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280079 WMITE - CI�V CLERK COURCII ' / PIN1� - FINANCE TT µ� CANARV - DEPARTMENT G I TY OF SA I NT PA V L File NO. ��/o� • � BLUE �MAVOR Council Resolution Presented By � Referred To Committee: Date Out of Committee By Date RESOLUTION APPROVING AMENDMENTS TO HOUSING PLAN PURSUANT TO MINNESOTA STATUTES, CHAPTER 462C AND AUTHORIZING SUBMISSION OF THE PLAN AMENDMENTS TO THE METROPOLITAN COUNCIL FOR REVIEW WE�REAS, Minnesota Statutes, Chapter 462C (the "Act" ) provides that a City may deveLop and administer programs of making or purchasing mortgage loans to finance the acquisition of single family housing primarily by low and moderate income persons and families anywhere within its boundaries; and WHEREAS, the Act further provides that a City may also plan, administer and make or purchase a loan or loans to finance one or more multi-family housing developments within its boundaries; and WHEREAS, the Act further provides that prior to the implementation of any such programs the City shall develop a housing plan as required by Minnesota Statutes, Section 462.01; and WI�REAS, the City has developed a housing plan dated March 6, 1980 (the "Plan" ), which Plan was approved by City Council Resolution No. 274521 adopted on March 7, 1980; and COUNCIL�iEN Yeas Nays Requested by D rtment of: Fletcher �� Galles [n Favor Masanz Nicosia Scheibel _ __ Against By Tedesco Wilson Form Approved by City Attorney Adopted by Council: Date B �/ ��Z �yw/�.� Certified Passed by Council Secretary Y A.�P./�/sL � By, t�pproved by iVlavor. Date _ Approved by Mayor for Submission to Council BY - – — BY a = ' ` y • . ��e.J WHEREAS, it is now proposed that the City should amend the Plan to make certain changes therein designed to more effectively implement the policies and purposes of the Act and the policies of the City of St. Paul with respect to housing and such amendments dated January , 1983 (the "Plan Amendments" ) have been submitted to this Council for approval; and WI�REAS, the Development Committee of this Council considered the Plan Amendments at a public meeting held on March 23, 1983; and the Development Committee has reccommended adoption of the Plan Amendments; and WE�REAS, the Act requires that a public hearing be held on the Plan Amendments after one publication of notice of the hearing in a newspaper circulating generally in the City and publication of said notice with respect to the Plan Amendments took place at least 30 days prior to the hearing; and WI�REAS, a public hearing was held on the Plan Amendments before this Council on March 29, 1983, after publication in the St. Paul Post-Dispatch and Pioneer Press on February 26, 1983 of notice of the hearing as required by the Act, and all persons who appeared at the hearing were given an opportunity to express their veiws with respect to the Plan Amendments; and WHEREAS, the Plan Amendments must be sulxnitted for review to the Metropolitan Council pursuant to the act; NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of St. Paul, Minnesota as follows: 1. The Plan Amendments to the City of St. Paul 462C Housing Plan dated March 6, 1980, are hereby approved and adopted; and hereafter the housing plan required by Chapter 462C for the City of Saint Paul shall be the Plan, as amended. WHIT� - CITV CLERK" C=NARPINK - FINANCE GITY OF SAINT PAUL Council .(�Dj`�'� w- / Y'DEPARTMENT File NO• II�A f�� t' BLUE MAVOR Council Resolution Presented By Referred To Committee: Date Out of Committee By Date 2. The Mayor is hereby authorized and directed to subonit the Plan Amendments to the Metropolitan Council for its review and comment . The comments of the Metropolitan Council, if any, shall be submitted to this Council for its consideration. 3. This resolution shall be published as required by the Charter of the City of Saint Paul, Minnesota. This resolution shall take effect upon such publication. COUIVCIL114EN Requested by Department of: Yeas Nays Fletcher �e�lmex Galles In Favor Masanz Nicosia scheibel _�__ Against BY — Tedesco � Wilson Adopted by Council: Date MAR 2 9 1983 Form roved by City Attorney Certified P s_ d b Council ta BY �',�� " ^�� By /1pp by Mavor: D te t�Z Ap ro e Mayor for S b i s to Council B — P�BUSHED APR 91983 ; ►. 4 ' , , PED DEPART(,1ENT , �� Nancy West �ONTACT Z49t� X��R PHONE �� ' 3/l�i/83 DATE (Routing and Expl.anation Sheet) Assign Number for Routing Qrder (Clip All Locations for Mayoral Signature): 2 Department Di rector ��C�i�� Y 3 Ci ty Attorney �hA� 1 5 '� 4 Gi rector of Management/Mayor �;�gF�r� aF�-�CE Finance and Management Services Director 5 City Clerk Budget Director 1 Deputy Director for Housing i�hat Will be Achieved by Taking Action on the Atta�ched Materials? (Purpose/Rationale): By reviewing and signing attached resolution by March 21 , 1983: � 1 . City Council resolution will be prepared and to City Clerk for Council 's March 29, 1983 meeting; 2. City Council will approve Amended 462C Housin Plan; 3. Upon approval by Met Council , St. au H w� e able to apply new financing techniques to assist rental housing projects. Financial , Budgetary and Personnel I�acts Anticipated: No increase in personnel . Plan amendment is technical --broadens financing techniques available to HRA under current tax-exempt revenue bonding authority. Broadened financing techniques will lead to developing 500-700 new or rehabbed Funding Source and Fund Activity Nur�er Charged or Credited: /rental housing units. PED Project #33615 (Multi-Family Rental Hsg. Dev. Program) 100% Tax-Exempt Bonds (Hsg. ) Attachments (List and Nu�er all Attachments� : 1 . City Council resolution approving amended plan. DEPAI2TMENT REVIEW CITY ATTORNEY REVIEW x Yes No Council Resolution Required? Resolution Required? Yes No Yes x No Insurance Required? Insurance Sufficient? Yes No Yes x No Insurance A�tached? Revision of October, 1982 (See Reverse Side for Instructions) ' � � ��11�'�� y %Oj CITY OF SAINT P/1UL INTERDEPARTMENTAL MEMORANDUM DATE: FEBRUARY 24, 1983 TO: AL OLSON, CITY CLERK FROM: SHERI PEMBERTON, PED 7�+"^'/- SUBJECT: CITY COUNCIL PUBLIC HEARING - MARCH 29, 1983 Attached is a copy of the Public Hearing Publication for February 26, 1983. This notice has been published in the St. Paul Pioneer Press and St. Paul Legal Ledger. This Public Hearing Notice meets the thirty (30) day require- ment. Please place this Public Hearing on the City Council Agenda for March 29, 1983. A City Council Resolution will be forwarded to you by the City Attorney's Office, prior to the City Council meeting. Thank you. SAP:rmf cc: Nancy West Gary Peltier Becky Hartman Attachments r' • ' � - ' • ��°lJ��t,7 PUBLIC HEARING N07'ICE . . ' . ' NOTICE OF PUBLIC HEARING `� � ' CITY OF SA1NT PAUL AMENDED HQUSING PLAI` NOTICE IS HEREBY GIVEN of a PUBLIC HEARING to be held before the CaUNCIL _ _ OF THE CITY OF SAINT PAUL in Council CE�ambers,Third Fto�r, City Natl, 15�West Kellogg � _ � Boulevard, on U�C� March �, 1983 at IO;00 a.m., upon the City of Saint Paul AMENDED HOUSIN� PLAN developed in accordance with�and pursuant to the requirernents of Chapter �62C of Minnesota Statutes 1982_ . , Chapter 462C of Minnesota Statutes 1982 pravides, i� part, that a City ma�► develop and administer programs of making o: purchasing of mo:tgage Ioans to finance the acquisition of single family housing by low and moderate income persons and farnilies, and to finance the acquisition, cons#ruction or rehabilitation of one or more multi family housing developments - , as those terms are defined in and subject to the conditions of said Chapter 462C, including requirernents that the City develop a Housing Plan and conduct a p�.�blic hearing on said _ Housing Plan prior to proceeding with its approval and adoption. � THE CITY. OF SAINT PAUL AMENDED HOUSING PLAN setting forth the matters contained in Section 462C.03 of Minnesota �ta.tutes and supporti�g docUments are available for inspection by any interested person in tne offices of the City Clerk, Room 386, City . Hall, ar.d of the Housing Division, Department of Planning a�d: Economic Development, 12th Floor City Hall Annex, 25 Vlest Fourth Street, Saint Paul, Minnesota, during regular business hours. . UPON SAID PUBLIC HEARING, the City Council shall consider the provisions of said Amended Housing Plan and (a) housing needs in the City, (b) how #he Amended Housing Plan meet� these needs and the methods to be usec` to carry out the Amended �jousing Plan, . (c) target areas within the City for use of each such method, (d) the �inancing programs . included in the Amended Housing Plan, (e) the number and qualification of lenders eiigible to participate in the program, (f) the estimated amount of mortgage Ioans to be made or ` purchased and of revenue bonds to be issu°d in the programs, (g) methods of monitoring program implementation by participants, (h) the administrative capacity of the City to monitor and supervise housing finance programs, (i) the cost, including administrative costs, to the Ci�y, (j) an analysis of how the programs will meet the needs of low anci moderate income families in the City, (k) other relevant matters and concerns relating to the Amended � Housing Plan and programs proposed thereby, and (1) whether to adopt said Amended Housing Plan with or �vithout f�rther amendments. � ' �� . . , • • � . . . • . PRIOR TO SAID PUBLIC HEARING, the Development Committee of the City Council �shal! consider the provisions of said Amerided Housing Plan, including provisions (a} -through (i)�listed above, at their public meeting to be held in Room 1O1 , "1'�9c�. Floor, City Hall, on 1'Ve��'5��, March Z 3 , 1983, at /�' U ' � �- �� . ,�.