274524 WHITE - CiTV CLERK COIIRCII �����
PINK - FINANCE G I TY OF SA I NT PAU L ' "
CANARV - DEPARTMENT �
.:�_U�"`-�- MAVOR File �O.
C;�.ty Attny. JTH . .
Co�ncil Resolution
Presented By
Referred To Committee: Date
Out of Committee By Date
RESOLUTION APPROVING HOUSING PLAN
PURSUANT TO MINNESOTA STATUTES, CHAPTER 462C
AND AUTHORIZING SUBMISSION OF THE PLAN
TO THE METROPOLITAN COUNCIL FOR REVIEW
WHEREAS, 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 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 imple-
mentation of any such programs the city shall, develop a housing
plan as required by Minnesota Statutes, Section 462C.03 (the
"Plan") ; and
WHEREAS, at the direction of the Mayor, the Planning and
Economic Development Department has developed and submitted a
"City of Saint Paul 462C Housing Plan, " dated January 26, 1980,
and revised City of Saint Paul 462C Housing Plan documents under
date of February 29 and March 6, 1980, with the revised sections
identified in Exhibit "A" hereto attached; and
WHEREAS, all references to the Plan in this Resolution shall
mean the City of Saint Paul 462C Housing Plan dated March 6, 1980;
and
COUNCILMEN , � �
Yeas Nays Requested by Department of:
Butler [n Favor
Hozza
Hunt
Lzvine __ Against BY
Maddox
Showalter
Tedesco Form A pproved by City Attorney
Adopted by C ouncil: Date
Certified Vassed by Council Secretary BY
By
�pproved by ENavor: Date _ Approved by Mayor for Submission to Council "
BY - - – — BY
NiN17E - CiTV CLERK
PINK - FINANGE G I TY OF SA I NT PAU L Council
CANARV - DEPARTMENT File NO..-���
BLUE - MAVOR
�r " '
Co�ncil Resolution
Presented By
Referred To Committee: Date
Out of Committee By Date
-2-
WHEREAS, the Act requires that a public hearing be held on
the Plan after one publication of notice of the hearing in a
newspaper circulating generally in the city, at least 30 days
before the hearing; and
WHEREAS, public hearing was held before this Council on
March 6, 1980, after publication in the Saint Paul Dispatch-
Pioneer Press on January 26, 1980 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 views with respect to
the Plan; and
WHEREAS, the Plan must be submitted for review to the
Metropolitan Council pursuant to Minnesota Statutes, Section
462C. 04;
NOW THEREFORE, BE IT RESOLVED by the City Council of the
City of Saint Paul, as follows:
1. The City of Saint Paul 462C Housing Plan, dated
March 6, 1980, is hereby approved and adopted with the
revisions therein incorporated.
2. The mayor is hereby authorized and directed to
submit the Plan to the �tetropolitan Council for its review
and comment. The comments of the Metropolitan Council, if
any, shall be submitted to the Council for its consideration.
COU[VCILMEIV Requested by Department of:
Yeas M A ON Nays
_� � Department of Planning & Economic Develop
� In Favor ment
Hunt
Ixvine � __ Against BY
Maddox
Showalter MAR 6 � ��v
Tede Form Approved by City Aktorney
Adopted,- Council: Date
Cert ied Yass y Co cil Secjetary BY �
B� � ' �
I�ppr v d y 1Aavor: D t _ ��R 1 �90� Appro ayor for Subm' o to ouncil
By _ By
�-iSttED MAR 1 5 19$0
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AFFIDAVIT OF PUBI.ICATION
STATE OF MINNESOTA
CO�JNTY OF RAMSEY
�-�� ���-g� bein
duly sworn on oath, says: that he is, and�during
all times herein stated has been, Clerk of the
Northwest Publications, Inc., publisher of the
newspaper known as the St. Paul Dispatch, St.
Paul Pioneer Press, St. Paul Sunday Pioneer
Press, a newspaper of general circulation within
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the City of St. Paul and the County of Ramsey.
That the Notice hereto attached was cut from
the columns of said newspaper and was printed
and published therein on the following dates:
2fi_ day of ,Tanuary , 19 $�
day of , 19
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28 day �,f Janua.x_v �, 19 —�
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Notan• Public
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Revisions in Hearin Draft of 462C
p. 4 5th paragraph - phrase left out. Should read "With the rental market
becoming increasingly tight (particularly -For families) , new rental - �
housing construction is essential . The cost of such new construction
units, however . . ."
p. 5 2.6 Report of the Migration Committee is referenced.
p. 5 2.7 last paragraph. Insert "lower income" between 7570 and elderly.
p. 6 3.0 Chart has been expanded to include cost estimates.
p. 7 3.1 Change in 3rd sentence. Should read "The Public Housing Agency
is currently making application for expansion of the Moderate Rehabilitation
Program with an additional 60 units."
p. 8 3.6 Phrase left out. Third sentence should read "A description of
the City's initial Below Market Interest Rate Ownership Program of
1979 is included in the appendix. It is the City's intention to issue
additional bonds to expand this program. "
p. 8 3.7 Last paragraph. Change to "Additional legislation may be required
to provide for acquisition of single-fami1y homes for rental use."
p. 9 4.0 There will be subheadings throughout 4.0 to correspond to the
Chapters of the Housing Policy °lan.
p. 15 5.1 .1 Under exceptions, "A redevelopment project established pursuant
to Section 462.521 " shou7d be added.
p. 16 5.1 .2 A section has been added to describe how the programs will meet
the needs of low and moderate income residents.
p. 16 5.3 This phrase should be added to the end of 2. . . . "and to encourage
economic integration."
p. 16 5.4 Language on displacement has been changed.
p. 17 5.5 Last sentence ends after ". . .five years."
' � ��t d'
^ r.�`���"���
p. 17 5.6 Add to end of paragraph "This prohibition will be secured with a
covenant running with the land. °
p. 17 5.7 Add "This restriction will not apply to structures occupied primarily
by elderly or handicapped households."
� p. 18 6.1 .2 A section applying to larger projects has been added.
p. 19 6.2.1 The work "Rental " has been added to the title:
p. 20 6.3 Should read "provided they are authorized to do so by resolution of
the City Council and meet previously d°scribed. . .bonds."
p. 22 7.2.1 Language has been add�d here to explain the concept of contracting
for services.
TABLE OF CONTENTS
1 .0 INTRODUCTION �
2.0 HOUSING NEED 2
2. 1 RENTAL OPPORTUNITIES 2
2.2 HOUSING REHABILITATION 2
2.3 SMALL HOUSING UNITS 2
2.4 FAMILIES AND LARGE FAMILIES 3
2.5 LOW AND MODERATE INCOME HOUSEHOLDS 3
2.6 MIDDLE AND HIGHER INCOME HOUSEHOLDS 5
2.7 ELDERLY AND HANDICAPPED HOUSEHOLDS 5
3.0 PROGRAM OBJECTIVES 6
3.1 REHABILITATION FOR RENTERS �
3.2 CONSTRUCTION OF NEW RENTAL HOUSING 7
3. 3 MULTI-UNIT REHABILITATION FOR OWNERSHIP 7
3.4 NEW MULTI-UNIT .OWNERSHIP OPPORTUNITIES 8
3.5 REHABILITATION OF SINGLE-FAMILY HOMES $
3.6 SINGLE-FAMILY AND COOPERATIVE MORTGAGE LOANS 8
3.7 ACQUISITION OF SINGLE-FAMILY HOMES FOR LARGE 8
FAMILIES
4.0 HOUSING POLICIES TO BE ��
IMPLEMENTED 4.1 POLICIES TO BE DIRECTLY IMPLEMENTED 10
4. 1 . 1 HOUSING SUPPLY 10
4. 1 .2 AFFORDABLE HOUSING 10
4. 1 .3 HOUSING ASSISTANCE 12
4 1 4 NEIGHBORHOOD QUALITY 13
4.2 POLICIES WHICH WILL BE INDIRECTLY IMPLEMENTED 14
4.2.1 HOUSING SUPPLY 14
4.2.2 AFFORDABLE HOUSING 14
4.2.3 HOUSING ASSISTANCE 15
4 2 4 NEIGHBORHOOD QUALITY 15
4.2.5 HOUSING OPPORTUNITY 16
5.0 BOND FINANCED HOUSING »
PROGRAM POLICIES 5.1 INCOME OF HOUSEHOLDS TO BE SERUED 17
5.1 .1 INCOME LIMITS »
5. 1 .2 MEETING THE NEEDS OF LOW & MODERATE 18
INCOME HOUSEHOLDS
5.2 PURCHASE PRICE LIMITS 18
5.3 SITE LOCATIONS 19
5.4 DISPLACEMENT 19
5.5 RENT REGULATORY AGREEMENT 19
5.6 CONDOMINIUM CONVERSIONS 19
1
• TABLE OF CONTENTS (CONTINUED) �����;�
5. 7 �ISCRIMINATION AGAINST CHILDREN IN RENTAL 19
HOUSING
5.8 HEALTH, SAFETY, AND ENERGY REQUIREMENTS 20
5.9 QUALITY OF PROJECTS 20
6.0 FINANCING METHODS 21
6.1 MULTI-FAMILY HOUSING DEVELOPMENT 21
6. 1 .1 NEW CONSTRUCTION AND REHABILITATION OF 21
MULTI-FAMILY RENTAL PROPERTY
w 6.1 .2 LARGER RENTAL PROJECTS 21
6. 1 .3 NEW CONSTRUCTION AND REHABILITATION OF
MULTI-FAMILY OWNER-OCCUPIED PROPERTY 22
6.2 NEW CONSTRUCTION AND REHABILITATION OF SINGLE- 22
FAMILY PROPERTY
6.2.1 ACQUISITION OF SINGLE-FAMILY PROPERTY FOR 22
LARGE FAMILY RENTAL
6.2.2 NEW CONSTRUCTION AND ACQUISITION AND 23
REHABILITATION OF SINGLE-FAMILY OWNER-
OCCUPIED PROPERTY
6.3 PORT AUTHORITY & HOUSING & REDEVELOPMENT 23
, AUTHORITY
7.0 ADMINISTRATION 24
7.1 DEPARTMENT OF PLANNING AND ECONOMIC DEVELOPMENT 24
7.2 ADMINISTRATIVE PROCEDURES AND COSTS 24
7.2. 1 IMPLEMENTATION METHODS 25
8.0 APPENDIX 2�
8. 1 MULTI-FAMILY RENTAL HOUSING DEVELOPMENT PROGRAM 27
8.2 BELOW MARKET INTEREST RATE HOME MORTGAGE PROGRAM 28
8.3 BELOW MARKET HOME REHABILITATION LOAN PROGRAM 29
. 1 .0 INTRODUCTION
As the availability and affordability of private market
financing for the construction, purchase and rehabili-
tation 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 continua-
tion 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 financ-
ing should be used in St. 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
opportunities for home ownership and to facilitate sub-
stant�al rehabilitation of deteriorated single-family
homes.
