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Authorization for Bonds to Finance Senior Housing

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Date Introduced: 3/6/2003
Date Passed:
3/6/2003

Sponsors:
Stroger
Co-Sponsors:
Silvestri, Suffredin

Summary:

In order to finance multi-family housing for seniors in Morton Grove, the Cook County Board authorized the issuance of bonds. The total amount of bonds issued will not exceed $5 million. The bonds will not mature any later than December 1, 2004 and bear an interest rate not exceeding 10%.


Full Text of Legislation:

WHEREAS, by virtue of Section 6(a) of Article VII of the 1970 Constitution of the State of Illinois, The County of Cook, Illinois (the “County”) is a home rule unit of local government and as such may exercise any power and perform any function pertaining to its government and affairs; and

 

WHEREAS, by this Ordinance, the Board of Commissioners of the County (the “County Board”) has determined that it is necessary and in the best interests of the County to provide financing to Morton Grove Senior Housing, L.P. (the “Borrower”), an Illinois limited partnership, the general partner of which (the “General Partner”) is Morton Grove Development Corp., to pay a portion of the costs of acquiring, rehabilitating and equipping the Morton Grove Senior Apartments (the “Development”), a multi-family housing development consisting of 56 units located at 9016 Waukegan Road, Morton Grove, Illinois, by issuing a series of tax-exempt revenue bonds and using the proceeds of the sale thereof to purchase fully modified mortgage-backed securities which are guaranteed as to timely payment by the Government National Mortgage Association (“GNMA”), the payment of principal of and interest on which corresponds to payments on a mortgage loan to be made from the County to the Borrower which mortgage loan is insured by the Federal Housing Administration (“FHA”); and

 

WHEREAS, by this Ordinance, the County Board has determined that it is necessary and in the best interests of the County to borrow money for the purposes set forth above and in evidence of its limited, special obligation to repay that borrowing, to issue its Multi-Family Housing Revenue Bonds (Morton Grove Senior Apartments), Series 2003 (FHA Insured/GNMA) (the “Bonds”), as provided in this Ordinance; and

 

WHEREAS, in connection with the issuance of the Bonds, the County Board has determined by this Ordinance that it is necessary and in the best interests of the County to enter into (i) a Trust Indenture (the “Indenture”) between the County and a trustee (the “Trustee”) to be selected by the Chief Financial Officer (as defined below) providing for the security for and terms and conditions of the Bonds to be issued, (ii) a Financing Agreement (the “Financing Agreement”) among the County, the Borrower and the Trustee providing for the use of the proceeds of the Bonds to purchase fully modified mortgage backed securities guaranteed by GNMA from Project Funding Corporation, or another entity acceptable to the County and the Borrower (the “GNMA Issuer”), and the corresponding making of a mortgage loan by the GNMA Issuer to the Borrower backing those securities and insured by FHA, all for the purposes described above, (iii) a Bond Purchase Agreement (the “Purchase Agreement”) among the County, the Borrower and the Underwriters (as defined below), providing for the sale of the Bonds and the preparation and circulation of a preliminary official statement for the Bonds (the “Preliminary Official Statement”) and an official statement for the Bonds (the “Official Statement”), (iv) an Arbitrage Compliance Agreement (the “Arbitrage Agreement”) among the County, the Trustee and the Borrower, and (v) a Regulatory Agreement among the County, the Borrower and the Trustee (the “Regulatory Agreement”); and


 

WHEREAS, it is anticipated that the Borrower will receive certain Section 8 rental subsidy program assistance in connection with the Development through the United States Department of Housing and Urban Development (“HUD”); and WHEREAS, the Illinois Housing Development Authority (the “Authority”) has ceded to the County for allocation to the Bonds an amount of the Authority’s 2003 volume cap allocation under Section 146 of the Code (as defined below) equal to $1,000,000 (the “IHDA Volume Cap”).

 

NOW, THEREFORE, BE IT ORDAINED BY THE BOARD OF COMMISSIONERS OF THE COUNTY OF COOK, ILLINOIS, AS FOLLOWS: Section 1. Incorporation of Recitals. The recitals contained in the preambles to this Ordinance are hereby incorporated into this Ordinance by this reference. All capitalized terms used in this Ordinance, unless otherwise defined herein, shall have the meanings ascribed thereto in the Indenture.

