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Home My WebLink About2005/07/05-Minutes-Fort Worth Housing Finance Corporation (FWHFC) CITY OF FORT WORTH, TEXAS FORT WORTH HOUSING FINANCE CORPORATION CALLED—SPECIAL SESSION MINUTES TUESDAY,JULY 5,2005 Present: Vice President Becky Haskin(arrived at 5:09 p.m.) Secretary Donavan Wheatfall Director Mike Moncrief Director Salvador Espino Director Chuck Silcox Director Jungus Jordan Director Carter Burdette Director Kathleen Hicks Director Wendy Davis City staff: City Manager Charles Boswell City Attorney David Yett Assistant City Attorney Vicki Ganske Director of Housing Jerome C. Walker City Secretary Marty Hendrix Other staff: Assistant City Manager Libby Watson Acting Assistant City Manager Richard Zavala Karen Meunier, Housing Program Manager Don Cager, Housing Program Manager Jim Keyes, Finance Director Guests: Robert Johnson, Senior Vice President of First Southwest Company, the City bond agent Laura Alexander, with First Southwest Company Dan Settle, Jr., with Kelly Hart & Hallman, the City's bond counsel Call to Order (Agenda Item I) With a quorum present, Secretary Wheatfall called the meeting to order for the Board of Directors of the Fort Worth Housing Finance Corporation at 5:05 p.m. on Tuesday, July 5, 2005, CITY OF FORT WORTH, TEXAS FORT WORTH HOUSING FINANCE CORPORATION CALLED—SPECIAL SESSION MINUTES TUESDAY,July 5, 2005 Page 2 in the Pre-Council Chamber of the Fort Worth Municipal Building, 1000 Throckmorton, Fort Worth, Texas. Approval of Minutes of the May 10, 2005 Meeting (Agenda Item II) Secretary Wheatfall opened the floor for a motion on the approval of the minutes of the Tuesday, May 10, 2005 meeting. MOTION: Upon a motion made by Director Silcox and seconded by Director Moncrief, the Board of Directors voted eight (8) "ayes" and zero (0) "nays", with Secretary Haskin being absent, to approve the Tuesday, May 10, 2005 minutes as presented. The motion carried. Receive Final Report Relating to the Series 1991 Single Family Program and Authorization of Expenses (Agenda Item III) Director of Housing Jerome C. Walker spoke before the Board of Directors regarding this agenda item. He introduced Robert Johnson and Laura Alexander, with First Southwest, the City's Bond Agent. They presented a PowerPoint presentation on the redemption of 1991 single-family mortgage revenue bond issue. Mr. Johnson pointed out that there was a single- family mortgage revenue bonds issue in the amount $100 million sold in 1980 by the Fort Worth Housing Finance Corporation (HFC). He stated that below market interest rate mortgage loans were made to qualified first time homebuyers in Fort Worth. These mortgage loan payments were the source of the bond repayment. He pointed out that $60 million of the original $100 million was refunded/refinanced in 1991 and the HFC received cash release. (Vice President Becky Haskin arrived at the meeting at 5:09 p.m.) Mr. Johnson stated that today there are sufficient funds currently on hand to payoff outstanding 1991 bonds in full on August 1, 2005. He stated that the final legal and financial analysis of the program including rerunning of the cash flows has been performed in preparation of the final bond payment. He added that $3.5 million (which is an estimate) in mortgages would remain upon final payoff of the bonds. Mr. Johnson stated that the IRS limitation allows the HFC to retain $1,053,176 before final expenses and he referenced the letter of instructions, which was handout information distributed o the Board Members. He stated that approximately $675,000 in funds on hand after v CITY OF FORT WORTH,TEXAS FORT WORTH HOUSING FINANCE CORPORATION CALLED—SPECIAL SESSION MINUTES TUESDAY,July 5,2005 Page 3 Receive Final Report Relating to the Series 1991 Single Family Program and Authorization of Expenses (cont'd) (Agenda Item III) the bond payoff will be available to the HFC by August 1, 2005. He stated that the remaining funds would be advanced to HFC by the trustee as mortgage loans are paid off and that this would occur in the next 12 to 24 months. He stated that after the HFC receives its funds, the remaining estimated $2.5 million in loans would be forgiven. Mr. Johnson indicated the reasons for asset accumulation included the large refunding size ($60 million) combined with the conservative amount of reserve funds established by the rating agencies and the bond rate being below