--' AT SAID PUBLIC HEARiNG all interested persons may appear and be heard upar� � • - `� - � the Amended Housing Plan, any of its provisions,any further amendments thereto�and upon whether said CITY OF SAINT AAUL AMENDED HOUSING PLAI�' should or should not be- adopted by the City'Council. � � � �^'� Dated this �_�day of February, I983. � ALBERT OLSOn', CITY CLERK - - . 386 Ci�ty Hall Saint Paul, Minnesota 55102� � . . . . . . . . . - . ' . . .. , -� �" , y 2�0�� } � . ' � Pab� 24, i983 ,, ,� . . . , � ;�� r, � � � . � � . �; F _ j IE ; + � � ! Mr. 3ames Bellus i . , ; , ; Director of Planaing & 8conomic Development .. ,� � /{ 14th Floor, City Ha].l Annex , , � -�:. �'� Daar M�. BelluB: . � , , � - � . The City Council set a date of hearing 6ir�Mareh 29th, 1983 ta co�neider aa . . 15J am�ndment to xhe 462C Hdueing Plen. Wtll qou please take the. necessary ' � stept to provide proper notification af th�s publiC fi�ering. ; � , � � , ' I 9eY}► truly qours� • ' ' i . . � ; Aibert B. alsom ' . • _ � � City Clerk . , ;� _ ABO/sch ,� , ' � _ , . - - , � „ . , � . . • y . , . . � � . . � � -Z-�.. � � � . � . - � . . \ . , . . . . . . . . . . . . � . . � _ . � ' . . � . � � . . . . . � � . .. - ` i � � . . . .. � � - '_ , . . . � - � . � � � � , . � i . . � , . . � . - . . . . ', . � . . . . . . . , . . . . .. _ , .. ; . . . , . . ' . � . . . . . . _ . . � � � . � � . � . ' � M. . ., . . . . . � � . ' / .. - . , 1 � . . . � . . . . . . . I • � . � �� . � . . - . . ' . ' � . . . . '. � � . . .. 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A�i � N N � N � n � o � � �rt � S � �O _O _� . � . `�� , . ,��._ � ' ��t**o.� � i. ;� � CITY� OF SAINT PAUL o � ; OFFICE OF THE MAYOR � =i i t 1° : '�' i ' ��'"�* +� ?o � \ ,__.. � i , � �� 347 CITY HALL ;��`✓ , ~;�•� SAINT PAUL, MINNESOTA 55102 ' , GEORGE LATIMER (612) 298-4323 � ,: „' -� MAYOR c � _ '�� _ �� ,, � _ � ,��`��.'�� '�,� :�� T l February 1, 1983 �'; ' �� y, , '� Council President Victor Tedesco and Members of the Saint Paul City Council Seventh Floor - City Hall St. Paul, MN 55102 RE: AMENDMENT TO 462C HOUSING PLAN Dear Council President Tedesco and Members of the City Council: I've enclosed a copy of the amended 462C Housing Plan for the City of Saint Paul. This plan amendment, although technical in nature, requires that a public hearing be conducted by the City Council before Council action to approve the amendment. Background on 462C Plan The 462C Housing Plan is required by Minnesota Statutes, Chapter 462C, to enable the City to develop and administer housing programs using bond financing. The plan is intended to identify the housing needs of the City and to outline the methods and financing programs which will address these needs. The existing 462C Plan was approved by the City Council in March, 1980. Purpose of Plan Amendment Needs change and housing finance methods change. The purpose of this plan amendment is to update the housing needs information, using recent data from the 1980 Census, the 1981 Housing Conditions Report and the 1982 Lower Income Housing Strategy, and to provide the foundation for a comprehensive program for the financing of selected rental housing projects. Rental Housing Development Program The most significant portion of the amendment provides broader financing tools to fund a rental housing program. This program, the Multi-Family Rental Housing Development Program, will provide "individualized" financing, in the context of a comprehensive program, for the financing of the new construction, rehabilitation, • ��'�9 �d�: � ... Page Two - or acquisition/rehabilitation of rental housing in the City. Separate series of bond issues, each of which will finance a specific project or projects, will give the City an ability to structure project financing according to the needs of a particular development and market condition. All bond series will be issued under the umbrella of the overall program to develop rental housing. All projects will be required to meet program guidelines for maintaining all units as rental, and for setting aside at least 20% of all units for occupancy by low- and moderate-income families or individuals. Projects will continue to be reviewed for funding on a case-by-case basis by the Housing and Redevelopment Authority Board of Commissioners. Other plan amendments are updates of the 1980 plan's needs information, and changes on program requirements caused by statutory and administrative program changes. The Saint Paul Planning Commission reviewed and approved the amended plan at their 7anuary 28, 1983 meeting. A copy of their resolution is attached. I trust that you will find the 462C Housin� Plan amendment to be a valuable vehicle for providing the City a greater range of financing tools to develop housing in Saint Paul. Your action on scheduling a public hearing on the plan amendment and considering approval of the amendment will help move us a step closer to realizing significant rental housing construction and rehabilitation in the City. Please call Ken Johnson, Deputy Director for Housing, (292-1577) if you need additional information. Sincerely, e atimer GL/bkd Enclosure cc: Ken Johnson ` • ' � ��' CITY OF SAINT PAUL _ 462C HOUSING PLAN MARCH 6, 1980 AMENDED JANUARY, 1983 DEVELOPED BY THE CITY OF SAINT PAUL, MINNESOTA PURSUANT TO CHAPTER 462C, MINNESOTA STATUTES 1979 PLANNING AND HOUSING DIVISIONS DEPARTMENT OF PLANNING AND ECONOMIC DEVELOPMENT � . J MINNEAPOLIS/SAINT PAUL FAMILY HOUSING PROGRAM PROFILE OF UNITS CLOSED ' 1981 . ' • _ Average�Program Mortgage Amount $SS,261 (1) Average Program Mortgage with ECL � $56,700 (2) � Average Program Mortgage with ECL d� EPL $48,959 (3) .Average Program Mortgage with ECL, EPL dt GPL $47,095 (4) Average Sales Price $67,258 Average Unit Size 1,003 square feet Average Number of Bedrooms 2•4 Average Gross Income � $23,000 Average Age of Borrower 26 Average Family Size 3•4 Percentage of Borrowers New to City 75 Percentage of Borrowers Formerly Renters SS (1) Program mortgage only (without Minneapolis/Saint Paul Family Housing Fund loans). (2) Average mortgage amount is with an Equity Contribution Loan (ECL), average $2,625. ECL is an interest free loan to be used as a down payment and repaid when the home is sold. (3) Average mortgage amount is with an ECL, average $3,000; and with an Equity Participation Loan (EPL), average $12,097. EPL is a loan up to $15,000 or 20 percent of the sales price to reduce the borrower's payments to 28 percent of the household income; the loan is repaid when the home is sold, including a percentage of the appreciated value of the home. (4) Average mortgage amount is with an ECL, average $3,000; with an EPL, average $13,330; and with a Graduated Payment Loan (GPL), average $1,991. GPL is a loan up to $5,000 in the form of monthly payments to assist the borrower to make mortgage payments; the loan is for a five year period and must be repaid when the home is sold. . . � � �. �`��9 TABLE OF CONTENTS Page 1.0INTRODUCTION . 1 ' � 2.0 HOUSING NEED � 1 2.1 RENTAL OPPORTUNITIES � 1 2.2 HOUSING REHABILITATION 1 2.3 SMALL HOUSING UNITS 2 2.4 FAMILIES AND LARGE FAMILIES 2 2.5 LOW AND MODERATE INCOME HOUSEHOLDS 2 2.6 MIDDLE AND HIGHER INCOME HOUSEHOLDS 3 2.7 ELDERLY AND HANDICAPPED HOUSEHOLDS 3 3.0 PROGRAM OBJECTIVES 4 3.1 REHABILITATION FOR RENTERS 5 3.2 CONSTRUCTION OF NEW RENTAL HOUSING 5 3.3 MULTI-UNIT REHABILIT'ATION FOR OWNERSHIP 5 3.4 NEW MULTI-UNIT OWNERSHIP OPPORTUNITIES 5 3.5 REHABILITATION OF SINGLE-FAMILY HOMES S 3.6 SINGLE-FAMILY AND COOPERATIVE MORTGAGE LOANS 6 3.7 ACQUISITION OF SINGLE-FAMILY HOMES FOR LARGE FAMILIES 6 � 4.0 HOUSING POLICIES TO BE IMPLEMENTED 7 4.1 POLICIES TO BE DIRECTLY IMPLEMENTED 7 4.1.1 HOUSING SUPPLY 7 4.1.2 AFFORDABLE HOUSING 7_8_9 4.1.3 HOUSING ASSISTANCE 9 4.1.4 NEIGHBORHOOD QUALITY 9 4.2 POLICIES WHICH WILL BE INDIRECTLY IMPLEMENTED 10 4.2.1 HOUSING SUPPLY 10 � 4.2.2 AFFORDABLE HOUSING 10 4.2.3 HOUSING ASSISTANCE 10-11 4.2.4 NEIGHBORHOOD QUALITY 11 4.2.5 HOUSING OPPORTUNITY 11 5.0 BOND FINANCED HOUSING PROGRAM POLICIES 12 5.1 INCOME OF HOUSEHOLDS TO BE SERVED 12 5.1.1 INCOME LIMITS 12 � 5.1.2 MEETING THE NEEDS OF LOW AND MODERATE 12 INCOME HOUSEHOLDS 5.2 PURCHASE PRICE LIMITS 13 5.3 SITE LOCATIONS 13 5.4 DISPLACEMENT 13 5.5 RENT REGULATORY AGREEMENT 13 5.6 CONDOMINIUM CONVERSIONS 13 5.7 DISCRIMINATION AGAINST CHILDREN IN RENTAL HOUSING 14 5.8 HEALTH, SAFE'fY, AND ENERGY REQUIREMENTS 14 5.9 QUALITY OF PROJECTS 14 ' � , . , , Page • 6.0 FINANCING METHODS 15 6.1 MULTI-FAMILY HOUSING DEVELOPMENT 15 6.1.1 NEW CONSTRUCTION AND REHABILITATION OF 15 MULTI-FAMILY RENTAL PROPERTY � • 6.1.2 NEW CONSTRUCTION AND REHABILITATION OF � 15 MULTI-FAMILY OWNER-OCCUPIED PROPERTY 6.2 NEW CONSTRUCTION AND REHABILITATION OF 15 � SINGLE-FAMILY PROPERTY � 6.2.1 ACQUISITION OF SINGLE-FAMILY PROPERTY FOR . 