 

Section 2.        Findings and Determinations. The County Board hereby finds and determines that the delegations of authority that are contained in this Ordinance, including the authority to make the specific determinations described in this Ordinance, are necessary and desirable because the County Board cannot itself as advantageously, expeditiously or conveniently exercise such authority and make such specific determinations. Thus, authority is granted to the President of the County Board (the “President”) or the Chief Financial Officer to determine to sell the Bonds and on such terms as and to the extent such officers determine that such sale or sales is desirable and in the best financial interest of the County. As used in this Ordinance, the term “Chief Financial Officer” means the Chief Financial Officer of the County appointed by the President of the County Board or, if there is no such officer then such person as shall be designated by the President.

 

Section 3.        Authorization of Bonds. The issuance of the Bonds in an aggregate principal amount of not to exceed Five Million Dollars ($5,000,000) is hereby authorized. The aggregate principal amount of the Bonds to be issued shall be as set forth in the related notification of sale referred to below. The Bonds shall contain a provision that they are issued under authority of this Ordinance. The Bonds shall not mature later than December 1, 2044. The Bonds shall bear interest at a rate not to exceed ten percent (10%), payable on the interest payment date(s) as set forth in the Indenture and in the related notification of sale. The Bonds shall be dated, shall be subject to redemption prior to maturity, shall be payable in such places and in such manner and shall have such other details and provisions as prescribed by the Indenture, the form of the Bonds therein and the related notification of sale. The provisions for execution, signatures, authentication, payment and prepayment, with respect to the Bonds shall be as set forth in the Indenture and the form of the Bonds therein. Each of the President and the Chief Financial Officer is hereby authorized to execute and deliver the Indenture on behalf of the County, such Indenture to be in substantially the form submitted herewith as Exhibit A and made a part hereof and hereby approved with such changes therein as shall be approved by the President or the Chief Financial Officer executing the same. Each of the President and the Chief Financial Officer is hereby authorized to act as an authorized officer (each an “Authorized Officer”) of the County for the purposes provided in the Indenture. Each of the President and the Chief Financial Officer is hereby authorized to execute and deliver the Financing Agreement on behalf of the County, such Financing Agreement to be in substantially the form submitted herewith as Exhibit B and made a part hereof and hereby approved with such changes therein as shall be approved by the President or the Chief Financial Officer executing the same.

Each of the President and the Chief Financial Officer is hereby authorized to execute and deliver the Regulatory Agreement on behalf of the County, such Regulatory Agreement to be in substantially the form submitted herewith as Exhibit C and made a part hereof and hereby approved with such changes therein as shall be approved by the President or the Chief Financial Officer executing the same. Each of the President and the Chief Financial Officer is each hereby authorized to execute and deliver an Arbitrage Agreement on behalf of the County, in substantially the form of tax agreements used in previous issuances of tax-exempt bonds pursuant to programs similar to the Bonds, with appropriate revisions to reflect the terms and provisions of the Bonds and the applicable provisions of the Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder (the “Code”), and with such other revisions in text as the President or the Chief Financial Officer executing the same shall determine are necessary or desirable in connection with the exclusion from gross income for federal income tax purposes of interest on the Bonds. The execution of the Arbitrage Agreement by the President or the Chief Financial Officer shall be deemed conclusive evidence of the approval of the County Board to the terms provided in the Arbitrage Agreement.

 

Section 4.        Security for the Bonds. The Bonds shall be limited obligations of the County, payable solely from all right, title and interest of the County in the GNMA mortgage backed securities purchased pursuant to the Financing Agreement, all right, title and interest of the County (other than certain reserved rights of the County as described in the Indenture) in the Financing Agreement, the proceeds of the Bonds and income from the temporary investment thereof, as provided in the Indenture. In order to secure the payment of the principal of, premium, if any, and interest on the Bonds, such rights, proceeds and investment income are hereby pledged to the extent and for the purposes as provided in the Indenture and are hereby appropriated for the purposes set forth in the Indenture. Nothing contained in this Ordinance shall limit or restrict the subordination of the pledge of such rights, proceeds and investment income as set forth in the Indenture to the payment of any other obligations of the County enjoying a lien or claim on such rights, proceeds and investment income as of the date of issuance of the Bonds, all as shall be determined by the Chief Financial Officer at the time of the sale of the Bonds. The Indenture shall set forth such covenants with respect to the application of such rights, proceeds and investment income as shall be deemed necessary by the Chief Financial Officer in connection with the sale of the Bonds.

