Oakland Municipal Code Ch. 4.32 City Residential Mortgage Revenue Bond Law

A. This chapter may be cited as the city residential mortgage revenue bond law.

B. The Council finds and declares that it is necessary, essential, a public purpose and a municipal affair for the city to be authorized to make, purchase and contract for the making of below-market-interest-rate loans to finance residences in depressed residential areas within the city in order to encourage the rehabilitation of property in such areas and to encourage residents of all social and economic positions to reinhabit such areas, rendering them more socially balanced and economically self-sufficient. Unless the city intervenes to provide such assistance, many such depressed residential areas will deteriorate at an ever-accelerated pace because property owners cannot obtain such assistance from private sources.

C. The Council finds and declares that it is necessary, essential, a public purpose and a municipal affair for the city to make, purchase and contract for the making of below-market-interest-rate loans to encourage the availability of adequate housing and home finance 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. D. Unless the context otherwise requires, the terms defined in this Chapter shall have the following meanings:

"Bonds" means any bonds, notes, certificates, debentures or other obligations issued by the city pursuant to this Chapter 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.

"City" means the city of Oakland.

"Council" means the City Council of the city of Oakland.

"Participating party" means any person, company, corporation, partnership, firm, local agency, political subdivision of the state or other entity or group of entities eligible to receive a loan pursuant to the terms of this Chapter. No elective officer of the city shall be eligible to be a participating party.

"Persons and families of low or moderate income" means persons and families whose income does not exceed one hundred twenty (120) percent of area median income, or any higher percentage of area median income upon a determination by the Council that such amount of income is too low to qualify a substantial number of persons and families who can afford the rental or purchase of residences financed pursuant to this Chapter. As used in this definition, "area median income" means the median household income within the city, as adjusted for family size, as determined by the city. Nothing in this definition shall prevent the city from adopting federal or state estimates of area median income for the standard metropolitan statistical area which includes the city, or federal or state formulas for the adjustment of area median income for family size.

"Program loan" means any loan made pursuant to this Chapter for any purpose specified in Section 4.32.020A.

"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, federal- or state-chartered savings and loan association, trust company, mortgage banker or other financial institution.

"Redevelopment project area" means any area within the city for which a final redevelopment plan has been adopted by the Council pursuant to the Community Redevelopment Law (Part 1 of Division 24 of the Health and Safety Code of the state of California).

"Rehabilitation" means the reconstruction, renovation, replacement, extension, repair, betterment, equipping, developing, embellishing or otherwise improving of existing residences consistent with standards of strength, effectiveness, fire-resistance, durability and safety so that such structures are satisfactory and safe to occupy for residential purposes and are not conducive to ill health, transmission of disease, infant mortality, juvenile delinquency and crime because of any one or more of the following factors:

a. Defective design and character of physical construction;

b. Faulty interior arrangement and exterior spacing;

c. Inadequate provision for ventilation, lighting and sanitation; or

d. Obsolescence, deterioration and dilapidation.

"Rehabilitation area" means any area so designated by the city pursuant to Section 4.32.020I or any area designated by the city as a residential rehabilitation area pursuant to a comprehensive residential rehabilitation financing program adopted pursuant to the provisions of the Marks-Foran Residential Rehabilitation Act of 1973 (Part 13 of Division 24 of the Health and Safety Code of the state of California).

"Rehabilitation standards" means the applicable local or state standards for the rehabilitation of residences located in residential rehabilitation areas, including any higher standards adopted by the city.

"Residence" means real property improved with a residential structure and, in redevelopment project areas and rehabilitation areas only, 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. "Residence" includes condominium and cooperative dwelling units, real property improved with single-family residential structures, and real property improved with multifamily residential structures.

"Revenues" means amounts received as repayment of principal, interest, and all other charges received by the city with respect to program loans, any proceeds received by the city from mortgage, hazard or other insurance on or with respect to loans, all other income and receipts derived by the city from the making or purchasing of program loans, any amounts received by the city as investment earnings on moneys deposited in a reserve fund or any similar fund-securing bonds, and such other moneys as the Council may, in its discretion, make available therefor.

(Prior code § 12-1.01—12-1.04)

A. The city may make, purchase from qualified mortgage lenders, or otherwise contract with qualified mortgage lenders for the making of, loans to participating parties for any of the following purposes:

1. To finance the rehabilitation of residences, or the acquisition of newly rehabilitated residences, located within a rehabilitation area or a redevelopment project area, subject to the following limitations:

a. No more than twenty (20) percent of any such loan may be used for rehabilitation which is not required under the rehabilitation standards, except that in the case of owner-occupied one- to four-dwelling-unit properties, up to forty (40) percent of any such loan may be used for rehabilitation not required under the rehabilitation standards, and

b. Loans may not be made for the purpose of refinancing outstanding indebtedness with respect to a residence which has been or will be subject to rehabilitation, or for the purpose of financing the cost of acquisition of a residence which has been or will be subject to rehabilitation, unless the cost, including in such costs any amounts previously expended for rehabilitation of such residence within a rehabilitation area or redevelopment project area established at the time of such expenditure, of meeting the rehabilitation standards is at least twenty (20) percent of the principal amount of the loan;

