were to keep your exposure from rates going against you and from also the hfc not having to contribute for negative arbitrage. So our highest rates were as high as 655 mortgage rate, with 4% downpayment. Our lowest rates down as low as 599. The loan origination period was approximately 24 months although we extended this program to June of this year. We actually delivered our last certificate in July 1st on this year, so several pholgs ago. Our lendable procedures were 17 million and all loans came with a 4% grant for downpayment assistance, as I mentioned. Under tab 3 -- go ahead.
>> so there were a few lots that had 5% because the corporation contributed some money.
>> yeah, that's exactly right. We did a number -- for a variety reasons this program along with many state and local programs had sole origination and so we came to, did a number of things to alleviate that. We extended the origination period, met with lenders, transferred allocations among lenders and actually came to you to seek an extra 1% of downpayment assistance for several lots and that occurred on several. I believe the ones that originated off 5 and 6, an extra 1% of dpa from the corporation. Under the neck page, by the way, the summary of the bond issue, we have for all tempt -- first time home buyer requirements and those are all listed for the 2002 program. Under tab 3 with the total loan origination, loans closed were slightly under $6 million. 46 loans. We did not use the remainder of 65 so we used 35% of the money, 65% of the money was unused or 11 million. Then on the next page, it's listed by lender. Ctx mortgage was our best lender. We also had countrywide, kay bee homes, former sterling capital, now home 1, 2, 3 and state bank. Under tab 4 is a summary, judge and Commissioners, of the demographic data for the families served in that pie chart. And under the next page under tab 4 is the average annual family income ranges. You see 24% of our borrowers were between 20 and 41 thousands, 41% between 40 and 60,000. 65% of home buyers were at 60% and $60,000 a year or lower. And then finally, that final page under tab 4, there's a list of the occupations as reported by the home buyer to the lender and the lender to the servicer. Just give you an idea of some of the occupations, Commissioner Davis you had asked in one ever our prior meetings. Under tab 5, we just have a little information on the mortgage loans made in the Travis County 2002 2-a program. Average home cost $130,000. Actually that was probably going higher as we went from 2002 to 2003 to four and 2005. Our loan types are all fha loans. We also could have done usda or farmers home loans. All of them go to ginny may securities for these bonds. But these were all in this face fha. New homes 58% new -- excus me, 58% existing and 48% new construction. Under tab 6:00, before we talk about the note program, this was a tax and deliver structure. It eliminated negative arbitrage, you all didn't have to pay money when we put this in place, and it also kept the mortgage rates competitive throughout our declining interest rate environment in the last several years. In the second bullet, this program used all recycled proceeds from your 2001 short-term tax-exempt note program. That 2001 program was put in place to capture pre-payments and mortgage -- principal payments and -- so in other words for this program we had no new volume cap from the state. This was all from your recycled proceeds. By the way we'll get to that in a second because the question now is what do we do with the unused portion of those notes. Under the third bullet, I just note because these recycled proceeds were used, the lower -rpblg nation, this is not unique to Travis County, local programs throughout the state and state programs and local programs throughout the country have had very tough origination the last several years. But because we used recycled rather than new money it did not affected -- had we gotten 17 million from the state in 2002 to put in place and only used 35% of it, we would only be able to get from the state now about 4 million for a new program which would be too small to do one so we did not have one negative that occurred from this which is negatively affecting our utilization percentage. That's still good if and when Travis County goes back to the state to ask for a bond volume cap for a new deal. In the fourth bullet, good -- which paid off all the transactions costs. In other words Travis County in prior programs did not put any cash into this program. And in fact this will provide a small amount of fees ongoing coming back to you. The ones who lost because of this -- the fact [inaudible] was not Travis County, the lenders who put up the money and didn't originate all of it and also the servicer put up a portion up front and didn't get it all back. I might mention the final pointed, this was a very difficult market for tax-exempt promise and we also didn't have the city of Austin as parted of our lending area for the first 12 months. But we did make close to $6 million of loans to assist 46 low and moderate income first time buyers to achieve the hope of the american dream of homeownership. So we are happy with the innovation of this program, the fact that it wasn't a negative drain on the utilization percentage of the corporation or of your resources. And we're happy that we did get some of it used. And we appreciate the opportunity to work with you all on it and I値l stop there for any questions and I guess, judge, we can go on to the second point about what we do with the remaining recycled bond note proceeds.
>> what was going on in the conventional market during this time? Lock in under 6% -- [inaudible] was this higher than market, about the same or what was going on?
>> we were, Commissioner Sonleitner, a little usually above market close to market each time. So the benefit somebody was getting was not below rate market loan, rather they were getting a 4% downpayment grant. So each time we were pretty close to market. A lot of times we set the lot and the rates would go down which made each individual lot more problem mattedic but the trend was a declining rate environment during the time we did these loans. It goes up and down from the rates we set. They were up and down over the board between a 599 and mid sixes.
