Travis County Commissioners Court
February 7, 2006
Housing Finance Corporation
Well, good afternoon, we have returned from our recess, we will take up the item for the Travis County housing finance corporation, voting session. 1. Consider and take appropriate action on request to approve membership invoice from Texas association of local housing finance agencies. Mr. Davis?
>> good afternoon, him harvey Davis, manager for the corporation. I’m asking your approval to spend $175 for our annual membership to this organization. We have been members of the organization since 1998. This is the state organization for Texas housing finance corporations. I do recommend approval. This -- the organization does provide us valuable technical assistance and the opportunity to -- to make contact with other housing finance corporations.
>> very good. And we do have a quorum present. Judge Biscoe will be here momentarily. As will Commissioner Sonleitner.
>> move approval of item no. 1.
>> second.
>> all those in favor say aye.
>> aye.
>> opposed? Unanimous support. 2. Consider and take appropriate action on request to approve first amendment to home program contract #542042 with the Texas department of housing and community affairs.
>> this contract ended December 31st, 2005. This was a contract to provide a down payment assistance to first-time home buyers. We have now started a -- a new contract as of the beginning of the year. This amendment is an extension so that we can receive refunding and close on -- we actually have already closed, but so that we receive reimbursement for one home that was set up and ready to close at the end of the -- of the contract period, but the closing did not take place until after the contract period. The state has -- has approved the extension and so I’m asking the board to -- to approve this -- this contract extension.
>> any questions?
>> move approval.
>> second.
>> all in favor? Opposed? Unanimous support. 3. Consider and take appropriate action on request to approve resolution authorizing filing of application with, and paying application fee to, the Texas bond review board to obtain an allocation of state volume cap for a single family mortgage bond program in 2006.
>> and last October, you authorized a working group to investigate the feasibility of a new single family bond program. We have done extensive work on this process and -- and what we are asking -- which -- this is mark o'brien with morgan keegan who will give the board a brief overview of what we have done and where we are in the process at this time. What this agenda item is requesting is that we -- is a board approval to go to the -- to approve a resolution that -- that authorizes us to go to the Texas bond review board for -- for an allocation of -- of private activity bonds that will probably be an allocation of -- of less than $2 million and to pay the application fee to the Texas bond review board, which is $500. So, mark, if you would give us a brief overview of where we are.
>> thank you, harvey, Commissioners, mark o'brien with morgan keegan and company the single fund underwriter. In October when we spoke to the board we gave a report on the 2002 b single family bond program. We also have 19 million of recycled volume cap in the 2000-1-1 program. Short term tax exempt notes that can be used for a long-term lending program if we refund them into a long-term lending program. The discussion there was do we pay off all of those loans or keep half of it, about nine million, non-amt, particularly attractive because it carries lower interest rates on the bonds. The board at that point authorized us to go, the working group, morgan keegan financial advisor, bond counsel to explore the possibly of a new program. This was in October. What we have done since that time is requested of the city of Austin that will be able to lend in a new program in the city. After some delay they said that they would allow lending of Travis County 2006 program in the city with some restriction that's we believable will be acceptable to the program. Second we, morgan keegan also recently developed the first of its kind new bond structure that we closed in December for el paso county colorado, colorado springs, the reason I bring it up, given the current bond environment a new program would have required a relatively significant cash investment on the part of the Austin housing finance corporation -- on the part of the housing development corporation, which you might be unwilling to do. We have since required a structure that will require little to no [indiscernible] for the housing finance corporation, another positive in this process. Third several one on one meetings in December with several of our leading lenders, to see if there might be interest. We got good feedback from those one on one meeting. January 24th we had a meeting here, a formal lenders meeting to describe what a program would like for spring 2006 and also to gauge their interest. That was very well attended. We had very good participation, harvey and members of the city staff were there. County staff were there. Excuse me, I don't care anybody from the -- I don't think anybody in the city was there, excuse me. Over 50 lender representatives. It was a very good meeting. Our lender responses or offers to participate are due on the 14th on valentine's day, next week. Assuming that we have sufficient lender demand, which would be about a $10 million minimum size, we would plan on pricing the issue early March and closing in -- in mid late March. That would be our schedule, assuming that we have sufficient demand. We would need, the reason for this application number one to tell you where we are for this meeting, also why we are making an application to the bond review board if we have 19 million volume cap. The reason is is that because this is older, it relates back to earlier bond issues. We need to have a small amount of new money allocation in there to make 30 year mortgages. If we did this program just with this old volume cap, federal tax law rule would preclude us from doing full 30 year fixed rate, a small portion, maybe 20% of the issue would have to be the new money, that's the reason for the application. That's where we are, we are asking the board to authorize it now, come the 14th or when we have if we have sufficient lender demand, we can quickly get that in line, get the allocation back, get the program closed and priced quickly for first time home buyer families in Travis County and the city of Austin.
>> could you tell me -- you are now are going to be -- to be allowed to lend money to the residents within the [indiscernible] area of the city of Austin.
