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HomeMy WebLinkAbout1978-11-29 - Minutes - 40. �'' MINUTES OF A PUBLIC FACILITIES BOARD MEETING • A meeting of the Public Facilities Board was held on Wednesday, Novem- Y: ber 29, 1978, at 9:30 o'clock A.M. in the Board of Directors Room, City • Administration Building, Fayetteville, Arkansas. • MEMBERS PRESENT: John Dominick, Dale Christy, Ron Pennington and George Faucette, Jr. MEMBERS ABSENT: F. H. Martin OTHERS PRESENT: Don Grimes, David McWethy, Jim McCord, David Malone, Ann Henry, Phil Colwell, Gail Biswell, Hayden Mcllroy, Jim Bell, Wade Bishop, members of the press, and other unidentified members of the audience. Jim McCord, City Attorney, called the meeting to order. It was deter- mined that a quorum of the membership was present. V ' The first item of business was to elect officers for the Board. The following persons were nominated for the office immediately following their name: F. H. Martin Chairman Dale Christy . - Vice-Chaiiman Secretary. Treasurer - - -. Ron Pennington A motion was made that nominations cease and, after a vote having been • taken, the aforementioned nominees were unanimously elected to fill the offices for which they were nominated. City Attorney, Jim McCord, stated that it would be necessary for a majority of the members to be present at future meetings (3 members) in order that business could be conducted. He stated that he did not feel it would be necessary for the Board to form By-Laws, but that the Board itself could make the final decision on this matter. Mr. McCord stated that the official bond counsel for the Board would be the law firm of Friday, -Eldredge 4 Clark, Little Rock, Arkansas. He also stated that he himself would be available as co-counsel with that firm to the Board. Mr. McCord then announced that Vice--Chairman, Dale Christy, would pre side over the remainder of the meeting in the absence of the newly elected Chairman, F. H. Martin. George Faucette, Jr. questioned whether the first step the Board . should take in pursuing its duties should be the preparation of an income survey and Mr. McCord replied that an income survey as well as a decision as to the size of the bond issue to be offered should be the initial steps. Dale Christy noted that the City Ordinance creating this Board recom- mended restricting loan agreements for bond proceeds to finance housing lo- cated within the City's corporate limits to 75% of all loan agreements made. The remaining 25% would be available to finance existing housing located ILD within the City's projected growth area and extra-territorial planning area. WICADITIMED • Public Facilities Board Meeting November 29, 1978 Page 2 Mr. McCord stated that this Board had the. authority, upon approval by the City Board of Directors, to reallocate these percentages as they felt necessary. • David Malone, a member of the City Board of Directors, stated that he had several comments to make. He stated that the comments he would make at this meeting reflected his personal opinions and did not necessarily reflect the opinions of the City Board as a whole. Mr. Malone stated that he and other members of the Board of Directors • had been inundated by interested lending agencies and underwriters every since the first -mention of the possibility of the creation of such a Board. He stated that he wanted this Board to be aware of the fact that he felt its most pressing duty at this time was to invite proposals from local lending institutions, consult with the lending institutions offering proposals at great length, and to make judgments about the income levels which would be eligible for bond proceeds. He stated that, after a thorough investigation into the lending institutions' proposals and into the income levels 1.1hich they felt should be eligible, that this Board might even decide that it was impossible to put together "a bond package sizeable enough to become saleable." He said that if a package could not be put together that would "fly" that this Board might want to go back to the Board of Directors with a recommen- dation that thewhole idea just wasn't feasible, or in the alternative, with a recommendation that the creating Ordinance should be rewritten in a manner which would allow creation of a saleable bond issue, 'He stated that the :` Ordinance' could be amended, that it was "not written in stone." Mr. Malone also stated that he had several personal concerns he would like to air, namely: 1, He was concerned that the percentages recommended in the ordinance for restricting loan agreements inside-outside Fayetteville might not be feasible. He said that the City must provide water, sewer, sanitation and fire services inside the City and that he felt a greater percentage of loans should maybe be made to Fayetteville residents. He said he would even like "to encourage this Board, if possible, to make all the loans within the City limits." 2. He stated that, even though the bonds would contain a clause stating the City of Fayetteville in no manner would be financially or legally obligated for "bad loans" which were unproductive, he felt that the City had "a moral obligation" and could definitely be hurt by possibly losing their good standing and rating on other bonds, i.e. , water and sewer bonds. 