the mortgage rate established in 1991. Mr. Johnson stated that the action being requested by the Board is approval of the letter of instructions including payment of the expenses. Mr. Johnson then briefly reviewed the copies of the memorandum and letter of instructions he had distributed to the Board Members regarding the Home Mortgage Revenue Refunding Bonds Series 1991A in the amount of$57,000,000 and the taxable Home Mortgage Revenue Bonds Series 1991B in the amount of$1,500,000. There was discussion by the Board regarding the fact that certain outstanding loans will be forgiven. Mr. Johnson explained this issue further for the Board Members and that it would equal between $2.5 to $3 million in loans. Director Davis requested clarification on the number of people that will benefit from this decision and Mr. Johnson provided this information. Director Espino requested clarification on the notification to the mortgagors regarding the loans that will be forgiven and whether a 1099 Form will be provided from the trustee. Dan Settle, the City's Bond Counsel, advised the Board of the income tax consequences and that the mortgagors will be made aware of who issued the forgiveness of the loans. Vice President Haskin requested clarification on the number of years that the homeowners had to have owned the home to receive this benefit. Mr. Johnson indicated that it was 10 years. Director Burdette pointed out that perhaps the current owner was not the original homeowner and questioned if they still receive this benefit. It was clarified that it falls to the current owner. CITY OF FORT WORTH, TEXAS FORT WORTH HOUSING FINANCE CORPORATION CALLED—SPECIAL SESSION MINUTES TUESDAY, July 5, 2005 Page 4 Receive Final Report Relating to the Series 1991 Single Family Program and Authorization of Expenses (cont'd) (Agenda Item III) Secretary Wheatfall requested input on the success of this program and if there is a benefit and whether has it been evaluated. Mr. Johnson stated that the program was successful; however, this type of single-family loan process is much more difficult to do today. He stated that there is still the ability to issue the loans, but it is the interest factor that is the problem. He added that the interest spread is really tight; but it is better than the conventional market. In further discussion, it was clarified that the City staff and First Southwest representatives are saying the answer for today's market is really "no". Mr. Settles talked about the funds that are needed to kick off the program and that this would not occur in the future. There was further discussion by the Board on the program and that it had worked well. Secretary Wheatfall requested to know the number of people that were helped with this program. Mr. Johnson advised that he would obtain this information. Secretary Wheatfall opened the floor for action on this item. MOTION: Upon a motion made by Director Silcox and seconded by Director Davis, the Board of Directors of the Fort Worth Housing Finance Corporation voted nine (9) "ayes" and zero (0) "nays"to approve the letter of instructions as presented and to authorize payment of the following expenses: First Southwest Company $12,000 (financial analysis) Kelly Hart & Hallman/McCall, Parkhurst and Hornton LLP $5,000 (document review) Greenberg Traurig, LLP $15,000 (cashflow analysis, yield proof analysis and verification) J. P. Morgan Trust Company, N. A. $10,000 (Trustee fees and expenses) Nathan Sommers $1,500 (Trustee Counsel fees and expenses) The motion carried. CITY OF FORT WORTH, TEXAS FORT WORTH HOUSING FINANCE CORPORATION CALLED—SPECIAL SESSION MINUTES TUESDAY,July 5,2005 Page 5 Request for Future Agenda Items and/or Reports (Agenda Item IV) There were no future agenda items requested by the Board Members or reports given by the Board Members. Adiourn (Agenda Item V) MOTION: Upon a motion made by Director Silcox and seconded by Director Davis, the Board of Directors of the Fort Worth Housing Finance Corporation voted nine (9) "ayes" and zero (0) "nays" to adjourn the called — special session of the Fort Worth Housing Finance Corporation at 5:23 p.m. on Tuesday, July 5, 2005. These minutes approved by the Fort Worth Housing Finance Corporation Board of Directors on the 23rd day of August, 2005. APPROVED: D Becky . Haskin Vice President TEST: D navan Wheatfall Secretary Prepared and respectfully submitted by: Marty Hendrix City Secretary