-1-
. 2.0 HOUSING NEED
Based on survey and analysis of the current housing stock
and demographic data of St. 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 in un-
availability of private financing. "
In addition, the low multi-unit vacancy rate for the
metropolitan area in general (6.1% in 1979) and St. Paul
in particular (4.3% in 1979) makes it crucial for St. Paul
to preserve and expand rental opportunities to meet the
strong demand for rental housing. (See Inventory of
Housing Needs , Department of Planning and Economic Develop-
ment, November, 1979, Pages 10-11 ).
2.2 HOUSING REHABILITATION The City' s 1974 Survey of Housing Conditions indicated
that housing conditions in St. Paul deteriorated between
the time of the 1960 Census and the 1974 survey.
Although there is evidence that this process of general
neighborhood decline is not continuing, there remains
an ongoing need for rehabilitation of the housing stock
throughout the City. According to the Housing Assistance
Plan, approximately 30,000 of the 112,508 housing units
in the city are in need of rehabilitation. (Housin
Assistance Plan approved May 25, 1979. Further informa-
tion from the 1974 survey is contained in the Residential
Improvement Strate , St. Paul City Planning,
February, 1977.
One particular rehabilitation need which has not received
emphasis in the past is rehabilitation of multi-unit
rental structures. This is a critical need in neighbor-
hood revitalization areas and is needed to some degree
in many older portions of the City.
District 8 has the largest concentration of older multi-
unit structures. As an indication of the level of multi-
unit rehabilitation needed there, in August of 1979
-2-
there were 132 multi-unit residential buildings that
had been inspected for certificate of occupancy but were
not yet certified because of improvement work needed.
At that time, a total of 303 buildings had been inspected
and 146 multi-unit bu;' �'?ngs remained to be inspected.
In addition to District 8, rehabilitation of multi-unit
structures will also be emphasized in the six newly
established Identified Treatment Areas (ITA' s). (See
Inventory of Housing Needs , Department of Planning and
Economic Development, Pages 9-10).
2. 3 SMALL HOUSING UNITS From 1950 to 1978, St. Paul s average household size
decreased from 3.38 to 2.46 persons per household. This
decline in household size has resulted in increased de-
mand for smaller housing units in both the ownership and
rental housing markets. Since household size is pro-
jected to continue to decline, the demand� for small units
is expected to be a permanent segment of the market.
According to Metropolitan Council projections of housing
unit needs , approximately 64% of St. Paul 's new housing
construction over the next ten years should be one and two
bedroom units. (Metropolitan Council , (Proposed) Guide-
lines for Review of Housinq Elements of ompre ensive
Plans , March 13, 1978).
2.4 FAMILIES AND LARGE A critical housing need exists in the area of rental
FAMILIES 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 land-
lords 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 St. Paul is 5723 households, 1408 of which
are large families (5 or more persons). (See Estimated
Housing Assistance Needs and Program Mix Goals for
Metropolitan Area Communities , Housing Division, Metro-
politan Council , August, 1979).
2.5 LOW AND MODERATE According to income guidelines , approximately 50% of
INCOME HOUSEHOLDS St. Paul 's population is eligible for subsidized housing.
The income limit for Section 8 subsidized housing is 80%
of the SMSA median income, which is currently $16,800 for
a family of four.
-3-
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 estimates, 18,775 households in
St. 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 handi-
capped, only the level of family and elderly need is used
in the allocation of housing assistance funds. The
elderly need is estimated to be 6051 households and the
family need is estimated at 5723 households , for a total
� housing assistance need of 11 ,774 households.
Based on St. 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 ($16,800 to $23,100 currently for a family
of four) is in need of some type of housing assistance if
they are to enter the homeownership market in the face of
rapid escalation of the cost of housing.
Households at the upper end of this income category can
afford what Metro Council defines as "modest cost"
housing. Currently, modest cost housing is defined as
single-family housing selling below $55,000 or multi-unit
housing renting for $350 to $460 monthly for a family of
four or five.
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 �416 monthly in housing costs (based on the 25
percent income test). A $40,000 mortgage at 13 1/2%
interest rate results in a monthly payment of $460.
Taxes , insurance, and utilities will add $100 to $200
a month, thus placing even a very modest home out of
reach for such families.
For families with �incomes betwzen 70 and 9� percent of
the median ($14,700 to $19,950) , 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 ne� construction units , however, results in
rents considerably beyond the incomes of this population
group.
-4-
At an average cost of $40,000 per unit, an apartment or
rental townhouse for such a family, financed at a
12 percent interest rate over a 30-year period, results
in an approximate monthly rental of $576. Families
between 70 and 95 percent of the median income can
afford $300-$400 a month in housing costs.
2.6 P�IDDLE & HIGHER INCOME An economically diverse population and economic inte-
HOUSEHOLDS gration within neighborhoods are established city ob-
jectives. The major recommendations of the St. Paul
Migration Cor�nittee adopted by the City Council in 1975
include the establishment of a goal for the City of
"a balanced and diverse population, broadly representa-
tive of the metropolitan area population. " (Saint Paul ,
Population Change: Challen e and 0 ortunit , 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 re-
development and economic integration.
2. 7 ELDERLY & HANDICAPPED Housing needs of the handicapped household are very
HOUSEHOLDS difficult to ascertain. The 1970 census reported 15,393
handicapped persons in St. Paul , and the Metropolitan
Council estimates that about 3% of the one and two
person households eligible for subsidized housing are
handicapped. (Estimated Housing Assistance Needs and
Program Mix Goals for Metropolitan Area Corrrnunities,
Housing Division, Metropolitan Council , August, 1979).
Although their numbers are declining slightly, elderly
households continue to comprise a sizeable share of
St. Paul 's population. Two years ago, it was estimated
that the 1980 elderly population would approximate
32,210 persons. (See Demographic Information Profile
of St. Paul , St. Paul City Planning, March, 1978 .
In their estimates of housing assistance need, Metro
Council estimates that 7570 lower-income elderly and
handicapped households are inadequately housed. (See
Estimated Housing Assistance Needs and Program Mix Goals
for Metropolitan Area Communities, Housing Division,
Metropolitan Council , August, 1979).
-5-
� 3.0 PROGRAM OBJECTIVES
On the basis of the needs identified, the following
objectives are established for bond financed housing
programs in St. Paul :
Potential Average
Program Range Per Unit Program
Activity (Units) Cost Dollar Range
IMPROVEMENT & EXPANSION OF
RENTAL HOUSING SUPPLY
l . Rehabilitation of multi- 500-700 Units $30,000 $ 15,000,000 - $ 21 ,000,000
unit structures for rental
occupancy
2.Construction of new 600-1500 Units $45,000 $ 27,000,000 - $ 67,500,000
rental housing
IMPROVEMENT OF OWNER
HOUSING & EXPANSION OF
OWNERSHIP OPPORTUNITY
3. Rehabilitation and pur- 150-225 Units $60,000 $ 9,000,000 - $ 13,500,000
chase of ownership units
in multi-unit structures
4.Construction of new 200-250 Units $75,000 $ 15,000,000 - $ 18,750,000
housing in multi-unit
structures for owner oc-
cupancy, purchase of units
S.Rehabilitation and pur- 700-800 Loans $65,000 $ 45,500,000 - $ 52,000,000
chase of single-family
homes
6.Expansion of modest- 700-900 Loans $60,000 $ 42,000,000 - $ 54,000,000
cost ownership opportu-
nities by providing mort-
gage loans for the pur-
chase of existing or new-
ly constructed single-
family homes or coopera-
tive units
PROVIDE 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
-6-
3. 1 REHABILITATION FOR Because of the need for rental units and the difficulty
RENTERS 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 rehabilita-
tion with as little increase in rental rates as possible.
Rental units to be rehabilitated under this program will
include units assisted under the Section 8 moderate
rehabilitation program and may include units assisted
under the Section 8 substantial rehabilitation program.
Section 8 moderate rehabilitation assistance has been
committed for 75 units from fiscal 1980 funds. The
Public Housing Agency is currently making application for
expansion of the Moderate Rehabilitation Program with an
additional 60 units. A description of the multi-family
rehabilitation program instituted by the City is included
in the appendix.
3.2 CONSTRUCTION OF NEW As indicated in the draft housing policy, it is the City s
RENTAL HOUSING intention to maintain a balance between rental and owner-
ship opportunities in new construction so long as rental
demand is not met effectively in other ways. �:�;,�d financ-
ing is necessary to produce modest cost units to realize
market rate development that will include Section 8
assisted units. Because of the overall limitations on
the City's bonding capacity for housing and because of
the lack of Section 8 assistance available to the City, a
major portion of this objective will have to be achieved
through Minnesota Housing Finance Agency financing.
3. 3 MULTI-UNIT Condominiums provide needed alternative ownership possi-
REHAQILITATION FOR bilities for the City' s growing population of smaller
OWNERS�IP 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 financing 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.
-7-
3.4 NEW MULTI-UNIT As indicated in the Housing Policy Plan, a variety of
OWNERSHIP OPPORTUNITIES attached ownership opportunities (townhouses, condo-
miniums) are needed to provide alternatives to single-
family homes for smaller households in the City' s neigh-
borhoods. 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 Financing will be provided for rehabilitation of single-
SINGLE-FAMILY HOP�ES family and owner occupied properties both to remedy
serious deterioration and to improve energy efficiency.
