ARTICLE VI. - MULTIFAMILY RENTAL PROJECTS

The following words, terms and phrases, when used in this article, shall have the meanings ascribed to them in this section, except where the context clearly indicates a different meaning:

Bonds means bonds, notes or other obligations issued by the city pursuant to this article.

Costs means the costs chargeable to a project in accordance with generally accepted accounting principles and includes, without limitation, the cost of acquisition, construction, reconstruction, alteration, improvement and extension of any building, structure, facility or other improvement; the cost of lands, rights-in-lands, easements, privileges, agreements, franchises, utility extensions, access roads and site development necessary or useful and convenient for any project or in connection therewith; financing costs including but not limited to discount on bonds, costs of issuance of bonds, engineering and inspection costs, trustees' or fiscal agent's fees, costs of financial, legal, professional and other estimates and advice; organization, administrative, insurance and city charges, and the operation and other expenses of the city or department or any person prior to or during any acquisition or construction; and all such other expenses as may be necessary or incidental to the financing, acquisition, construction or completion of any project or part thereof, including but not limited to capitalized interest and such provisions for reserves for payment of principal of or interest on bonds during or after such financing, acquisition or construction as the department may determine to be appropriate, but shall not include raw materials, work in progress or stock in trade.

Department means the office of economic development of the city.

Multifamily rental project means a project which requires a minimum capital expenditure of $250,000.00, which will accomplish one or more of the public purposes specified in this article and includes the new construction or the substantial rehabilitation of existing buildings which after such rehabilitation will be used or continue to be used as rental properties and, in any case, will have separate living units containing complete facilities for sleeping, eating, cooking and sanitation, which will be occupied upon completion by three or more separate families, none of whom may be an owner of the project.

Owner means any person who either at law or in equity is vested with ownership of at least a 50 percent interest in the multifamily rental project.

Project means any one or more of the following:

(1)

The acquisition, construction, reconstruction, rehabilitation, alteration, improvement and extension of any building, structure or other facility, whether or not in existence or under construction;

(2)

The improvement of real estate and the extension or provision of utilities, access roads and other appurtenant facilities; or

(3)

Loans made from the proceeds of bonds to finance any of the foregoing.

Project ordinance means an ordinance supplemental hereto, enacted pursuant to this article by the council of the city authorizing the issuance of a series of bonds and specifying, among other things, the purposes for which such bonds are being issued.

Revenues means receipts, fees, rental or other payments to be received on account of leases, mortgages, conditional sale, sales, surety or guaranty agreements; payments and any other income derived from the lease, sale or other disposition of a project; monies in any reserve, insurance or other funds or accounts, and income from the investment thereof, established in connection with the issuance of bonds for a project or projects; and fees, charges or other monies to be received by the city in respect of projects and contracts with persons.

(Code 1968, § 51-54; Ord. No. 99-053(sub 1), § 1, 6-22-99)

Cross reference— Definitions and rules of construction generally, § 1-2.

Sec. 8-188. - Legislative findings and policy.

(a)

It is hereby determined and declared as a matter of legislative finding that:

(1)

The unavailability of multifamily rental housing and the failure of private enterprise to provide additional multifamily rental housing are serious menaces to the health, safety, morals and general welfare of the people of the city; and the construction, reconstruction or rehabilitation of multifamily rental housing should be encouraged;

(2)

There exists within the city a serious shortage of sanitary, decent and safe rental housing; this shortage has contributed to and will contribute to the creation and persistence of slums and blight; this shortage has been a major contributing factor to the deterioration of the quality of the environment and living conditions of large numbers of persons and families in the city, and this shortage is inimical to the health, welfare and prosperity of the residents of the city;

(3)

It is imperative that the supply of rental housing for persons and families displaced by the deterioration and elimination of existing rental housing be increased;

(4)

Private enterprise and investment have been unable, without assistance, to produce the needed construction, reconstruction or rehabilitation of sanitary, decent and safe rental housing and the increased availability of such rental housing will reduce rentals of existing rental housing and enable persons and families of low and moderate income to afford decent housing;

