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275507 WHITE - CITY CLERK ��/�� PINL� - �FINANCE � �0 CANARY - DEPARTMENT G I T Y O F S A I N T �A tT L COUIICII =� BLU6 - MAYOR File N O. Cty Atty/SDM . , o n il Resolution Presented By � Referred To Committee: Date Out of Committee By Date RESOLUTION OF THE COUNCIL OF THE CITY OF SAINT PAUL CONCURRING IN THE ACTION OF TH� HOUSING AND REDEVELOPMENT AUTHORITY OF THE CITY OF SAINT PAUL, MINNESOTA AMENDING RESOLUTION 80-5/7-1 AND APPROVING AND AUTHORIZING EXECUTION OF A LETTER OF UNDERSTANDING BETWEEN PIPER, JAFFRAY & HOPWOOD, DAIN BOSWORTH INCORPORATED, MERRILL LYNCH, PIERCE, FENNER & SMITH, INCORPORATED AND THE HOUSING AND REDEVELOPMENT AUTHORITIES OF THE CITIES OF SAINT PAUL AND MINNEAPOLIS WHEREAS, by its Resolution No. 80-5/7-1, adopted May 7, 1980, the Board of Commissioners of the Housing and Redevelopment Authority of the City of Saint Paul, Minnesota (HRA) , authorized the joint preparation with the Minneapolis Housing and Redevelopment Authority (Authority) of a Housing Mortgage Revenue Bond Is�ue in an aggregate amount not to exceed $150,000,000, authorized retention of fiscal consultants and co-bond counsel with costs allocated as a part of such issue, or to be shared in the event of no issue, and authorized joint preparation of a Housing Program for submission to the Minnesota Housing Finance Agency for its approval of the Program and Issue; and WHEREAS, by its Resolution No. 80-8/6- adopted August 6, 1980 the Board of Commissioners of the Housing and Redevelopment Authority of the City of Saint Paul, Minnesota amencled said Resolution No. 80-5/7-1 to change the a5gregate principal amount of bonds to approximately $250, 000,OOO;and WHEREAS, by its Resolution No. 80-8/6- the Board of Commissioners of the HRA also approved the proposal of Piper, Jaffray & Hopwood, Dain Bosworth, Incorporated, Merrill Lynch, COUNC[LME[V Request by Department o • Yeas Na s /' Hunt y /�} � � levine in Favor Maddox McMahon . Showalter __ A g81[1 S t BY Tedesco wison Form Approve y Cif� A t y Adopted by Council: Date c Cerlified Passed by Council Secretary BY By Approved by 14ayor: Date — P� by Mayor for S issi ncil By - WHITE - CITY CLERK n PIN1� ,- �FINANCE �j CAMIRY - DEPARTMENT COUIICII � � ��S�j BLUE - MAYOR G I T Y O F S A I N T PA IT L File N O. � � . Cty Atty/SDM Council Resolution Presented By Referred To Committee: Date Out of C�ommittee By Date 2. Pierce, Fenner & Smith, Incorporated contained in a letter of understanding concerning underwriting services and fees and authorized execution of an acceptance thereof. NOW THEREFORE BE IT RESOLVED by the Council of the City of Saint Paul that it hereby concurs in the increase in the aggregate amount of Housing Mortgage Revenue Bonds to be issued to approximately $250,000,000 and the approval of the terms of the underwriters ' proposal contained in the Letter of Understanding. Yeas COUNCILME Na s Reques g by Depa�tment of: Y 1 Hunt � �.JI Levine In Favor Maddox / McMahon 0 B snowetcer - __ Against Y Tedesco Wilson Au� 2 6 19g0 Adopted by Council: Date — Form Approv b C' y ` Certified --e by un � ec ry BY _ � . By A''�. � n Ap by Mayor for Sub i si ouncil Approved avor: Dat �itiL�� ,,,•� By BY Ptt�LtSHED S E P 6 198fl g.,i f, ,-..>,=� �',,�'3`� �L+' ►��.i�L� .�'_�.' .�:��L �� :�� ''��` �L:;. �'�.; o�,�xc�: o., Tr:��, cr.��,_� co��c�� pr�� f- .,, . .1,.;� S: ;i\�;.. - _ E �� . � �i �:.,� t-J ��• Date : August 21 , 19$0. `�;';\-�.�.. ,�,.