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Ordinance No. 650151 ORDINANCE NO. 650 AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF CYPRESS PROVIDING FOR AN AFFORD- ABLE HOME OWNERSHIP AND REHABILITATION PROGRAM AND FOR THE ISSUANCE OF RESIDEN- TIAL MORTGAGE REVENUE BONDS IN CONNECTION WITH SAID PROGRAM THE CITY COUNCIL OF THE CITY OF CYPRESS HEREBY DOES ORDAIN AS FOLLOWS: SECTION 100. FINDINGS Section 101. This City Council finds and declares that the subject of housing is of vital importance to the health, safety, and welfare of the residents of this City, for the following reasons: (a) Decent housing is an essential motivating force in helping people achieve self - fulfillment in a free and demo- cratic society. (b) Unsanitary, unsafe, overcrowded, or congested dwelling accomodations constitute conditions which cause an increase in, and spread of, disease and crime. (c) A healthy housing market is one in which residents of this City have a choice of housing opportunities and one in which the housing consumer may effectively choose within the free market place. Section 102. The City Council finds and declares that there exists within the City a serious shortage of decent, safe, and sanitary housing which is affordable to many persons in the City. This shortage is exacerbated during periods of rising interest rates, particularly as high interest rates have the effect of diminishing the number of otherwise creditworthy buyers from qualifying for private sector mortgage capital sources. In order to remedy this adverse effect on potential home buyers on the lower end of the purchasing spectrum, it is necessary to implement a public program to reduce the cost of mortgage financing for single - family purchases for those persons unable to compete for mortgage financing in the conventional mortgage market. Section 103. This City Council further finds and determines that the adoption and implementation of an Afford- able Home Ownership and Rehabilitation Program will provide for and promote the public health, safety and welfare of the City; assist low and moderate income persons and families in acquiring, owning, improving and maintaining decent, safe and sanitary housing; assist in maintaining and improving the existing housing stock in the City; and promote the integra- tion throughout the City of Cypress of families of varying economic means. 152 SECTION 200. DEFINITIONS Except where the context clearly requires otherwise, the following words and phrases shall have the respective meanings set forth in this Section. Words and phrases not defined herein shall have the same meaning assigned to them in other documents of the Program. Section 201. "Affordable Home Ownership and Rehabili- tation Program" means the program established by the City for the purpose of assisting persons and families of low and moderate income in acquiring, owning, improving and maintaining decent, safe and sanitary housing in the City of Cypress. Section 202. "City" means the City of Cypress, California. Section 203. "Financing" means the lending of moneys or any other thing of value for the purpose of facilitating Residential Acquisition for persons and families of low and moderate income pursuant to this ordinance. Section 204. "Local Codes" means applicable local, state and federal standards for residential construction or rehabilitation. Section 205. "Mortgage Loan" or "Mortgage" means an interest - bearing loan which is evidenced by a promissory note and secured by a mortgage, deed of trust, or other security instrument on a single - family home and which may but it not required to be additionally secured by insurance on the pay- ment of such note, for the purpose of purchasing, construct- ing or improving a Residence. Section 206. "Participating Party" means any person, corporation, partnership, firm, or other entity or group of entities requiring and eligible Financing for Residential Acquisition pursuant to the provisions of this ordinance. The City Council shall by resolution establish and revise, from time to time as may be necessary, criteria for deter- mining who shall be eligible to be a Participating Party; provided, however, that no officer or employee of the City shall be eligible to be a Participating Party under the provisions of this ordinance. Section 207. "Qualified Mortgage Lender" or "Mortgage Lender" means a mortgage lender authorized by the City to do business with the City and to aid in Financing pursuant to this ordinance on behalf of the City for which service the Qualified Mortgage Lender will be reasonably compensated. Such a mortgage lender shall be a state or national bank, federal or state - chartered savings and loan association, or trust company or mortgage banker which is capable of pro- viding service or otherwise aiding in the financing of mortgages on Residential Acquisition within the City. Section 208. "Rehabilitation" means enlargement of and /or repairs and improvements to a Residence as may be permitted by rules and regulations to be adopted by the City. -2- 153 Section 209. "Residential Acquisition" means the acquisition or Rehabilitation of Residences . Section 210. "Residence" means real property improved with a single - family residential structure, and includes condominium and cooperative dwelling