Staff Report MCCDATE:
WE
FROM:
COUNCIL AGENDA REPORT
OCTOBER 22, 2015
MAYOR AND TOWN COUNCIL
LAUREL PREVETTI, TOWN MANAGER
MEETING DATE: 11/03/15
ITEM NO: 9
SUBJECT: AUTHORIZE THE TOWN MANAGER TO EXECUTE A COOPERATIVE
AGREEMENT BETWEEN THE TOWN OF LOS GATOS AND THE COUNTY OF
SANTA CLARA TO ALLOW ISSUANCE OF MORTGAGE CREDIT
CERTIFICATES (MCC) WITHIN THE BOUNDARIES OF THE TOWN OF LOS
GATOS AND AUTHORTIZE THE COUNTY OF SANTA CLARA TO ADMINISTER
THE MCC PROGRAM ON BEHALF OF THE TOWN
RECOMMENDATION:
Authorize the Town Manager to execute a Cooperative Agreement (Attachment 1) between the Town of
Los Gatos (Town) and the County of Santa Clara (County) to allow issuance of Mortgage Credit
Certificates (MCC) within the boundaries of the Town and authorize the County to administer the MCC
Program on behalf of the Town.
BACKGROUND:
The Tax Reform Act of 1986 established the MCC Program as a means of assisting qualified individuals
with the acquisition of new and existing single - family housing. The Town and the County entered into
the original Cooperative Agreement on November 24, 1987 (Attachment 2).
The MCC program is a Federal Income Tax Credit Program administered by the County of Santa
Clara, which provides assistance to first -time homebuyers inthe purchase of owner - occupied residential
units. Under this program, a qualified buyer's loan amount is increased while federal income taxes are
reduced by 15% of the annual interest paid on the home mortgage. This entitles qualified home - buyers
to reduce the amount of their federal income tax liability by an amount equal to a portion of the
interest paid during the year on a home mortgage.
PREPARED BY: Matt Morley 6�ca j
Director of Parks and ublic Works
Reviewed by:
Town Manager Town Attorney
PAGE 2
MAYOR AND TOWN COUNCIL
SUBJECT: AUTHORIZE THE TOWN MANAGER TO EXECUTE A
COOPERATIVEAGREEMENT BETWEEN THE TOWN OF LOS GATOS AND THE
COUNTY OF SANTA CLARA TO ALLOW ISSUANCE OF MORTGAGE CREDIT
CERTIFICATES (MCC) WITHIN THE BOUNDARIES OF THE TOWN OF LOS
GATOS AND AUTHORTIZE THE COUNTY OF SANTA CLARA TO ADMINISTER
THE MCC PROGRAM ON BEHALF OF THE TOWN
OCTOBER 22, 2015
BACKGROUND (cont'd):
The tax credit allows the buyer to qualify more easily for a loan by increasing the effective income
of the buyer. Since the borrower's taxes are being reduced by the amount of the credit, this increases
the take -home pay by the amount of the credit, thus enabling the buyer to qualify for a larger loan
than would otherwise be possible.
Eligible buyers must be first time purchasers and cannot have had an ownership in in their
principal residence for the previous three years, from date of application. The home to be purchased
utilizing the MCC program must be used as the borrower's principal residence and may not be used as a
place of business or as a rental or vacation home. It may be either an attached (condominium or
townhome) or detached single - family home.
The County intends to submit a 2015 County -wide MCC Application to the state regulatory agency for
the MCC program, the California Debt Limit Allocation Committee ( CDLAC). The CDLAC will
review the application at their December 16, 2015 allocation meeting. Subsequent to approval, MCCs
will be available to eligible first -time homebuyers countywide on a first -come, first served basis.
The Cooperative Agreement will enable residents of the Town to receive MCCs on or after December
16, 2015, pending an allocation from the CDLAC in December as anticipated.
DISCUSSION:
Although the existing Cooperative Agreement between the Town and County will remain in effect
unless the Town provides a written notice of termination, the County Counsel is recommending that the
MCC Cooperative Agreement be updated and executed, as the original agreement is outdated. The
County has requested that these cooperative agreements be in place by December 1, 2015. This will
allow for immediate availability of funds to eligible first -time homebuyers on or after December 16.
The Cooperative Agreement includes provisions for County to administer the MCC program for, and
issue MCCs within, the Town. Those cities which will also be adopting a Cooperative Agreement
with the County are: Campbell, Gilroy, Los Altos, Milpitas, Morgan Hill, Mountain View, Palo Alto,
San Jose, Saratoga, and Sunnyvale.