St. Paul 's Below Market Home Rehabilitation Program was
designed in part to take advantage of the opportunity for
achieving rehabilitation of deteriorated properties
through households in the market for ownership units.
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 of 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 Rehabilitation Program
is included in the appendix.
3.6 SINGLE-FAMILY & One of the most important opportunities which the bond
COOPERATIVE P�ORTGAGE financing tool provides is the opportunity to make financ-
LOANS ing 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 owner-
ship opportunities will broaden the income-range of house-
holds for which ownership is possible. A description of
the City' s initial Below Market Interest Rate ownership
program of 1979 is included in the appendix. It is the
City's intention to issue additional bonds to expand this
program. In accordance with 462C.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 ACQUISTION OF Low and moderate income arge households requiring units
SINGLE-FAMILY HOMES with three or more bedrooms represent the most difficult
FOR LARGE FAMILIES housing need to meet in St. Paul at the present time.
-8-
(�ousinq St. Paul T980-1990, draft) . 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. Acquisition
of single-family homes by a non-profit entity for rental
to large families with incomes below 110 percent of the
metropolitan median family income is planned. 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.
Additional legislation may be required to provide for
acquisition of single-family homes for rental use.
-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 St. Paul 1980-
1990, draft) . Other policies w� ii be �mpiemen ed in-
directly or to a lesser extent, depending upon the
specific guidelines of each program.
4.1 POLICIES TO BE Policies which will be directly implemented by the bond
DIRECTLY IMPLEMENTED finance programs include the following:
.1 .1 HOUSING SUPPLY
OBJECTIVE 1
CONSTRUCT AT LEAST 10,000 PdEW HOUSING UNITS IN ST. 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 & 2 & 3 BEDROOM OWNERSHIP
HOUSING UNITS WILL BE 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.
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A.RETAIN MODEST COST OWNERSHIP OPPORTUNITIES IN THE
EXISTING SJPPLY 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 CONSTRUCTION.
C.ENSURE THAT A MAJOR PORTION OF RENTAL UNITS CONSTRUCTED
ARE AFFORDABLE TO �ODERATE INCOMF 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 REHAB-
ILITATED WITH THE USE OF SUBSIDIES AND REGULATIONS AS
NECESSARY TO ENSURE THAT RENT INCREASES AfJD DISPLACEMENT
ARE MINIMIZED. (SEE ADDITIONAL POLICIES UNDER REHABILI-
TATION. )
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 CONTINUED RENTAL DEVELOPMENT AT LEAST
SU�FICIENT TO REPLACE LOST UNITS AND TO MAKE EFFECTIVE
USE OF AVAILABLE SUBSIDY RESOURCES.
POLICY A5
PARTICULARLY IN THOSE AREAS WHERE DISPLACEMENT IS IDENTI-
FIED 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.
PO�ICY A6
POTENTIAL 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.
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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 REDEUELOPMENT, CON-
VERSION AND IMPROVEMENT ACTIVITY IS GOVERNED IN PART
BY THE DEMONSTRATED AVAILABILITY OF SATISFACTORY AL-
TERNATIVE HOUSING WHEREVER DISPLACEMENT IS A FACTOR.
POLICY All
THE CITY WILL CONTINUE TO PARTICIPATE IN HOUSING DEVELOP-
MENT PROJECTS THROUGH BOND FINANCING AND OTHER COST RE-
DUCING 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 ST. PAUL.
POLICY Al2
THE CITY SHOULD ENSURE THAT THE MINNESOTA HOUSING
FINANCE AGENCY HOME OWNERSHIP PROGRAM RESOURCES, AND ANY
OTHER AVAILABLE PUBLIC MEANS FOR PROVIDING BROADER
ACCESS TO HOME OWNERSHIP ARE FULLY AND EFFECTIVELY USED
IN THE CITY.
POLICY A18
THE CITY SUPPORTS THE FORMATION OF COOPERATIVES TO
ENSURE CONTINUED HOME OWNERSHIP OPPORTUNITIES FOR LOW
AND MODERATE INCOME HOUSEHOLDS AND TO LESSEN THEIR
POTEP�TIAL FOR DISPLACEMENT FROM MULTI-UNIT APARTMENTS.
a. ENCOURAGE COOPERATIVE 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.
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POLICY C4
CONTINUE TO SUPPORT THE DEVELOPP�ENT OF ASSISTED HOUSING
FOR ELDERLY HOUSEHOLDS OP�LY IN THOSE NEIGHBORHOODS
WHERE THE EXISTING SUPPLY 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 NEIGHBOR—
HOOD REVITALIZATION.
POLICY C11
PROVIDE ASSISTANCE THROUGH SUBSTANTIAL AND MODERATE
REHABILITATION TO THE EXTENT THAT OPPORTUNITIES CAN BE
DEVELOPED.
POLICY C12
USE SECTION 8 RESOURCES WHERE APPROPRIATE TO MAINTAIN
HOUSING OPPORTUNITIES FOR LOWER INCO��E HOUSEHOLDS IN
AREAS WHERE DISPLACEMENT IS OCCURRING.
4.1 .4 NEIGHBORHOOD QUALITY
POLICY Q9
THE CITY WILL CONTINUE TO CHANNEL REHABILITATION LOANS
APdD GRANTS TO LOWER AND MODERATE INCOME HOMEOWNERS
THROUGHOUT 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 RATES
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 NECESSARY
AND WHERE AVAILABLE TO AVOID DISPLACEMENT. WHERE
HOUSING ASSISTANCE CANNOT BE MADE AVAILABLE, RENT REGU—
LATORY AGREEMENTS SHOULD BE USED TO AVOID DISPLACEMENT.
—13—
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 HOf�ES WILL BE SECOND IN
PRIORITY ONLY TO MEETING HEALTN AND SAFETY REQUIREMENTS.
4.2 POLICIES WHICH WILL BE Policies which will be implemented to a lesser extent,
INDIRECTLY IMPLEMENTED depending upon program guidelines , include the
following:
4.2. 1 HOUSING SUPPLY
POLICY S7
THE CITY 6•dILL 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
DEMOLITION OF OCCUPIED RENTAL UNITS MUST BE LIMITED AND
TEMPERED BY THE AVAILABILITY OF ALTERNATIVE HOUSING FOR
THOSE OCCUPANTS.
POLICY A13
THE CITY WILL CONTINUE TO ENCOURAGE THE FINANCIAL IN-
DUSTRY 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.
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4.2.3 HOUSING ASSISTANCE
OBJECTIVE 3
ENSURE THAT ADDITIONAL HOUSING ASSISTANCE IS MADE AVAIL-
ABLE TO MEET THE NEEDS OF LOWER INCOME HOUSEHOLDS IN
ST. PAUL.
POLIGY C13
A MIX OF MARKET RATE AND ASSISTED UNITS IN FAMILY DEVELOP-
MENT IS ENCOURAGED. PROPOSALS FOR FAMILY DEVELOPMENT
WITH A 20% ASSISTED/80% MARKET-RATE P4IX WILL CONTINUE TO
BE CONSIDERED HIGH PRIORITY, HOWEVER.
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 ST. PAUL'S
RESIDENTIAL BLOCKS BY 1990.
A. REALIZE SUBSTANTIAL IMPROVEMENT OF 1000 RESIDENTIAL
BLOCKS THROUGH PUBLIC ACTION AND PRIVATE REINVESTMENT.
B.MAINTAIN AND CONSERVE 1680 RESIDENTIAL BLOCKS.
C.ACHIEVE ENOUGN REHABILITATION TO REDUCE SUBSTANDARD
' UNITS TO NO MORE THAN 15% OF TOTAL HOUSING SUPPLY.
OBJECTIVE 5
ACHIEVE WEATHERIZATION OF AT LEAST 85% OF ST. PAUL RES-
IDENTIAL STRUCTURES OVER THE NEXT 10 YEARS AP�D SUBSTAN-
TIAL ACHIEVEMENT IN THE APPLICATION OF NEW TECHNOLOGY
TO REDUCE USE OF NON-RENEWABLE FUELS IN ST. PAUL NOMES.
;:
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� ������
4.2.5 HOUSING OPPORTUNITY
� POLICY 05
SUPPORT PROVISION OF BARRIER FREE HOUSING AS A PORTION
OF ALL NEW HOUSING DEVELOPED IN ST. PAUL.
POLICY Q6
CONTINUE TO ENSURE THE AVAILABILiTY OF REHABILITATION
RESOURCES FOR BARRIER-FREE MODIFICATION OF EXISTING
DWELLING UNITS.
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� 5.0 BOND FINANCED HOUSING PROGRAM POLICIES
5. 1 INCOME OF HOUSE- It is the City s• policy to improve housing opportunities
HOLDS TO BE SERVED for persons of all income levels. Municipal Bond financ-
ing can be used to increase affordability of housing
acquisition and rental for low and moderate income house-
holds and stimulate much needed reinvestment otherwise
infeasible in redevelopment areas.
5.1 .1 INCOME LIMITS
Programs Income Limits Exceptions
Rehabilitation and At least 20% of ten- Without regard to in-
new construction of ants eligible for come limits if projects
multi-family rental Section 8 assistance occupied primarily by
housing elderly persons; or
Up to 25% of ten-
ants without regard Projects occupied pri-
to income marily by handicapped
persons; or
At least 55-80% ten-
ants of low and mod- A development located
erate income as de- within a redevelopment
fined by MHFA as area established pur-
either: suant to Chapter 472A;
or
A.110% of the HUD
median income A development located
($23,000) within an industrial
� development district
B.The MHFA income established pursuant to
limit for multi- 458.191; or
unit developments
(�28,050) A redevelopment project
established pursuant to
Section 462.521
� __ _�
Rehabilitation and Not to exceed the 20% of all loans without
new construction of greater of 110% of regard to income if lo-
single family owner- HUD median income cated within a Develop-
occupied structures ($23,000) or 100% of inent District pursuant to
f�IHFA income limits Chapter 472A.03; or
During the first A redevelopment project
six months of the established pursuant to
program, 50% of the Section 462. 521 ; or
funds available to
households with in- An Industrial Develop-
comes below 90% of inent District pursuant
the Program Income to 458. 191 ; or
Limits
,�
Programs Income Limits Exceptions
Up to 20% of pur- L�Jhere necessary to further
chases without re- policiPS of economic
gard to income inteqration
5. 1 .2 MEETING THE NEEDS OF LOW AND MODERATE INCOME
HOUSEHOLDS
St. Paul 's bond financing capability will be used for
the types of housing programs identified in 3.0. These
program objectives are based on the housing needs of
St. Paul 's population which are not being met by the
private market.