�.,� C � fa� Yi ��"� � � � � �' � �i�` - � C� : �ai�i� F��a�� i�y CQ��;��1 . -. �� a �j : ��k�11�� 9� FINANCE, MANAGEMENT & PERSONNEL _ , George McMahon ; �1�aieman., rr�akes the fait�eving ��porfi csn �. �". ' � Orc3inance �9) � �esotu�ion � � � � ��ti er (CONTINUED FROM PAGE 1 ) � �� At its meeting of August 21 , 1980, the Finance Committee recommended approval of the following: � � � 9. Resolution placing title of Trainee (Custodian Engineer) in Section 3.0 - � Custodial Engineers-Ungraded. (11231-GM) � 10. Resolution establishing rate of pay for Trainee (Custodian Engineer). (11232-GM) 11 . . Resolution granting time-and-one-half pay for major holidays to employees in - Special Employment Section of Ungraded Division who are paid on hourly basis. (11.233-GM) - � 12. Resolution establishing biweekly salary rates �for Grade 39 in ProfessTOna1- Administrative Supervisors Group. (11246-GM) ' 13. Resoiution approving 'collateral pledged by designated bank to protect funds of City of Saint Paul heJd in said bank. (11247-GM) - 14. Resolution permitting teachers to remain in the group insurance up to five � years if they are on Mobility Leave. (11254-GM) 15. Resalu�ion transferring $23,000 from Contingent Reserve General to General Government Accounts-Urban Corps to provide "match" monies for student-intern salaries. (11260-GM) ` . -5 7- han e a ree ate 16. Resolution amending prev�ous Resolution No 80 / 1 , to e g g g principal amount of bonds from �150 million to approximately $250 million for . McKnight Foundation Housing Project. (11276-GP�) 17. Resolution authorizing transfer of funds for payment to $tate Auditar for Central Village audit for months of March, April and May 1980. (11278-GM) `;i-I'Y 'r��LL S6VENTH FLOOR S:11tiT PAUL, ibFI\\�.SOTc1 5�i�' . t�1 Q1: 12/�975 � ' Rev. : /�/76 , F,m.1- � I6—�„56 �� • EXPLANA7IQN QF ,i�ISi'RI#T�VE 0#�ERS . _ ,..; _ � ` Frf�ol �.�. _ . ;, � � � . . � � �. � , 1,. �_ . . � � . . . - . . . . . _ Date: Au�sc 6, �9so �; _ � � , � �. � :� ��'� � 10: �R C�OR6E LATIN�R � }y � . . . . .. . . . . ' ' A h ��1: Terry Mc N�llis4� ti. ' j RE: MC KNiGHT FOUNDATIaN ;'; ,., . � , � ..�W��l�` s ACTIO�t REQUESTEQ: ,,.,, �:� �uthorize submission of City Council� Resolution � � �� 4 � : � r . .} : r �� . }� �:, P#JRP�„JM��.t�TIp1�1� FOR Tti 1 S`AcT I ON: ;x � ,..,.,. �� .., ��., . , ;: - <=. Letter of IJr�derstanding hz►s been se�c�essfulfy negotiat�d �vith.�t#at�ssta�ce�f ` `'' c�-bend c.�wrtsel and our fiscal cortsult�r�t with t� #ir�ns of Pi�' Jaffray dt �Ivpv�c�d, Y=� ,.: '- Inc., D�i��,spvorth, Inc., and M�rrill�I..Ynch Pierce Fenner dc Smith, Inc.., atac�t� R be�rt approtr#sd by the Finar��e Cor�mi�fee on July 17, afld wfi�l bc s�if'`ted to th� �� , �RA Boa�td tm August 6. . Pcevious Reisolutior► authorized ataf# to pc�ceed but ro�rith ' ` . a� �mit'�q��IS�miliion, and the anticipated issue si�e is.now $�5Q rnillian. � �. �. :a ' (�TT1�F1M�N1'$: '' . �� Council Rasolution, previcws Resolution and Letter of [Jnc�rst�ndir�g �, � . ': . ; � � s; �, �. , � ;: . . . � . . � � ' . . . . . � . � . . . . . . . ' .' � . y' . . . 7 . . . � , ' � . . � . � . � . . , . ` ' fi , . , . .� . i, � . � ' . . . - ; . � �i��. . . . . . � . . . . . . . . .. � � � .. ' . ` �B: . . . . . ' � � . .. ". . . . . " . ' ,��. , - - . � .. . . ' � � . � .. y: . . . ' � � . . , . � . . - .. . . . . � .. . . '..`�' . . � . . . . ' . . . , � . . . . . ��,5 . , �� RESOLUTION NO. 80-,�� 7 - / ��S�� / � A RESOLUTION OF THE HOUSING AND REDEVELOPMENT AUTHORITY T OF THE CITY OF SAINT PAUL, AUTHORIZING THE JCIINT PREPARA- TION WITH THE AOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF MINNEAPOLIS OF A HOUSING MORTGAGE REVENUE BOND ISSUE, IN AN AGGREGATE PRINCIPAL AMOUNT NOT TO EXCEED $150, 000, 000; AUTHORIZING THE RETEi�iTION OF FISCAL CONSULTANTS AND BOND COWiSEL; AUTHORIZING THE STAFF OF THE HOUSING AND REDEVELOPMENT AUTHORITY OF THE CITY OF SAINT PAUL TO PREPARE A HOUSING FROGRAM FOR SUBMISSION TO THE MINNESOTA HOUSING FINANCE AGENCY AND TO DO ALL THINGS NECESSARY TO SECURE THE APPROVAL OF THE MINNESOTA HOUSING FINANCE AGENCY FOR THE ISSUANCE OF HOUSING MORTGAGE REVENUE BONDD PURSUANT TO THIS . RESOLUTION WHEREAS, the Housing and Redevelopment Authority of the City of Saint Paul (HRA) has been created pursuant to the Municipal . Housing and Redevelopment Act, as amended, cohstituting Chapter 487 of the Minnesota Laws of 1947, as amended, and appearing as Minnesota Statutes, Sections 462. 