Irvine Municipal Code Ch. 4 City of Irvine Multifamily Residential Mortgage Revenue Bond Law

This chapter may be cited as the City of Irvine Multifamily Residential Mortgage Revenue Bond Law.

(Code 1976, § II.H-601; Ord. No. 83-12, § 1, 10-25-83)

A. The Council hereby finds and declares that it is necessary, essential, a public purpose and a municipal affair for the City to be authorized to make loans or otherwise provide funds to finance the development of affordable multifamily rental housing to meet a substantial housing need identified in the community.

B. The Council further finds and declares that it is necessary, essential, a public purpose and a municipal affair for the City to make loans or otherwise provide funds to encourage the availability of adequate housing and home finance for individuals of low or moderate income, and to develop viable communities by providing decent housing, an enhanced living environment, and increased economic opportunities for individuals of low or moderate income.

(Code 1976, § II.H-602; Ord. No. 83-12, § 1, 10-25-83)

The following words, terms and phrases, when used in this chapter, shall have the meanings ascribed to them in this section, except where the context clearly indicates a different meaning:

Acquisition means the acquisition of a residence pursuant to the program.

Bonds means any bonds, notes, certificates, debentures or other obligations issued by the City pursuant to this chapter defined and payable exclusively from revenues as in this chapter defined and from any other funds specified in this chapter upon which such obligations may be made a charge and from which they are payable.

Construction loan means a loan made pursuant to the program to a participating party to finance residential construction, rehabilitation or acquisition, whether such loan is insured or uninsured.

Individuals of low or moderate income means individuals whose income does not exceed the qualifying limits for "individuals of low or moderate income" within the meaning of section 103(b)(12)(C) of the Internal Revenue Code of 1954, as amended.

Loan-to-lender means a general obligation loan to a qualified mortgage lender enabling such mortgage lender to make one or more construction loans or mortgage loans.

Local codes means any applicable local, State and federal standards for residential construction or rehabilitation.

Mortgage loan means a long-term loan made pursuant to the program to a participating party which is secured by a mortgage or a deed of trust, whether insured or uninsured, and which provides for the permanent financing of residences pursuant to this chapter.

Participating party means any person, company, corporation, partnership, firm or other entity or group of entities receiving financing for residential construction, rehabilitation or acquisition pursuant to the program. No elective officer of the City shall be eligible to be a participating party.

Participation purchase means the purchase of a participation in a cash flow from single-family mortgage loans from a qualified mortgage lender enabling such qualified mortgage lender to make one or more construction loans or mortgage loans.

Program means the City's program of making construction loans to mortgage loans both directly and through loans-to-lender and participation purchases pursuant to this chapter.

Qualified mortgage lender means any mortgage lender authorized by the City to aid the City pursuant to this chapter. A qualified mortgage lender may be a State or national bank, a federal or State-chartered savings and loan association, a trust company, a mortgage banker, an insurance company or other lender authorized to finance multifamily housing in the State of California, which is capable of providing service to or otherwise aiding the City pursuant to this chapter.

Rehabilitation means the making of repairs and improvements to a substandard residence so that it meets the requirements of the local codes.

Residence means real property improved with a multiple-family rental residence structure of one or more units, or, if one of the units is occupied by an owner of the units, five or more units, and also includes real property improved with a commercial or mixed residential and commercial structure which, in the judgment of the City, is an integral part of a residential neighborhood.

Residential construction means the construction of new residences meeting the requirements of the local codes.

Revenues means amounts received as repayment of principal, interest and all other charges received by the City with respect to loans under this chapter, any proceeds received by the City from mortgage guaranty insurance on such loans, all other income and receipts derived by the City from the making or purchasing of loans or participations therein under this chapter, any amounts received by the City as investment earnings on monies deposited in a sinking, redemption or reserve fund, or any other fund, letter of credit or other guarantee securing bonds or providing for the payment of the principal of, or interest on, bonds and such other monies as the Council may, in its discretion, make available therefor.