>> we've always heard that in terms of what stands in the way of a lot of folks is the downpayment. Should I read into that that perhaps that isn't as much of a barrier for some folks? That you either qualify or you don't, but it's not really related to the downpayment? How should I -- what should I read into this?
>> the fact that we did less of it? I wouldn't read into it the downpayment has become less important. I think I would read some other things into it. What was happening here was that this was a more cumbersome process for lenders to have rates -- if we had just said here's your 599 mortgage rate and 10 million, that was one thing that was negatively affecting it. Second thing was that the -- the lenders had a refi boom on their hands. A third thing was that there were some other programs available for downpayment assistance, genesis, seller financed programs. Which are falling out of favor. But during the time of this program, they were more common. I expect you will see lots of them. And so those were -- I wouldn't read into it -- I think downpayment is still key, I still we had other negative market forces for this program and other programs throughout the state and country at the same time that were making this program more difficult to originate.
>> my sense also was that the state had really excellent bond programs and lenders were tending to go to and use the state bond programs in lieu of the Travis County bond program. So there is -- you know, the state always -- or usually has an ongoing bond program, and during this period they had better rates and some with downpayment assistance.
>> and could we get -- not for today she at a later point in terms of what kind of out kwraoefp we did to get the -- outreach we did to get the word out about our program. [inaudible] urban league anymore, one of the things I was having conversations with him about is that there were some people that just flat out didn't know about the downpayment program linking to a low interest rate program. And just making sure that folks who are working on trying to get their credit repaired, get them knowledgeable, get them through the process, that we are also linking them to a solution and just making sure that we're not just relying on the industry to get word out about a product which may be one of many with somebody going out looking for a house. Drive for qualifications --
>> during this process, we did put Travis County housing finance corporation on the Travis County -- as a department on the Travis County website. And in that section we included the brochure, and we also, which I think helped a whole lot because there are so many programs, you know, for a home buyer here [inaudible] Austin housing finance corporation, capital area, the state, Travis County, so we did a summary of all the programs in central Texas, it's about a five-page summary, that explains what each of the governmental entities are offering home buyers, their website, the phone numbers, and put that on the internet, and we've had a lot of calls from people that have been able to use that as a resource of, you know, doing their research of what there is out there.
>> what effect did the situation at fannie mae have on our volume?
>> it had the effect, judge, they wouldn't extend that program anymore. We had extended it six months, we would have gone further, we had the full three and a half years to use the program, although this had new volume cap. When they had these difficulties they stopped extending these programs so our 7-1 delivery was the last one and they weren't able to go any further and that was the most immediate effect.
>> is that -- options for possible uses?
>> yes, judge, and in fact under tab 7 I talk several bullets about that and we can go through that briefly and talk about the 2001 note program. As I mentioned, the mark for local single-family programs has improved somewhat over the past six months, and as you and i, harvey and cliff have discussed, a couple of reasons are rate compression, rates are going higher. In other words, tax exempt rates are more appreciable -- many more basis points below taxable rates. And negative arbitrage. This idea we have to put this money for 12 months while we're waiting for mortgages to be originated. If we put that in investment that's paying 200 base points less than bonds that's where you get into problems because you don't have the ability to split cash in the program to pay back. But all these programs have kind of gotten better over the last several months and put some real-life exampless, some local issuers have reisn'tly completed some single-family issues and I include two examples done by our firm, a 12 and a half million dollar houston program which closed at the end of July and a $12 million county program that closed just three weeks ago. These programs used a premium -- publicly premium structure -- fannie mae is no longer in this market or at least for the time being they are out of this market perhaps until next year so we are unable to do private placement with them. We are publiclyly selling these to fannie mae. We achieved good rates for the houston and other one respectively. Low issue contributions. Economic benefit, in other words, creating asset and ongoing income. And so far good origination. In the houston example we are 26% originating, about 3.5 million, seven weeks into the origination period. So it's not all rosesy for local single-family programs, but seems like the pendulum is swinging back a little bit. So what we had mentioned in the last bullet was that we would recommend that the hfc authorize staff and faa and council or your faa in abstentia, I suppose, to explore the prospects of putting into place a late 2005 or early 2006 program and included in that assessment would be going out to lenders, explaining what sort of program we put together, structure, rates, dpa, origination period. And included in that would be a determination of what to do with those $18 million you have of tax-exempt short-term notes currently sitting there not being used.
>> is there where we share with the board what mr. Davis and misripy had us do on Friday?