411 et seq. (the "Enabling Act") ; and WHEREAS, the Municipal Housing Programs Act, Chapter 306 of the Minnesota Laws of 1979 (the "Act") , declares and provides that a city or a housing and redevelopment authority may develop and — administer programs of making or purchasing mortgage 1.oans to � =inance the acquisition of single family housing primarily by low m and moderate income persons and families anywhere within its boundaries (the "Program") ; and WHEREAS, the Act �;_ ovides that a city or housing and redevelop- �nent authority may issue and sell revenue bonds or obligations in order to finance the Program which bonds shall be payable exclusively �rom the revenues of the Program; and � wHEREAS, the HR.A has determined that the City of Minneapolis and the City of Saint Paul are in a unique position to cooperate and assist one another in carrying out the purposes of the Act to the greater benefit of each city by the joint and mutual development and administration of a single Program to make mortgage loans available to finance the acquisition of single fainily housing by low and moderate income persons and families anywhere within the boundaries of either city; and WHEREAS, neither the City of Saint Paul nor the State of �linnesota or any political subdivision thereof shall be liable an the Bonds , and the Bonds shall not be a debt of the City of Saint Paul , the State of riinnesota or any political subdivision �hereof nor shall give rise to a charge against the general credit or �axing power of the City of Saint Paul, the State of Minnesota or ��ny political subdivision thereof (including without limitation �he HRA) , nor shall be payable out of any funds or properties of �he H� other than revenues of the � Program; NOW, THEREFORE, BE IT RESOLVED BY THE BOARD OF COMD2ISSIONERS OF 7'F�E IiOUSING AND REDEVELOPMENT AUTHORITY OF THE CITY OF SAINT - • z . �AUL, MINNESOTA: Section 1. That the joint 'preparation of a housing mortgage revenue bond issue by the HRA and the Housing and Redevelopment ..__ �luthozity in and for the City of Minneapolis in an aggregate principal amount not to exceed $150 , 00O, OOQ is in the public interest of the City of Saint Paul, and that the preparation of such a joint bond issue by the City Planning and Economic Development Department, acting as the staff of the HRA is therefore authorized. ; - ' Section 2 . That for the purpose of preparing the joint bond issue the retention of Evensen-Dodge, Inc. , as fiscal cansultants, to grovide necessary assistance for a fee to be determined in accordance with the attached letter designated as Exhibit A and � - the provision of Section 6 . Section 3. That for the purpose of preparing the joint bond issue the retention of the law firms of Holmes & Graven, Chartered, � and Bri-gs & Morgan, P.A. to act as co-bond ccSunsel for a fee to be determined in accordance wi.th the attached Ietters desigiiated as Exhibits B and C and the provision of Section 6 . Section 4. That in the event that no bonds shall be issued under the proposed Program, the HRA and the Housing and Redevelopment Authority in and for the City of Minneapolis shaZl each bear its own administrative costs and shall egually share the costs af the fisacl consultant anc� bond• counsel, suc�h:` costs to be -determined in accordance with Exhibits A, B, and C. _..... Section S . That the staff of t-he HRA is authorized and - directed to prepare a housing prograin as reguired by Minnesota Statutes, Section 462C. 03 of the Act; to present said housing program to the HRA for public hearing and approval and to submit said program to the Minnesota Housing Finance Agency for their approval as required by Minnesota Statutes, Section 462C. 04 . Section 6 . That the staff of the HRA is authorized and directed to assist and cooperate with the Housing and Redevelopment Authority in and for the City of Minneapolis in all ways necessary to achieve the purposes of this resolution. Upon receipt of a signed and attested copy of a resolution of the Commissioners of the Housing and Redevelopment Authority in and for the City of Minneapolis _ approving preparation of a joint Program proposal , authorizing retention of the fiscal consultant and co-bond counsel identified in Sections� 2 and 3 , and committing to payment of costs substantially in accordance with Section 4 hereof, 'HRA and the Minneapolis Authority staff may issue a letter to the consultant and counsel directing co.