15 � LARGE FAMILY RENTAL . 6.2.2 NEW CONSTRUCTION AND ACQUISITION AND 16 REHABILITATION OF SINGLE-FAMILY OWNER- � OCCUPIED PROPERTY 6.3 PORT AUTHORITY AND HOUSING & REDEVELOPMENT AUTHORITY 16 7.0 ADMINISTRATION 17 7.1 DEPARTMENT OF PLANNING AND ECONOMIC DEVELOPMENT 17 7.2 ADMINIS'TRATIVE PROCEDURES AND COSTS 17 7.2.1 IMPLEMENTA?ION METHODS I7-18 8.0 APPENDIX 19 8.1 MULTI-FAMILY RENTAL HOUSING DEVELOPMENT PROGRAM 19 8.2 BELOW MARKET INTEREST RATE HOME MORTGAGE PROGRAM 20 8.3 BELOW MARKET HOME REHABILITATION LOAN PROGRAM 21 8.4 MINNEAPOLIS/SAINT PAUL FAMILY HOUSING PROGRAM, PHASE 1 22 ��00'79 ' 1.OIN'fRODUCTION As the availability and affordability of private market financing for the construction, purchase and rehabilitation of housing diminished in the 1970's, in the face of increasing need and demand for the provision of new housing and the upgrading of the existing housing stock within the City of Saint Paul, the City and its Port and Housing and Redevelopment Authorities took action to meet this need for mortgage credit by issuance of general obligation and revenue bonds under authority of several statutes, including Chapter 260, � Laws of Minnesota 1975, authorizing the City to undertake housing finance programs funded by bond proceeds. , Minnesota Statutes 1979, Chapter 462C, made the continuation of these programs after January, 1980 dependent upon the preparation, review, and approval of a City Housing Plan which, among other things, identifies the housing needs of the City and the methods and financing programs to be employed to meet these needs. After approval of the Plan, the total obligation of mortgage loans financed by bond issue under Chapter 462C is $160,345,000. (Based on 1978 Metropolitan Council population estimate of 270,690). Based on the needs identified in the Housing Plan and the programs which the City has developed, bond financing should be used in Saint Paul over the next-three years to secure the rehabilitation of multi-unit housing, particularly rental housing; to expand the supply of rental housing through new construction; to increase opportunties for homeownership and to facilitate substantial rehabilitation of deteriorated single-family homes. 2.0 HOUSING NEED Based on survey and analysis of the current housing stock and demographic data of Saint . Paul, the following housing needs have been identified. 2.1 RENTAL OPPORTUNITIES The supply of rental housing is decreasing at this time for several reasons. Deconversions . of sub-divided houses to single-family residences, conversions of multi-unit rental structures to condominiums, and demolition of substandard apartment buildings, all act to decrease the supply of rental housing. Replacement of rental units through new construction is not keeping pace with the loss of units because of the cost and unavailability of private . financing. In addition, the low multi-unit vacancy rate for Saint Paul (3.5-4.5% since 1977) makes it crucial for Saint Paul to preserve and expand rental opportunities to meet the strong demand for rental housing. A 69�6 vacancy rate is generally considered necessary in order to provide market choice. 2.2 HOUSING REHABILITATION . The City's 1981 Housing Conditions Report indicated that housing conditions improved since the 1974 survey was conducted. Although this is evidence that the process of general neighborhood decline is not continuing, there remains an ongoing need for rehabilitation of the housing stock throughout the City. The 1981 survey confirms that approximately 2596 of all housing structures in the City need repair. (Please see 1981 Saint Paul Housing Conditions Report, Department of Planning and Economic Development, March 1982.) . - 1 - One.particular rehabilitation need which has not received emphasis in the past is rehabilitation ' of multi-unit rental structures. Most of the City's housing structures (85%) are single- family homes. Eight out of ten of these homes are sound. The remainder of the housing (159i6) has more than one unit per structure. Of these multi-unit structures, nearly one- half need rehabilitation. Since 1974, the pace of rehabilitating multi-unit structures has lagged behind the pace of rehabilitating single-family homes. This rehab need is most visible in older neighborhoods surrounding downtown. � 2.3 SMALL HOUSING UNITS From 1950 to 1980, Saint Paul's average Mousehold size decreased from 3.38 to 2.44 persons per household. This decline in household size has resulted in increased demand for smaller housing units in both the ownership and rental housing markets. Since household size is projected to continue to decline, the demand for small units is expected to be a permanent .segment of the market. According to the City's adopted housing supply policies, construction of smaller 1-, 2- and 3-bedroom units will be encouraged by the City. 2.4 FAMILIES AND LARGE FAMILIES A critical housing need exists in the area of rental housing for families with children, and, in particular, large, low-income families. This need exists for three reasons: First, a shortage of rental units with three or more bedrooms; second, the reluctance of many landlords to rent to families with children; and third, the unaffordability of those rental units which are suitable for families with children. The estimated housing assistance need for lower income families in Saint Paul is 5,723 households, 1,408 of which are large families (5 or more persons). (Please see Estimated Housin Assistance Needs and Pro ram Mix Goals for Metro olitan Area Communities, Housing Division, Metropolitan Council, August, 1979. 2.5 LOW AND MODERATE INCOME HOUSEHOLDS According to income guidelines, approximately 10,000 households in Saint Paul are eligible for subsidized housing. The income limit for Section 8 subsidized housing is $22,880 for a family of four (80% of the SMSA median income). Metropolitan Council's estimate of housing assistance need is based on the number of households who are both income eligible and presently inadequately housed. According to their 1978 estimates, 16,505 renter households in Saint Paul are in need of housing assistance. But since no housing assistance programs allow for any assistance to single individuals unless they are elderly or handicapped, only the level of family and elderly need is used in the allocation of housing assistance funds. The elderly need is estimated to be 3,998 households, the family need is estimated at 3,843 households -- a total housing assistance need of 7,841 households. Based on Saint Paul's and other cities' experience with housing programs, it has become obvious that the income group earning between 80% and 110% of the SMSA median family income ($22,880 to $31,460�currently for a family of four) is in need of some type of housing assistance if they are to enter the homeowriershp market in the face of rapid escalation of housing costs. - - 2 - . , . . The goal of homeownership is quickly receding for many�families who once had sufficient income for purchase. A family of four with an income of $20,000 can afford only $500 in monthly in housing costs (based on the 30 percent income test). A $60,000 mortgage at 16f4% interest rate results in a monthly payment of $878 PITI, thus placing even a very modest home out of reach for such families. . For families with incomes between 70 and 95 percent of the median ($20,020 to $27,170), rental housing remains the most common housing option. -With the rental market becoming increasingly tight (particularly for families), new rental housing construction is essential. The cost of such new construction units, however, results in rents considerably beyond the incomes of this population group. 