CONCLUSION:
Staff recommends that the Town Council authorize the Town Manager to execute a Cooperative
Agreement between the Town and the County, to continue to allow issuance of MCCs within the
PAGE
MAYOR AND TOWN COUNCIL
SUBJECT: AUTHORIZE THE TOWN MANAGER TO EXECUTE A
COOPERATIVEAGREEMENT BETWEEN THE TOWN OF LOS GATOS AND THE
COUNTY OF SANTA CLARA TO ALLOW ISSUANCE OF MORTGAGE CREDIT
CERTIFICATES (MCC) WITHIN THE BOUNDARIES OF THE TOWN OF LOS
GATOS AND AUTHORTIZE THE COUNTY OF SANTA CLARA TO ADMINISTER
THE MCC PROGRAM ON BEHALF OF THE TOWN
OCTOBER 22, 2015
CONCLUSION (cont'd):
boundaries of the Town of Los Gatos and authorize the County to administer the MCC Program on
behalf of the Town.
ALTERNATIVES:
Alternatively, the Town Council could direct staff to:
1. Not update the Cooperative Agreement between the Town and the County, continue involvement in
the MCC program, and pass a resolution which approves participation for 2015, 2016, and 2017.
2. End participation in the MCC program, and provide written notice to the County.
These alternatives are not recommended by staff as an update enhances the original agreement by
making it more current and discontinuing the program in the Town will leave first -time homebuyers
with fewer opportunities to purchase a home.
COORDINATION:
This report has been coordinated with the Town Attorney's Office and the County of Santa Clara.
FISCAL IMPACT:
There is no cost to the Town. The costs of administering the MCC Program are borne by the County's
receipt of a $500 application fee charged to each qualified applicant.
ENVIRONMENTAL ASSESSMENT:
This is not a project defined under CEQA, and no further action is required.
Attachments:
1. MCC Cooperative Agreement between the County of Santa Clara and the Town of Los Gatos.
2. Cooperative Agreement between the County of Santa Clara and the Town of Los Gatos dated
November 24, 1987.
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COUNTY OF SANTA CLARA
MORTGAGE CREDIT CERTIFICATE (MCC) PROGRAM
MCC COOPERATIVE AGREEMENT BETWEEN THE COUNTY OF SANTA CLARA AND
THE TOWN OF LOS GATOS
THIS MCC COOPERATIVE AGREEMENT (the "Cooperative Agreement ") is hereby
made and entered into as of this day of 2015, by and between the County
of Santa Clara, California, (the "County ") and the Town of Los Gatos (the "Town ").
WITNESSETH
WHEREAS, the Tax Reform Act of 1984 established the Mortgage Credit certificate
Program (hereinafter referred to as the "MCC Program ") as a means of assisting qualified
individuals with the acquisition of new and existing single family housing; and
WHEREAS, the County and Town have determined to engage in anMCC Program pursuant to
Chapters 1399, Statutes of 1985 Section 50197, et seq of the Health and Safety Code of the State of
California (the "Act') and as authorized by the Internal Revenue Code of 1986 (the "Code ") in order to
assist individual home purchasers in the County to afford both new and existing homes within the
statutory limits as provided for in said Act; and
WHEREAS, in furtherance of the MCC Program, the Town Council has authorized the County
to apply to the State of California Debt Limit Allocation Committee (CDLAC) in the name of the Town
for a mortgage bond allocation to be traded for authority to issue Mortgage Credit Certificates ; and
WHEREAS, the County of Santa Clara, Office of Supportive Housing, or its Designee, is
administering a County-wide MCC Program; and
WHEREAS, the Town and County wish to cooperate with one another pursuant to the Act in the
exercise of their powers under the Act for the purposes of the MCC Program; and
WHEREAS, the County will be operating an MCC Program in the County, and the Town desires
that the Program be applicable to otherwise eligible real property in the Town;
WHEREAS, the County, pursuant to the Act, has established the MCC Program, and has
determined to cooperate with the Town pursuant to the Act and in the exercise of its powers under
the Act for purposes of the Program ;and
NOW, THEREFORE, in consideration of the mutual covenants hereinafter provided, the
parties hereto agree as follows:
SECTION I The words and phrases of this Cooperative Agreement shall, for all purposes hereof
unless otherwise defined herein, have the same meanings assigned to such words and phrases in the
Act.
MCC Cooperative Agreement 2015 Page 1 of 3
ATTACHMENT 1
SECTION 2. The County agrees to use its best efforts to undertake the Program and to issue
mortgage credit certificates therefore pursuant to the Act and the Code from time to time to the
extent that the County receives allocations from the California Debt Limit Allocation Committee
( "CDLAC ").
