01261981 Regular Meeting - Laserfiche WebLink

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59 FI H ST 3()((A'~¿(J)c<j¿- ()() ~l PAl';lT I:-;YI':ST;\I¡'::-;T IIA:";I,I.:HS MERCA',TILE U^'~K 111J1IJJlNG IJALLAS. TI':XAS 7:ï~(¡1 W BOYD LONDON JR y,C[ P"rs'()['<T \21,1,7,\2.G4GI January 22, 1981 Mr. A. C. Gonzalez, City of San Marcos 630 East Hopkins. San Marcos, Texas Dear A. C.: In response to your inquiry concerning the City's inobility to sell housing revenue bonds during the 1980 calendar year, I am writing this leHer. City Manager 78666 As you may recall, cities and counties initially were outhorized hy the Texas legislature in 1979 to issue housing revenue bonds for the benefit of low and moderate income individuals. Just prior to the effective dote of Ihe legislotion in Texas, a bill was introduced in the U.s. House of Representatives ¡{lat would have imposed severe restrictions as to income limilations and purchase price of homes, as well as make bonds issued under then prevailing methods taxable for federal income tax purposes. Although the legislation was not adopled unti I very recently, the ef- feet was to keep issuers from issuing any bonds unti I the problems were solved. In June 1980, Senator Long [X1s<:ed a resolution (the" Long Re',olulion") through the U.s. Senate thaI, in elred, stored thot any adion taken on housing legislation during the current term of Congress by the Senote would not be opplieJ retroactively to housing revenue bonds issued in the interim. Morket acceptance of ¡he compromise atlempt from the Senate vias quite slow. So slow in focT, that no issues were done in Texas utilizing the Long Resolution. About September 1980, just about ¡he same time thot we thought the mo¡-ket might begin to accept bonds issued under the long Resolution, the long-term and short-term interest rates began a rapid deterioration. At this point, it appeared that housing revenue bor,cls, m they had been issued in the past, could not sell at all because of the 10% usury ceiling in Texas on tax-exempt bonds. We then began to look for a I ternative ways to get financings done. Through- out the 10n(1 process, the morkct hod been tclin~J us that the smaller city and county issues were more marketable than the larger ones. Then, in late November of 1980,