These programs will meet the needs of low and moderate
income households by increasing the supply of rental
housing through new construction and rehabilitation,
broadening the income range of households for which owner-
ship is possible by providing single-family and coopera-
tive mortgage financing, providing financing for rehab
of single-family homes, and providing rental housing for
large families through the acquistion of single-family
homes.
Section 5.0 identifies city policies which will be used
to guide the establishment of the programs listed in 3.0.
These policies , especially the ones concerning displacement,
condominium conversions , income limits, rent regulatory
agreements, and discrimination against children are de-
signed to ensure that, where possible, housing acquired,
constructed, or rehabilitated for low and moderate in-
come residents continues to serve that income group.
5.2 PURCHASE P�ICE LIMITS
Purchase Price
Program Limits Exceptions
Rehabilitation and Not to exceed three Not to exceed four times
new construction of times the income the income limits estab-
single-family owner limits established lished in the same pro-
occupied structures for same program gram, for loans qualify-
($69,300 using ing without income limits
110% median)
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5.3 SITE LOCATIONS Activities to be financed by bond funds will not be
targeted to limited areas geographically within the city
except in the following respects:
1 .Pdew construction and rehabilitation to include housing
assistance for lower income households will be guided
by the locational priorities of the 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 displace-
ment, 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 RENT REGULATORY In projects involving rehabilitation or development of
AGREEP�ENT rental housing, a rent regulatory agreement will be en-
tered into to prevent unreasonable rent increases. The
agreement will be jointly reached by the City, lender,
and owner, and will provide sufficient rental income to
meet debt service, operating expenses , and a reasonable
return on equity. The agreements will be in effect for
a minimum of five years.
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 oc-
cupied or vacant. Where rehabilitation for condominium
use is financed, priority will be given to providing
modest cost units. Conversion of suitable non-residential
property to condominium use is encouraged. Conversion
of City-financed newly constructed or rehabilitated
rental housing to condominiums will be prohibited for a
minimum of five years. This prohibition will be secured
by a covenant running with the land.
5.7 DISCRIMINATION AGAINST In newly constructed or rehabilitated rental housing
CHILDREN IN RENTAL HOUSING assisted under bond financed programs , property owners
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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 Rehabilitated structures of three or more dwelling units
ENERGY REQUIREMENTS 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 compatability with surrounding development.
Projects which it is determined will have an adverse
impact on the neighborhood environment will not be funded.
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� 6.0 FINANCING METHODS
��.�.
�� �����
6. 1 MULTI-FAMILY HOUSING 6. 1 .1 NEW CONSTRUCTION AND REHABILITATION OF MULTI-
DEVELOPMENT FAMILY RENTAL PROPERTY
Financing for the new construction or rehabilitation of
structures with four or more rental units is provided
through the issuance and sale of St. Paul Housing and
Redevelopment Authority's Housing Revenue Notes. These
Notes are considered "Industrial Development Bonds"
under the Internal Revenue Code Section 103(b) and thus
are not prohibited by the pending federal legislation
affecting housing mortgage subsidy bonds. Local
�� ��
lending institutions accept applications and apply their
normal underwriting standards in determining approval .
All loans under $1 million may be subject to the require-
ments of the Internal Revenue Code Section 103(b) that
no more than 10% of the net proceeds of the note may
be used to pay project costs which are treated as "working
capital , e.g. , refinancing of existing indebtedness on
the property. In the case of loans over $1 million but
less than $10 million, those as well as other limitations
apply. In existing buildings the lesser of $5,000 per
unit or 50% of the as-is value of the property must be
put into rehabilitation as long as applicable la�v requires.
Since the Minnesota Housing Finance Agency (MHFA) is
allocating the entire set-aside for Section 8 new con-
struction units, a primary vehicle for providing rental
opportunities to low and moderate income persons, St. Paul
will be referring a large percentage of its proposals to
MHFA for mortgage financing. St. Paul will be utilizing
its financing mechanism in projects which are either too
small in number of units for the MHFA process or in
projects for which Section 8 subsidies are not needed and/or
desirable for the site.
Since tax-exempt notes are sold to local lending institu-
tions on a project-by-project basis , it is difficult to
predict the exact number of participants. Lenders may sell
"participations to other lending institutions" or other-
wise arrange secondary purchasers for this kind of
financing.
The new construction and rehabilitation of multi-family
structures for cooperative use is encouraged.
6.1 .2 LARGER RENTAL PROJECTS
Larger projects which require separate financing programs
will be carried out by the City, the Port Authority or the
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Housing and Redevelopment Authority.
6. 1 .3 NEW CONSTRUCTION AND REHABILITATION OF MULTI-
FAMILY OWNER-OCCUPIED PROPERTY
Assuming favorable resolution of pending federal leg-
islation with regard to mortgage subsidy bonds, St. Paul
anticipates a public issuance of tax-exempt revenue
bonds for the purpose of providing below-market financing
for the purchase, and purchase and rehabilitation of
owner-occupied units in multiple dwelling buildings.
These units will be in the form of condominiums or
cooperatives, townhomes and other commonwall housing
developments. New construction will occur in the down-
town area as well as on scattered sites in neighborhoods.
Purchase and rehabilitation will occur primarily in vacant
multi-family rental buildings and in non-residential
buildings convertable to residential use, and secondarily,
in currently occupied multi-family rental buildings.
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 1979 Below Market
Interest Rate home Mortgage Program and the Below Market
Home Rehabilitation Loan Program.
6.2 NEW CONSTRUCTION AND 6.2. 1 ACQUISITION OF SINGLE-FAMILY PROPERTY FOR LARGE
REHABILITATION OF SINGLE- FAMILY RENTAL
FAMILY PROPERTY Again, assuming that the ability to sell tax-exempt bonds
is restored, 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 Section 8 Certifi-
cate Program, as well as other possible, but still un-
defined, forms of subsidies , will be provjded as much as
possible. New construction and acquisition of buildings ,
with two, three, and four rental units, is also being
considered.
-22-
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.
Additional legislation may be required to provide for
acquisition of single-family homes for rental use.
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, one, the Below Market Interest Rate Home Mortgage
Program involving financing for the new construction,
acquisition, and acquisition and substantial rehabilitation
of owner-occupied, one-to four-unit dwellings; the other,
the Below Market Home Rehabilitation Program involving
the acquisition and substantial rehabilitation of owner-
occupied, one-to four-unit structures.
Providing that favorable resolution of the federal
legislation is achieved, 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 in-
volving previously described qualified lenders is also
contemplated.
6. 3 PORT AUTHORITY AND The St. Paul Port Authority and the Housing and Redevelop-
THE HOUSING AND REDEVELOP- ment Authority may issue revenue bonds to finance multi-
MENT AUTHORITY 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.
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7.0 ADMINISTRATION
7. 1 DEPARTMENT OF St. Paul ' s Department of Planning & Economic Development
PLANNING & ECONOMIC (PED) carries out a comprehensive, integrated, and
DEVELOPMENT coordinated approach to planning and development functions.
The department is composed of four divisions--Community
Development, Renewal , Planning and Economic Development.
The Renewal Division assists residents, neighborhoods,
the downtown area, private businesses , and public agencies
in the development, redevelopment, financing and rehabili-
tation 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 With regard to Multi-Family Rental Housing, the lender and
PROCEDURES AfJD COSTS 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 , assisting
in the preparation of scopes and bids , assisting in under-
writing and determining Fair Market Rents and rent
controls, and assisting in surveying of existing tenants.
The 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 1% commitment fee of the original
principal loan amount and .lOq 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 reg-
ular 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.
-24-
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 Renewal Division will be
devoting at least 50� of their time toward implementation
of the Multi-Family Programs. Support staff will include
legal 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
De�artment, 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 , Briggs and Morgan. 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.
The two project managers will be devoting 30% of their
time toward implementation of the Single-Family Program.
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 Mort-
gage 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 the pre-committing and
purchasing qualified mortgages from participating lending
institutions, monitoring performance of lending institutions
to assure compliance with executed seller's and s ervicer'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 probably include a Program Adminis-
trator. The Program Administrator's functions and fees
are fully described in pages 9-10 and 35-37 of the
attached BMIR Official Statement and in pages 10-11 and
43-44 of the attached BMHR Official Statement.
Additionally, in both programs , the City selected on a
public bid basis , bond underwriters to assist the City
-25-
in structuring the bond issue, preparing the Official
Statement and in 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
attached BMIR Official Statement and on the cover page
and in pages 22-41 of the BMHR Official Statement.
It is anticipated that future programs of the same kind
would include a bond underwriter.
-26-
' 8.0 APPENDIX
8. 1 �4ULTI-FAMILY RENTAL This Program provides financing for the new construction,
HOUSING DEVELOPMENT rehabilitation, and acquisition and rehabilitation of
PROGRAM structures with four or more rental units.
The borrower must agree to a five-year rent-regulatory
agreement and condominium conversion restriction to be
placed on the property in the form of a covenant, and to
a ban on discrimination to families with children in
units suitable for their occupancy.
Financing for the Multi-Family Rental Housing Development
Program is accomplished through the issuance and sale of
St. Paul Housing and Redevelopment Authority tax-exempt
housing revenue notes. These notes are considered
"Industrial Development Bonds," under Internal Revenue
Code Section 103B, and thus not prohibited by the pending
federal legislation affecting housing mortgage subsudy
bonds." The interest on the loans made possible by the
issuance of the notes are exempt from Federal and State
taxation, except for state corporation franchise taxes.