(Code 1976, § II.H-603; Ord. No. 83-12, § 1, 10-25-83)

The City may make construction loans and mortgage loans both directly and through loans-to-lenders and participation purchases to finance residential construction, rehabilitation and acquisition, provided that all times during the "qualified project period," as that term is defined in Section 103(b)(12)(B) of the Internal Revenue Code of 1954, as amended, at least 20 percent of the dwelling units of any residence financed pursuant to the program are to be occupied by individuals of low or moderate income, or, if the residential construction, rehabilitation or acquisition qualifies as a "targeted area project," as that term is defined in Section 103(b)(12)(A) of the Internal Revenue Code, provided that during the qualified project period at least 15 percent of the dwelling units of any residence financed pursuant to the program are to be occupied by individuals of low or moderate income.

(Code 1976, § II.H-604; Ord. No. 83-12, § 1, 10-25-83)

The City may fix fees, charges and interest rates for construction loans, mortgage loans, loans-to-lenders and participation purchases and may from time-to-time revise such fees, charges and interest rates to reflect changes in interest rates on the City's bonds, losses due to defaults, changes in loan servicing charges, or changes in other expenses related to such loans, including City administrative expenses. Any change in interest rate shall conform to the provisions of Civil Code § 1916.5, and shall reflect changes in interest rates on the City's bonds, losses due to defaults, changes in loan servicing charges, and changes in such other expenses related to the program.

(Code 1976, § II.H-605; Ord. No. 83-12, § 1, 10-25-83)

The City may fix the character, terms and conditions upon which construction loans, mortgage loans, loans-to-lenders and participation purchases may be made. Construction loans and mortgage loans made to participating parties through or by qualified mortgage lenders, and loans-to-lenders made to and participation purchases made from qualified mortgage lenders, shall be of such character and on such terms and conditions as are established by the City. The full amount owed on any such loan may be made due and payable upon sale or other transfer of ownership of the residence financed by such loan and upon such terms and conditions as may be established by the City.

(Code 1976, § II.H-606; Ord. No. 83-12, § 1, 10-25-83)

The City may fix fees for servicing of loans by qualified mortgage lenders.

(Code 1976, § II.H-607; Ord. No. 83-12, § 1, 10-25-83)

The City may hold deeds of trust or mortgages as security for construction loans, mortgage loans, loans-to-lenders and participation purchases and may pledge or assign the same as security for repayment of bonds. Such deeds of trust or mortgages may be assigned to, and held on behalf of, the City by any bank, trust company or other financial institution appointed to act as trustee by the City in any resolution providing for the issuance of bonds.

(Code 1976, § II.H-608; Ord. No. 83-12, § 1, 10-25-83)

The City may employ such engineering, architectural, financial, accounting, legal or other professional services as may be necessary in the judgment of the City for the purposes of this chapter.

(Code 1976, § II.H-609; Ord. No. 83-12, § 1, 10-25-83)

The City may acquire by deed, purchase, lease, contract, gift, devise or otherwise any real or personal property, structures, rights, rights-of-way, franchises, easements, and other interests in lands necessary or convenient for the purposes of this chapter, upon such terms and conditions as it deems advisable, and may lease, sell or dispose of the same in such manner as may be necessary, desirable or convenient to carry out the purposes of this chapter.

(Code 1976, § II.H-610; Ord. No. 83-12, § 1, 10-25-83)

In addition to all other powers specifically granted by this chapter, the City may do all things necessary, desirable or convenient to carry out the purposes of this chapter.

(Code 1976, § II.H-611; Ord. No. 83-12, § 1, 10-25-83)

A. The City may, from time-to-time, issue bonds, for any of the purposes specified in Section 2-7-404. Bonds shall be negotiable instruments for all purposes, subject only to the provisions of such bonds for registration.

B. Every issue of bonds shall be a limited obligation of the City payable from all or any specified part of the revenues and the monies and assets authorized in this chapter to be pledged or assigned to secure payment of bonds. Such revenues, monies or assets shall be the sole source of repayment of such issue of bonds. Bonds issued under the provisions of this chapter shall not be deemed to constitute a debt or liability of the City or a pledge of the faith and credit of the City but shall be payable solely from specified revenues, monies and assets. The issuance of bonds shall not directly, indirectly, or contingently obligate the City to levy or pledge any form of taxation or to make any appropriation for their payment. All bonds shall contain on the face thereof a statement to the following effect:

"Neither the faith and credit nor the taxing power of The City of Irvine is pledged to the payment of the principal of or interest on this bond."