2.6 MIDDLE AND HIGHER INCOME HOUSEHOLDS An economically diverse population and economic integration within neighborhoods are established City objectives. The major recommendations of the Saint Paul Migration Committee adopted by the City Council in 1975 include the establishment of a goal for the City of "a balanced and diverse population, broadly representative of the metropolitan area population". (Saint Paul Po ulation Change; Challenge and Opportunity, Report of the Migration Committee, July, 1975 . In marginal or deteriorated areas of the City, attraction of middle and higher income households is essential to successful redevelopment and economic integration. 2.7 ELDERLY AND HANDICAPPED HOUSEHOLDS Housing needs of the handicapped household are very difficult to ascertain. The 1970 Census � reported 15,393 handicapped persons in Saint Paul, and the Metropolitan Council estimates that about 3% of the one- and two-person households eligible for subsidized housing are handicapped. (Estimated HousinR Assistance Needs and Pro ram Mix Goals for Metro olitan Area Communities, Housing Division, Metropolitan Council, August, 1979 . Although their numbers are declining slightly, elderly households continue to comprise a sizeable share of Saint Paul's population. The 1980 Census reports that people aged 60 or over account for 19.796 of the City's population (53,238 elderly people). - 3 - � 3.0 PROGRAM OBJECTIVES � On the basis of the needs identified, the following objectives are established for bond financed housing programs in Saint Paul: . Potential � Average . Program Range Per Unit Program Activity (Units) Cost Dollar Range IMPROVEMENT AND EXPANSION " OF RENTAL HOUSING SUPPLY 1. Rehabilitation of multi-unit 500-700 Units $35,000 $ 17,500,000-24,500,000 structures for rental occupancy 2. Construction of new 600-1500 Units $55,000 $ 33,000,000-82,500,000 rental housing IMPROVEMENT OF OWNER HOUSING ac EXPANSION OF OWNERSHIP OPPORTUNI'fY 3. Rehabilitation and purchase 150-225 Units $60,000 $ 9,000,000-13,500,000 of ownership units in multi-unit structures 4. Construction of new 20A-250 Units $75,000 $ 15,000,000-18,750,000 housing in multi-unit structures for owner occupancy, purchase of units � 5. Rehabilitation and 700-800 Loans $65,000 $ 45,500,000-52,000,000 purchase of single-family homes 6. Expansion of modest 700-900 Loans $60,000 $ 42,000,000-54,000,000 cost ownership opportunities by providing mortgage loans for the purchase of existing or newly constructed single-family homes or cooperative units . PROVISION FOR LARGE FAMILY NEEDS 7. Provide for acquisition 100-250 Units $60,000 $ 6,000,000-15,000,000 of single-family homes � for large family units � TOTAL $159,500,000-241,750,000 � _ 4 _ - , . . � � ��"79 3.1 REHABILITATION FOR RENTERS Because of the need for rental units and the difficulty of building new ones, a high priority is placed on the preservation of rental housing in the existing supply. Bond financing is necessary to achieve needed rehabilitation with as little increase in rental rates as possible. , Rental units to be rehabilitated under this program will include units assisted under the S�ction`8 moderate rehabilitation program and may include units assisted under the Section 8 � substantial rehabilitation program. A description of the multi-family rehabilitation program to be instituted by the City is included in the appendix. . 3.2 CONSTRUCTION OF NEW RENTAL HOUSING As indicated in the housing policy, it is the City's intention to maintain a balance between rental and ownership opportunities in new construction as long as rental demand is not met effectively in other ways. Bond financing is necessary to produce modest cost units and to realize market rate development that will include units affordable to individuals and families of low- or moderate-income, as determined in a manner consistent with determinations of lower income families under Section 8 of the U. S. Housing Act of 1937, as amended, except that the percentage of inedian gross income which qualifies as low- or moderate-income shall be 80%. 3.3 MULTI-UNIT REHABILITATION FOR OWNERSHIP Condominiums provide needed alternative ownership possibi�ities for the City's growing population of smaller households. It is the City's objective to provide such alternatives through new construction, preserving existing rental housing for rental use where possible. . However, where deterioration is extensive and where buildings have been vacated, � rehabilitation for rental use sometimes is not economically feasible. Assistance will be provided with bond fanancing to achieve needed rehabilitation and effective use of structures which cannot be restored to provide sound and desirable rental units. Such financing will also be used where opportunities exist to create new residential opportunities . through conversion/rehabilitation of non-residential structures. 3.4 NEW MULTI-UNIT OWNERSHIP OPPORTUNITIES As indicated in the Housing Policy Plan, a variety of attached ownership opportunities (townhouses, condominiums) are needed to provide alternatives to single-family homes for smaller households in the City's neighborhoods. Various forms of attached housing and multi-unit structures are needed to provide more energy efficient use of available land in the City. 3.5 REHABILITATION OF SINGLE-FAMILY HOMES Financing will be provided for rehabilitation of single-family and owner occupied properties, . both to remedy serious deterioration and to improve energy efficiency. Saint Paul's Below Market Home Rehabilitation Program was designed, in part, to take advantage of the opportunity for achieving rehabilitation of deteriorated properties for households in the market for ownership units. . - S - Financing for major rehabilitation as part of, or in connection with, a mortgage for home purchase has traditionally been difficult to obtain. Yet it has been obvious that this could be one of the most effective ways of ineeting rehabilitation needs. The City's Bond Financed Rehabilitation Program was initiated in December, 1979. It is being monitored closely . and will be expanded with additional bond financing if demand levels warrant and if it proves to be an effective way to increase ownership opportunities and achieve needed rehabilitation. A description of the Below Market Home Rehabilitatiori Program is included in the appendix. 3.6 SINGLE-FAMILY COOPERATIVE MORTGAGE LOANS One of the most important opportunities which the bond financing tool provides is the " opportunity to make financing available for the purchase of single-family homes in the City. Mortgage lending for the purchase of single-family homes and the development of cooperative ownership opportunities will broaden the income range of households for whom ownership is possible. A description of the City's 1979 Below Market Interest Rate ownership program is included in the appendix. It is the City's intention to issue additional bonds to expand this program. In accordance with 462G.03 Subdivision 7, and any amendment thereto, loan proceeds will be prioritized to households with less than 90% of the program income limits for the first six months. 3.7 ACQUISITION OF SINGLE-FAMILY HOMES FOR LARGE FAMILIES Low- and moderate-income large households requiring units with three or more bedrooms represent the most difficult housing need to meet in Saint Paul at the present time. (Housing Saint Paul 1980-1990). While some units must be provided in new construction to meet current needs, it is desirable to make use of the existing stock of single-family homes as much as possible. This program will complement the Public Housing Agency's current program of acquisition of single-family homes for rental to very low income large families. An objective of the new program will be to provide a vehicle whereby some moderate- income households can, over a period of time, achieve ownership status. . . � - 6 - � 2��d'�9 . . . . 4.0 HOUSING POLICIES TO BE IMPLEMENTED The housing bond finance programs outlined above will directly implement some of the objectives and policies of the Housing Policy Plan. (Housing Saint Paul 1980-1990). Other policies will be implemented indirectly or to a lesser extent, depending upon the specific guidelines of each program. . ' 4.1 POLICIES TO BE DIREC"fLY IMPLEMENTED Policies which will be directly implemented by the bond finan�e programs include the following: . 4.1.1 HOUSING SUPPLY OBJECTIVE 1 CONSTRUCT AT LEAST 10,000 NEW HOUSING UNITS IN SAINT PAUL BY 1990 A. EXPAND BOTH OWNERSHIP AND RENTAL OPPORTUNITIES. B. INCREASE THE VARIETY OF HOUSING OPPORTUNITIES WITHIN NEIGHBORHOODS. C. INCREASE RENTAL AND OWNERSHIP OPPORTUNITIES FOR LOWER INCOME HOUSEHOLDS. POLICY S1 IN RESIDENTIAL CONSTRUCTION THE PROVISION OF ALTERNATIVES TO SINGLE . � FAMILY DETACHED HOMES WILL BE EMPHASIZED. POLICY S2 CONSTRUCTION OF SMALLER 1 dc 2 & 3 BEDROOM OWNERSHIP HOUSING UNITS WILL 6E ENCOURAGED BY THE CITY. POLICY S3 WITHIN MODEST COST AND LOWER-INCOME CONSTRUCTION, THE CITY WILL ENCOURAGE THE DEVELOPMENT OF FAMILY RENTAL UNITS, INCLUDING THREE- ' BEDROOM AND LARGER UNITS, SUFFICIENT TO MEET THE NEED FOR LARGE FAMILY HOUSEHOLDS. 