Local lending institutions accept the applications, and
underwrite the loans.
On December 12, 1979, the City' s Housing and Redevelopment
Authority approved as to form the Program's Master Note
Resolution and other documents it references, and authorized
staff to initiate projects and submit them to the HRA
for authorization to execute. This specific authorization
is in the form of a Supplemental Resolution. Following
the Supplemental Resolution, the note is executed, and
legal opinion rendered by bond counsel as to the tax-exempt
status of the note. On December 23 the first two projects
totaling $501 ,000 and involving 41 units were approved.
All loans under $1 ,000,000 are subject to the requirements
of the Internal Revenue Code, Section 103, that no more
, than 10% of the net proceeds of the note may be used
to pay project costs which are treated as "working capital ,"
e. g. , refinancing of existing indebtedness on the property.
Acquisition costs incurred subsequent to the effective
date of the Supplemental Resolution are financeable under
the program. In the case of loans over $1 ,000,000, but
less than $10,000,000, those limitations apply, as well
as additional limitation, such as computing all prior tax-
exempt financing for the same borrower in the City, plus
all capital expenditures within the City made by the
borrower within the previous three years. The minimum loan
is $50,000, and, as long as applicable law requires , the
-27-
lesser of $5,000 per dwelling unit on 50% of the as-is
value of the property must be put in eligible improve-
ments. To avoid conflict with pending federal legisla-
tion, no more than 5% of any loan may be used for the
acquisition or rehabilitation of an "owner-occupied
residence. "
8.2 BELOW MARKET INTEREST In April , 1979, the City of Saint Paul publicly issued
RATE HOME MORTGAGE $50 million in tax-exempt revenue bonds providing $41 .9
PROGRAM million in mortgages at 8 1/4% 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 $22,000.
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 afford-
ability 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 20% 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 homes purchased
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.
-28-
- ����•.
�
8.3 BELOW MARKET HOME In December, 1979, the City of Saint Paul 's Housing and
REHABILITATION LOAN Redevelopment Authority issued $47.9 million in tax-
PROGRAM exempt revenue bonds for home rehabilitation. The issue
provides $40.9 million in mortgage funds for the
acquisition and substantial rehabilitation or the acquisi-
tion 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 25% of
the appraised after-rehabilitation value of a structure
for purchasers of substantially rehabilitated buildings.
Income limits are waived for loans which involve rehab-
ilitation exceeding the lesser of $25,000 or 100� 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 Saint 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. ,
-29-
1 '
Revisions in Hearing Draft of 462C
p. 4 5th paragraph - phrase left out. Should read "With the rental market
becoming increasingly tight (particularly for families) , new rental
housing construction is essential . The cost of such new construction
units, however . . . "
p. 5 2.6 Report of the Migration Committee is referenced.
p. 5 2.7 last paragraph. Insert "lower income" between 7570 and elderly.
p. 6 3.0 Chart has been expanded to include cost estimates.
p. 7 3.1 Change in 3rd sentence. Should read "The Public Housing Agency
is currently making application for expansion of the Moderate Rehabilitation
Program with an additional 60 units. "
p. 8 3.6 Phrase left out. Third sentence should read "A description of
the City's initial Below Market Interest Rate Ownership Program of
1979 is included in the appendix. It is the City's intention to issUe
additional bonds to expand this program."
p. 8 3.7 Last paragraph. Change to "Additional legislation may be required
to provide for acquisition of single-family homes f�r rental use. "
p. 9 4.0 There will be subheadings throughout 4.0 to correspond to the
Chapters of the Housing Policy Plan.
p. 15 5.1 .1 Under exceptions, "A redevelopment project established pursuant
to Section 462.521 " should be added.
p. 16 5.1 .2 A section has been added to describe how the programs will meet
the needs of low and moderate income residents.
p. 16 5.3 This phrase should be added to the end of 2. . . . "and to encourage
economic integration. "
p. 16 5.4 Language on displacement has been changed.
p. 17 5.5 Last sentence ends after " . . .five years."
p. 17 5.6 Add to end of paragraph "This prohibition will be secured with a
covenant running with the land. "
p. 17 5.7 Add "This restriction will not apply to structures occupied primarily
by elderly or handicapped households."
p. 18 6.1 .2 A section applying to larger projects has been added.
p. 19 6.2.1 The work "Rental " has been added to the title.
p. 20 6.3 Should read "provided they are authorized to do so by resolution of
the City Council and meet previously described. . .bonds."
p. 22 7.2.1 Language has been added here to explain the concept of contracting
for services.
' TABLE OF CONTENTS
1 .0 INTRODUCTION 1
2.0 HOUSING NEED 2
2. 1 RENTAL OPPORTUNITIES 2
2.2 HOUSING REHABILITATION 2
2.3 SMALL HOUSING UNITS 2
2.4 FAP�ILIES AND LARGE FAMILIES 3
2.5 LOW AND MODERATE INCOME HOUSEHOLDS 3
2.6 MIDDLE AND HIGHER INCOME HOUSEHOLDS 5
2.7 ELDERLY AND HANDICAPPED HOUSEHOLDS 5
3.0 PROGRAM OBJECTIVES 6
3.1 REHABILITATION FOR RENTERS 7
3.2 CONSTRUCTION OF NEW RENTAL HOUSING 7
3. 3 MULTI-UNIT REHABILITATION FOR OWNERSHIP 7
3.4 NEW MULTI-UNIT OWNERSHIP OPPORTUNITIES 8
3.5 REHABILITATION OF SINGLE-FAMILY HOMES 8
3.6 SINGLE-FAMILY AND COOPERATIVE MORTGAGE LOANS 8
3.7 ACQUISITION OF SINGLE-FAMILY HOMES FOR LARGE 8
FAMILIES
4.0 HOUSING POLICIES TO BE �
IMPLEMENTED 4.1 POLICIES TO BE DIRECTLY IMPLEMENTED 10
4. 1 . 1 HOUSING SUPPLY �
4. 1 .2 AFFORDABLE HOUSING 1�
4. 1 .3 HOUSING ASSISTANCE 12
4.1 .4 NEIGHBORHOOD QUALITY 13
4.2 POLICIES WHICH WILL BE INDIRECTLY IMPLEMENTED 14
4.2. 1 HOUSING SUPPLY 14
4.2.2 AFFORDABLE HOUSING 14
4.2.3 HOUSING ASSISTAyCE 15
4.2.4 NEIGHBORHOOD QUALITY � 15
4.2.5 HOUSING OPPORTUNITY 16
5.0 BOND FINANCED HOUSING »
PROGRAM POLICIES 5.1 INCOME OF HOUSEHOLDS TO BE SERVED 17
5.1 .1 INCOME LIMITS 1�
5.1 .2 MEETING THE NEEDS OF LOW & MODERATE 18
INCOME HOUSEHOLDS
5.2 PURCHASE PRICE LIMITS 1$
5.3 SITE LOCATIONS 19
5.4 DISPLACEMENT 19
5.5 RENT REGULATORY AGREEMENT 9
5.6 CONDOMINIUM CONVERSIONS 19
i
' TABLE OF CONTENTS (CONTINUED)
5.7 DISCRIMINATION AGAINST CHILDREN IN RENTAL 19
HOUSING
5.8 HEALTH, SAFETY, AND ENERGY REQUIREMENTS 20
5.9 QUALITY OF PROJECTS 20
6.0 FINANCING METHODS 21
6.1 MULTI-FAMILY HOUSING DEVELOPMENT 21
6.1 .1 NEW CONSTRUCTION AND REHABILITATION OF 21
MULTI-FAMILY RENTAL PROPERTY
6.1 .2 LARGER RENTAL PROJECTS 21
6.1 .3 NEW CONSTRUCTION AND REHABILITATION OF
MULTI-FAMILY OWNER-OCCUPIED PROPERTY 22
6.2 NEW CONSTRUCTION AND REHABILITATION OF SINGLE- 22
FAMILY PROPERTY
6.2.1 ACQUISITION OF SINGLE-FAMILY PROPERTY FOR 22
LARGE FAMILY RENTAL
6.2.2 NEW CONSTRUCTION AND ACQUISITION AND 23
REHABILITATION OF SINGLE-FAMILY OWNER-
OCCUPIED PROPERTY
6.3 PORT AUTHORITY & HOUSING & REDEVELOPMENT 23
AUTHORITY
7.0 ADMINISTRATION 24
7. 1 DEPARTMENT OF PLANNING AND ECONOMIC DEVELOPMENT 24
7.2 ADMINISTRATIVE PROCEDURES AND COSTS 24
7.2. 1 IMPLEMENTATION METHODS 25
8.0 APPENDIX 27
8. 1 MULTI-FAMILY RENTAL HOUSING DEVELOPMENT PROGRAM 27
8.2 BELOW MARKET INTEREST RATE HOME MORTGAGE PROGRAM 28
8.3 BELOW MARKET HOME REHABILITATION LOAN PROGRAM 29
ii
' 1 .0 INTRODUCTION
As the availability and affordability of private market
financing for the construction, purchase and rehabili-
tation 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 continua-
tion 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 financ-
ing should be used in St. 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
opportunities for home ownership and to facilitate sub-
stantial rehabilitation of deteriorated single-family
homes.
-1-
' 2.0 HOUSING NEED
Based on survey and analysis of the current housing stock
and demographic data of St. 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 in un-
availability of private financing.
In addition, the lo�v multi-unit vacancy rate for the
metropolitan area in general (6.1% in 1979) and St. Paul
in particular (4.3% in 1979) makes it crucial for St. Paul
to preserve and expand rental opportunities to meet the
strong demand for rental housing. (See Inventory of
Housing Needs , Department of Planning and Economic Develop-
ment, November, 1979, Pages 10-11 ).
2.2 HOUSING REHABILITATION The City's 1974 Survey of Housing Conditions indicated
that housing conditions in St. Paul deteriorated between
the time of the 1960 Census and the 1974 survey.
