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TO: Mayor Robert J. O’Connor
FROM: Brian W. Caputo, Chief Financial Officer/City Treasurer
DATE: November 30, 2016
SUBJECT:
An Ordinance Amending and Restating Certain Documents Relating to the Collateralized Single Family Mortgage Revenue Bonds of the City of Aurora, Kane, DuPage, Will and Kendall Counties, Illinois, in an Aggregate Principal Amount Not to Exceed $600,000,000, Authorizing the Execution and Delivery of Certain Documents in Connection Therewith, and Related Matters.
PURPOSE:
To obtain the City Council’s approval of an ordinance that would permit the execution of documents amending certain terms of the city-sponsored Illinois Assist Program.
BACKGROUND:
For many years, the city has facilitated the issuance of revenue bonds to provide low-cost financing for first-time single-family homebuyers as well as other homebuyers in certain census tracks. Federal law permits local governments to issue tax-exempt bonds to provide this financing. Mortgages financed by the bonds have sometimes been issued at an interest rate that is lower than rates available for conventional mortgages. In addition, homebuyers in the program receive an effective cash award of 3% to 5% of the mortgage amount toward a down-payment. Only 30-year, fixed rate mortgages are supported by single-family mortgage revenue bonds.
The city does not provide any kind of financial guarantee for the single-family mortgage revenue bonds that are issued in its name.
The City of Aurora is the lead agency for a program that provides down-payment assistance for counties and cities throughout Illinois. The program has come to be known as the Illinois Assist Program. Currently, about 80 jurisdictions currently participate in our program.
Private activity bond volume cap is required for the issuance of single-family mortgage revenue bonds. Each year, jurisdictions cede all or a portion of their private activity bond volume cap to the city in order to participate in the program.
Monarch Mortgage Management serves as the program administrator for the Illinois Assist Program.
DISCUSSION:
The proposed ordinance would permit the execution of documents that would amend certain terms of the Illinois Assist Program. Currently, only first-time homebuyers are eligible for assistance. The first change in the program would permit individuals who are not first-time homebuyers to participate. Capacity exists in the program to make this change possible. In fact, broader eligibility criteria have become common among other mortgage assistance programs in the state similar to the Illinois Assist Program. Broader eligibility criteria would serve to promote home ownership.
The second change would permit more jurisdictions to participate in our program. As indicated above, about 80 jurisdictions currently participate in the Illinois Assist Program. However, another 24 Illinois counties are interested in participating. To enhance the outreach and impact of the program, the other jurisdictions should be permitted to participate.
IMPACT STATEMENT:
Not applicable.
RECOMMENDATIONS:
That the City Council approve the attached, proposed ordinance that will permit the execution of documents amending certain terms of the city-sponsored Illinois Assist Program.
cc: Alderman O’Connor, Chairman
Alderman Mervine
Alderman Bohman
Alderman Mesiacos, Alternate
CITY OF AURORA, ILLINOIS
ORDINANCE NO. _________
DATE OF PASSAGE ________________
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An Ordinance Amending and Restating Certain Documents Relating to the Collateralized Single Family Mortgage Revenue Bonds of the City of Aurora, Kane, DuPage, Will, and Kendall Counties, Illinois, in an Aggregate Principal Amount Not to Exceed $600,000,000, Authorizing the Execution and Delivery of Certain Documents in Connection Therewith, and Related Matters.