SECTION 3. The Town represents and warrants to the County that: (i) the Town has heretofore
adopted a general plan for the Town in conformance with the provisions Planning Zoning Law of
the State of California (Government Code Sections 6500 et seq.), (ii) said general plan includes a
land use element and a housing element as required by Government Code Section 65302, and (iii)
the Program complies with said land use element and housing element.
SECTION 4. The Town agrees that the County may issue mortgage credit certificates under the
Program, as specifically set forth in the Act and the Code, with respect to property located within the
geographic boundaries of the Town and further agrees that the County may exercise any or all of the
Town's powers for the purpose of issuing mortgage credit certificates pursuant to the Act and the Code
with respect to property located within the geographic boundaries of the Town.
SECTION 5. This Agreement may be tenninated by either party upon 60 days written notice
delivered to the other party, provided that termination of this Cooperative Agreement shall not
adversely affect the rights of the owners of any mortgage credit certificates issued by the County in
connection with the MCC Program. The term of this Agreement shall extend until such termination by
written notice.
SECTION 6. The Town agrees to undertake such further proceedings or actions as may be necessary
to carry out the terms an intent of this Agreement as expressed in the recitals hereto; provided,
however, that nothing herein shall require the Town to appropriate any funds to the County for services
under this Agreement. Funds for the administration of the program shall be derived by the County
from the application fees paid by MCC applications administered by the County. These fees shall be
collected and retained by the County in all cases administered by the County.
SECTION 7. Nothing in this Cooperative Agreement shall prevent the County from entering in to
one or more agreements with other municipal corporations within the County, if deemed necessary and
advisable to do so by the County.
SECTION 8. This Cooperative Agreement may be amended by one or more supplemental
agreements executed by the County and the Town at any time.
SECTION 9. Nothing contained herein shall be interpreted to impose a relationship of partners or
joint ventures between the Town and the County, except that no such amendment or supplement shall
be made which shall adversely affect the rights of the owners of any mortgage credit certificates
issued by the County in connection with the Program.
MCC Cooperative Agreement 2015 Page 2 of 3
SECTION 10. In lieu of and not withstanding the pro rata risk allocation which might otherwise be
imposed between the Parties pursuant to Government Code Section 895.6, the Parties agree that all
losses or liabilities incurred by a party shall not be shared pro rata but instead the County and Town
agree that pursuant to Government Code Section 895.4, each of the parties hereto shall fully indemnify
and hold each of the other parties, their officers, board members, employees and agents, harmless from
any claim, expense or cost, damage or liability imposed for injury (as defined by Government Code
Section 810.8) occurring by reason of the negligent acts or omissions or willful misconduct of the
indemnifying party, its officers, board members, employees or agents, under or in connection with or
arising out of any work, authority or jurisdiction delegated to such party under this Agreement. No
party, nor any officer, board member, employee or agent thereof shall be responsible for any damage
or liability occurring by reason of the negligent acts or omissions or willful misconduct of other parties
hereto, their officers, board members, employees or agents, under or in connection with or arising out
of any work, authority or jurisdiction delegated to such other parties under this Agreement.
IN WITNESS WHEREOF, the parties have executed this as indicated below.
TOWN OF LOS GATOS
:
Laurel Prevetti, Town Manager Date
Shelley Neis
Clerk Administrator
APPROVED AS TO FORM AND
LEGALITY:
Robert Schultz, Town Attorney
COUNTY OF SANTA CLARA:
Dave Cortese, President Date
Board of Supervisors
Date ATTEST:
Date
Megan Doyle Date
Clerk, Board of Supervisors
APPROVED AS TO FORM AND
LEGALITY:
Donald A. Larkin
Deputy County Counsel
MCC Cooperative Agreement 2015 Page 3 of 3
Date
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COOPE IVE AGREEMENT BETWEEN THE COUN' OF
SA CLARA AND THE TOWN OF LOS GAT
THIS COOPERATIVE AGREEMENT (the "Cooperative Agreement ") is made and
entered into as of NOV 2 4 1987 1987 by and between the County of
Santa Clara, a legal subdivision and body corporate and politic of
the State of California (the "County"), and the Town of Los Gatos (the
"Town "), a municipal corporation of the State of California.