Although there is evidence that this process of general
neighborhood decline is not continuing, there remains
an ongoing need for rehabilitation of the housing stock
throughout the City. According to the Housing Assistance
Plan, approximately 30,000 of the 112,508 housing units
in the city are in need of rehabilitation. (Housin9
Assistance Plan approved May 25, 1979. Further informa-
tion from the 1974 survey is contained in the Residential
ImProvement Strate , St. Paul City Planning,
February, 1977.
One particular rehabilitation need which has not received
emphasis in the past is rehabilitation of multi-unit
rental structures. This is a critical need in neighbor-
hood revitalization areas and is needed to some degree
in many older portions of the City.
District 8 has the largest concentration of older multi-
unit structures. As an indication of the level of multi-
unit rehabilitation needed there, in August of 1979
-2-
there were 132 multi-unit residential buildings that
had been inspected for certificate of occupancy but were
not yet certified because of improvement work needed.
At that time, a total of 303 buildings had been inspected
and 146 multi-unit buildings remained to be inspected.
In addition to District 8, rehabilitation of multi-unit
structures will also be emphasized in the six newly
established Identified Treatment Areas (ITA's). (See
Inventory of Housing Needs , Department of Planning and
Economic Development, Pages 9-10).
2. 3 SMALL HOUSING UNITS From 1950 to 1978, St. Paul ' s average household size
decreased from 3.38 to 2.46 persons per household. This
decline in household size has resulted in increased de-
mand for smaller housing units in both the ownership and
rental housing markets. Since household size is pro-
jected to continue to decline, the demand for small units
is expected to be a permanent segment of the market.
According to Metropolitan Council projections of housing
unit needs , approximately 64% of St. Paul 's new housing
construction over the next ten years should be one and two
bedroom units. (Metropolitan Council , (Proposed) Guide-
lines for Review of Housinq Elements of ompre ensive
Plans, March 13, 1978).
2.4 FAMILIES AND LARGE A critical housing need exists in the area of rental
FAMILIES 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 land-
lords 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 St. Paul is 5723 households, 1408 of which
are large families (5 or more persons). (See Estimated
Housin Assistance Needs and Program Mix Goals for
Metropolitan Area Communities , Housing Division, Metro-
politan Council , August, 1979).
2.5 LOW AND MODERATE According to income guidelines , approximately 50% of
INCOME HOUSEHOLDS St. Paul 's population is eligible for subsidized housing.
The income limit for Section 8 subsidized housing is 80%
of the SMSA median income, which is currently $16,800 for
a family of four.
-3-
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 estimates , 18,775 households in
St. 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 handi-
. capped, only the level of family and elderly need is used
in the allocation of housing assistance funds. The
elderly need is estimated to be 6051 households and the
family need is estimated at 5723 households, for a total
housing assistance need of 11 ,774 households.
Based on St. 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 ($16,800 to $23,100 currently for a family
of four) is in need of some type of housing assistance if
they are to enter the homeownership market in the face of
rapid escalation of the cost of housing.
Households at the upper end of this income category can
afford what Metro Council defines as "modest cost"
housing. Currently, modest cost housing is defined as
single-family housing selling below $55,000 or multi-unit
housing renting for $350 to $460 monthly for a family of
four or five.
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 �416 monthly in housing costs (based on the 25
percent income test). A $40,000 mortgage at 13 1/2%
interest rate results in a monthly payment of $460.
Taxes , insurance, and utilities will add $100 to $200
a month, 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 ($14,700 to $19,950) , 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.
-4-
At an average cost of $40,000 per unit, an apartment or
rental townhouse for such a family, financed at a
12 percent interest rate over a 30-year period, results
in an approximate monthly rental of $576. Families
between 70 and 95 percent of the median income can
afford $300-$400 a month in housing costs.
2.6 P�IDDLE & HIGHER INCOME An economically diverse population and economic inte-
HOUSEHOLDS gration within neighborhoods are established city ob-
jectives. The major recommendations of the St. 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 representa-
tive of the metropolitan area population. " (Saint Paul ,
Population Change: Challen e and 0 ortunit , 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 re-
development and economic integration.
2.7 ELDERLY & HANDICAPPED Housing needs of the handicapped household are very
HOUSEHOLDS difficult to ascertain. The 1970 census reported 15,393
handicapped persons in St. Paul , and the Metropolitan
Council estimates that about 3� of the one and two
person households eligible for subsidized housing are
handicapped. (Estimated Housing Assistance Needs and
Program Mix Goals for Metropolitan Area Cor�nunities,
Housing Division, P�etropolitan Council , August, 1979).
Although their numbers are declining slightly, elderly
households continue to comprise a sizeable share of
St. Paul 's population. Two years ago, it was estimated
that the 1980 elderly population would approximate
32,210 persons. (See Demographic Information Profile
of St. Paul , St. Paul City Planning, March, 1978 .
In their estimates of housing assistance need, Metro
Council estimates that 7570 lower-income elderly and
handicapped households are inadequately housed. (See
Estimated Housing Assistance Needs and Program Mix Goals
for Metropolitan Area Communities , Housing Division,
Metropolitan Council , August, 1979) .
-5-
� 3.0 PROGRAM OBJECTIUES
On the basis of the needs identified, the following
objectives are established for bond financed housing
programs in St. Paul :
Potential Average
Program Range Per Unit Program
Activity (Units) Cost Dollar Range
IMPROVEMENT & EXPANSION OF
RENTAL HOUSING SUPPLY
l . Rehabilitation of multi- 500-700 Units $30,000 $ 15,000,000 - $ 21 ,000,000
unit structures for rental
occupancy
2.Construction of new 600-1500 Units $45,000 $ 27,000,000 - $ 67,500,000
rental housing
IMPROVEMENT OF OWNER
HOUSING & EXPANSION OF
OWNERSHIP OPPORTUNITY
3. Rehabilitation and pur- 150-225 Units $60,000 $ 9,000,000 - $ 13,500,000
chase of ownership units
in multi-unit structures
4.Construction of new 200-250 Units $75,000 $ 15,000,000 - $ 18,750,000
housing in multi-unit
structures for owner oc-
cupancy, purchase of units
5.Rehabilitation and pur- 700-800 Loans $65,000 $ 45,500,000 - $ 52,000,000
chase of single-family
homes
6.Expansion of modest- 700-900 Loans $60,000 $ 42,000,000 - $ 54,000,000
cost ownership opportu-
nities by providing mort-
gage loans for the pur-
chase of existing or new-
ly constructed single-
family homes or coopera-
tive units
PROVIDE 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
-6-
3. 1 REHABILITATION FOR Because of the need for rental units and the difficulty
RENTERS 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 rehabilita-
tion with as little increase in rental rates as possible.
Rental units to be rehabilitated under this program will
include units assisted under the Section 8 moderate
rehabilitation program and may include units assisted
under the Section 8 substantial rehabilitation program.
Section 8 moderate rehabilitation assistance has been
committed for 75 units from fiscal 1980 funds. The
Public Housing Agency is currently making application for
expansion of the Moderate Rehabilitation Program with an
additional 60 units. A description of the multi-family
rehabilitation program instituted by the City is included
in the appendix.
3.2 CONSTRUCTION OF NEW As indicated in the draft housing policy, it is the City s
RENTAL HOUSING intention to maintain a balance between rental and owner-
ship opportunities in n�ew construction so long as rental
demand is not met effectively in other ways. Bond financ-
ing is necessary to produce modest cost units to realize
market rate development that will include Section 8
assisted units. Because of the overall limitations on
the City's bonding capacity for housing and because of
the lack of Section 8 assistance available to the City, a
major portion of this objective will have to be achieved
through Minnesota Housing Finance Agency financing.
3. 3 MULTI-UNIT Condominiums provide needed alternative ownership possi-
REHABILITATION FOR bilities for the City's growing population of smaller
OWNERSHIP 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 financing 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.
-7-
3.4 NEW MULTI-UNIT As indicated in the Housing Policy Plan, a variety of
OWNERSHIP OPPORTUNITIES attached ownership opportunities (townhouses, condo-
miniums) are needed to provide alternatives to single-
family homes for smaller households in the City's neigh-
borhoods. 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 Financing will be provided for rehabilitation of single-
SINGLE-FAMILY NOMES family and owner occupied properties both to remedy
serious deterioration and to improve energy efficiency.
St. Paul 's Below Market Home Rehabilitation Program was
designed in part to take advantage of the opportunity for
achieving rehabilitation of deteriorated properties
through households in the market for ownership units.
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 of 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 Rehabilitation Program
is included in the appendix.
3.6 SINGLE-FAMILY & One of the most important opportunities which the bond
COOPERATIVE P�ORTGAGE financing tool provides is the opportunity to make financ-
LOANS ing 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 owner-
ship opportunities will broaden the income-range of house-
holds for which ownership is possible. A description of
the City's initial Below Market Interest Rate ownership
program of 1979 is included in the appendix. It is the
City's intention to issue additional bonds to expand this
program. In accordance with 462C.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 ACQUISTION OF Low and moderate income arge households requiring units
SINGLE-FAMILY HOMES with three or more bedrooms represent the most difficult
FOR LARGE FAMILIES housing need to meet in St. Paul at the present time.
-8-
(�ousinq St. Paul 1980-1990, draft). 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. Acquisition
of single-family homes by a non-profit entity for rental
to large families with incomes below 110 percent of the
metropolitan median family income is planned. 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.
Additional legislation may be required to provide for
acquisition of single-family homes for rental use.
-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 St. Paul 1980-
1990, draft). Other policies wiii be imp �emen ed in-
directly or to a lesser extent, depending upon the
specific guidelines of each program.
4.1 POLICIES TO BE Policies which will be directly implemented by the bond
DIRECTLY IMPLEMENTED finance programs include the following:
4. 1 .1 HOUSING SUPPLY
OBJECTIVE 1
CONSTRUCT AT LEAST 10,000 PdEW HOUSING UNITS IN ST. 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 & 2 & 3 BEDROOM OWNERSHIP
HOUSING UNITS WILL BE 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 NEIGHBORNOODS FOR
HOUSEHOLDS OF ALL INCOME LEVELS.
-10-
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 CONSTRUCTION.