units. Section 211. "Revenue Bonds" means any bonds, notes, interim certificates, debentures, or other obligations issued by the City pursuant to this ordinance and which are payable exclusively from revenues and from any other funds specified in this ordinance upon which the Revenue Bonds may be made a charge and from which they are payable. Section 212. "Revenues" means all amounts received as repayment of principal, interest, and all other charges received for, and all other income and receipts derived by, the City from the Financing of Residential Acquisition including moneys deposited in a sinking, redemption, or reserve fund or other fund to secure the Revenue Bonds or to provide for the payment of the principal of, or interest on, the Revenue Bonds and any other moneys lawfully available therefore. Section 213. "State means the State of California. SECTION 300. POWERS Section 301. The City may make Mortgage loans to Participating Parties through Qualified Mortgage Lenders; purchase Mortgage Loans without premium made by Qualified Mortgage Lenders to Participating Parties; or purchase Mortgage Loans without premium made by Qualified Mortgage Lenders who will in turn make loans to Participating Parties in an amount set forth in such agreement all for the purpose of Financing Residential Acquisition. Section 302. The City may issue Revenue Bonds for the purpose of Financing the City's Affordable Home Ownership and Rehabilitation Program, as described herein, and for the purpose of funding or refunding previously issued Revenue Bonds. Section 303. The City may establish by resolution limitations respecting fees, charges, and interest rates to be used by Qualified Mortgage Lenders for Financing Residen- tial Acquisition pursuant to this ordinance and may from time to time revise such fees, charges, and interest rates to reflect changes in interest rates on the City's Revenue Bonds, losses due to defaults, changes in loan- servicing charges, or other expenses related to administration of the -3- 154 Affordable Home Ownership and Rehabilitation Program. Any change in interest rate shall conform to the provisions of Section 1916.5 of the Civil Code of the State, except that paragraph (3) of subdivision (a) of Section 1916.5 shall not apply and that the "prescribed standard" specified in Sec- tion 1916.5 shall be periodically determined by the City after hearing preceded by public notice to affected parties, and shall reflect changes in interest rates on the City's Revenue Bonds, and bona fide changes in loan servicing charges related to the administration of the Program under the provisions of this ordinance. The City may collect and disburse, or may contract to pay any person, partnership, association, corporation, or public agency for, collection and disbursal of payments of principal, interest, taxes, insurance, and mortgage insurance. The City may hold deeds of trust or mortgages, including mortgages insured under Title II of the National Housing Act, as security for Financ- ing Residential Acquisition and may pledge or assign the same as security for repayment of Revenue Bonds. Such deeds of trust or mortgages may be assigned to, and held on behalf of the City by, any bank or trust company appointed to act as trustee or fiscal agent by the City in any indenture or resolution providing for issuance of bonds pursuant to this ordinance. The City may establish the terms and conditions of Financing, which shall be consistent with the provisions of any applicable federal or state law under which the Financing is to be insured. Section 304. The City may employ and pay the reason- able costs of engineering, architectural, accounting, collect- ion, legal, and other services, including services in connec- tion with the servicing of loans made to Participating Parties, as may be necessary in the judgment of the City for the successful Financing of Residential Acquisition pursuant to this ordinance. The City may employ and fix the compensa- tion of financing consultants, bond counsel, and other advisors as may be necessary in its judgment to provide for the issuance and sale of any Revenue Bonds of the City. Section 305. Revenues and the proceeds of mortgage insurance or guarantee claims shall be the sole source of funds pledged by the City for repayment of its Revenue Bonds. Revenue Bonds issued under the provisions of this ordinance shall not be deemed to constitute a debt or lia- bility of the City or the State for which is pledged the faith and credit of the City or the State, but said bonds shall be payable solely from Revenues and the proceeds of mortgage insurance or guarantee claims. Section 306. All Residential Acquisition shall be undertaken or completed subject to the rules and regulations of the City. 