4.1.2 AFFORDABLE HOUSING OBJECTIVE 2 EXPAND HOUSING OPPORTUNITIES IN CITY NEIGHBORHOODS FOR HOUSEHOLDS OF ALL INCOME LEVELS. ' A. RETAIN MODEST COST OWNERSHIP OPPORTUNITIES IN THE EXISTING SUPPLY AND PROVIDE THAT A MAJOR PORTION OF NEW OWNERSHIP UNITS WILL BE AFFORDABLE TO MODERATE INCOME HOUSEHOLDS. B. PRESERVE EXISTING RENTAL HOUSING AND EXPAND RENTAL AS WELL AS OWNERSHIP OPPORTUNITIES IN NEW CONS"fRUCTION. � - 7 - . . . . C. ENSURE THAT A MAJOR PORTION OF RENTAL UNITS CONSTRUCTED ARE • AFFORDABLE TO MODERATE INCOME HOUSEHOLDS. (NOT INCLUDING UNITS ASSIGNED FOR LOWER INCOME HOUSEHOLDS.) D. SUPPORT CONTINUED EXPANSION OF DIVERSE HOUSING OPPORTUNITIES FOR MIDDLE AND HIGHER INCOME HOUSEHOLDS, PARTICULARLY IN THOSE NEIGHBORHOODS WHERE DISPLACEMENT IS NOT A PROBLEM. . ' POLICY A1 � DETERIORATED RENTAL HOUSING IN THE CITY SHOULD BE REHABILITATED WITH THE USE OF SUBSIDIES AND REGULATIONS AS NECESSARY TO ENSURE THAT RENT INCREASES AND DISPLACEMENT ARE MINIMIZED. (SEE ADDITIONAL POLICIES UNDER REHABILITATION.) - POLICY A3 � THE CITY SHOULD SUPPORT DEVELOPMENT OF RENTAL HOUSING IN APPROPRIATE LOCATIONS. A BALANCE SHOULD BE REALIZED IN NEW DEVELOPMENT BETWEEN CREATION OF NEW OWNERSHIP OPPORTUNITIES AND CON'fINUED RENTAL DEVELOPMENT AT LEAST SUFFICIENT TO REPLACE LOST UNITS AND TO MAKE EFFECTIVE USE OF AVAILABLE SUBSIDY RESOURCES. POLICY A5 PARTICULARLY IN THOSE AREAS WHERE DISPLACEMENT IS IDENTIFIED AS A PROBLEM, SUBSIDY RESOURCES, SUCH AS SECTION 8, SHOULD BE USED IN CONJUNCTION WITH REHABILITATION TO PREVENT DISPLACEMENT WHERE POSSIBLE, AND TO MITIGATE THE ADVERSE EFFECTS OF DISPLACEMENT WHICH DOES OCCUR. POLICY A6 � POTENI'IAL DISPLACEMENT IMPACT, THE POSSIBILITIES FOR MITIGATING DISPLACEMENT, AND AVAILABLE ALTERNATIVE HOUSING ARE IMPORTANT CONSIDERATIONS FOR THE CITY IN PRIVATE REDEVELOPMENT OR CONVERSION . ACTIVITY WHERE ANY FORM OF PUBLIC ASSISTANCE FOR DEVELOPMENT IS REQUESTED. POLICY A8 THE CITY WILL CONTINUE TO PROVIDE RELOCATION ASSISTANCE IN THE CASE OF ANY DISPLACEMENT CAUSED BY PUBLIC ACTION, UNDER THE PROVISIONS OF THE UNIFORM RELOCATION ACT. POLICY A9 THE CITY MUST SEE THAT THE PACE OF REDEVELOPMENT, CONVERSION AND IMPROVEMENT ACTIVITY IS GOVERNED IN PART BY THE DEMONSTRATED AVAILABILITY OF SATISFACTORY ALTERNATIVE HOUSING WHEREVER DISPLACEMENT IS A FACTOR. POLICY All THE CITY WILL CONTINUE TO PARTICIPATE IN HOUSING DEVELOPMENT PROJECTS THROUGH BOND FINANCING AND OTHER COST REDUCING MEANS TO ENSURE THAT A VARIETY OF NEW OWNERSHIP OPPORTUNITIES CAN BE MARKETED AT A COST MORE IN LINE WITH THE MEANS OF MODERATE INCOME OF HOUSEHOLDS IN SAINT PAUL. • _ 8 _ . 2�C�C��9 POLICY Al2� THE CITY SHOULD ENSURE THAT THE MINNESOTA HOUSING FINANCE AGENCY � HOMEOWNERSHIP PROGRAM RESOURCES, AND ANY OTHER AVAILABLE PUBLIC MEANS FOR PROVIDING BROADER ACCESS TO HOMEOWNERSHIP, ARE FULLY AND EFFECTIVELY USED IN 'THE CITY. POLICY A18 - THE CITY SUPPORTS THE FORMAT'ION OF COOPERATIVES TO ENSURE CONTINUED HOMEOWNERSHIP OPPORTUNITIES FOR LOW- AND MODERATE-INCOME HOUSEHOLDS AND TO LESSEN THEIR POTENTIAL FOR DISPLACEMENT FROM MULTI-UNT APARTMENTS. a. ENCOLJRAGE COOPERATVE DEVELOPMENT WITH AVAILABLE FEDERAL ASSISTANCE. 4.1.3 HOUSING ASSISTANCE POLICY C3 AS LONG AS DEMAND IS INDICATED, GIVE PRIORITY TO NEW AND REHABILITATED ASSISTED HOUSING WHICH INCLUDES SOME THREE-BEDROOM AND LARGER UNITS. POLICY C4 CONTINUE TO SUPPORT THE DEVELOPMENT OF ASSISTED HOUSING FOR ELDERLY HOUSEHOLDS ONLY IN THOSE NEIGHBORHOODS WHERE THE EXISTING SLJPPLY IS LOW AND WHERE THE DEMAND IS APPARENT. POLICY C10 BOTH SUBSTANTIAL AND MODERATE REHABILITATION WILL BE USED AS A MEANS OF MAINTAINING LOWER INCOME HOUSING UNITS IN AREAS UNDERGOING REHABILITATION AND AS AN AID TO NEIGHBORHOOD REVITALIZATION. • POLICY C11 ' PROVIDE ASSISTANCE THROUGH SUBSTANTIAL AND MODERATE REHABILITATION TO THE EXTENT "THAT OPPORTUNITIES CAN BE DEVELOPED. POLICY C 12 USE SECTION 8 RESOURCES WHERE APPROPRIATE TO MAINTAIN HOUSING OPPORTUNITIES FOR LOWER INCOME HOUSEHOLDS IN AREAS WHERE DISPLACEMEN'T IS OCCURRING. 4.1.4 NEIGHBORHOOD QUALITY POLICY Q9 THE CITY WILL CONTINUE TO CHANNEL REHABILITATION LOANS AND GRANTS TO LOWER AND MODERATE INCOME HOMEOWNERS T'HROUGHOUT THE CITY. POLICY Q11 WHERE PUBLIC ASSISTANCE IS PROVIDED FOR MULTI-UNIT REHABILITATION, CARE MUST BE TAKEN TO ENSURE THAT THE REHABILITATION WILL NOT RESULT IN � EXCESSIVE RENTAL RA'TES AND THAT THE HOUSEHOLDS IN NEED OF MODEST-COST RENTAL UNITS ARE THE ULTIMATE BENEFICIARIES. POLICY Q12 WHERE PUBLIC ASSISTANCE IS PROVIDED FOR REHABILITATION OF RENTAL UNITS, SUBSIDIES SHOULD BE USED WHERE NECESSRY AND WHERE AVAILABLE 'TO AVOID DISPLACEMENT. WHERE HOUSING ASSISTANCE CANNOT BE MADE AVAILABLE, RENT REGULATORY AGREEMENTS SHOULD BE USED TO AVOID DISPLACEMENT. � - 9 - POLICY Q16 � THE CITY WILL GIVE PRIORITY TO REHAB EFFORTS THAT RESULT IN GREATER HOUSEHOLD ENERGY EFFICIENCY AND CONSERVATION. A. IN PUBLICLY ASSISTED REHABILITATION EFFORTS, IMPROVING THE ENERGY • EFFICIENCY OF HOMES WILL BE SECOND IN PRIORITY ONLY TO MEETING HEALTH AND SAFETY RQUIREMEN'TS. . 4.2 POLICIES WHICH WILL BE INDIRECTLY IMPLEMENTED � POLICIES WHICH WILL BE IMPLEMENTED TO A LESSER EXTENT, DEPENDING UPON . PROGRAM GUIDELINES, INCLUDE THE FOLLOWING: -4.2.1 HOUSING SUPPLY POLICY S7 THE CITY WILL ACTIVELY ENCOURAGE NEW HOUSING DEVELOPMENT THAT PROMOTES ENERGY CONSERVATION AND USE OF RENEWABLE ENERGY RESOURCES. A. MAXIMUM FEASIBLE ENERGY EFFICIENCY WILL BE A PRIMARY CRITERION IN CITY REVIEWS OF ANY RESIDENTIAL BUILDING PROPOSAL FOR WHICH ANY FORM OF CITY ASSISTANCE IS REQUESTED. B. THOSE NEW HOUSING DEVELOPMENTS THAT DEMONSTRATE INNOVATIVE ADVANCES IN ENERGY CONSERVATION AND USE OF RENEWABLE ENERGY RESOURCES WILL RECEIVE PRIORITY SUPPORT FROM THE CITY. 4.2.2 AFFORDABLE HOUSING POLICY A2 DE�MOLITION OF OCCUPIED RENTAL UNITS MUST BE LIMITED aND ?EMPERED BY � THE AVAILABILITY OF ALTERNA'fIVE HOUSING FOR THOSE OCCUPANTS. POLICY A13 THE CITY WILL CONTINUE 'TO ENCOURAGE THE FINANCIAL INDUSTRY TO MEET AS MUCH OF THE LENDING NEEDS OF THE CITY RESIDENTS AS POSSIBLE AND WILL USE PUBLIC RESOURCES TO ADDRESS NEEDS WHICH CANNOT BE MET BY THE PRIVATE SECTOR. 4.2.3 HOUSING ASSISTANCE OBJECTIVE 3 ENSURE THAT ADDITIONAL HOUSING ASSISTANCE IS MADE AVAILABLE TO MEET THE NEEDS OF LOWER INCOME HOUSEHOLDS IN SAINT PAUL. POLICY C 13 A MIX OF MARKET RATE AND ASSISTED UNITS IN FAMILY DEVELOPMENT IS ENCOURAGED. PROPOSALS FOR FAMILY DEVELOPMENT WITH A 20% ASSISTED/80% MARKET-RATE MIX WILL CONTINUE TO 6E CONSIDERED HIGH PRIORITY, HOWEVER. - - 10 - � 28C��'�� . . . . POLICY C14 IN ORDER TO PROVIDE ENOUGH UNITS OF HOUSING, FAMILY ASSISTANCE MAY BE PROVIDED IN ALL-ASSISTED NEW CONSTRUCTION. POLICY C15 � IN ALL-ASSISTED NEW CONSTRUCTION OF FAMILY HOUSING, SMALL DEVELOPMENTS � IN SCALE WITH THEIR NEIGHBORHOOD SURROUNDINGS ARE ENCOURAGED. 4.2.4 NEIGHBORHOOD QUALITY OBJECTIVE 4 ACHIEVE A CONSERVATION STATUS FOR 80% OF SAINT PAUL'S RESIDENTIAL BLOCKS BY 1990. A. REALIZE SUBSTANTIAL IMPROVEMENT OF 1000 RESIDENTIAL BLOCKS THROUGH PUBLIC ACTION AND PRIVATE REINVESTMENT. B. MAINTAIN AND CONSERVE 1,680 RESIDENTIAL BLOCKS. � C. ACHIEVE ENOUGH REHABILITATION TO REDUCE SUBSTANDARD UNITS TO NO MORE THAN 15% OF 'TOTAL HOUSING SUPPLY. OBJECTIVE 5 ACHIEVE WEATHERIZATION OF AT LEAST 85% OF SAINT PAUL RESIDENTIAL STRUCTURES OVER THE NEXT 10 YEARS AND SUBSTANTIAL ACHIEVEMENT IN THE � APPLICATION OF NEW TECHNOLOGY TO REDUCE USE OF NON-RENEWABLE FUELS IN SAINT PAUL HOMES. 4.2.5 HOUSING OPPORTUNITY -. POLICY OS SUPPORT PROVISION OF BARRIER-FREE HOUSING AS A PORTION OF ALL NEW HOUSING DEVELOPED IN SAINT PAUL. POLICY 06 CONTINUE TO ENSURE THE AVAILABILITY OF REHABILITATION RESOURCES FOR BARRIER-FREE MODIFICATION OF EXISTING DWELLING UNITS. - 11 - 5.0 BOND FINANCED HOUSING PROGRAM POLICIES � " ' S.1 INCOME OF HOUSEHOLDS TO BE SERVED - � It is the City's policy to improve housing opportunities for persons of all income levels. Municipal bond financing can be used to increase affordability of housing acquisition and rental for low- and moderate-income households and stimulate much needed reinvestment otherwise infeasible in redevelopment.areas. 5.1.1 INCOME LIMITS � Program: Rehabilitation and new construction of multi-family rental housing. Income Limits: At least 20% of units held for low- or moderate-income tenants (80% SMSA median income). Up to 25% of tenants without regard to income. At least . 