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 �XPANSION 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 REHAB-
ILITATED WITH THE USE OF SUBSIDIES AND REGULATIONS AS
NECESSARY TO ENSURE THAT RENT INCREASES APJD DISPLACEMENT
ARE MINIMIZED. (SEE ADDITIONAL POLICIES UNDER REHABILI-
TATION. )
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 CONTINUED RENTAL DEVELOPMENT AT LEAST
SU�FICIENT TO REPLACE LOST UNITS AND TO MAKE EFFECTIVE
USE OF AVAILABLE SUBSIDY RESOURCES.
POLICY A5
PARTICULARLY IN THOSE AREAS WHERE DISPLACEMENT IS IDENTI-
FIED 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
POTENTIAL 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.
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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, CON-
VERSION AND IMPROVEMENT ACTIVITY IS GOVERNED IN PART
BY THE DEMONSTRATED AVAILABILITY OF SATISFACTORY AL-
TERNATIVE HOUSING WHEREVER DISPLACEMENT IS A FACTOR.
POLICY All
THE CITY WILL CONTINUE TO PARTICIPATE IN HOUSING DEVELOP-
MENT PROJECTS THROUGH BOND FINANCING AND OTHER COST RE-
DUCING 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 ST. PAUL.
POLICY Al2
THE CITY SHOULD ENSURE THAT THE MINNESOTA HOUSING
FINANCE AGENCY HOME OWNERSHIP PROGRAM RESOURCES, AND ANY
OTHER AVAILABLE PUBLIC MEANS FOR PROVIDING BROADER
ACCESS TO HOME OWNERSHIP ARE FULLY AND EFFECTIVELY USED
IN THE CITY.
POLICY A18
THE CITY SUPPORTS THE FORMATION OF COOPERATIVES TO
ENSURE CONTINUED HOME OWNERSHIP OPPORTUNITIES FOR LOW�
AND MODERATE INCOME HOUSEHOLDS AND TO LESSEN THEIR
POTEP�TIAL FOR DISPLACEMENT FROM MULTI-UNIT APARTMENTS.
a. ENCOURAGE COOPERATIVE 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 HOUS�NG WHICH INCLUDES SOME
THREE BEDROOM ANO LARGER UNITS.
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POLICY C4
CONTINUE TO SUPPORT THE DEVELOPP4ENT OF ASSISTED HOUSING
FOR ELDERLY HOUSEHOLDS OPJLY IN THOSE PdEIGHBORH00DS
WHERE THE EXISTING SUPPLY IS LOW AND 41HERE 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 RENABILITATION AND AS AN AID TO NEIGHBOR—
HOOD REVITALIZATION.
POLICY C11
PROVIDE ASSISTANCE THROUGH SUBSTANTIAL AND MODERATE
REHABILITATION TO THE EXTENT THAT OPPORTUNITIES CAN BE
DEVELOPED.
POLICY C12
USE SECTION 8 RESOURCES WHERE APPROPRIATE TO MAINTAIN
HOUSING OPPQRTUNITIES FOR LOWER INCO��E HOUSEHOLDS IN
AREAS WHERE DISPLACEMENT IS OCCURRING.
4.1 .4 NEIGHBORHOOD QUALITY
POLICY Q9
THE CITY WILL CONTINUE TO CHANNEL REHABILITATION LOANS
APJD GRANTS TO LOWER AND MODERATE INCOME HOMEOWNERS
THROUGHOUT THE CITY.
POLICY Q11
WHERE PUBLIC ASSISTAP�CE IS PROVIDED FOR MULTI—UNIT
REHABILITATION, CARE MUST BE TAKEN TO ENSURE THAT THE
REHABILITATION WILL NOT RESULT IN EXCESSIVE RENTAL RATES
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 NECESSARY
AND WHERE AVAILABLE TO AVOID DISPLACEMENT. WHERE
HOUSING ASSISTANCE CANNOT BE MADE AVAILABLE, RENT REGU—
LATORY AGREEMENTS SHOULD BE USED TO AVOID DISPLACEMENT.
—13—
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 HOf�ES WILL BE SECOND IN
PRIORITY ONLY TO MEETING HEALTH AND SAFETY REQUIREMENTS.
4.2 POLICIES WHICH WILL BE Policies which will be implemented to a lesser extent,
INDIRECTLY IMPLEMENTED depending upon program guidelines , include the
following:
4.2.1 HOUSING SUPPLY
POLICY S7
THE CITY L�dILL 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 NOUSING
POLICY A2
DEMOLITION OF OCCUPIED RENTAL UNITS MUST BE LIMITED AND
TEMPERED BY THE AVAILABILITY OF ALTERNATIVE HOUSING FOR
THOSE OCCUPANTS.
POLICY A13
THE CITY WILL CONTINUE TO ENCOURAGE THE FINANCIAL IN-
DUSTRY 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.
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4.2.3 HOUSING ASSISTANCE
OBJECTIVE 3
ENSURE THAT ADDITIONAL HOUSING ASSISTANCE IS MADE AVAIL-
ABLE TO MEET THE NEEDS OF LOWER INCOME HOUSEHOLDS IN
ST. PAUL.
POLICY C13
A MIX OF MARKET RATE AND ASSISTED UNITS IN FAMILY DEVELOP-
MENT IS ENCOURAGED. PROPOSALS FOR FAMILY DEVELOPMENT
WITH A 20% ASSISTED/80% MARKET-RATE P�IX WILL CONTINUE TO
BE CONSIDERED HIGH PRIORITY, HOWEVER.
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 ST. PAUL'S
RESIDENTIAL QLOCKS BY 1990.
A.REALIZE SUBSTANTIAL IMPROVEMENT OF 1000 RESIDENTIAL
BLOCKS THROUGH PUBLIC ACTION AND PRIVATE REINVESTMENT.
B.MAINTAIN AND CONSERVE 1680 RESIDENTIAL BLOCKS.
C.ACHIEVE ENOUGH REHABILITATION TO REDUCE SI��
- UNITS TO NO MORE THAN 15% OF TOTAL HOUSI�''
OBJECTIVE 5
ACHIEVE WEATHERIZATION OF PT
IDENTIAL STRUCTURES OVEp
TIAL ACHIEVE��IENT IN T'
TO REDUCE USE OF ''
' S.0 BOND FINANCED HOUSING PROGRAM POLICIES
5. 1 INCOME OF HOUSE- It is the City s policy to improve housing opportunities
HOLDS TO BE SERVED for persons of all income levels. Municipal Bond financ-
ing can be used to increase affordability of housing
acquisition and rental for low and moderate income house-
holds and stimulate much needed reinvestment otherwise
infeasible in redevelopment areas.
5.1 .1 INCOME LIMITS
Programs Income Limits Exceptions
Rehabilitation and At least 20% of ten- Without regard to in-
new construction of ants eligible for come limits if projects
multi-family rental Section 8 assistance occupied primarily by
housing elderly persons; or
Up to 25% of ten-
ants without regard Projects occupied pri-
to income marily by handicapped
persons; or
At least 55-80% ten-
ants of low and mod- A development located
erate income as de- within a redevelopment
fined by MHFA as area established pur-
either: suant to Chapter 472A;
or
A.110% of the HUD
median income A development located
($23,000) within an industrial
development district
B.The MHFA income established pursuant to
limit for multi- 458.191; or
unit developments
(�28,050) A redevelopment project
established pursuant to
Section 462.521
Rehabilitation and Not to exceed the 20% of all loans without
new construction of greater of 110% of regard to income if lo-
single family owner- HUD median income cated within a Develop-
occupied structures ($23,000) or 100% of inent District pursuant to
��HFA income limits Chapter 472A.03; or
During the first A redevelopment project
six months of the established pursuant to
program, 50% of the Section 462.521 ; or
funds available to
households with in- An Industrial Develop-
comes below 90% of inent District pursuant
the Program Income to 458.191 ; or
Limits
,�
Programs Income Limits Exceptions
Up to 20% of pur- t•lhere necessary to further
chases without re- policies of economic
gard to income integration
5.1 .2 MEETING THE NEEDS OF LOW AND MODERATE INCOME
HOUSEHOLDS
St. Paul 's bond financing capability will be used for
the types of housing programs identified in 3.0. These
program objectives are based on the housing needs of
St. Paul 's population which are not being met by the
private market.
These programs will meet the needs of low and moderate
income households by increasing the supply of rental
housing through new construction and rehabilitation,
broadening the income range of households for which owner-
ship is possible by providing single-family and coopera-
tive mortgage financing, providing financing for rehab
of single-family homes , and providing rental housing for
large families through the acquistion of single-family
homes.
Section 5.0 identifies city policies which will be used
to guide the establishment of the programs listed in 3.0.
These policies , especially the ones concerning displacement,
condominium conversions , income limits, rent regulatory
agreements, and discrimination against children are de-
signed to ensure that, where possible, housing acquired,
constructed, or rehabilitated for low and moderate in-
come residents continues to serve that income group.
5.2 PURCHASE PRICE LIMITS
Purchase Price
Program Limits Exceptions
Rehabilitation and Not to exceed three Not to exceed four times
new construction of times the income the income limits estab-
single-family owner limits established lished in the same pro-
occupied structures for same program gram, for loans qualify-
($69,300 using ing without income limits
110% median)
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5.3 SITE LOCATIONS Activities to be financed by bond funds will not be
targeted to limited areas geographically within the city
except in the following respects:
1 .P�ew construction and rehabilitation to include housing
assistance for lower income households will be guided
by the locational priorities of the Housin9 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 displace-
ment, priority will be given to projects which wil� meet
the housing needs of those who have been displaced so
that housing alternatives will be available in their
neighborhoods.
5.5 RENT REGULATORY In projects involving rehabilitation or development of
AGREEMENT rental housing, a rent regulatory agreement will be en-
tered into to prevent unreasonable rent increases. The
agreement will be jointly reached by the City, lender,
and owner, and will provide sufficient rental income to
meet debt service, operating expenses , and a reasonable
return on equity. The agreements will be in effect for
a minimum of five years.
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 oc-
cupied or vacant. Where rehabilitation for condominium
use is financed, priority will be given to providing
modest cost units. Conversion of suitable non-residential
property to condominium use is encouraged. Conversion
of City-financed newly constructed or rehabilitated
rental housing to condominiums will be prohibited for a
minimum of five years. This prohibition will be secured
by a covenant running with the land.