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 conven- ient for the Financing of Residential Acquisition, upon such terms and conditions as it deems advisable, and may lease, sell, or dispose of the same in such manner as may be neces- sary or desirable to carry out the objectives and purposes of this ordinance. -4- 1.55 Section 307. (a) The City may, from time to time, issue its nego- tiable Revenue Bonds for the purpose of purchasing or making Mortgage Loans for Financing Residential Acquisition. In an- ticipation of the sale of Revenue Bonds, the City may issue negotiatble bond anticipation notes and may renew such notes from time to time. Bond anticipation notes may be paid from the proceeds of sale of the bonds of the City in anticipa- tion of which they were issued. Bond anticipation notes and agreements relating thereto and the resolution or resolutions authorizing such notes and agreement may contain any provi- sions, conditions, or limitations which a bond, agreement relating thereto, or bond resolution of the City may contain, except that any such note or renewal thereof shall mature at a time not later than two years from the date of the issuance of the original note. (b) Every issue of its Revenue Bonds shall be a special obligation of the City payable from all or any part of the Revenues specified in this ordinance. The Revenue Bonds shall be negotiable instruments for all purposes, subject only to the provisions of such bonds for registration. Section 308. In determining that amount of bonds to be issued, the City may include all costs of the issuance of such Revenue Bonds, bond reserve funds, and bond interest estimated to accrue for a period not exceeding 24 months from the date of issuance of the bonds. Section 309. The Revenue Bonds may be issued as serial bonds or as term bonds, or as a combination thereof. The Revenue Bonds shall be authorized by resolution of the City and shall bear such date or dates, mature at such time or times, not exceeding 50 years from their respective dates of issuance, bear interest at such fixed or variable rate or rates (not to exceed ten percent per year), 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, and be subject to such terms of redemption as the resolution or resolutions of the City may provide. The bonds may be sold at either a public or private sale and for such prices as the City shall determine. Pending pre- paration of the definitive bonds, the City may issue interim receipts, certificates, or temporary bonds, which shall be exchanged for such definitive bonds. The City may sell any Revenue Bonds or other evidence of indebtedness at a price below the par value thereof, but the discount on any Revenue Bond so sold shall not exceed 6 percent of the par value thereof. Section 310. Any resolution or resolutions authorizing any Revenue Bonds or any issue of Revenue Bonds may contain provisions respecting any of the following terms and con- ditions, which shall be a part of the contract with the holders of the - Revenue Bonds: -5- j56 (a) The pledge of all or any part of the revenues, subject to such agreements with bondholders as may then exist. (b) The interest and principal to be received and other charges to be charged and the amounts to be raised each year thereby, and the use and disposition of the reve- nues. (c) The setting aside of reserves or sinking funds and the regulation and disposition thereof. (d) Limitations on the purposes to which the proceeds of a sale of any issue of Revenue Bonds, then or thereafter issued, may be applied, and pledging such proceeds to secure the payment of the Revenue Bonds or any issue of Revenue Bonds. (e) Limitations on the issuance of additional Revenue Bonds, the terms upon which additional Revenue Bonds may be issued and secured, and the refunding of outstanding Revenue Bonds. (f) The procedure, if any, by which the terms of any contract with bondholders may be amended or abrogated, the amount of Revenue Bonds the holders of which must consent thereto, and the manner in which such consent may be given. (g) Limitation on expenditures for operating, admin- istration, or other expenses of the City. (h) Specification of the acts or omissions to act which shall constitute a default in the duties of the City to holders of its Revenue Bonds, and providing the rights and remedies of such holders in the event of default. (i) The mortgaging of any Residence and the site thereof for the purpose of securing the bondholders. (j) The mortgaging of land, improvements, or other assets owned by a participating party for the purpose of securing the bondholders. Section 311. Neither the members of the City Council nor any person executing the Revenue Bonds shall be liable personally on the Revenue Bonds or be subject to any per- sonal liability or accountability by reason of the issuance thereof. Section 312. The City shall have the power out of any funds available therefor to purchase its Revenue Bonds. The City may hold, pledge, cancel, or resell such Revenue Bonds, subject to and in accordance with agreements with the bond- holders. Section 313. Any Revenue Bonds issued under the provi- sions of this ordinance may be secured by a trust agreement by and between the City and a corporate trustee or trustees, which may be any trust company or bank having the power of a trust company within or without this State. Such a trust -6- 157 agreement or the resolution providing for the issuance of Revenue Bonds may pledge or assign the revenues to be re- ceived or proceeds of any contract or contracts pledged, and may convey or mortgage any residence the acquisition of which is to be financed out of the proceeds of such Revenue Bonds. Such trust agreement or the resolution providing for the issuance of bonds may provide for the assignment to such corporate trustee or trustees of insured