2. To finance the acquisition of residences not newly rehabilitated, located within rehabilitation area or a redevelopment project area, provided, however, that for purposes of this subsection "residence" shall not include any residential structure, the average sales price of dwelling units in which exceeds area median sales price as determined by the city;

3. To finance the acquisition, construction or rehabilitation by a person or family of low or moderate income of a residence located within the city, for occupancy by such person or family; or

4. To finance the acquisition, construction or rehabilitation by any participating party of a residence, the occupancy of at least thirty (30) percent of the dwelling units in which will be limited to persons and families of low or moderate income.

B. The city may fix fees, charges, and interest rates for program loans 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 program loan servicing charges, or changes in other expenses related to the program loans, including city administrative expenses. Any change in interest rate on a program loan shall conform to the provisions of Section 1916.5 of the Civil Code.

C. The city may fix the character, terms and conditions upon which program loans may be made. Program loans made to participating parties by qualified mortgage lenders shall be of such character and on such terms and conditions as previously established by the city.

D. The city may fix fees for servicing of program loans, or may itself undertake, or may contract to pay any person, partnership, association, corporation, or public agency for such servicing.

E. The city may hold deeds of trust or mortgages as security for program loans 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 appointed to act as trustee by the city in any resolution or indenture providing for issuance of bonds.

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

G. 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 or desirable to carry out the purposes of this Chapter, upon such terms and conditions as may be established by the city.

H. In addition to all other powers specifically granted by this Chapter, the city may do all things necessary or convenient to carry out the purposes of this Chapter.

I. The Council may by resolution designate an area within the city as a rehabilitation area upon making the following findings:

1. There are a substantial number of deteriorating structures in the area which do not conform to community standards for decent, safe and sanitary housing;

2. Financial assistance from the city for rehabilitation is necessary to arrest the deterioration of the area; and

3. Financing of residential rehabilitation in the area is economically feasible.

(Prior code § 12-2.01—12-2.09)

A. 1.

The city may, from time to time, issue bonds for any of the purposes specified in Section 4.32.020A. Bonds shall be negotiable instruments for all purposes, subject only to the provisions of such bonds for registration.

2. Every issue of bonds shall be a limited obligation of the city payable from all or any specified 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 specified 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 payments.

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 is pledged to the payment of the principal of, or premium or interest on this bond.

B. In determining the amount of bonds to be issued, the city may include all costs of the issuance of such bonds, reserve funds, and capitalized bond interest.

C. Bonds may be issued as serial bonds, term bonds, installment bonds or pass-through certificates, 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 fixed 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 a public or private sale and for such prices as the city shall determine. Pending preparation of definitive bonds, the city may issue temporary bonds, which shall be exchanged for such definitive bonds when prepared.

D. 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:

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

2. 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;

3. 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;

4. The setting aside of reserves and sinking funds and the regulation and disposition thereof;

5. 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;

6. Limitation on the use of revenues for expenditures for operating, administration or other expenses of the city;

7. Specification of the acts or omissions to act 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;

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

9. The mortgaging of any residence and the site thereof for the purpose of securing the bondholders;

10. 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

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

E. 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 filed or recorded except in the records of the city.

F. 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.

G. The city shall have the power out of any funds available therefor to purchase its bonds. The city may hold, pledge, cancel, or resell such bonds, subject to and in accordance with agreements with the bondholders.

H. 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 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.

I. 1.

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 or any subsequent date or dates of redemption, purchase, or maturity of such bonds, and, if deemed advisable by the city, for the additional purposes specified in Section 4.32.020A.

2. 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 dates 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 or dates as may be determined by the city.

3. Pending use for purchase, retirement at maturity or redemption of outstanding bonds, any proceeds held in escrow pursuant to subsection (I)(2) 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 be applied to the payment of the outstanding bonds to be refunded or to the payment of interest on the refunding bonds. 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.

4. 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.

J. 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 program loan, or by the failure to make any program loan, for which bonds are authorized to be issued under this Chapter.

(Prior code §§ 12-3.01—12-3.10)

A. This chapter, being necessary for the welfare of the city and its inhabitants, shall be liberally construed to effect its purposes.

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

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

D. 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 by this Chapter 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.

E. To the extent that the provisions of this Chapter are inconsistent with the provisions of any general statute or special act or parts thereof, the provisions of this Chapter shall be deemed controlling.

F. It shall be a misdemeanor, punishable by a fine not to exceed one thousand dollars ($1,000.00) and/or imprisonment not to exceed one year, to make any false statement or certification on any mortgage loan application or other mortgage loan documentation submitted in connection with the city multilender mortgage purchase program.

(Prior code §§ 12-4.01—12-4.05, 12-4.07)