WITNESSETH:
WHEREAS, the Tax Reform Act of 1984 established the Mortgage
Credit Certificate Program (hereinafter referred to as "MCC Program ")
as a means of assisting qualified individuals with the acquisition of
new and existing single family housing; and
WHEREAS, the County and the Town have heretofore determined to
engage in an MCC Program pursuant to Chapters 1399, Statutes of 1985
00
Section 50197, et seq of the Health and Safety Code of the State of
California (the ct) in order to assist individual home purchasers
in the Town to afford both new and existing homes within the statutory
limits as provided for in said Act; and
v
w WHEREAS, in furtherance of the MCC Program the Town Council
o authorized the application to the State of California Mortgage Bond
" Allocation Committee (MBAC) in the name of the Town of Los Gatos for a
mortgage bond allocation in the amount of $20,000,000 to be traded for
x authority to issue Mortgage Credit Certificates in a face amount of
W $5,000,000 (based upon the 4:1 trade -in value of bond allocation); and
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WHEREAS, the Town application for the MCC Program subsequently
approved by the MBAC on August 26, 1987, and
WHEREAS, the County Housing Bond Coordinator is administrating a
County wide MCC Program with support from the San Jose Real, Estate
Board to educate potential home buyers and mortgage lender, to
prepare and review buyer MCC applications, and to disburse Mortgage
Credit Certificates and monitor program status, and
WHEREAS, the Town and County wish to cooperate with one another
pursuant to the Act in the exercise of their powers under the Act for
the purposes of the MCC Program;
NOW, THEREFORE, in consideration of the covenants herein after
provided, the parties hereto agree as follows:
SECTION 1. The words and phrases of this Cooperative Agreement
shall, for all purposes hereof unless otherwise defined herein, have
the meanings assigned to such words and phrases in the Act.
SECTION 2. The Town represents and warrants to the County that:
M t _7o_wn }ras heretofore adopted a general plan for the Town in
conformance with the provisions of the Planning and Zoning Law of the
State of California (Government Code Sections 65000 et seq.), (ii)
said general plan includes a land use element and a housing element as
required by Government Code Section 65302, and (iii) the Program
complies with said land use element and housing element.
SECTION 3. Administration of the MCC Program for the Town shall
be performed by the County's Housing Bond Coordinator in cooperation
with the San Jose Real Estate Board.
J inmo
ATTACHMENT
SECTION 4. 1 'County shall develop and staff !program for
the effective a - d inistration of the MCC program within the geo-
graphical boundaries of the County. The County shall take reason-
able steps to develop cooperation with local real estate and
lending institutions in order to obtain their participation in
securing applications from eligible applicants for review and
approval by County representatives on behalf of the County and
the Town.
SECTION 5. Specific duties of the County's Housing Bond
Coordinat' or sfail include, but not be limited to, the intake and
approval of home buyers' MCC applications, the issuance of Mort-
gage Credit Certificates, the monitoring of the City's MCC Pro-
gram status, and preparation of local or State reports required
in the performance of aforesaid duties.
SECTION 6. The responsibilities of the San Jose Real Estate
Board w—M— n7c ude educational activities necessary to adequately
inform potential home buyers, realtors and trortgage lenders on
the availability of the MCC Program.
SECTIO14 7. In full cooperation for performance of aforesaid
duties and responsibilities by the County Housing Bond Coordinator
and San Jose Real Estate Board, the MCC applicant will pay a one -time
non - refundable application fee of $150. On the basis of agreement
between the County and the mortgage lending institution, the appli-
cation fee will be apportioned to the County Housing Bond Coor-
dinator to receive $100 and the mortgage lending institution to
receive $50 to cover expenses attributed to program administration.
SECTION 8. The Town agrees to undertake such further pro-
ceedings or actions as may be necessary to carry out the terms and
intent of this agreement.
SECTION 9. Nothing in this Cooperative Agreement shall prevent
the Count�yr"om entering into one or more agreenents with other
municipal corporations within the County, if deemed necessary and
advisable to do so by the County.
SECTION 10. This Cooperative Agreement may be amended by one or
more supp ementai agreements executed by the County and the Town at
any time.
SECTION 11. This agreement may be terminated by either party
upon 9 ays wr tten notice delivered to the other party. The term
of this agreement shall extend until such termination by written
notice.
SECTION 12. Nothing contained herein shall be interpreted to
impose a reiat3onship of partners or joint ventures between the Town
and the County.
SECTION 13. The County agrees to indemnify, defend and hold the
Town, its s�f cers, attorneys, employees and agents harmless against
any and all claims, damages or causes of action arising from any act
or omission on the part of the County, its officers, attorneys,
employees and agents.
-2-
IN WITNESS W `,EOF, the parties hereto have c ,'-ed this Co-
operative Agreemel._'to be executed and attested by .;eir proper
officers thereunto duly authorized, and their official seals to
be hereto affixed, all as of the day first above written.
(SEAL)
ATTEST:
ATTE
er oar o upervisors
LJVONALD M. RAINS
APPROVED AS TO FORM AND LEGALITY:
County Counsel
COUNTY OF SANTA CLARA
ai rperson o tl e
Board of Supervisors
Dianne McKenna
TOWN OF LOS GATOS
(SEAL)
own anager
ATTEST: APPROVED AS TO FORM
wn �or
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