 

Section 5.        Sale and Delivery of Bonds. The Bonds shall be sold and delivered to, or upon the direction of, one or more underwriters (the “Underwriters”) to be selected by the Chief Financial Officer, subject to the terms and conditions of the Purchase Agreement. The Chief Financial Officer is authorized to execute and deliver the Purchase Agreement on behalf of the County such Purchase Agreement to be in substantially the form submitted herewith as Exhibit D and made a part hereof and hereby approved with such changes therein as shall be approved by the Chief Financial Officer. The distribution of the Preliminary Official Statement and the Official Statement to prospective purchasers of the Bonds and the use thereof by the Underwriters in connection with the offering and sale of the Bonds are hereby authorized, provided that the County shall not be responsible for the content of the Preliminary Official Statement or the Official Statement except as specifically provided in the Purchase Agreement executed by the Chief Financial Officer. The compensation paid to the Underwriters in connection with the sale of the Bonds shall not exceed three percent (3%) of their aggregate principal amount. In connection with the offer and delivery of the Bonds, the Chief Financial Officer, and such other officers of the County as may be necessary, are authorized to execute and deliver such instruments and documents as may be necessary to implement the transaction and to effect the issuance and delivery of the Bonds. Any limitation on the amount of Bonds issued pursuant to this Ordinance as set forth herein shall be exclusive of any original issue discount or premium.

 

Section 6.        Bond Order. Subsequent to the sale of the Bonds the Chief Financial Officer shall file in the Office of the County Clerk a bond order for the Bonds directed to the County Board setting forth (i) the aggregate original principal amount of, maturity schedule and redemption provisions for the Bonds sold, (ii) the identity of the Trustee, (iii) the identity of the GNMA Issuer, (iv) the interest rates on the Bonds, (v) the identity of the Underwriters and (vi) the compensation paid to the Underwriters in connection with such sale. There shall be attached to such notification the final form of the Indenture.

 

Section 7.        Use of Proceeds. The proceeds from the sale of the Bonds shall be deposited as provided in the Indenture and used for the purposes set forth in the second paragraph of the recitals of this Ordinance.

 

Section 8.        Declaration of Official Intent. A portion of the cost of the acquisition, rehabilitation and equipping of the Development which the County intends to finance with the proceeds of the Bonds may have been paid from available monies of the Borrower prior to the date of this Ordinance. It is the intention of the County to utilize a portion of the proceeds of the Bonds to reimburse such expenditures (if any) which have been or will be made for those costs, to the extent allowed by the Code. It is necessary and in the best interests of the County to declare its official intent under Section 1.150-2 of the Treasury Regulations promulgated under the Code so to utilize those Bond proceeds.

 

Section 9.        Additional Authorization. The President, the Chief Financial Officer, and any other officer of the County designated by the President or Chief Financial Officer are each hereby authorized to execute and deliver such other documents and agreements and perform such other acts as may be necessary or desirable in connection with the Bonds, including, but not limited to, the exercise following the delivery date of the Bonds of any power or authority delegated to such official under this Ordinance with respect to the Bonds upon original issuance, but subject to any limitations on or restrictions of such power or authority as herein set forth.

 

Section 10.      Volume Cap. The County Board allocates to the Bonds an amount of the County’s 2002 volume cap allocation under Section 146 of the Code equal to $4,000,000. The County filed with the Internal Revenue Service a carry forward election with respect to such volume cap allocation prior to February 15, 2003.

 

Section 11.      Severability. If any provision of this Ordinance shall be held to be invalid or unenforceable for any reason, the invalidity or unenforceability of such provision shall not affect any of the remaining provisions of this Ordinance.

 

Section 12.      Administrative Fees. The County is hereby authorized to charge an administrative fee or fees in connection with the issuance of the Bonds, which shall be collected under such terms and conditions as determined by the Chief Financial Officer and which shall be in an amount as determined by the Chief Financial Officer but not to exceed the maximum amount permitted under the Section 148 of the Code to avoid characterization of the Bonds as “arbitrage bonds” as defined in such Section 148. Such administrative fee or fees shall be used by the County for administrative expenses and other housing activities.

 

Section 13.      Complete Authority; Inconsistent Provisions. This Ordinance shall constitute complete authority for the issuance of the Bonds. All ordinances, resolutions, motions or orders in conflict with this Ordinance are hereby repealed to the extent of such conflict.

 

Section 14.      No Impairment. No provision of the Code or violation of any provision of the Municipal Code shall be deemed to impair the validity of this Ordinance or the instruments authorized by this Ordinance or to impair the rights of the owners of the Bonds to receive payment of the principal of, premium, if any, or interest on the Bonds or to impair the security for the Bonds; provided further, however, that the foregoing shall not be deemed to affect the availability of any other remedy or penalty for any violation of any provision under the Municipal Code.

 

Section 15.      Filing with County Clerk. A copy of this Ordinance shall be filed in the Office of the County Clerk and shall be made available for public inspection in the manner required by law.

 

Section 16.      Effective Date. This ordinance shall be in full force and effect immediately upon its passage and approval.

 

Approved and adopted this 6th day of March 2003.


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