(Code 1976, § II.H-612; Ord. No. 83-12, § 1, 10-25-83)

In determining the amount of bonds to be issued, the City may include all costs of issuance of such bonds, reserve funds, and capitalized interest for such periods as the City may determine.

(Code 1976, § II.H-613; Ord. No. 83-12, § 1, 10-25-83)

Bonds may be issued as serial bonds, term bonds or installment bonds, or any combination thereof. Bonds shall be authorized by resolution of the Council, shall be registered and shall bear such date or dates, mature at such time or times, bear interest at such fixed or variable rate or rates, be payable at such time or times, be in such denominations, be in such form, carry such registration privileges, be executed in such manner, be payable in lawful money of the United States of America at such place or places, be subject to such terms of redemption and have such other terms and conditions as such resolution or any indenture authorized by such resolution to be entered into by the City may provide. Bonds may be sold at either public or private sale and for such prices as the City shall determine. The City may sell any bonds at a price below the par value thereof. Pending preparation of definitive bonds, the City may issue temporary bonds, which shall be exchanged for definitive bonds when prepared.

(Code 1976, § II.H-614; Ord. No. 83-12, § 1, 10-25-83)

Any resolution authorizing any bonds or any issue of bonds, or any indenture authorized by such resolution to be entered into by the City, may contain provisions respecting any of the following terms and conditions, which shall be a part of the contract with the holders of such bonds:

A. The terms, conditions and form of such bonds and the interest and principal to be paid thereon;

B. Limitations on the uses and purposes to which the proceeds of sale of such bonds may be applied, and the pledge or assignment of such proceeds to secure the payment of such bonds;

C. Limitations on the issuance of additional parity bonds, the terms upon which additional parity bonds may be issued and secured, and the refunding of outstanding bonds;

D. The setting aside of reserves and sinking funds and the regulations and disposition thereof;

E. The pledge or assignment of all or any part of the revenues and the use and disposition thereof, subject to such agreements with the holders of bonds as may then be outstanding;

F. Limitations on the use of revenues for expenditures for operating, administration, or other expenses of the City;

G. Specifications of the acts or omissions to act, if any, which shall constitute a default in the duties of the City to holders of such bonds, and providing the rights and remedies of such holders in the event of default, including any limitations on the right of action by individual bondholders;

H. The appointment of a corporate trustee to act on behalf of the City and the holders of its bonds, the pledge or assignment of loans, deeds of trust, mortgages and any other contracts of such trustee, and the rights of such trustee;

I. The mortgaging of any residence and the site thereof for the purpose of securing the bonds;

J. The procedure, if any, by which the terms of any contract with bondholders may be amended or abrogated, the amount of such bonds the holders of which must consent thereto, and the manner in which such consent may be given; and

K. Any other provisions which the Council may deem reasonable and proper for the purposes of this chapter and the security of the bondholders.

(Code 1976, § II.H-615; Ord. No. 83-12, § 1, 10-25-83)

Any pledge of revenues or other monies or assets pursuant to the provisions of this chapter shall be valid and binding from the time such pledge is made. Revenues, monies and assets so pledged and thereafter received by the City shall immediately be subject to the lien of such pledge without any physical delivery thereof or further act; and the lien of any such pledge shall be valid and binding as against all parties having claims of any kind in tort, contract or otherwise against the City, irrespective of whether such parties have notice thereof. Neither the resolution nor any indenture by which a pledge is created need be filed or recorded except in the records of the City.

(Code 1976, § II.H-616; Ord. No. 83-12, § 1, 10-25-83)

Neither the members of the Council, the officers or employees of the City, nor any person executing any bonds shall be liable personally on the bonds or be subject to any personal liability or accountability by reason of the issuance thereof.