(5)

The unavailability of multifamily rental housing decreases the city's population, and has an adverse impact on the tax base of the city, with a disproportionate effect on elderly persons and others with fixed incomes;

(6)

The increased availability of multifamily rental housing would lead to the deconcentration of low income residents of the city;

(7)

Private enterprise and investment will be encouraged to build rental housing and to rehabilitate existing facilities for rental housing if private financing is supplemented by revenue bond financing, as provided in this program;

(8)

It is to the economic benefit of the city to encourage the availability of adequate rental housing; and

(9)

By reason of the unavailability of private credit sources, rental housing has not been constructed in redevelopment areas in the city and the residents of certain areas of the city, and in particular minority groups, are denied such rental housing.

(b)

Therefore, it is hereby declared to be the policy of the city to promote the health, safety, morals and general welfare of the people of the city by providing for the issuance of revenue obligations to finance the acquisition, construction or reconstruction of existing facilities for use as multifamily rental housing for the public purpose of supplying rental housing within the city, which will protect the public health and welfare and will aid in the elimination and prevention of blight and will redevelop areas of the city. Such purposes are hereby declared to be public purposes for which revenue bonds and other obligations of the city may be issued.

(Code 1968, § 51-52)

Sec. 8-189. - Authorization.

This article is enacted pursuant to the provisions of the constitution of the state under 22 Del. C. ch. 8 (§ 801 et seq.) as effectuated by vote of the electors in the adoption of the home rule charter of the city.

(Code 1968, § 51-53)

Sec. 8-190. - Authority to issue bonds; purpose.

The city may issue bonds pursuant to this article for the purpose of providing funds for any one or more of the following purposes:

(1)

To pay all or any part of the cost of a multifamily rental project.

(2)

To make loans to finance all or any part of the cost of a multifamily rental project.

(3)

To fund or refund any bonds issued under this article.

(4)

To provide additional funds to complete a project.

(Code 1968, § 51-58)

Sec. 8-191. - Obligation of bonds.

(a)

Bonds issued under this article shall not constitute an indebtedness, liability, moral obligation or a pledge or charge against the general credit or taxing powers of the city within the meaning of any constitutional provision, statutory limitation or provision of the city charter and shall never constitute or give rise to any pecuniary liability of the city other than from the revenues specifically pledged to pay the bonds. The bonds and the interest thereon shall be special obligations of the city payable solely and exclusively from one or more of the following sources:

(1)

From the revenues and property financed, in whole or in part, with the proceeds of the bonds.

(2)

From the revenues of certain designated projects whether or not financed, in whole or in part, with the proceeds of such bonds.

(3)

From amounts payable pursuant to loan agreements, surety agreements, guarantees or other agreements to make payment given in connection with the financing of a project.

(b)

Bonds issued pursuant to this article shall not be in any way a debt or liability of the state or of any other political subdivision thereof and shall not create or constitute any indebtedness or obligation of the state or of any other political subdivision, either legal, moral or otherwise, and nothing in this article shall be construed to authorize the incurrence of any indebtedness on behalf of or in any way to obligate the state or any other political subdivision.

(c)

All bonds shall contain on the face thereof a statement that neither the credit nor taxing power of the city nor of the state or any other political subdivision thereof is pledged to pay the principal of or interest on the bonds.

(Code 1968, § 51-59)

Sec. 8-192. - Application to department.

(a)

Prior to the issuance of any bonds under this article, there shall be submitted to the department an application for assistance in such form as the department shall prescribe containing information and documents sufficient for the department to find and determine that:

(1)

The bonds are to be issued for a multifamily rental project which will:

Upon completion, have three or more separate living units, with each unit containing complete facilities for sleeping, eating, cooking and sanitation and none of which will be occupied by the owner; and

Will aid, assist and encourage the supply of rental housing within the city;

(2)

The bonds are to be payable solely from revenues as specified in section 8-191

(3)

The issuance of the bonds will accomplish the public purposes contemplated by this article; and

(4)

The amount to be financed does not exceed the estimated cost of the project.