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WHEREAS, the City of Aurora has a population of more than 25,000 persons and is, therefore, a home rule unit under subsection (a) of Section 6 of Article VII of the Illinois Constitution of 1970; and
WHEREAS, subject to said Section, a home rule unit may exercise any power and perform any function pertaining to its government and affairs for the protection of the public health, safety, morals, and welfare; and
WHEREAS, Whereas, pursuant to the Constitution and the laws of the State of Illinois, and particularly Section 6(a) of the Constitution, the City is authorized to issue its revenue bonds in order to aid in providing an adequate supply of residential housing for low and moderate income persons and families within the City, and to issue its revenue bonds to refund such previously issued revenue bonds issued for such purpose, which constitute valid public purposes for the issuance of revenue bonds by the City; and
WHEREAS, pursuant to Section 10 of Article VII of the Constitution and the Intergovernmental Cooperation Act (5 Illinois Compiled Statutes 2010, 220/1 et seq., as supplemented and amended), public agencies may exercise and enjoy with any other public agency in the State of Illinois any power, privilege or authority which may be exercised by such public agency individually, and, accordingly, the City has previously entered into an Intergovernmental Cooperation Agreement dated as of April 1, 2005 (the “Cooperation Agreement”), by and among the City and other units of local government named therein (the “Original Units”), and an Intergovernmental Cooperation Agreement dated as of October 1, 2011, by and among the City and other units of local government named therein, to provide for the issuance of such revenue bonds and to provide for the issuance of mortgage credit certificates, and to aid in providing an adequate supply of residential housing in such units of local government (the “Program”); and
WHEREAS, to provide for the inclusion of additional units of local government in the Program (the “Additional Units”), it is now determined that it is necessary, desirable and in the public interest for the City to amend the Cooperation Agreement through the extension and delivery of an amended Cooperation Agreement dated as of April 1, 2005 (the “Amended Cooperation Agreement”) by and among the City, the Additional Units and the Original Units; and
WHEREAS, the City has previously determined that it is necessary, desirable and in the public interest to issue its revenue bonds to finance the Program; and
WHEREAS, to provide for the Program, the City has previously authorized the issuance, sale and delivery of its Collateralized Single Family Mortgage Revenue Bonds in an aggregate principal amount not to exceed $600,000,000 (the “Bonds”), to be issued in several series, to obtain funds to finance the acquisition of mortgage-backed securities (the “GNMA Securities”) of the Government National Mortgage Association (“GNMA”), evidencing a guaranty by GNMA of timely payment of, the acquisition of mortgage-backed securities (the “Fannie Mae Securities”) of the Federal National Mortgage Association (“Fannie Mae”), evidencing a guaranty by Fannie Mae of timely payment of, and the acquisition of mortgage-backed securities (the “FHLMC Securities”) of the Federal Home Loan Mortgage Corporation (“FHLMC”), evidencing a guaranty by FHLMC of the timely payment of, monthly principal of and interest on certain qualified mortgage loans under the Program (the “Mortgage Loans”), all under and in accordance with the Constitution and the laws of the State of Illinois; and
WHEREAS, in connection with the issuance of the Bonds, the City has previously entered into an Amended and Restated Origination and Servicing Agreement dated as of March 1, 2013 (the “Origination Agreement”) by and among the City, the Trustee referred to below, the Program Administrator referred to below and the Lenders named therein from time to time (the “Lenders”), among other documents; and
WHEREAS, as a result of certain market conditions and the provisions of competing programs, it is now further determined that it is necessary, desirable and in the public interest for the City to amend the Origination Agreement through the execution and delivery of a First Amendment to Amended and Restated Origination Agreement dated as of July 1, 2016 (the “Amendment”), by and among the City, Amalgamated Bank of Chicago, as Trustee (the “Trustee”), Monarch Mortgage Management, LLC (the “Program Administrator”) and the Lenders; and
WHEREAS, forms of the Amended Cooperation Agreement and the Amendment have been presented to and are now before the City Council of the City (the “City Council”)
NOW, THEREFORE, BE IT ORDAINED by the City Council of the City of Aurora, Illinois, as follows:
Section 1. That it is the finding and declaration of the City Council that the issuance of the Bonds is advantageous to the City, and therefore serves valid public purposes, as set forth in the preamble hereto and in the Cooperation Agreement; that this authorizing ordinance is adopted pursuant to the Constitution and the laws of the State of Illinois, and more particularly Section 6(a) of Article VII of the Constitution; and that the words and terms as used in this authorizing ordinance shall have the meanings set forth in the Amendment unless the context clearly indicates another or different meaning or intent.
