LOS ANGELES -- Rural counties in California are banding together behind a single-family mortgage revenue bond program to give first-time home buyers some of the same benefits usually available only in more urbanized areas.

"Each county standing alone doesn't have the demand" to justify running its own program, particularly in Sparsely Populated regions, said Marcia Basque, executive director of the Regional Council of Rural Counties.

In response, the council is sponsoring creation of the California Local Government Finance Authority, which will issue bonds on behalf of the Rural Single-Family First Time Home Buyer Mortgage Program.

Roughly a dozen counties already are on board to participate. Basque said that most if not all of the council's 22 member counties will probably sign on -- many county boards will meet soon to vote on participating.

One of the biggest challenges involved laying the foundation for the lending program.

"It takes an enormous amount of work" to assemble a lender network reaching into rural counties, said Robert Doty, president of American Government Financial Services Co., the financial adviser for the program.

The rural mortgage system generally will operate in the same way as similar borrowing programs elsewhere.

The process begins with mortgage origination by local lenders, mortgage brokers, or even county housing personnel, who assist first-time buyers in completing the necessary documentation. The mortgages will be placed with a national institution, such as the Federal National Mortgage Association, that securitizes mortgages.

Securitized mortgage certificates will then be used to back the mortgage revenue bonds sold to investors. Participating counties and cities will not have any liability for debt service payments.

The financing authority expects to assemble a bond issue of $50 million to $100 million, with a sale tentatively targeted for November, Basque said. An application for a mortgage bond allocation from the state is expected to be filed this month, she said.

Basque expressed optimism about obtaining the allocation, partly because the program will help rural home buyers who may not have had a chance to participate in such tax-exempt bond programs before. She also said "the genuine interest and excitement" among counties should be an advantage in obtaining an allocation.

George K. Baum & Co. will serve as senior manager on the bond transaction. Hawkins, Delafield & Wood will be the bond counsel, and Orrick, Herrington & Sutcliffe will serve as underwriters' counsel.

County supervisors see the program as a way to underpin local economic activity by expanding retail activity and construction jobs.

"We believe that the time has come for rural counties in California to become proactive in their own economic interests, and this is one important way to do so," said Phil Ozenick, chairman of the Placer County Board of Supervisors, in a recent statement about the program.

The regional council also is establishing other joint-action programs geared for rural counties.

One program focuses on solid-waste management and regulation.

Many of the complex laws affecting this field "may work okay in larger counties, but rural counties have problems complying" with some of the requirements, Basque said.

Accordingly, the regional council's approach is to "band together and take a multicounty look at it."

The council also is developing a county medical services program, with an initial focus on management cost containment, for those who do not qualify for either MediCal or Medicare funding. The state used to be a deep pocket for serving this population, but California "capped its risk a year ago," Basque said.

The regional council also is expected to help rural counties in areas such as financial management and capital planning, which are growing more crucial in the midst of state funding cutbacks and citizen resistance to new tax burdens.

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