Petaluma Municipal Code Ch. 4.10 Multifamily Residential Mortgage Revenue Bond Law

Article I. General Provisions and DeDnitions

This chapter may be cited as "The City of Petaluma Multifamily Residential Mortgage Revenue Bond Law." (Ord.

1505 NCS §1, 1982.)

A. The council hereby Lnds and declares that it is necessary, essential, a public purpose and a municipal aPair

for the city to be authorized to make loans or otherwise provide funds to Lnance the development of aPordable

multifamily rental housing to meet a substantial housing need identiLed in the community.

B. The council further fords and declares that it is necessary, essential, a public purpose and a municipal aPair

for the city to make loans or otherwise provide funds to encourage the availability of adequate housing and home

Lnance for persons and families of low or moderate income, and to develop viable communities by providing

decent housing, enhanced living environment, and increased economic opportunities for persons and families of

low or moderate income.

(Ord. 1505 NCS §1, 1982.)

Unless the context otherwise requires, the terms deLned in this chapter shall have the following meanings:

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

B. "Bonds" means any bonds, notes, certiLcates, debentures or other obligations issued by the city pursuant to

this chapter and payable exclusively from revenues as in this chapter deLned and from any other funds speciLed

in this chapter upon which such obligations may be made a charge and from which they are payable.

C. "Construction loan" means a loan made pursuant to the program to a participating party to Lnance

residential construction, rehabilitation or acquisition, whether such loan is insured or uninsured.

D. "Loan to lender" means a general obligation loan to a qualiLed mortgage lender enabling such mortgage

lender to make one or more construction loans or mortgage loans.

E. "Local codes" means applicable local, state and federal standards for residential construction or

rehabilitation.

F. "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

Lnancing of residences pursuant to this chapter.

G. "Participating party" means any person, company, corporation, partnership, Lrm or other entity or group of

entities receiving Lnancing for residential construction, rehabilitation or acquisition pursuant to the program. No

elective oNcer of the city shall be eligible to be a participating party.

H. "Participation purchase" means the purchase of a participation in a cashMow from single-family mortgage

loans from a qualiLed mortgage lender enabling such qualiLed mortgage lender to make one or more

construction loans or mortgage loans.

I. "Persons or families of low or moderate income" means persons and families whose income does not exceed

the qualifying limits for "persons or families of low or moderate income" within the meaning of Section 167(k)(3)(B)

of the Internal Revenue Code of 1954, as amended. From time to time, the city shall adopt by resolution the

qualifying income limits for person or families of low or moderate income.

J. "Program" means the city’s program of making construction loans and mortgage loans both directly and

through loans to lenders and participation purchases pursuant to this chapter.

K. "QualiLed mortgage lender" means any mortgage lender authorized by the city to aid the city pursuant to this

chapter. A qualiLed mortgage lender may be a state or national bank, a federal-chartered or state-chartered

savings and loan association, a trust company, a mortgage banker, an insurance company or other lender

authorized to Lnance multifamily housing in the state, which is capable of providing service to or otherwise aiding

the city pursuant to this chapter.

L. "Rehabilitation" means the making of repairs and improvements to a substandard residence so that it meets

the requirements of the local codes.

M. "Residence" means real property improved with a multifamily rental residential structure of four 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 intregal part of a residential neighborhood.

N. "Residential construction" means the construction of new residences meeting the requirements of the local

codes.

O. "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 moneys

deposited in a sinking, redemption, or reserve fund or any other fund securing bonds or providing for the

payment of the principal of, or interest on, bonds and such other moneys as the council may, in its discretion,

make available therefor.

(Ord. 1505 NCS §1, 1982.)

Article II. Program Loans

The city may make construction loans and mortgage loans both directly and through loans to lenders and

participation purchases to Lnance residential construction, rehabilitation and acquisition; provided, that at least

twenty percent of the dwelling units of any residence Lnanced pursuant to the program are to be occupied by

persons or families of low or moderate income. (Ord. 1505 NCS §1, 1982.)