>> yes. They on a case by case, program by program basis Commissioner Davis, the city of Austin, that's about -- under state law, a city within your jurisdiction that has over 20,000 of the population has to pass a resolution allowing loans to be made within the city limits. The staff indicated that they are willing to do so. We will need formal city action, but they have indicated --
>> you also missing some possible -- listing some possible restrictions, I want to know what those restrictions are, if the city have blessed us with the advent of pursuing this, but then their corporate boundaries with restrictions, I basically don't know what are they and would it hamper -- the restrictions of course I guess wouldn't hinder us from -- from making sure that we get the full maximum impact of -- of these particular -- of this particular program as far as first home buyer assistance.
>> right. They put three conditions. Number one that the newly constructed homes financed under this program in the city be smart compliant. Number two that the home buyer take home buyer education class. And three that the home purchase price not be higher than its on the city's current mortgage credit certificate or mcc program. That purchase price limit is 210,000. The limit if they had no restriction on it, just the federal, the bond limit of the federal law would be about 237,000. We don't think any -- I guess in a perfect world we wouldn't want any restrictions because we would want to make the program as lender friendly as possible. But we don't -- these restrictions were on there -- on the 2002 program when they authorized lending in the city of Austin. After their mcc program was done. It didn't seem to raise objection from the lenders. We'll see [multiple voices]
>> home buyer education requirement.
>> home buyer education was the second part of it. His is that the same type of situation if the person doesn't get involved unless they have the proper educational tools to make sure all of these things that they are getting involved in, they are aware of as far as new home ownership stuff like that.
>> right. Yeah, we think home buyer education is a good thing for low, first time home buyers, that wasn't particularly problematic for us. So far not so for the lenders that we have talked to.
>> Commissioner, for our bond programs in the past, we have never had the home buyer education requirement. So that is something that we -- that since this is -- is a requirement for the city, we may -- it may be that it would make sense to make it a requirement for the -- for the whole county.
>> okay. Well -- [indiscernible] go ahead.
>> it sounds like that this is kind of new to us, that we are lending the money where people would -- would be able to -- to receive the money in the corporate limits of the city versus strictly in the county. Is that true? And if that's the case, are are we doing this because we need to prop up demand? Obviously when you think of Travis County you know that most of Travis County is the city of Austin. Is that what it's all about, mark?
>> yes.
>> in a roundabout way.
>> yeah, Commissioner Daugherty. The -- back in the early days of these corporations Austin hfc did very little in fact Travis County back in 1980 did all of the bond programs. In 1995 Austin hfc started getting more active. We did some programs between 1997 and 2002, about half the programs were with travis excluding the city and half were with it. As a general rule, and some of the programs without the city of Austin went very well because there's a lot of home buyer demand in the -- in the doughnut outside of the hole of Austin. But as a general rule, we would like to have a larger lepd -- as large of a lending area as possible. That's the reason why we made the request of the city and also wanted to know the answer, regardless of what the answer was, we would be able to go to lenders and say where is your lending area.
>> do we also -- I’m sorry Commissioner. Real quick. That sparked something else, when you brought that question up Commissioner. And that is the -- the numbers that -- that a person would probably be allowed to participate in, especially if it's going to go into a 30 year fixed rate mortgage rate. And my question is, do we track the number of participants within the boundaries of the city of Austin, is it a combination of looking at numbers of persons that live within the corporate city limits and those that live in the unincorporated areas of Travis County? Are both of those numbers combined or would they be separate as far as persons that low to moderate income families, first-time buyers, home buyers, go through this process. How would that -- would they be merged or would they be separate?
>> they would be merged Commissioner. The federal law -- for a tax exempt bond program that you put in place, the federal law requires, has three requirements for the home buyers that they be -- income limit first time -- income limit approximately limit on the -- purchase limit on the house, first time home buyer. Those restrictions are given to us by i.r.s., tells us what those limits are. Generally by -- by smsa. So for Austin, it's the -- it's the greater capital area. So the same income purchase price and first-time home buyer requirements are the same for both travis and the city of Austin. So our program would look the same in both Austin and travis.
>> all righty. So well I guess my point, though, I was trying to get to -- to the bottom line as far as I was concerned the city -- if I could know who was in the city of Austin receiving this benefit of this program versus the outside that's receiving the same similar benefits under the same program.
>> right. They -- in past programs some have been just Travis County, outside the city because -- in which case obviously all of those home buyers got the low mortgage rate plus the down payment assistance. In this case they would be -- assuming the city approves it, which they indicated they will, our program for spring 2006 will be available to the city and county residents and we generally report to you afterwards what that break down was --
>> that's what I was getting to, the breakdown of identifying where they reside.
>> right.
>> would be my -- would be the answer that I’m looking for. But I know that would be after the fact.
>> yeah, after we original originate the loans. That would be part of our reporting to you in terms of average purchase price, home buyer income, city versus county [multiple voices]
>> I see, thank you very much for that.
>> sure.
>> thank you.
>> I move approval of the --
>> second.
>> second that.
>> discussion? This is 3, right? All in favor? That passes by unanimous vote. Of those presents. Second.
>> all in favor? That passes by unanimous vote, also. Thank you very much.
>> thank you, judge.
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Last Modified:
Wednesday, February 8, 2006 10:44 AM