5.7 DISCRIMINATION AGAINST In newly constructed or rehabilitated rental housing
CHILDREN IN RENTAL HOUSING assisted under bond financed programs , property owners
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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 Rehabilitated structures of three or more dwelling units
ENERGY REQUIREMENTS 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 compatability with surrounding development.
Projects which it is determined will have an adverse
impact on the neighborhood environment will not be funded.
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- 6.0 FINANCING METHODS
6. 1 MULTI-FAMILY HOUSING 6.1 .1 NEW CONSTRUCTION AND REHABILITATION OF MULTI-
DEVELOPMENT FAMILY RENTAL PROPERTY
Financing for the new construction or rehabilitation of
structures with four or more rental units is provided
through the issuance and sale of St. Paul Housing and
Redevelopment Authority's Housing Revenue Notes. These
Notes are considered "Industrial Development Bonds"
under the Internal Revenue Code Section 103(b) and thus
are not prohibited by the pending federal legislation
affecting housing mortgage subsidy bonds. Local
�� ��
lending institutions accept applications and apply their
normal underwriting standards in determining approval .
All loans under $1 million may be subject to the require-
ments of the Internal Revenue Code Section 103(b) that
no more than 10% of the net proceeds of the note may
be used to pay project costs which are treated as "wo�king
capital ," e.g. , refinancing of existing indebtedness on
the property. In the case of loans over $1 million but
less than $10 million, those as well as other limitations
apply. In existing buildings the lesser of $5,000 per
unit or 50% of the as-is value of the property must be
put into rehabilitation as long as applicable law requires.
Since the Minnesota Housing Finance Agency (MHFA) is
allocating the entire set-aside for Section 8 new con-
struction units, a primary vehicle for providing rental
opportunities to low and moderate income persons, St. Paul
will be referring a large percentage of its proposals to
MHFA for mortgage financing. St. Paul will be utilizing
its financing mechanism in projects which are either too
small in number of units for the MHFA process or in
projects for which Section 8 subsidies arenot needed and/or
desirable for the site.
Since tax-exempt notes are sold to local lending institu-
tions on a project-by-project basis, it is difficult to
predict the exact number of participants. Lenders may sell
"participations to other lending institutions" or other-
wise arrange secondary purchasers for this kind of
financing.
The new construction and rehabilitation of multi-family
structures for cooperative use is encouraged.
6.1 .2 LARGER RENTAL PROJECTS
Larger projects which require separate financing programs
will be carried out by the City, the Port Authority or the
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Housing and Redevelopment Authority.
6. 1 .3 NEW CONSTRUCTION AND REHABILITATION OF MULTI-
FAMILY OWNER-OCCUPIED PROPERTY
• Assuming favorable resolution of pending federal leg-
islation with regard to mortgage subsidy bonds, St. Paul
anticipates a public issuance of tax-exempt revenue
bonds for the purpose of providing below-market financing
for the purchase, and purchase and rehabilitation of
owner-occupied units in multiple dwelling buildings.
These units will be in the form of condominiums or
cooperatives, townhomes and other commonwall housing
developments. New construction will occur in the down-
town area as well as on scattered sites in neighborhoods.
Purchase and rehabilitation will occur primarily in vacant
multi-family rental buildings and in non-residential
buildings convertable to residential use, and secondarily,
in currently occupied multi-family rental buildings.
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 1979 Below Market
Interest Rate home Mortgage Program and the Below Market
Home Rehabilitation Loan Program.
6.2 NEW CONSTRUCTION AND 6.2. 1 ACQUISITION OF SINGLE-FAMILY PROPERTY FOR LARGE
REHABILITATION OF SINGLE- FAMILY RENTAL
FAMILY PROPERTY Again, assuming that the ability to sell tax-exempt bonds
is restored, 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 Section 8 Certifi-
cate Program, as well as other possible, but still un-
defined, 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.
-22-
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 Tess
participation in a public sale among eligible lenders.
Private placements involving previously described qualified
lenders is contemplated.
Additional legislation may be required to provide for
acquisition of single-family homes for rental use.
6.2.2 NEW CONSTRUCTION AND ACQUISITION AND REHABILITATI N
OF SINGLE-FAMILY OWNER OCCUPIED PROPERTY
As previously indicated, St. Paul undertook two bond issues
in 1979, one, the Below Market Interest Rate Home Mortgage
Program involving financing for the new construction,
acquisition, and acquisition and substantial rehabilitation
of owner-occupied, one-to four-unit dwellings; the other,
the Below Market Home Rehabilitation Program involving
the acquisition and substantial rehabilitation of owner-
occupied, one-to four-unit structures.
Providing that favorable resolution of the federal
legislation is achieved, 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 in-
volving previously described qualified lenders is also
contemplated.
6. 3 PORT AUTHORITY AND The St. Paul Port Authority and the Housing and Redevelop-
THE HOUSING AND REDEVELOP- ment Authority may issue revenue bonds to finance multi-
MENT AUTHORITY 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.
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� 7.0 ADMINISTRATION
7. 1 DEPARTMENT OF St. Paul ' s Department of Planning & Economic Development
PLANNING & ECONOMIC (PED) carries out a comprehensive, integrated, and
DEVELOPMENT coordinated approach to planning and development functions.
The department is composed of four divisions--Community
Development, Renewal , Planning and Economic Development.
The Renewal Division assists residents , neighborhoods,
the downtown area, private businesses , and public agencies
in the development, redevelopment, financing and rehabili-
tation 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 With regard to Multi-Family Rental Housing, the lender and
PROCEDURES AP�D COSTS 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 , assisting
in the preparation of scopes and bids , assisting in under-
writing and determining Fair Market Rents and rent
controls , and assisting in surveying of existing tenants.
The 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 1% 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 reg-
ular 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.
-24-
in structuring the bond issue, preparing the Official
Statement and in 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
attached BMIR Official Statement and on the cover page
and in pages 22-41 of the BMHR Official Statement.
It is anticipated that future programs of the same kind
would include a bond underwriter.
-26-
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 Renewal Division will be
devoting at least 50� of their time toward implementation
of the Multi-Family Programs. Support staff will include
legal 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 , Briggs and Morgan. 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.
The two project managers will be devoting 30% of their
time toward implementation of the Single-Family Program.
Support staff wi11 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 Mort-
gage Program and the Below Market Home Rehabilitation
(BMHR) Loan Program, th� 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 the pre-cor�nitting 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 probably include a Program Adminis-
trator. The Program Administrator's functions and fees
are fully described in pages 9-10 and 35-37 of the
attached BMIR Official Statement and in pages 10-11 and
43-44 of the attached BMHR Official Statement.
Additionally, in both programs , the City selected on a
public bid basis, bond underwriters to assist the City
-25-
8.0 APPENDIX
8. 1 MULTI-FAMILY RENTAL This Program provides financing for the new construction,
HOUSING DEVELOPMENT rehabilitation, and acquisition and rehabilitation of
PROGRAM structures with four or more rental units.
The borrower must agree to a five-year rent-regulatory
agreement and condominium conversion restriction to be
placed on the property in the form of a covenant, and to
a ban on discrimination to families with children in
units suitable for their occupancy.
Financing for the Multi-Family Rental Housing Development
Program is accomplished through the issuance and sale of
St. Paul Housing and Redevelopment Authority tax-exempt
housing revenue notes. These notes are considered
"Industrial Development Bonds," under Internal Revenue
Code Section 103B, and thus not prohibited by the pending
federal legislation affecting housing "mortgage subsudy
bonds." The interest on the loans made possible by the
issuance of the notes are exempt from Federal and State
taxation, except for state corporation franchise taxes.
Local lending institutions accept the applications , and
underwrite the loans.
On December 12, 1979, the City' s Housing and Redevelopment
Authority approved as to form the Program's Master Note
Resolution and other documents it references, and authorized
staff to initiate projects and submit them to the HRA
for authorization to execute. This specific authorization
is in the form of a Supplemental Resolution. Following
the Supplemental Resolution, the note is executed, and
legal opinion rendered by bond counsel as to the tax-exempt
status of the note. On December 23 the first two projects
totaling $501 ,000 and involving 41 units were approved.
All loans under $1 ,000,000 are subject to the requirements
of the Internal Revenue Code, Section 103, that no more
than 10% of the net proceeds of the note may be used
to pay project costs which are treated as "working capital ,"
e.g. , refinancing of existing indebtedness on the property.
Acquisition costs incurred subsequent to the effective
date of the Supplemental Resolution are financeable under
the program. In the case of loans over $1 ,000,000, but
less than $10,000,000, those limitations apply, as well
as additional limitation, such as computing all prior tax-
exempt financing for the same borrower in the City, plus
all capital expenditures within the City made by the
borrower within the previous three years. The minimum loan
is $50,000, and, as long as applicable law requires , the
-27-
lesser of $5,000 per dwelling unit on 50% of the as-is
value of the property must be put in eligible improve-
ments. To avoid conflict with pending federal legisla-
tion, no more than 5% of any loan may be used for the
acquisition or rehabilitation of an "owner-occupied
residence."
8.2 BELOW MARKET INTEREST In April , 1979, the City of Saint Paul publicly issued
RATE HOME MORTGAGE $50 million in tax-exempt revenue bonds providing $41 .9
PROGRAM million in mortgages at 8 1/4% 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 $22,000.
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 afford-
ability 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 20% 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 homes purchased
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.
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8.3 BELOW MARKET HOME In December, 1979, the City of Saint Paul 's Housing and
REHABILITATION LOAN Redevelopment Authority issued $47.9 million in tax-
PROGRAM exempt revenue bonds for home rehabilitation. The issue
provides $40.9 million in mortgage funds for the
acquisition and substantial rehabilitation or the acquisi-
tion 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 25% of
the appraised after-rehabilitation value of a structure
for purchasers of substantially rehabilitated buildings.
Income limits are waived for loans which involve rehab-
ilitation exceeding the lesser of $25,000 or 100% 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 Saint 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.
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