>> that's correct. That's correct. We have currently outstanding in 2001, we put in place the nolty program which the idea was to get recycled proceeds. As people pre-pay loans, we issue tax-exempt notes and the capture of that bond authority. You don't make money or lose money on these notes, they are just a vehicle to keep that bonding authority alive. It was a $30 million program. We filled up, stopped recycling in March of this year. Had reached capacity. We have used 6 million of it in our 2001 bond program. We used about almost 6 million in this program, we have 18 million outstanding today of these 2001 notes. In 2004, we extended them for another three years. So if you do nothing, they stay in place until 2007.
>> but yesterday was the deadline?
>> every six months -- yeah, every six months we remarket these. The part of that remarketing requires a bond opinion and certification from an underwriter that you have a reasonable expectation you are going to use this money between now and -- what's the date in '07? I believe it's -- may of '07. You reasonably expect you are going to use this money. So when we talked to you about this judge, Friday, the question was does the housing finance corporation have a reasonable expectation that they can use 18 million of recycled bond proceeds in the next 18 months. And the determination there was you could either kept the whole 18 million in place or redeem some of it, say 9 million, or redeem all of it. Your determination at that time was not let any of it slip away because it had to be done Monday and bring it back to the board and say what do we want to do with this 18 million. And it could be redeemed in any 30-day period. If you decided 60 days from now I don't think we're going to use it, we don't have reasonable expectation of using it in the next year and a half, you can pull the plug and the bond is redeemed. You don't make or lose any money on this. The income is exactly the note you are paying. This is really just a question what is the reasonable question of the board as to whether or not they will use this 18 million in the next year and a half.
>> yesterday we executed the paperwork necessary to preserve 18 plus million dollars for our use thinking we would put a new program in place or not. But at least we want that opportunity. May incur some legal fees in doing so. But I thought that was the right thing to do. The other thing is that we do have some options as to what program we can put in place. But I think we ought to give ourselves an opportunity to review, try to figure how we can make ours as effective as the competitive programs. And if we conclude after doing that that in fact we should go ahead and use the money to redeem the bonds, then we still can do that within 30 days.
>> correct. After you made the determination right to redeem, correct.
>> the other thing house ing is so critical that if we can put together an attractive program, then I think we ought to. It looks like though other jurisdictions that have really made their programs more attractive by making a monetary investment. So they would either reduce the interest rate or reduce the downpayment. Historically we have -- I guess we've done one or both at times, right?
>> of this 2002, two of the lots the corporation added one percent. And those two lots were actually the two lots that did better than the others. So as I recall on my work sheet, it was more than hafr of the 46 loans originated were done the 5% downpayment assistance. I did talk with southeast Texas housing finance corporation who had a program in which they funded 2%, so they had 6% downpayment assistance, and he said their program did very well. I think it fully originated. You know, they had to put in a lot of money to fund that.
>> mark reminded me that in some past years we really have done remarkably well, not that we've been able to use each year, it's just during the last few years it hasn't really --
>> that's correct, judge. And in 1997, you used 14 -- you originated 14 million, 199,816,000,000, 1999 another 14 million. So if your reasonable expectations are based on the last two and a half years, you would say no, I don't expect to news 18 and a half million. If they are based on a longer time period or because you think the market is getting better, it's reasonable to assume you can go forward. But in any case, few authorize us to look at the development of a program, you can make a determination 60 days from now, yes, let's try to put in a new program or no, we don't expect in which case the bonds are redeemed.
>> who is holding these notes, again?
>> morgan keegan. It's often been a money loser, but the idea was you would have this -- able to do more programs in the future. We'll see if our expectations are reasonable.
>> would we be limited in a future program of being outside of the city of Austin or would we be able to get something that the jurisdictional lines don't really mean anything in which case you would just have a greater audience?
>> good question, Commissioner Sonleitner. The current rules provide a city within your jurisdiction with over 20,000 population that has a housing finance corporation, has to consent to the use of the bond proceeds within their jurisdiction. So assuming that the hfc authorized expiration of a program, not a program, but explored developing a program, that would be one of the first questions of the city of Austin. And they may consent or may not. If in the event they think this is one more benefit, they would consent. If on the other hand they may think, well, it may be in competition, they may be less inclined to do it. Their answer in 2002 was let's wait until we fin he shall our ncc program and we'll come in and it was actually 12 months before the city of Austin was in this lending area which kind of got us off on a false start because at that point the lenders told us that was important, the city of Austin. I will say in years past that was less important to them. Some of those early programs in '97, '98 and 1999. They didn't really care about the city of Austin. They will have to consent and we'll probably determine that shortly from them if there is an appetite from the city to allow lending. Therefore we would present that to the lenders including the city or just the county outside the city.
>> this would be some good conversations to have no matter what simply because we're also the same page making sure that the opportunities are there. It ought not be I want them coming through my program not your program. It ought to be we're all on the same program and anything we can do to get somebody past that gap and into a home, you know, the city is looking at some major things related to housing bonds. To me it's like we ought to all be doing whatever we can and not get into a jurisdictional my stuff, no, your stuff, we're all in comp test. We ought to be doing the regional global thing as opposed to somehow somebody says not in my backyard eye couldn't agree more and couldn't have said it better. We'll pass that along.
