01261981 Regular Meeting - Laserfiche WebLink

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FI HST SofdJu{)('ó{ C()~! 1"\:-';'1 Mr. A. C. Gonzalez, Ci,ty Manëiger City of San Marcos' January 22, 1981, page two the Congress agreed on a compromise proposal which basicall¡ allowed all housing revenue bonds that were delivered to the bond purchasers by Deceml>er 31, 1980. This suddenly changed the strategy of issuing bonds in Texas. Still saddled with the 10% usury limitation, the market began to realize that only a very few of these bonds would be issued in Texas, and for that reason, decided that it would only accept bonds from issuers ¡hot hod a large population base, were issuing bonds in amounts ranging from $20 ro $25 mi 1/ ion, and whose marker srudy indica- ted a low percentage of bonds sold to potential mortgage demand. The compro- mise legislation firmed the market considerably, although the usury limitation was still a problem. At this point, some very unusual financing schemes were ad- vanced. Because of the rushed nature of the financings and the new types of fi- nancing schemes involved, only nine issues were completed. These issues are listed below: Abilene, City of Midland County (Midland) Nueces County (Corpus Christi) Wi II iamson Coun ty Lubbock, City of Bay town, Ci ty of Denten County (Denton) Torn I]reen County (Son Angelo) Bexar County (San Antonio) Texas issuers, in general, were denied the ability to issue housing revenue bonds by a combination of factors, primari Iy legislation that was "introduced" that had an effective dote which penalized issuers who went ahead with housing issues and bondholders who bought the bonds. That, along with usury limitations which primarily affected us the lost six months, served to knock the smaller housing issuers out of the market, while only a select few were able to finance. The new legislation, passed by Congress and effective Janucry 1, 1981, imposes income limitations and purchase price limitations along with an annual state- wide limit on the total dollar volume of housing. revenue bonds which can be sold. This new legislation serves to impose another level of government on the issuers, that of the State of Texas, and it is our strong belief that Texas will be issuing the bonds on its own and distributing the proceeds throughout the State to participating lending institutions. This, in effect, will drastically reduce the available funds to cities such asSan Marcos; in the long run, because of the other limitations, will not be of substantial benefit. I hope I have answered to your satisfaction your inquiry. If necessary, I would be happy to meet with you or your Counci I to further discuss the matter