HomeMy WebLinkAbout2006 Resolution No. 072•
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RESOLUTION NO . I 2..
SERIES OF 2006 --
A RESuLUTJON APPROVING A NEW LINE OF CREDIT WITH WESTST AR BANK FOR
$750,000 TO SUPPORT THE ACTIVITIES OF THE HOUSING REHABILITATION
ENTERPRISE FUND AND AUTHORIZING THE CITY MANAGER TO NEGOTIATE
THREE ADDITIONAL ONE-YEAR EXTENSIONS FOR TilS LINE OF CREDIT THAT
WILi . NOT INCREASE THE TOTAL AMOUNT OF THIS LINE OF CREDIT .
WHEREAS , Englewood City Council appro ved Ordinan ce 23, Serie s of 1999, asswning all of
the assets and liabilities of the Rehabilitation Program from th e Englewood Hou sing Authority;
and
WHEREAS , Englewood City Council appro ved Ordinanc e 26, ~ ci es of 1999 , establishin g th e
Hous ing Rehabilitation Fund and Ordinance 31 , Seri es of 2003 , creating the City of En glewood
Hous ing Rehabilitation Enterpri se Fund ; and
WHEREAS , Englewood City Council also approved Re soluti on 33. Series of 2000, and
Resolution No . 77, Series 2003 , authorizing an agre ement establi shing a line of credit for the
continuance of the Housing Rehabilitation Fund with thre e additional one -year line of credit
extension s; and
WHEREAS , this line of cred it is contracted with Vectra Bank and create s an outs tanding
indebtedness to Vectra of $1 ,255 , I 59 which include s $60 ,000 in curre nt line of credit advance s;
and
WHEREAS , Weststar has shown an intere st in participating in _the program with the Fund ; and
WHERE AS, upon signin g of thi s new line of credit , the unused current line of credit with
Vectra will be cancelle<I;
NOW, THEREFORE , BE IT RESOLVED BY THE CITY COUN CIL OF THE CITY OF
ENGLEWOOD , COLORADO , THAT :
~ Englewood City Council hereby authorizes the City Manager to sign a new line of
credit with Weststar Bank for $750 ,000 to support the activities of the Housing Rehabilitation
Enterprise Fund .
~ Englewood City Council hereby authorizes the City Maruiaer to nego1ia1e tennl for •
three additional one-year periods that will not increase the amount of the line of credit.
ADOPTED AND APPROVED this 7~ day of August, 2006.
I, Loucrishia A. Ellis, City Clerk for the City of Englewood , Co lorado, hereby certify the
above is a ttue copy of Resolution No. ~ Series of 2006.
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COUNCIL COMMUNICATION
Date: A1enda Item: Subject:
August 7, 2006 11 c I Resolution Establishing a Line of Credit for the
HOl1sing Rehabilitation Enterprise Fund
Initiated By:
Community De velopment Department
I Staff Source:
Janet Grimmett, Housing Finance Specialist --
COUNCIL GOAL AND PREVIOUS COUNCIL ACTION
City Council approved Ordinance 23, Series 1999 assuming all the assets and liabilities of the
Rehabilitation Program from the Englewoo~ . lousing Authority. Council also approve d R~solution
33 , Series of 2000 and Resolution 77, Serie : '. 2003 authorizing an agreer:ient establishing lines of
credit for the continuance of the Housing R,,, ,bilitation Fund with three additional one-year line of
credit extensions to be negotiated .
Also approv ed was Ordinance 26, Series of 19q9 establishing the Housing Rehab ilita tion Fund and
Ordinance 31 . Series of 2003 creating the City of Engl ewoo d Housing Rehabilitation Enterprise
Fund .
RECOMMENDED ACTION
Staff reco mmends Council adopt a Resolution establishing a new line of credit with WestStar Bank
for $750,000 to support the acti vi ties of th e Housing Rehabilitation Enterprise Fund and to approve
the City Manager or designee to negotiate three additional one-year periods that will not increase
the amount of the line of credit.
BACKGROUND, ANAI .YSIS , AND ALTERNATIVES IDENTlnED
The City created the Housing Rehabilitation Loan Program in 1977 to preserve the existing housing
stock in the City and to address the problems of low-Income families with the financing of major
repairs . The Program was administered through the Englewood Housing Authority until early 1999
when the City established the Hc•1s,ng Rehabilitation Fund and assumed all of the assets and
liabilities of the Rehabilitation Prograru.
A major component of the success of the program is the support from the banking community.
Since 1977 various lines of credit totaling over $6 .~ million have been extended to •he Fund from
various local banks .
The 2006 reque,t Is fo r an additional $750,000 guidance line from WestStar Bank to be disbursed
for one )'ear to support the rehab program . This amount Is In addition to the current outstanding
debt owed to Vectra Bank of $1,178,822 from past lines of credit. The Vectra Bank line of credit
has expired and will not be renewed .
Tl-e propose,! lnldal fixed Interest rate offered by WestStar Bank Is 6.365%. The Interest rate Is •
fixed, but new advances from the guidance line are subject to monthly adjustments based on the
prime rate . All loans are approved at a fixed rate to be repaid over a 20-year maximum term .
Addldonal one-year guidance line periods will need to be negotiated annually by the City Manager
or deslgnee for the next 3 years In order to continue the program at Its current level of service .
At the completion of tach rehabilitation projec~ the individual loan Is secured b~· ;. Promissory
Note and Deed of Trust (usually a second) recorded on the homeowner's propP.rty. The City
Manag~r ·s designee (the Director of C~m munlty Development) signs a note from the Fund to the
bank plus issues an Assignment of Deed thereby fully collaterallzing each loan using the
homeowner's property as security. Each homeowne r makes monthly payments to the Fund and ~,r
Fund then passes these payments through to the bank. An addidonal collateral account equal to
5% of the outstanding balance of the amount drawn from the guidance line will be required to be
held on deposit at WestStar Bank . Fund 46 Is available to fund the account as needed .
FINANCIAL IMPACT
Existing Community De velopm ent staff administers the Housing Rehabilitation Fund . No additional
monies will be requ ired. The outstanding debt of the Housing Rehabilit ation Fund will be in creas ed
by the amount of the gu idanc e line used, up to a maximum additional amount of $750,00 0, which
will take the total current debt up to $1 ,928 ,82 2.
LIST Of ATTACHMENTS
Resoluti on •
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