(b)

The department may require the submission of additional information in order that it may make such other findings and determinations as it shall deem pertinent to its evaluation of the application.

(Code 1968, § 51-60)

Sec. 8-193. - Approval of application.

(a)

Approval of application. If the department shall make the findings required by section 8-192, in consultation with the director of real estate and housing or her designee, the department shall approve the application and shall transmit evidence of its approval to the mayor. If the mayor shall concur in the department's approval of the application, the mayor shall notify the department in writing of such concurrence and shall transmit such application and other documents, together with any additional recommendations, to council so that a project ordinance may be introduced.

(b)

Requirements preliminary to introduction of project ordinance. Prior to the introduction of a project ordinance, following the approvals and transmittals as set forth in subsection (a) of this section the following shall occur:

(1)

The council's finance committee shall first receive the preliminary written opinion from the firm of certified public accountants selected by council pursuant to the city charter, the "outside auditor", to make the audit of the city's fiscal year about the accounting treatment of the special obligation bond issue proposed for the project, such as whether the issue is or is not required to be recorded in any fund of the city.

(2)

The council's finance committee shall first receive the preliminary written opinion of the city solicitor and the preliminary written opinion of the city's bond counsel to the effect that the special obligation bond issue to be proposed by the ordinance for the project is or is not in accordance with all applicable requirements of this Code; is in whole or in part, or is not a tax exempt financing; and stating that the bonds are special obligations of the city and do not pledge the credit or taxing power thereof, but are payable solely from the revenues specified in section 8-191

(3)

The applicant's representative, whether legal counsel or financial representative, or both, shall make a presentation of the project proposal at a meeting of the city council's finance committee, with the city's outside auditor representative and the city's bond counsel representative both to be present at such meeting. If the representatives of either the outside auditor, or of the bond counsel, or both, are not present at such meeting, the presentation of the proposals will not be recognized as complying with the requirements of this subsection unless the finance committee specifically accepts a written statement from the outside auditor or from bond counsel submitted for good cause in lieu of the requirements of presence at such meeting.

(4)

A preliminary cost disclosure statement, an estimate of all costs, shall be presented to the city council prior to the introduction of the ordinance.

(c)

Interjurisdiction special obligation bond. An interjurisdiction special obligation bond issue shall have obtained, prior to its issuance, by one or more credit-rating agencies, a credit rating qualifying it as a non-speculative issue.

(Code 1968, § 51-61; Ord. No. 99-053(sub 1), § 1, 6-22-99)

Sec. 8-194. - Conditions precedent to issuance of bonds.

(a)

Prior to the issuance of any bonds under this article, council shall adopt a project ordinance approving the project and approving or modifying the findings previously transmitted pursuant to section 8-193 authorizing the issuance of the bonds, stating the aggregate principal amount thereof and stating that the bonds are special obligations of the city and do not pledge the credit or taxing power thereof, but are payable solely from the revenues specified in section 8-191 and further providing that if the project being financed, at any time while such bonds are outstanding, ceases to be a multifamily rental project, such bonds shall become immediately due and payable. Such project ordinance or, if council shall deem it appropriate, a subsequent resolution or resolutions shall also specify the form, terms and provisions of the bonds to be issued, and the manner of sale, which may be public or private, and the terms upon which or the prices for which the bonds are to be sold or exchanged.

(b)

In connection with any project to be financed by bonds, the council may, after approval of the department, with the recommendation of the mayor and prior to the adoption of the project ordinance required by this section, adopt a resolution indicating the city's intent to issue bonds under this article, which resolution shall act as the inducement resolution required for the purposes of section 103 of the Internal Revenue Code.

(Code 1968, § 51-62)

State law reference— Notice to state prior to issuance of certain bonds, 29 Del. C. § 8317.

