HomeMy WebLinkAboutIR 6947 INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 6947
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�aE 40R1'p To the Mayor and Members of the City Council June 26, 1984
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�rEXPy Subject: SINGLE—FAMILY HOUSING BONDS
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The Council has requested that the staff obtain information about the
process for initiating a new single-family mortgage bond program. You
have previously been provided with a letter from the City's Financial
Advisor on the subject. Attached to this Informal Report is a copy of
that letter, as well as a letter from the City's bond counsel, McCall
Parkhurst and Horton.
The administrator of the last Tarrant County Housing Finance Corporation
single-family program has provided the following data on that program as
requested by the Council:
Total Mortgages Purchased - 681 for $41,500,000
Mortgages Purchased in Fort Worth - 231 for $13,183,200
40% of the Mortgages Purchased from Developers
Mortgage Rate 10 1/8°s
Delinquency in Fort Worth - 2
Total Delinquency - 6
Based on the two attached letters the first step to be taken if the
Council wants to pursue a program, is to have the Board of Directors of
the Fort Worth Housing Finance Corporation select underwriters and enter
into a bond purchase agreement.
When the Fort Worth Housing Finance Corporation last sold single-family
bonds, a group of underwriters were selected after submitting written
proposals and the bond sale was negotiated. In view of the uncertainty
about the possibility of a new program, the staff does not recomnend the
same procedure be followed this time. It is expensive and time
consuming to ask for proposals, evaluate them and make a selection. On
the other hand, it is important that the City enter into a Bond Purchase
Agreement with an underwriter at the earliest possible date in the event
that the allocation process is the same as last time.
The staff suggests that in order to possibly establish a place in the
allocation process, a Bond Purchase Agreement be entered into with the
First Southwest Company and that the Agreement contain a clause allowing
the Agreement to be assigned to another group of underwriters. At the
time the process is authorized by law the Fort Worth Housing Finance
Corporation could ask for competitive bids for the underwriting and the
Agreement with First Southwest would be assigned to the successful
bidder.
ISSUED BY THE CITY MANAGER -- FORT WORTH, TEXAS
INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 6947 - Page 2
,PTf Rf0
50P71 To the Mayor and Members of the City Council June 26, 1984
ExA Subject: SINGLE-FAMILY HOUSING BONDS
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First Southwest has agreed to sign such an Agreement with the assignr-ient
clause. 'There would be no cost to the Fort Worth Housing Finance Cor-
poration for entering into such an Agreement. All it does is provide
the City with a possible slot in the event favorable legislation is
passed. There is no obligation on the part of the Fort Worth Housing,
Finance Corporation to corplete the process, but we have taken the
initial action that gives the option to continue.
If the Fort Worth Housinq Finance Corporation chooses not to follow this
process, then the first action to be taken is to determine a method of
selecting underwriters. There are a number of alternatives available:
o Use the same underwriters who were selected on the first issue
(Rauscher Pierce Refsnes, Goldman Sachs, Underwood Neuhaus,
and ?Terrill Lynch)
o Select a group of underwriters based on recent successful
bidders for Fort Worth competitively issued bonds (Prudential
Bache, Salomon Brothers, Dean Witter)
o Request proposals from all interested underwriters and select
based on the proposals su'hmi.tted.
o Select one or nore of the last housing underwriting group who
has had experience with Fort Worth to join with a croup
selected by one of the other processes.
It is staff's opinion that the most efficient action would be to enter
into the Agreement with First Southwest and then ask for competitive
bids at the appropriate time.
* * * * * * * * * *
.Should additional information be desired, it will be furnishe(j upon.
request.
Robert L. Herchert
City Manager
Attachrhent - 2 ~
'- ISSUED BY THE CITY MANAGER — FORT WORTH, TEXAS