55-809�6 tenants of low- and moderate-income as defined by MHFA as either: A) 1109i6 of the SMSA median income (31,460); B) the MHFA income limit for multi-unit developments. Exceptions: At least 1596 of units held for low- or moderate-income tenants (809�6 SMSA median income) for a development located within a "targetted area" established pursuant to Sec. 103A(k)(2) and Sec. 103A(k)(3) of the Internal Revenue Code of 1954, as amended. Without regard to income limits if projects occupied primarily by elderly persons; or projects occupied primarily by handicapped persons. Program: Rehabilitation and new construction of single family owner-occupied structures. Income Limits: Not to exceed the greater of 110% of SMSA median income (31,460) or l009b of MHFA income limits. During the first six months of the program, SO�i of the funds available to households with incomes below 9096 of the Program Income Limits. Up to 2096 of purchases without regard to income. Exceptions: 20% of all loans without regard to income if located within a Development District pursuant to Chapter 472A.03; or a redevelopment project established pursuant to Section 462.521; or an Industrial Development District pursuant to 458.191; or � a "targetted area" established pursuant to Sec. 103A(k)(2) or Sec. 103A(k)(3) of the � Internal Revenue Code. Where necessary to further policies of economic integration. 5.1.2 MEETING THE NEEDS OF LOW- AND MODERATE-INCOME HOUSEHOLDS Saint Paul's bond financing capability will be used for the types of housing programs identified in Section 3.0. These program objectives are based on Saint Paul's housing needs which are not being met by the private market. These programs will meet the needs of low- and moderate-ineome households by increasing the supply of rental housing through new construction and rehabilitation, broadening the income range of households for which ownership is possible by providing single-family and cooperative mortgage financing, prov�iding financing for rehab of single-family homes, and providing rental housing for large families through the acquisition of single-family homes. Section 5.0 identifies City policies which will be used to guide the establishment of the programs listed in Section 3.0. These policies, especially the ones concerning displacement, condominium conversions, income limits, arid discrimination against children, are designed to ensure that, where possible, housing acquired, constructed, or rehabilitated for low- . and moderate-income residents continues to serve that income group. � - 12 - . . _ . . ��f9 � 5.2 PURCHASE PRICE LIMITS Pro�;ram: Rehabilitation and new construction of single-family owner-occupied structures. Purchase Price Limits: Not to exceed three times the income limits established for the same program. � . Exceptions: Not to exceed four times the income limits established in the same program, for loans qualifying without income limits. � , 5.3 SITE LOCATIONS Activities to be financed by bond funds will not be targeted to limited areas geographically wi#hin the City except in the following respects: 1. New construction and rehabilitation to include housing assistance for lower income households will be guided by the locational priorities of the Lower Income Housing Strategy, which supercedes Saint Paul's Housing Assistance Plan. 2. Funds will be targeted to redevelopment areas to achieve otherwiSe infeasible development and to achieve economic integration. 5.4 DISPLACEMENT Projects which will result in significant displacement of tenants will not be funded unless adequate plans and resources exist for meeting relocation needs. - In selecting proposals for funding in neighborhoods where public or private development � has resulted in displacement, priority will be given to projects which will meet the housing needs of those who have been displaced so that housing alternatives will be available in their neighborhoods. � 5.5 MAINTENANCE OF RENTAL UNITS In projects involving rehabilitation or development of rental housing, all units will be maintained as rental throughout the "qualified project period" required by Section 103(b)(4)(12)(B� of the Internal Revenue Code. In addition, 209i6 of the units must be held for occupancy by low- and moderate-income families or individuals throughout the qualified project period. 5.6 CONDOMINIUM CONVERSIONS Because of the need to preserve rental units, priority will be given to rehabilitation for rental use where multi-unit buildings require improvement, whether occupied or vacant. Conversion of suitable non-residential property to residential use is encouraged. Conversion of City-financed newly constructed or rehabilitated rental housing to condominiums will � be prohibited for a minimum of five years. � - 13 - . . . s 5.7 DISCRIMINATION AGAINST CHILDREN IN RENTAL HOUSING In newly constructed or rehabilitated rental housing assisted under bond financed programs, ' property owners may not discriminate against families with children in units suitable for occupancy by families with children. This restriction will not apply to structures occupied primarily by elderly or handicapped households. 5.8 HEALTH, SAFETY AND ENERGY R�QUIREMENTS � Rehabilitated structures of three or more dwelling units must meet the City's Housing Code and must complete all health, safety, and energy improvements before other general -improvements can be made. Rehabilitated structures of one and two units must meet the City's Minimum Housing Standards. Structures involving new construction must meet the City's Building Code. All structures must meet applicable state housing, building and energy codes. 5.9 QUALITY OF PROJECTS One criterion in the selection of proposals will be the quality of the project in terms of design, materials, and the compatibility with surrounding development. Projects, which it is determined will have an adverse impact on the neighborhood environment, will not be f unded. ' - 14 - . _ _- 2��'�"19 • 6.0 FINANCING METHODS � 6.1� MULTI-FAMILY HOUSING DEVELOPMENT b.l.l NEW CONSTRUCT'ION AND REHABILITATION OF MULTI-FAMILY RENTAL PROPERTY The St. Paul Housing and Redevelopment Authority intends to implement a program to � finance a number of rental housing developments, including both new construction and � rehabilitation of existing structures. St. Paul will use whatever specific financing structure appears most appropriate at the time the financing is accomplished, including, but not limited to, tax-exempt revenue notes or bonds, a loan-to-lender�structure utilizing Federal Deposit Insurance Corporation (FDIC)or Federal Savings and Loan Insurance Corporation (FSLIC) insurance as additional security, use of letters of credit or other credit facilities as additional security, use of mortgage insurance, credit insurance or bond insurance as additional security, and other security devices as appropriate. 6.1.2 NEW CONSTRUCTION AND REHABILITATION OF MULTI-FAMILY OWNER-OCCUPIED PROPERTY St. Paul has experience in the public issuance of tax-exempt revenue bonds for the purpose of providing below-market �inancing for the purchase, and purchase and rehabilitation of owner-occupied units, in multiple dwelling buildings. Further issues will focus on units which are in the form of condominiums or cooperatives, townhomes and other commonwall housing developments. New construction will occur in the downtown area as well as on scattered sites in neighborhoods. Purchase and rehabilitation_will occur in vacant multi- famly rental buildings and in non-residential buildings convertible to residential use. Similar developments involving the private placement of tax-exempt bonds with lenders is also . contemplated. � All private lending institutions with offices located in St. Paul or with a record of ongoing originations in St. Paul, and which are FHA/VA, FNMA/FHLMC or otherwise city approved will be eligible to participate in the program. With a public sale we anticipate participation from approximately twenty to twenty-five lenders. This is based on our experience from St. Paul's Below Market Interest Rate Home Mortgage Program (1979), the Below Market Home Rehabilitation Loan Program (1979), and the Minneapolis/St. Paul Family Housing Program - Phase I (1981). , 6.2 NEW CONSTRUCTION AND REHABILITATION OF SINGLE-FAMILY PROPERTY 6.2.1 ACQUISITION OF SINGLE-FAMILY PROPERTY FOR LARGE FAMILY RENTAL St. Paul may publicly issue and/or privately place tax-exempt bonds for the purposes of providing mortgages to purchase single-family dwellings for large families' purposes. It is anticipated that these dwellings will be located or constructed citywide and will be targeted primarily toward low-income large families in need of the kind of living and open space available in a single-family environment. The Existing Housing Section 8 Certificate Program, as well as other possible, but still undefined, forms of subsidies, will be provided as much as possible. New construction and acquisition of buildings, with two, three, and four rental units, is also being considered. Since this type of housing development may be on a smaller scale than that