The city may Lx 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 reMect 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 Section 1916.5 of the California Civil Code, and shall reMect 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. (Ord. 1505 NCS §1, 1982.)

The city may Lx 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 qualiLed mortgage lenders, and loans to lenders made to and participation purchases made

from qualiLed 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 Lnanced by such loan and upon such terms and conditions as may be established by

the city. (Ord. 1505 NCS §1, 1982.)

The city may Lx fees for servicing of loans by qualiLed mortgage lenders. (Ord. 1505 NCS §1, 1982.)

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 or trust company or other

Lnancial institution appointed to act as trustee by the city in any resolution providing for the issuance of bonds.

(Ord. 1505 NCS §1, 1982.)

The city may employ such engineering, architectural, Lnancial, accounting, legal or other professional services as

may be necessary in the judgment of the city for the purposes of this chapter. (Ord. 1505 NCS §1, 1982.)

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 interest 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.

(Ord. 1505 NCS §1, 1982.)

In addition to all other powers speciLcally granted by this chapter, the city may do all things necessary, desirable

or convenient to carry out the purposes of this chapter. (Ord. 1505 NCS §1, 1982.)

Article III. Bonds and Notes

A. The city may, from time to time, issue bonds for any of the purposes speciLed in Section 4.10.201. 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 speciLed part of the

revenues and the moneys and assets authorized in this chapter to be pledged or assigned to secure payment of

bonds. Such revenues, moneys 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 speciLed revenues, moneys 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 ePect:

Neither the faith and credit nor the taxing power of The City of Petaluma is pledged to the payment of the

principal of or interest on this Bond.

(Ord. 1505 NCS §1, 1982.)

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 period as the city may determine. (Ord. 1505 NCS §1, 1982.)

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 and shall bear such date or dates, mature at such time or times, bear

interest at such Lxed or variable rate or rates, be payable at such time or times, be in such denominations, be in

such form, either coupon or registered, 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

deLnitive bonds, the city may issue temporary bonds, which shall be exchanged for deLnitive bonds when

prepared. (Ord. 1505 NCS §1, 1982.)

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 regulation 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. Limitation on the use of revenues for expenditures for operating, administration, or other expenses of the

city;

G. SpeciLcation 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 to 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.

(Ord. 1505 NCS §1, 1982.)

Any pledge of revenues or other moneys or assets pursuant to the provisions of this chapter shall be valid and

binding from the time such pledge is made. Revenues, moneys 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 Lled or recorded except in the records of the

city. (Ord. 1505 NCS §1, 1982.)

Neither the members of the council, the oNcers 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. (Ord. 1505 NCS §1, 1982.)

The city shall have the power out of any funds available thereof at its 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. (Ord. 1505 NCS §1, 1982.)

Any holder of bonds issued under the provisions of this chapter or any of the coupons appertaining thereto, 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 speciLed 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 oNcer,

employee, or agent thereof, including the Lxing, charging, and collecting of rates, fees, interest, and charges

authorized and required by the provisions of such resolution or indenture to be Lxed, established, and collected.

(Ord. 1505 NCS §1, 1982.)

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 or to 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

speciLed in Section 4.10.201.

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 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 of outstanding bonds, any proceeds held in

escrow pursuant to subdivision B of this section 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 satisLed 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.

(Ord. 1505 NCS §1, 1982.)

The validity of the authorization and issuance of any bonds is not dependent on and shall not be aPected 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. (Ord. 1505 NCS §1, 1982.)

Article IV. Supplemental Provisions

This chapter, being necessary for the welfare of the city and its inhabitants, shall be liberally construed to ePect its

purposes. (Ord. 1505 NCS §1, 1982.)

If the jurisdiction of the council to order the proposed act is not aPected, any omission of any oNcer 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. (Ord. 1505 NCS §1, 1982.)

This chapter is full authority for the issuance of bonds by the city for the purposes speciLed herein. (Ord. 1505

NCS §1, 1982.)

alternative.

This chapter shall be deemed to provide a complete, additional, and alternate 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 ePectuated 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. (Ord. 1505 NCS §1, 1982.)