��nencement of the provision of services and the incurring of costs. PASSED AND APPROVED THIS day of , 198Q. HOUSING AND REDEVELOPMEI�'T AUTHORITY OF THE CITY OF --•-�� SAINT PAUL, MINNESOTA (SEn I,) • BY Chairperson ��cr�tarv ••..�Te — c�.. cLe•..c . o�wiK � � FIN�M�E COLL[IC1Z � � �C�ti�Fr — OCP�i+TUEqT � File NO. a�.,,E .. p � ITI" t7F SAI \T � �1L• L • Cty Atty�JTH , , Counc�l Resolu�ion Presented B�� Referred To Committee_ Date Out of Committee By Date RESOLUTION OF THE COUNCIL OF THE CITY OF SAINT PAUL CONCURRING IN ACTION OF THE HOUSING AND REDEVELOPMENT AUTHORITY OF TAE CITY OF SAINT PAUL, MINNESOTA, AUTHORIZING JOINT PREPARATION OF A HOUSING MORTGAGE PROGRAM WITH THE CITY OF PKINNEAPOLIS AND REVENUE BOND ISSUE IN CONNECTION THEREWITH WHEREAS, by its Resolution No. 80-5/7-1, adopted May 7, 1980, the Board of Commissioners of the Housing and Redevelopment Authority of the City of Saint Paul, Minnesota (HR.A) , authorized the joint preparation with the Minneapolis Housing and Redevelopment Authority . (Authority) of a Housing Mortgage Revenue Bond= Issue in an aggregate amount not to exceed 5150, 000, 000 , authorized retention of fiscal �onsultants and co-bond counsel with costs allocated as a part of such issue, or to be shared in the event of no issue, and authorized joint preparation of a Housing Program for submission to the Minnesota Housing Finance Agency for its approval of the Program and Issue; , and WHEREAS, there is a need for the additional provision of • adequate housing and sources of housing construction or purchase fina�cing not being met by private enterprise, nor by City Housing Finance Programs undertaken to date , which would be significantly ameliorated by the under��king with the City of 2�tinneapolis and its Authority and with the financial assistance of the McKnight Foundation of the proposed Housing Pragram and Revenue Bond Issue; and � � WHEREAS, the preparation of a Housing Finance Program and Revenue Bond Issue for the purpose of making or purchasing mortgage loans to finance the acquisition of single family housing primarily by low and moderate income persons and families within the City COUNCILI�SEN Requested by Department of: Yeas Nays . Butler In Favor Hozza Hunt � Levine Against BY Maddox Showalter Tedesco Form Approved by City Attorney Adooted b�• Cuuncil: Date __- — • � ! �---1--= ��.._ � '` �. ! ��, Certified F'assed by Cuuncii Secretary BY ; ` �` ' Bt Appro�ec' by tiiavor: Da1e Approved by Mayor for Submission to Council B}• _ BY .�LJEQ�_ M�OORTMENT GITY OF ,-SAIi`'T PAUL co�ncii � File N 0. � � � Council Resolution Presented B}� F Referred To Commi ttee: Date Out of Committee By Date 2. is necessary and in the public interest as contributing to the public health and welfare of th� community in the provision of adequate housing for its citizens. NOW TFiEREFORE, BE IT RESOLVED by the Council of the City of Saint Paul tha� it hereby concurs in the joint preparation by the Housing and Redevelopment Authorities of Minneapolis and _ Saint Paul of a Housing Programpproposal and Revenue Bond Issue in the aggregate not to exceed $150, 000,000, the retention of fiscal consultants and band counsel, and the submission of said Program and Issue for the approval of the Minnesota Housing Finance Agency. FURTHER RESOLVED that all City Officers and Departments are authorized and directed to render every aid and assistance in the preparation and submission for approval of said Program - and Issue. , ' � COUNC(L31EN Yeas Nays Requested by Department of: Butler In Favor Hozza _ Hunt Le�ine Against BY Maddox • Showalter Tedesco Form Approved by City Attorney ,�dopted b}• Council: Date -- -- ---— Cert�fird Pa��ed by Council Secretary BY B�. , Appruved hy `tavor. Date Approved by Mayar for Suhmission to Council B�• By ,�,:.. .