loans, to be held by such trustee or trustees on behalf of the City for the benefit of the bondholders. Such trust agreement or resolu- tion providing for the issuance of Revenue Bonds may contain such provisions for protecting and enforcing the rights and remedies of the bondholders as may be reasonable and proper and not in violation of law, including such provisions as may be included in any resolution or resolutions of the City authorizing the issuance of the Revenue Bonds. Any bank or trust company doing business under the laws of this State which may act as depository of the proceeds of Revenue Bonds or of revenues of other moneys may furnish such indemnity bonds or pledge such securities as may be required by the City. Any such trust agreement may set forth the rights and remedies of the bondholders and of the trustee or trustees, and may restrict the individual right of action by bond- holders. In addition to the foregoing, any such trust agreement or resolution may contain such other provisions as the City may deem reasonable and proper for the security of the bondholders. All expenses incurred in carrying out the provisions of such trust agreement or resolution may be treated as a part of the cost of Residential Acquisition. Section 314. Any holder of Revenue Bonds issued under the provisions of this ordinance or any of the coupons appertaining thereto, and the trustee or trustees appointed pursuant to any resolution authorizing the issuance of such Revenue Bonds, except to the extent the rights thereof may be restricted by the resolution authorizing the issuance of the Revenue Bonds, may, either at law or in equity, by suit, action, mandamus, or other proceedings, protect or enforce any and all rights specified in the laws of this State or in such resolution, and may enforce and compel the performance of all duties required by this ordinance or by such resolu- tion to be performed by the City or by any officer, employee, or agent thereof, including the fixing, charging, and collect- ing of rates, fees, interest, and charges authorized and re- quired by the provisions of such resolution to be fixed, established, and collected. Section 315. The City Council may provide for the issuance of the Revenue Bonds of the City for the purpose of refunding any Revenue Bonds of the City then outstanding, including the payment of any redemption, purchase, or maturity of such bonds, and, if advisable, for the additional purpose of paying all or any part of the cost of additional Residen- tial Acquisition. The proceeds of Revenue Bonds issued pursuant to this section may be applied to the purchase or retirement at maturity or redemption of outstanding Revenue Bonds, either at their earliest or any subsequent redemption date or upon the purchase or retirement at the maturity thereof and, pending such application, that portion of the proceeds allocated for such purpose may be placed in escrow, to be -7- 15.8 applied to such purchase or retirement at maturity or redemp- tion on such dates, as may be determined by the City. Pend- ing use for purchase, retirement at maturity, or redemption of outstanding Revenue Bonds, any proceeds held in such an escrow may be invested and reinvested as provided in the resolution authorizing the issuance of the refunding bonds. Any interest or other increment earned or realized on any such investment may also be applied to the payment of the outstanding Revenue 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. That portion of the proceeds of any Revenue Bonds issued pursuant to this section which is designated for the purpose of paying all or any part of the cost of additional Residential Acquisition may be invested and reinvested in obligations of, or guaranteed by, the United States of America or in certificates of deposit or time deposits secured by obliga- tion of, or guaranteed by, the United States of America, maturing not later than the time or times when such proceeds will be needed for the purpose of paying all or any part of such cost. All Revenue Bonds issued pursuant to this section shall be subject to the provisions of this ordinance in the same manner and to the same extent as other bonds issued pursuant to this ordinance. Section 316. The City may enter into loan agreements with or on behalf of any Participating Party relating to Residential Acquisition of any kind or character. The terms and conditions of such loan agreements may be as mutually agreed upon, but such terms and conditions shall not be inconsistent with the provisions of this ordinance. Any such loan agreement may provide the means or methods by which any mortgage taken by the City shall be discharged, and it shall contain such other terms and conditions as the City may require. The City may fix, revise, charge and collect interest and principal and all other rates, fees and charges with respect to Financing of Residential Acquisi- tion. Such rates, fees, charges and interest shall be fixed and adjusted so that the aggregate of such rates, fees, charges and interest will provide funds sufficient with other revenues and moneys which it is anticipated will be available therefor, if any, to all of the following: (a) Pay the principal of, and interest on outstanding Revenue Bonds issued to finance such Residential Acquisition as the