>> and it would also be wonderful too if we could collaborate with a couple of area housing finance corporations, if you had a bond program that was coordinated with them at least so that lenders could count on the whole area, all the counties and not have to worry about is this home in Travis County or the city of Austin or hays county. I mean that's really what is hard, what we should be trying to work toward.
>> so the question is where do we go from here?
>> well, we -- what we recommend is that you authorize us to explore the options of the first option being doing a single-family bond program. And whether that's a doable thing. And then if that looks like it's going to be difficult, then perhaps looking at the ncc option, and then come back to the board with our recommendations in one or two months.
>> one or two months or one or two weeks?
>> months.
>> months. Need a little time to -- keep in mind, if we're doing a bond program, you have to have lender demand. We'll go on the and survey lenders. We won't ask for checks right offhand she but in any case, a bond program is always good-bye to be dependent on lender demand, whether or not they think there's product they can move and write a 50 [inaudible] state rule.
>> my final question today is can you explain to the board the explanation you gave me about half of the bonds falling into -- half of our 18 million falling into a really a more attractive category than the other half. And I assume that gives us a little more flexibility in terms of making half of it, I guess, more attractive.
>> that's correct, judge. I値l try to be very brief on that explanation. This 18 million that's sitting there in tax-exempt notes, 9 million of it, approximately half, relates to actually a 1980 issue. It was refunded in '91 and so in other words it's all derived back from a very large issue. In 1980, they had different rules. These bonds were not subject to the alternative minimum tax or or a.m.t. So if we were to do a 9 million program, we kept the goods [inaudible] then if we were to do a $10 million program using 9 million of that recycled proceeds plus a million from the state, we could then sell these bonds about 30 basis points less than rate. Let's say the mortgage rate was supposed to be around a 6. It would be closer to 5.70 and that's because investors will take a lower rate on a.m.t. Proceeds. So half of your money has this attractive quality about it which is another reason why we were loathe to recommend the judge either knock out the whole 18 million before talking to you about it or knock out the 9 because it was so attractive. There is 9 million of this that is quite attractive if we end up doing a program at the end of this year or early next year using this 9 million in a publicly sold setting, it will have the additional attractive effect of a lower mortgage rate, lower bond rate and lower mortgage rate.
>> one other follow-up question that you can get back to me on. Of these 46 loans, if we could do like a dot map to kind of show us -- my sense would be a lot of this is going on in eastern Travis County because when you look at the price ranges, it speaks Pflugerville and manor and Austin colony, a lot of places where you can find a phrod in that category -- product in that category. Especially since we knocked out city of Austin and you can forget anything in western Travis County being in that category.
>> we have plenty of that stuff over there.
>> well, graveyard point doesn't count. But I壇 be interested in seeing because that's certainly where we're seeing the subdivisions [inaudible]. And again, to play on the natural strength there of working with manor, the Pflugerville chamber, just to get the word out of let's play to our strengths.
>> we can do that. We can get addresses and I think probably some plotting program we can use. I値l put that on my list, Commissioner. Thank you.
>> what's the deadline on c? Applying for an allocation.
>> there's actually moral indication right now at the state than there are takers. So I don't know exactly what the current schedule is with the bond review board eye think the last day they can issue -- [inaudible] a week or so before that.
>> but you would consider that possibility when you review the options and decide what to come back and recommend?
>> right. Right. The idea would be this program would either be for a late 2005 or early 2006 or do nothing, in which case you would say let's redeem the notes. All of that would be involved in the time frame. Take that time frame into account in making our recommendation to the board.
>> so ms. Ripy, are you comfortable with this taking four to six weeks to come back to the court?
>> yes. The decision has been made that the notes rephaepb outstanding at this point. As long as the corporation is exploring the options and looking at what your options are, we're comfortable.
>> ms.rippy and I had to vouch on reasonable expectations of using this money.
>> judge, we know you are never unreasonable in these things, so -- [laughter]
>> questions, comments? Move that we authorize the appropriate staff to proceed with a fair review of our options and to come back and make specific recommendations to us.
>> second.
>> in about four to six weeks.
>> six to eight, I guess. Four to eight weeks.
>> think four and not eight, okay?
>> judge, we will do that. I stand corrected.
>> seconded by director Davis. Any discussion? If we have questions, we'll just get them to y'all between now and then. All in favor? That passes by unanimous vote.
>> move adjourn.
>> thank you for your hard work, dedication, et cetera.
>> thank you, judge.
>> thank you all.
>> all in favor? That passes by unanimous vote
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Last Modified:
Wednesday, October 5, 2005 8:54 AM