which could be involved in a single-family owner-occupied program, there is a potential for less participation in a public sale among eligible lenders. Private placements involving previously described qualified lenders is contemplated. - 15 - 6.2.2 NEW CONSTRUCTION AND ACQUISITION AND REHABILITATION OF SINGLE- FAMILY OWNER-OCCUPIED PROPERTY � As previously indicated, St. Paul undertook two bond issues in 1979. The Below Market Interest Rate Home Mortgage Program involved financing the new construction, acquisition, and acquisition and substantial rehabilitation of owner-occupied, one-to four-unit dwellings. • The Below Market Home Rehabilitation Program involved the acquisition and substantial rehabilitation of owner-occupied, one-to four-unit structures. St. Paul expects to structure one or more public issues and/or a number of private placements of tax-exempt bonds for some or all of the•purposes upon which the two 1979 programs were based. It is anticipated that a high percentage of the homes to be financed under . this kind of a program will be single-family homes. Additional legislation may be required to meet this objective. All private lending institutions with offices located in St. Paul or with a record of ongoing originations in St. Paul, and which are FHA/VA, FNMA/FHLMC or otherwise City-approved will be eligible to participate in the program. Financing for these purposes will involve from twenty to twenty-five originating lenders. Private placements involving previously described qualified lenders is also contemplated. 6.3 PORT AU'THORITY AND THE HOUSING AND REDEVELOPMENT AUTHORITY The St. Paul Port Authority and the Housing and Redevelopment Authority may issue revenue bonds to finance multi-unit housing developments, provided they are authorized to do so by resolution of the City Council and meet previously described requirements and limitations applicable to City-issued revenue bonds. -16- . . . - 28��'�9 ' 7.0 ADMINISTRA'fION 7.1 DEPARTMENT OF PLANNING AND ECONOMIC DEVELOPMENT St. Pau!'s Department of Planning and Economic Development (PED) carries out a comprehensive, integrated, and coordinated approach to planning and development functions. The department is composed of five divisions -- Community Development, Development, Housing, Planning and Business Revitalization. The Housing Division assists residents, neighborhoods, the downtown area, private businesses, and public agencies in the development, redevelopment, financing and rehabilitation of land, housing and other property in St. Paul. The Division manages over 100 ongoing development projects and programs, and it also provides a variety of technical and financial assistance to developers, neighborhood groups, and individual citizens. 7.2 ADMINISTRATIVE PROCEDURES AND COSTS With regard to Multi-Family Rental Housing, the lender and the City share responsibilities for processing privately placed tax-exempt notes. The lender exercises its normal underwriting standards in reviewing the loan; the City's role involves the performing of inspections and assisting in the preparation of scopes and bids, underwriting and surveying of existing tenants. 'fhe City will assist in identifying housing projects which will provide low and moderate income persons and families with affordable housing opportunities. Lenders will be encouraged to finance those projects meeting the above criteria. To the extent permitted by arbitrage regulations the City will charge a 19i6 commitment fee of the original principal loan amount and .10% of the declining principal balance to cover its expenses. This policy applies to . all privately placed mortgages, whether rental or ownership, multi- or single-family. Lenders may charge appropriate fees with City approval to cover their expenses in originating and servicing the loans. In private placements of loans, lenders may include in the mortgage amount their related costs. The City will monitor the program's consistency with stated goals and objectives through regular staff ineetings and regular communication with neighborhood groups. With regard to publicly issued bonds for single- and multi-family, both rental and ownership, the City recruits and works with qualified lending institutions to structure the program . and to detail procedures. The same monitoring procedures have been instituted for previous City bond programs. On a program-by-program basis the City will establish on either a negotiated or bid basis, amounts related to the costs of issuance. 7.2.1 IMPLEMENTATION METHODS Two project managers from the Housing Division will be devoting at least 50% of their time toward implementation of the Multi-Family Programs. Support staff will include lega! work from the City Attorney's Office, financial advice from the City's Financial Consultant, accounting from the City's Finance Department, site review from the City's Technical Services staff, Zoning staff, Police Department, Fire Department, construction package review from the City's Building Codes Division and Rehabilitation staff, and legal assistance from the City's Program Bond Counsel. These and other technical staff, both from within and without the city government, will provide assistance as needed in implementing the particular project or program. -17- - - . The two project managers will be devoting 3095 of their time toward implementation of the Single-Family Programs. Support staff will include the City Attorney's Office, Bond Counsel, Technical Services, Zoning, Police Department, Fire Department, Building Codes Division and Rehabilitation Section. In both the Below Market Interest Rate (BMIR) Home Mortgage Program and the Below • Market Home Rehabilitation (BMHR) Loan Program, the City retained the services of a Program Administrator to assist the City in administering and operating the program. Generally, the Program Administrator is responsible for pre-committing and purchasing qualified mortgages from participating lending institutions, monitoring performance of lending institutions to assure compliance with executed seller's and servicer's agreements, and collecting�and reporting program data. Selection of a Program Administrator was . conducted on a public bid basis. It is anticipated that future programs of the same kind would include a Program Administrator. The Program Administrator's functions and fees �re fully described in pages 9-10 and 35-37 of the BMIR Official Statement and in pages 10-11 and 43-44 of the BMHR Official Statement. Additionally, in both programs, the City selected on a public bid basis, bond underwriters to assist in structuring the bond issue, preparing the Official Statement and marketing the bonds for sale to investors. The underwriter's function is described further on the cover page and in pages 18-32 of the BMIR Official Statement and on the cover page and in pa.ges 22-41 of the BMHR Official Statement. It is anticipated that future programs of the same kind would include a bond underwriter. -18- . . . � � ��o�� 8.0 APPENDIX . . 8.1 MULTI-FAMILY RENTAL HOUSING DEVELOPMENT PROGRAM This Program will provide "individualized" financing in the context of a comprehensive program for the financing of the new construction, rehabilitation, or acquisition/rehabilitation of rental housing (one or more units). � A borrower in the Program must agree to: (1) maintain all units as rental and (2) maintain � 20% of the units for occupancy by low/moderate income �individuals or families (159i6 of the units for projects located in targeted areas) for at least the qualified project period. For the purposes of this Program, the following definitions shall apply: Low/Moderate Income Adjusted income at or below 809� of the median gross income for the Standard Metropolitan Statistical Area as determined by the U.S. Department of Housing and Urban Development. Qualified Project Period The time period required by Section 103 (b) (4) (12) (B) of the Internal Revenue Code and referred to as the "qualified project period". Targeted Area Either a "qualified census tcact" within the meaning of Section 103 A (k) (2) of the Internal Revenue Code of 1954, as amended, or an "area of chronic economic . distress" within the meaning of Section 103 A (k) (3) of the Internal Revenue � Code of 1954, as amended. Financing for the Program will be accomplished through separate series of bond issues, each of which will finance one or more specific projects. The St. Paul Housing and Redevelopment Authority intends to tailor each financing structure to the particular project(s) so that, at the time a specific project is carried out, the exact financing structure which is utilized will be the one determined to be best-suited to assure the viability of the project and to effectively implement the objectives of this housing plan and of the rental housing development and financing program. (Please see Section 2.1 Housing Needs -Rental Opportunities and � Section 3.0 Program Objectives ��1 and ��2.) While a separate series of bonds may be issued to finance each project, all series of bonds will be issued to finance this overall Program to develop rental housing in the City. St. Paul anticipates developing numerous rental housing projects throuphout the City. To date, several potential projects have been identified: Energy Park (new constrUCtion, 380 units), Pathways (new construction, 200 units), Johnson Parkway (rehabilitation, 72 units), Lorraine Apartments (rehabilitation, 42 units), Shepard Park (new construction, 365 units), Miller Hospital (rehabilitation, 187 units), Block 40 (new construction, 150 units), and Capitol �Park (new construction, 100-120 units). This listing of potential projects is intended to be illustrative only, and does not represent a final or definitive listing of projects to be financed pursuant to the rental housing program. Additional projects will be aggressively pursued and added to this Program as they are determined to be feasible and consistent with this Plan and its objectives. � - 19 - � . • . 