same shall become due and payable. (b) Create and maintain reserves required or provided for in any resolution authorizing such Revenue Bonds. A sufficient amount of the Revenues derived from Residential Acquisition may be set aside at such regular intervals as may be provided by resolution in a sinking or other similar fund, which is hereby pledged to, and charged with, the payment of the principal of and interest on such revenue bonds as the same shall become due, and the redemption price or the purchase price of revenue bonds retired by call or purchase as therein provided. Such pledge shall be valid -8- 159 and binding from the time the pledge is made. The rates, fees, interest, and other charges, revenues, or moneys so pledged and thereafter received by the City shall immed- iately 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 loan agreement by which a pledge is created need be filed or recorded except in the records of the City. The use and disposition of moneys to the credit of such sinking or other similar fund shall be subject to the provisions of the resolution authorizing the issuance of such Revenue Bonds. Except as may otherwise be provided in the resolution, such sinking or other similar fund may be a fund for all Revenue Bonds of the City issued to finance the acquisition of the residence of a particular Participating Party without dis- tinction or priority. The City, however, in any such resolu- tion may provide that such sinking or other similar fund shall be the fund for a particular project or projects of Residential Acquisition and for the bonds issued to finance such project or projects and may, additionally, authorize and provide for the issuance of Revenue Bonds having a lien with respect to the security authorized by this section which is subordinate to the lien of other Revenue Bonds of the City, and in such case, the City may create separate sinking or other similar funds securing the Revenue Bonds having the subordinate lien. (c) Pay operating and administrative costs of the City incurred in the administration of the Program authorized by this ordinance. Section 317. All moneys received pursuant to the pro- visions of this ordinance, whether revenues or proceeds from the sale of Revenue Bonds or proceeds of mortgage insurance or guarantee claims, shall be deemed to be trust funds to be held and applied solely as provided in this ordinance. Any bank or trust company in which such moneys are deposited shall act as trustee of such moneys and shall hold and apply the same for the purpose specified in this ordinance, sub- ject to the terms of the resolution authorizing the Revenue Bonds. Section 318. In addition to all other powers specific- ally granted by this ordinance, the City may do all things necessary or convenient to carry out the purposes of this ordinance. SECTION 400. MISCELLANEOUS. Section 401. This ordinance, being necessary for the purpose of carrying out the City's powers with respect to its municipal affairs and to promote the health, safety and welfare of the City and its inhabitants, shall be liber- ally construed to effect its purposes. Section 402. If the jurisdiction of the City to order a proposed act is not affected, an omission of any officer -9- 160 or the City in proceedings under this ordinance or any other defect in the proceedings shall not invalidate the proceed- ings of Revenue Bonds issued pursuant to this ordinance. Section 403. This ordinance is full authority for the issuance of bonds by the City for the purpose of Financing Residential Acquisition. SECTION 500. SEVERABILITY. Section 501. If any section, subsection, subdivision, sentence, clause, phrase or portion of this ordinance, or the application thereof to any person or place, is for any reason held to be invalid or unconstitutional by the deci- sion of any court of competent jurisdiction, such decision shall not affect the validity of the remaining portions of this ordinance or its application to other persons or places. The City Council hereby declares that it would have adopted this ordinance, and each section, subsection, subdivision, sentence, clause, phrase or portion thereof, irrespective of the fact that any one or more sections, subsections, sub- divisions, sentences, clauses, phrases, or portions, or the application thereof to any person or place, be declared invalid or unconstitutional. Section 502. The City Clerk is hereby ordered and directed to certify to the passage of this ordinance and to give notice thereof by causing copies of this ordinance to be posted in three public places within the City. First read at a regular meeting of the City Council of said City held on the 13th day of November 1979, and finally ordered published at a regular meeting of said Council held on the 26th day of November 1979. ATTEST: AYOR OF THE CITY OF CYPRES CITY CLERK OF' THE' CI Y OF CYPRESS STATE OF CALIFORNIA ) COUNTY OF ORANGE ) SS I, DARRELL ESSEX, City Clerk of the City of Cypress, DO HEREBY CERTIFY that the foregoing Ordinance was duly adopted at a regular meeting of the said City Council held on the 2.6th day of November 1979; by the following roll call vote: AYES: 5 COUNCIL MEMBERS: Evans, Hudson, Lacayo, MacLain and Rowan NOES: 0 COUNCIL MEMBERS: None ABSENT: 0 COUNCIL MEMBERS: None CITYd-RK OF- E CITY OF CYPRESS