3. He stated that he would like this Board to "look closely at the fees and charges" proposed by the various lending institutions in that he felt the proposals should be very competitive. He said that if local lending institutions did not propose competitive bids that perhaps this Board should. go out of Fayetteville for more competitive bids. 4. He stated that, to the extent possible, he felt the revenues created by this project should be kept locally. However, he stated, that if this Board for some reason felt they should not be kept locally, he felt it should go back to the City Board of Directors with such a recommendation. 5. Finally, he. stated that he felt the Public Facilities Board had the very best board members of any other county or city proposing such a bond issue and that he felt it had the expertise to get the needed answers. - 1 'Ct Public Facilities Board Meeting �.: November 29,• 1978 Page 3 Mr. Phil Colwell, another member of the Board of Directors, also stated that he had heard conversations such as, since Fayetteville was start- ing about a month behind other cities and counties creating Public Facilities Boards, Fayetteville would be lagging behind all the way. He said, however, that he personally felt (from reading recent articles in the Gazette) that starting late could be a definite advantage in that Fayetteville could "learn from the others' mistakes." Dale Christy stated that the first two things that should be addressed by this Board were: 1. Preparing or obtaining a relevant income survey, and 2. Obtaining commitments from potential lenders. He stated that, in the second instance, he felt this Board should give potential lenders some type of income level guidelines they could use in preparing proposals. John Dominick stated that he would like to see family incomes up to $25,000 or $28,000 included. Mr. Christy inquired of Mr. Dominick whether those figures would be reached "as the result of some sort of income survey," and Mr. Dominick stated that he felt the best way to go about it would be to ascertain the cost of • houses regarded as "low cost" and "moderate cost" perhaps using FmHA or FHA guidelines. He stated that a 1,400 to 1,450 square foot home could be consid- ered a modest house. Jim McCord commented that there was nothing in the statute which stated that low and moderate houses should be the guideline, but rather that "public need" should be served to assist in financing homes that would assist people in decent, safe and sanitary, etc. housing. Mr. Christy stated that an investigation should be made regarding ob- taining a survey or perhaps getting the bond counsel to obtain a survey. Ron Pennington asked whether there might not be an existing survey which would do for this purpose, and Mr. Christy responded that the levels of income reported in other surveys could possibly be outdated or might not re- flect levels of the Fayetteville area accurately. George Faucette, Jr. stated that he felt quite sure the maximum income level should be in the high $20,000 range and John Dominick restated his previous position that he would like to see at least $25,000 to $28,000 as the maximum. Jim Bell, First National Mortgage Co. , Fort Smith, stated that Pine Bluff was using $29,000 and he felt, Fayetteville's ceiling should be higher. Hayden McIlroy, Mcllroy Bank, stated thathe thought the maximum should be as high as possible in order to justify the creation of the entire bond issue. Mr. Bell stated that the higher the ceiling, the higher a rating could be obtained from Standard and Poor's. He stated that Jefferson County was using a progressive income level schedule. He said their 1979 ceiling was about $26,000 and that. in 1981 it would be about $31-$32,000. He said that the provision for an inflation or progressive schedule was on a three- year period since their bond issue had a "life" of three years. He said that Fayetteville might want to bring the life of its first issue down to around one or one and one-half years. He also commented that Springdale had retained the N.W. Arkansas Regional Planning Commission to conduct an income level Public Facilities Board Meeting -. November 29, 1978 "`' Page 4 survey and that it should be done that day or in the very near future. Mr. Bell also stated that perhaps the City could ask the bond underwriters to include in their fee proposals the cost of absorbing an income level sur- vey. He said that "at some point in time they are going to have to make a commitment." He said -the Board could not make a decision on an underwriter without proposals, and since the underwriters could not make firm proposals without concrete income level guidelines and bond issue size to go by, he did not think it would be out of line to ask the underwriter who is awarded the bid to absorb the cost of a survey. Mr. McCord stated that proposed underwriters should be contacted by mail as soon as possible with as much information as possible. He asked whether there was an existing list of interested underwriters who had recently contacted the Board or City. Don Grimes, City Manager, stated that he had such a list but that it was incomplete. Mr. Bell suggested that the underwriters be given a $12 million figure to use in preparing a