•.��,�. _—_- - � . �A�� Letter of Understanding Mr. Gary E. Stout, Executive Director St. Paul Housing and Redevelopment Authority 14th Floor City Hall Annex St. Paul, 1VIinnesota 55102 ; �, Mr. James R. Lemley, Executive Director Minneapolis Housing and Redevelopment Authority 217 South Third Street Minneapo�is, Minnesota 55401 R,E: Miruteapolis/ Saint Paul Single Family Housing Program Gentlemen: Piper, Jaffray ac Hopwood Incorporated, Dain Bosworth Incorporated, and Merrill Lynch, Pierce, Fenner & Smith, Incorporated, welcome the opportunity to repre- sent the Housir� and Redevelopment Authorities of the Cities of Minneapolis and Saint Paul in connection with their proposed Single Family Housing Program (the "Program") to be fin�nced with the proceeds of their revenue bonds in a principal amount of apQroximately $250,000,000. The exact principal amount af bonds is to be determined within the near future. Pursuant to this Letter of Understanding we will act as the Managing Underwriters of a syndicate of:underwriters to make a public offering of the bonds and we are prepared to work with you, your staffs, your legai counsel and such other advisors or consultants as you may choose to employ, to structure and market the above band issue on your behalf for this Program. Minneapolis/Saint Pau.l Family Housir►g Pro�ram Assumptions: It is anticipated that the above mentioned Program will be structured utilizing a combination of approximately $250 million of tax-exempt bond proceeds, with assistance from one or more of the following private and/or governmental sources: - McKnight Foundation Grant Funds (currently estimated to be $5,000,000); - MeKnight Foundation "Program Re�ated Investment" ("P.R.I.T') funds (the principal amount of which is currently undetermined, except that the anticipated amount is substantially in excess of $5 million); - The respective Cities may apply for UDAG funds to be utilized in the Program, in a principa� amount yet to be determined; and tilr. Gary E. Stout, Executive Director, St. Paul Housing and Redevelopment Authority tiIr. James R. Lemley, Executive Director, Minneapolis Housing and Redevelopment Authority Page Two - The respective Cities will consider the use of federal or other governmental assistance when and if available and feasible. At the present time, we i.mderstand that the respective HRA's anticipate a tax- exempt bond sale in the approximate principal amount of $250,000,000, the proceeds of which will be used for the financing of home mortgages at a below market interest rate. Mortgage Pool Policy Criteria: It is anticipated that the bond proceeds and other financial resources available for the Program will be used in approximately the following manner (subject in all respects to the provisions of Minnesota Statutes, Chapter 462C and other appli- cable law): Pool of Mortgages: 20�0 of the funds available for home mortgage loans are to be reserved for some period of time for persons and families with an adjusted gross income of 80% or below of the HUD SMSA median income, primari�y for the purchase of existing houses without substantial rehabilitation; 80% of the funds available for home mortgage loans are to be reserved far some period of time for new construction or substantial rehabilitation (substantial rehabilitation being defined as impravements costing at least $25,000 or 50% of the "as is" val�ue of the home, whichever is less). 