Sec. 8-195. - Powers of department.

To effectuate the public purposes of this article, the department shall have the following powers:

(1)

To adopt, amend and repeal rules and regulations and to carry out the provisions of this article;

(2)

In connection with any application for assistance under this article or commitments therefor, to require and collect such fees and charges as the department shall determine to be reasonable; and

(3)

To do any and all things necessary or convenient to carry out its purposes and exercise the powers given and granted in this article or in a project ordinance as required by section 8-194

(Code 1968, § 51-63)

Sec. 8-196. - Issuance of bonds.

The city shall have the power to borrow money and issue bonds for the purposes stated in section 8-190. Every issue of bonds shall be special revenue obligations of the city payable solely and exclusively from any revenues or property pledged for such payment as provided in section 8-191. Such bonds shall be authorized by project ordinance and may be issued in one or more series and shall be in such amounts, bear such date or dates, mature at such time or times not exceeding 40 years from the date thereof, bear interest at a rate or rates, be in such denomination or denominations, be in such form, either coupon or registered, carry such conversion or registration privileges, have such rank or priority, be executed in such manner, be payable from such sources, in such medium and at such place or places within or without the state, and be subject to such terms of redemption, with or without premium, as such project ordinance or a subsequent resolution may provide.

(Code 1968, § 51-64)

Sec. 8-197. - Security for bonds.

(a)

After adoption of a project ordinance and consistent therewith, the department shall have the power to covenant and agree with the several holders of such bonds, as to:

(1)

The custody, security, use, expenditure or application of the proceeds of the bonds;

(2)

The use, regulation, operation, maintenance insurance or disposition of all or any part of any project or projects;

(3)

Payment of the principal of or interest on the bonds, and the sources and methods thereof, the rank or priority of any such bonds as to any lien or security, or the acceleration of the maturity of any such bonds;

(4)

The use and disposition of all revenues or other monies derived or to be derived from any project or projects;

(5)

Pledging, setting aside, depositing or trusteeing all or any part of the revenues or other monies of a project or projects or bond proceeds to secure the payment of the principal of or interest on bonds and determining the powers and duties of any trustee with regard thereto;

(6)

The setting aside out of the revenues or other monies of a project or bond proceeds, of reserves and sinking funds, and the source, custody, security, regulation, application and disposition thereof;

(7)

The rents, fees or other charges for the use of any project, including any parts thereof theretofore constructed or acquired and any parts, replacements or improvements thereof thereafter constructed or acquired, and the fixing, establishment, collection and enforcement of the same;

(8)

Limitation on the issuance of additional bonds secured by the same revenues;

(9)

Vesting in a trustee, fiscal or escrow agent, within or without the state, such property, rights, powers and duties in trust as the department may determine and limiting the rights, duties and powers of such trustee;

(10)

Payment of costs or expenses incident to the enforcement of the bonds or of the provisions of this article or of a project ordinance or of any covenant or contract with the holders of the bonds or of any covenant or contract with the owner;

(11)

The procedure, if any, by which the terms of any covenant or contract with, or duty to, the holders of bonds may be amended or abrogated, the amount of bonds the holders of which must consent thereto, and the manner in which such consent may be given or evidenced; and

(12)

Any other matter or course of conduct which is declared to further secure the payment of the principal of or interest on the bonds.

(b)

All such provisions and all such covenants and agreements shall constitute valid and legally binding contracts between the city and the several holders of the bonds, regardless of the time of issuance of such bonds, and shall be enforceable by any such holder or holders by appropriate action, suit or proceeding in any court of competent jurisdiction.

(Code 1968, § 51-65)

Sec. 8-198. - No liability of officers.

Neither the members of council, employees of the department nor other representatives of the city shall be liable personally on the bonds by reason of the issuance thereof or their execution thereof.

(Code 1968, § 51-66)

Secs. 8-199—8-210. - Reserved.

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