proposal. He said that if the proposals for that size of issue were not good enough to merit a workable bond issue, perhaps the figure could be raised or lowered to suit the need. Mr. Christy countered that this Board had nothing to gain by talking to lenders until it had enough facts about income levels, etc. and Mr. Bell responded that if a survey could be made within 3 or 4 weeks that the Board could still spend the interim waiting time in contacting underwriters. George Faucette, Jr. asked who could be contacted to conduct such a survey and John Dominick suggested that James Miller or Phil Taylor of the. . Bureau of Business Research could do a survey, or Bob Harlan of the N.W. Arkansas Regional Planning Commission. . A general discussion ensued and in conclusion, Vice-Chairman Dale Christy stated that the following conclusions were the concensus of the Board: 1. That letters should be mailed to as many possible underwriters asking for proposals to be submitted to the City in quintuplet no later than December 8th; and that the proposals should include all fees which would be charged by the institutions (including a fee for absorbing the cost of an income level survey) ; 2. That the N.W. Arkansas Regional Planning Commission should be asked to submit an estimated timetable for conducting and finalizing an income level survey; 3. That the estimated cost of such a survey should be obtained from Jim Miller of the Bureau of Business Research; and 4. That the next regular meeting of this Board would be on Tuesday, December 12, 1978, at 10;00 o''clock. A.M. in the City Board of Directors Room. The meeting adjourned at 10:30 o'clock A.M. ' �_ _ _ .00 SUMMARY OF CERTAIN PROVISIONS AND TERMS OF THE PROGRAM (for informational purposes only; descriptions are qualified in their entirety by the terms and conditions of the Sale, Servicing and Administration Agreement) . Trustee: The First National Bank of Fayetteville Administrator: The Lomas & Nettleton Company Origination Period: From the date of delivery of the Bonds until and including April 30, 1980. Types of Loans: Conventional, FHA or VA. Each Participant may originate mortgage loans as deter- mined by its own customer demands and will not be re- stricted to any maximum or minimum mix between FHA, VA or Conventional Loans. Conventional Loans may not ex- ceed a 95% loan to value ratio and any conventional loan with an initial loan to value in excess of 80% will require private mortgage insurance to a 72% level. Origination Fees: 1% maximum payable by either the buyer or sell- er may be charged and retained by each Participant. Program Participation Fees: Each Participant must collect, on behalf of the Issuer, program participation fees on eac—Fi mortgage loan as follows: Conventional Loans: 1%, to be paid by seller. • FHA/VA Loans: 2%, to be paid by seller, Prepayment Penalties: All conventional loans will require a 1% . non-waivable prepayment fee for approximately the first six (6) years a loan is outstanding. The exact time period will be set when the Bonds are sold. Servicing Fees: payable monthly in an amount equal to 1/12 of 3/8 of one percent of the principal balance of each mortgage loan being serviced. • Remittancess On or before the 6th day of each month, Participant must remit to the Trustee all payments received from the Mortgagor (exclusive of Escrow Payments or Servicing Fees) for the preceding month. Eligibility Requirements; Eligible Borrowers Maximum Income: $30,000; aggregate gross income of head of household and spouse. Maximum Mortgage Amount: $70,000 or such lower amount re- quired by normal underwriting standards, or FHA, VA, FNMA or FHLMC requirements. 1 4 4 . • Eligible Loan Area • 75% of funds allocated to a Participant must be used to originate mortgages within the corporate limits of the City of Fayetteville. 4,,V) 25% of funds allocated to a Participant may be used to originate mortgages on existing residences located out- side the corporate •limits of the City of Fayetteville (.111k; but inside the jurisdictinn_ area and not within another City's planning jurisdiction area. No mortgage loans may be made to finance the acquisition of residences newly constructed (not ! . previously occupied) or under construction. •1 Commitment Fees: Each Participant must pay to the Issuer a Com- mitment Fee equal to 2% of its Allocation. A pro rata • portion of the Commitment Fee will be refunded as mort- gage loans are originated by a Participant and purchased by the Issuer. Any Commitment Fees remaining unrefunded • after April 30, 1980 because of failure of a Participant • to originate and sell to the Issuer an amount of mortgage loans equal to its allocation will be forfeited. • Reallocation: At any time prior to April 30, 1980, a Participant, with the approval of the Issuer, may voluntarily transfer any part or all of its unused allocation to another Participant or Participants for a fee or charge not to exceed 2% of the amount transferred. Closings: Closings for the purchase of mortgage loans 'by the Issuer will be held not less frequently than twice a month during the Origination Period at the Office of the Trustee. All mortgage loan documents must be delivered • to the Office of the Trustee not less than ten (10) days prior to a closing. •