Title
A resolution authorizing the execution and delivery of all necessary documents in connection with the sale of the securities acquired with the proceeds of the Sedgwick County, Kansas, Shawnee County, Kansas, and Reno County, Kansas Single Family Mortgage Revenue Bonds (Mortgage-Backed Securities Program), 1995 Series A; authorizing the execution and delivery of instructions relating to the defeasance and redemption of such bonds; and authorizing the officers, employees and representatives of Sedgwick County, Kansas, to do and perform all things necessary, appropriate and incidental thereto under the authority of the act.
Body
Recommended Action: Adopt the resolution and authorize the Chairman and Commissioners to sign.
In 1995, Sedgwick, Shawnee and Reno Counties jointly issued $51,525,000 of mortgage revenue bonds for the purpose of making mortgage loans (8.50%) to first time home buyers throughout the state of Kansas. Over the past 18 years, principal payments and prepayments have been used to call these bonds every 6 months. Today, there are only $460,000 of bonds remaining. When the 1995A bond issue was originally structured, it was expected that all remaining assets, after the bonds paid off, would be used to forgive the remaining mortgage holders. The concept of "mortgage forgiveness" was used to reduce the overall mortgage yield to make the mortgage yield less than 1.125% above the bond yield. This 1.125% yield spread was required by federal tax law when these tax exempt bonds were issued in 1995. Since 1995, the calculation of the yield spread has evolved and today tax counsel is willing to allow the yield to be recalculated in such a way that it will allow the elimination of "mortgage forgiveness."
By eliminating the "mortgage forgiveness," the remaining net excess assets ($92,057.00) can be released to the Issuers: Sedgwick, Shawnee and Reno Counties.
Alternatives: County could choose to do nothing and allow the bonds to mature.
Financial Considerations: The Issuers have determined that current market conditions may permit the redemption or purchase of one or more series of the outstanding Bonds at the purchase prices that will result in savings to the Issuers. These issues are optionally callable on and after July 1, 2013; and the Issuers plan to sell the MBS's at a premium and redeem the remaining outstanding issue of the bonds. Refunded dollars will be deposited in the General Fund, fund center 70001-110.
Legal Considerations: K.S.A. 12-5219 et seq. as amended, and the Constitution and laws of the State of Kansas permit cities and counties to issue revenue bonds jointly with other cities and counties to make mortgage loans, to pledge the mortgage notes and mortgages relating to such mortgage loans as security in payment of the principal of and interest on any such revenue bonds, and to enter into any agreements made in connection therewith. A simple majority vote is required.
Policy Considerations: N/A