8.2 BELOW MARKET IN7'EREST RATE HOME MORTGAGE PROGRAM � In April, 1979, the City of Saint Paul publicly issued $50 million in tax-exempt revenue bonds providing $41.9 million in mortgages at 8yv%and with terms up to 30 years to finance the acquisition, acquisition and substantial rehabilitation, and new construction of one to four unit owner-occupied structures.� . The program is administered by twenty-two local commercial banks, savings and loan associations and mortgage bankers. For existing single-family homes the maximum mortgage is $50,000 with a maximum adjusted gross income of $22,D00. � . For newly constructed or substantially rehabilitated single-family homes the maximum mortgage is $60,000 with a maximum adjusted gross income of $27,500. In designated redevelopment areas, there are mortgage limits of $85,000 with no income limits. However, an affordability test, which basically prohibits those individuals from purchasing homes which they could afford at market interest rates, must be met in this situation as well as with all other loans. The 2096 of the funds ($8.3 million) reserved under BMIR for Redevelopment Areas leveraged $27.9 million in construction and rehabilitation. Loans may be originated on an FHA/VA, private or conventional basis. There are no sales price limits in the program. Exclusive of Redevelopment Areas, with 98% of the funds committed, the average sales price of home urchased under this program has been $48,626, mortgage amount: $42,822, gross income: �19,693, adjusted gross income: $17,701, age: 29, new to the city: 33%, and former renters: 78%. • The program is administered by the City through local lending institutions and a Program Administrator. . -20- � . . . � . . 28 a�"19 ' 8.3 BELOW MARKET HOME REHABILITATION LOAN PROGRAM � In December, 1979, the City of St. Paul's Housing and Redevelopment Authority issued � $47.9 million in tax-exempt revenue bonds for home rehabilitation. The issue provides $40.9 million in mortgage funds for the acquisition and substantial rehabilitation or the acquisition of substantially rehabilitated owner-occupied one- to four-unit structures. The mortgage interest rate is 9 3/4 percent with terms up to 30 years. Refinancing of � an existing mortgage or contract for deed is eligible when tied to substantial rehabilitation. The program is administered by twelve commercial banks,savings and loan associations and mortgage bankers. Income limits for borrowers of properties involving substantial rehabilitation are $24,000 adjusted gross with mortgage limits at $72,000, Substantial rehabilitation is defined as 25% of the appraised as-is value of a structure for new purchasers and for owner-occupants wishing to refinance existing indebtedness, and 2596 of the appraised after-rehabilitation value of a structure for purchasers of substantially rehabilitated buildings. Income limits are waived for loans which involve rehabilitation exceeding the lesser of $25,000 or 10096 of the appraised as-is value of the building. In those instances the maximum mortgage amount is raised to $96,000. In all cases, borrowers must meet an affordability test similar to that which was instituted under the BMIR Program. Eligible improvements must include the correction of all health, safety, and energy conservation deficiencies. Other general improvements are eligible when the above items are completed. All projects involving condominium ownership of buildings must be pre-approved by the City of St. Paul. For projects involving buildings currently vacant, the City will approve only if the owner has not indicated a previous interest in rehabilitating the structure for rental purposes. For projects involving buildings currently occupied by tenants, the City will approve only if the sales price does not exceed $50,000 and only if the owner has submitted a plan which indicates the extent and conditions under which tenants will be purchasing units, and the benefits to be provided to tenants to be displaced. The program is administered by the City through local lending institutions and a Program Administrator. -21- . " � . � 8.4 MINNEAPOLIS/ST. PAUL FAMILY HOUSING PROGRAM - PHASE I ' In 1981, the St. Paul Housing and Redevelopment Authority and Minneapolis Community Development Agency combined on a $120 million "joint-issue" of tax-exempt single-family housing revenue bonds for the equity participation loan program. This program, also referred to as Phase I of the Minneapolis/St. Paul Family Housing Program, funds mortgages for new construction and substantially-rehabilitated, ownership housing in the Twin Cities. � The proceeds from the bond issue provide 11 7/8%, 30 year mortgages. Additional monies from the Minneapolis/St. Paul Family Housing Fund ($5.9 million) and from an Urban Development Action Grant ($2.9 million) are used for unique financial assistance methods which, in effect, lower the mortgages on the homes to make them more affordable to people with lower incomes. • Although exempt from recent federal restrictions on the use of tax-exempt revenue bonds, this program did meet state income and purchase price limits. The following chart profiles the types of buyers served in 1981. This program is administered by the City through local lending institutions and a Program Administrator. 'fhe St. Paul Housing and Redevelopment Authority anticipates joining again with the Minneapolis Community Development Agency on a "joint issue" for Phase II of the Family Housing Program. St. Paul will use the services of the Family Housing Fund, as well as the available resources of the McKnight Foundation and UDAG monies, to carry out Phase II, which will focus on assisting and encouraging home ownership. -22- . � .. ; .- ,. . � . � � `.s ��9 city of �saint paui � � � ' . � planning commissian resolutian � � � file number �8�-03�� . � � � . � --.. . . � date �a�uary 28. ,933 . . - . WHEREAS, this Comnission has determined that there is `a continuing need for the preseryation and development .of rental housing uni.ts ii� St. Paul , in= � cluding renta] units .for low and moderate incor�e households, as ind�icated in the housing element of. the Comprehensive Plan and in the Lower Income - Housing Strategy adopted February 12, 2982; and -�• WHEREAS, a flexible financing program known as the Multi-Family Renta1 Housing Program has been designed with appropriate provisions to help meet the rental housing needs; and . WHEREAS, the "City of St. Paul 462C Housing Plan" , adopted by t�ie City Council on March 6, 1980 as a guide for housing programs, must be amended to provide for this program .before the program can be impiemented; and WHEREAS, some of the information contained in the 462C Housing Plan as originally adopted is now inaccurate because of program accomplishments, changes in the City's population, changes in statutory and administrative program requirements, and changes in available resources; NOW, THEREFORE, BE IT RESOLVED, that the Planning Commi.ssion of the City of St. Paul finds the "462C Housing Plan for the City of St. Paul"� as amended . January, 1983, to be consistent with the Comprehensive Plan including ob3ectives and policy for housing, and consistent with additional objectives established in � the Lower Incone Housing Strategy, and BE IT FURTHER RESOLVED that the' Planning Commission of the City of St. Paul recommends to the Mayor and to the City Council adoption of the 462C Housing . Plan for the City of St. Paul as amended, January, 1983. � moved by Laneqran - seconded by Tavl or - � � in favor 16 against - � : : .