(Code 1976, § II.H-617; Ord. No. 83-12, § 1, 10-25-83)

The City shall have the powers out of any funds available therefor, at is sole option, to purchase its bonds. The City may hold, pledge, cancel or resell such bonds, subject to and in accordance with agreements with the bondholders.

(Code 1976, § II.H-618; Ord. No. 83-12, § 1, 10-25-83)

Any holder of bonds issued under the provisions of this chapter and any trustee appointed pursuant to any resolution authorizing the issuance of bonds, except to the extent the rights thereof may be restricted by such resolution or any indenture authorized thereby to be entered into by the City, may either at law or in equity, by suit, action, mandamus or other proceedings, protect or enforce any and all rights specified in law or in such resolution or indenture, and may enforce and compel the performance of all duties required by this chapter or by such resolution or indenture to be performed by the City or by any officer, employee or agent thereof including the fixing, charging and collecting of rates, fees, interest and charges authorized and required by the provisions of such resolution or indenture to be fixed, charged and collected.

(Code 1976, § II.H-619; Ord. No. 83-12, § 1, 10-25-83)

A. The City may issue bonds for the purpose of refunding any bonds then outstanding, including the payment of any redemption premiums thereof and any interest accrued to or accrue to the earliest subsequent date of redemption, purchase or maturity of such bonds, and, if deemed advisable by the City, for the additional purposes specified in Section 2-7-404.

B. The proceeds of bonds issued for the purpose of refunding any outstanding bonds may, in the discretion of the City, be applied to the purchase or retirement at maturity or redemption of such outstanding bonds, either at their earliest or at any subsequent redemption date or upon the purchase or retirement at the maturity thereof and may, pending such application, be placed in escrow to be applied to such purchase or retirement at maturity or redemption on such date as may be determined by the City.

C. Pending use for purchase, retirement at maturity or redemption bonds, any proceeds held in escrow pursuant to Subdivision B may be invested and reinvested as provided in the resolution or indenture. Any interest or other increment earned or realized on any such investment may also be applied to the payment of the outstanding bonds to be refunded. After the terms of the escrow have been fully satisfied and carried out, any balance of such proceeds and any interest or increment earned or realized from the investment thereof may be returned to the City to be used by it for any lawful purpose.

D. All bonds issued pursuant to this section shall be subject to the provisions of this chapter in the same manner and to the same extent as other bonds issued pursuant to this chapter.

(Code 1976, § II.H-620; Ord. No. 83-12, § 1, 10-25-83)

The validity of the authorization and issuance of any bonds is not dependent on and shall not be affected in any way by any proceedings taken by the City for the making of any loan or the entering into of any agreement, or by the failure to make any loan or enter into any agreement, for which bonds are authorized to be issued under this chapter.

(Code 1976, § II.H-621; Ord. No. 83-12, § 1, 10-25-83)

On behalf of the City, the Assistant City Manager or his or her designee is hereby authorized and directed to make the notifications required by Health and Safety Code § 52087, and to file the annual reports required by Health and Safety Code § 52098.

(Code 1976, § II.H-622; Ord. No. 83-12, § 1, 10-25-83)

If the jurisdiction of the Council to order the proposed act is not affected, any omission of any officer or the City in proceedings under this chapter or any other defect in the proceedings shall not invalidate the proceedings or bonds issued pursuant to this chapter.

(Code 1976, § II.H-624; Ord. No. 83-12, § 1, 10-25-83)

This chapter is full authority for the issuance of bonds by the City for the purposes specified herein.

(Code 1976, § II.H-625; Ord. No. 83-12, § 1, 10-25-83)

This chapter shall be deemed to provide a complete, additional and alternative method for doing the things authorized thereby, and shall be regarded as supplemental and additional to the powers conferred by other laws. The issuance of bonds under the provisions of this chapter need not comply with the requirements of any other law applicable to the issuance of bonds. The purposes authorized hereby may be effectuated and bonds may be issued for any such purposes under this chapter notwithstanding that any other law may provide for such purposes or for the issuance of bonds for like purposes and without regard to the requirements, restrictions, limitations or other provisions contained in any other law.

(Code 1976, § II.H-626; Ord. No. 83-12, § 1, 10-25-83)