Section 2. That the form, terms and provisions of the proposed Amended Cooperation Agreement be, and they are hereby, in all respects approved; that each of the Mayor of the City and the Chief Financial Officer/City Treasurer of the City be, and is hereby, authorized, empowered and directed to execute, and the City Clerk of the City be, and is hereby, authorized, empowered and directed to attest and to affix the official seal of the City to, the Amended Cooperation Agreement in the name and on behalf of the City, and thereupon to cause the Amended Cooperation Agreement to be delivered to the Additional Units and the Original Units; that the Amended Cooperation Agreement is to be in substantially the form presented to and now before the City Council and hereby approved or with such changes therein as shall be approved by the officer of the City executing the Amended Cooperation Agreement, his or her execution thereof to constitute conclusive evidence of his or her approval of any and all changes or revisions therein from such form of Amended Cooperation Agreement; that from and after the execution and delivery of the Amended Cooperation Agreement, the officers, officials, agents and employees of the City are hereby authorized, empowered and directed to do all such acts and things and to execute all such documents as may be necessary to carry out and comply with the provisions of the Amended Cooperation Agreement as executed; and that the Amended Cooperation Agreement shall constitute and is hereby made a part of this authorizing ordinance and a copy of the Amended Cooperation Agreement shall be placed in the official records of the City, and shall be available for public inspection at the principal office of the City.
Section 3. That the form, terms and provisions of the proposed Amendment be, and they are hereby, in all respects approved; that each of the Mayor of the City and the Chief Financial Officer/City Treasurer of the City be, and is hereby, authorized, empowered and directed to execute, and the City Clerk of the City be, and is hereby, authorized, empowered and directed to attest and to affix the official seal of the City to, the Amendment in the name and on behalf of the City, and thereupon to cause the Amendment to be delivered to the Trustee, the Program Administrator and the Lenders; that the Amendment is to be in substantially the form presented to and now before the City Council and hereby approved or with such changes therein as shall be approved by the officer of the City executing the Amendment, his or her execution thereof to constitute conclusive evidence of his or her approval of any and all changes or revisions therein from such form of Amendment; that from and after the execution and delivery of the Amendment, the officers, officials, agents and employees of the City are hereby authorized, empowered and directed to do all such acts and things and to execute all such documents as may be necessary to carry out and comply with the provisions of the Amendment as executed; and that the Amendment shall constitute and is hereby made a part of this authorizing ordinance and a copy of the Amendment shall be placed in the official records of the City, and shall be available for public inspection at the principal office of the City.
Section 4. That the Mayor, the City Clerk, the Chief Financial Officer/City Treasurer and the other proper officers, officials, agents and employees of the City are hereby authorized, empowered and directed to do all such acts and things and to execute all such documents and certificates as may be necessary to carry out and comply with the provisions of the Amended Cooperation Amendment and the Amendment, as executed, and to further the purposes and intent of this authorizing ordinance, including the preamble to this authorizing ordinance.
Section 5. That all acts of the officers, officials, agents and employees of the City heretofore or hereafter taken, which are in conformity with the purposes and intent of this authorizing ordinance and in furtherance of the issuance and sale of the Bonds, be, and the same hereby are, in all respects, ratified, confirmed and approved, including without limitation the publication of a notice of public hearing.
Section 6. That the provisions of this authorizing ordinance are hereby declared to be separable, and if any section, phrase or provision of this authorizing ordinance shall for any reason be declared to be invalid, such declaration shall not affect the validity of the remainder of the sections, phrases and provisions of this authorizing ordinance.
Section 7. That all ordinances, resolutions and orders, or parts thereof, in conflict with the provisions of this authorizing ordinance are, to the extent of such conflict, hereby superseded; and that this authorizing ordinance shall be in full force and effect upon its adoption and approval as provided by law.
Presented, passed, approved and recorded by the City Council of the City of Aurora, Kane, DuPage, Will and Kendall Counties, Illinois, this ____ day of ____________, 2016.
Approved:
/s/ Robert J. O’Connor_____________________________
Mayor
[Seal]
Attest:
/s/ Wendy McCambridge______________________
City Clerk
Ayes:______________
Nays:______________
Absent or Not Voting:____________
Alderman ______________ moved, and Alderman _____________ seconded the motion, that said ordinance as presented be adopted.
After a full discussion thereof, the Mayor directed that the roll be called for a vote upon the motion to adopt said ordinance, as read.
Upon the roll being called, the following Aldermen voted:
Aye:__________
Nay:__________
Absent or Not Voting:__________
Whereupon the Mayor declared the motion carried and said ordinance adopted, and hereforth did approve and sign the same in open meeting, and did direct the City Clerk to record the same in full in the records of the City Council of the City of Aurora, Kane, DuPage, Will and Kendall Counties, Illinois.
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(Other Business)
Upon motion duly made and seconded, the meeting was adjourned.
[Seal]
________________________________
City Clerk