25% of the funds available for new construction or substantial rehabili- tation (that is, 20°�b of the total pool) �re to be reserved for persons and families with no income limits, to be used to finance homes located exclusively in redevelopment area.s. Further, a priority use of mortgage loan funds is to be allocated to newly constructed commonwall, highly energy-efficient, high-density structures, such as � townhouse and condominium dwelling units. Priority is also to be given to compatibly designed "in-fill" housing construction. Grant and P.R.I. funds are to be used primarily to assist lower income persons and families to purchase homes by assisting such persons with down-payment and monthly payment requirements through "equity participation" loans: or otherwise "leveraging" such funds v�ith bond proceeds. Mr. Gary E. Stout, Executive Direetor, St. Paul Housing and Redevel.opment Authority Mr. James R. Lemley, Executive Director, Minneapolis Housing and ftedevelopment Authority Page Three Investment Banker Relationship We at Piper, Jaffray & Hopwood Incorporated, Dain B�worth IncorQorated, and Merrill Lynch, Pierce, Fenner ac Smith, Incorporated, have been asked to proceed in the Structuring of the above mentioned Program, notwithstanding the fact that currently pending Federal legislation relating to the tax-exempt status of mortgage subsidy bonds makes these bonds not currently marketable. It is hoped that once the bond issue and program-related materials have been developed, the legislative process may be completed in such manner and to such an extent as to allow for a bond sale. Our relationship with the Cities of Minneapolis and Saint Pau� and their respective Housing and Redevelopment Authorities will be an investment banker/client relationship. We will perform all of our duties in accordance with the highest of standards. Pursuant to our recent discussions, Piper, Jaffray & Hopwood has designated R. Rodney Pakonen as its principal representative on this financing, Dain Bosworth has designated Francis X. Fallon as its principal representative and Merrill Lynch has designated Alfred Hurley as its princiQal representative. Mr. Pakonen will receive the help of Steven W. Oxberry and Rabert Sylvester. NTr. Fallon will work with James F. Dlugasch, A1 fred Hurl eY will receive the help of Julie Fassett . Delos Steenson of Piper, Richard Joseph of Dain, and Ed Swanton of Merrill Lynch will be involved in the negatiation of the Bond Purchase Agreement and the pricina and marketing of the bond issue. If there is any change in the persons who will be primarily responsible for structuring the issue, you will be so notified. We anticiQate that the HRA's may wish to assign certain specific responsibi�ities and duties to each of the representatives of Piper, Dain, and Merrill Lynch and we will cooperate with the HRa�s in making these assignments at the appropriate time. As your investment bankers, we expect to perform the following explicit functions, and any other aQpropriate services which may be necessary to assist you in carrying out the financing of the Program and the issuance, sale and delivery of the bonds under the terms and conditions of this Letter of Understanding and a Bond Purchase Agreement to be executed on the date of sale of the bonds. Assuming the full and continuing cooperation of the representatives of the respective Housing and Redevelopment Authorities, the Cities, the MeKnight Foundation, and your other advisors and consultants, we will: 1. Attend meetings with your staff, your governing body and its committees, ineluding, but not limited to, at your request, meetings of the HRA Boards, City Councils, meetings with State and Federal officials and McKnight Foundation representatives, and meetings with participating lenders, insurors, builder-developers, real estate agents and other groups or individuals deemed appropriate. Mr. Gary E. Stout, Executive Director, St. Paul Housing and Redeve�opment Authority Mr. James R. Lemley, Executive Director, Minneapolis Housing and Redevelopment Authority Page Four 2. Advise and assist, where appropriate, City and HRA staff and policy- makers in the development and determination of relevant policy and program issues involved in this financing. 3. Work closely with bond counsel and with ocir counsel, Dorsey, Windhorst, Hannaford, Whitney & Halladay, and City legal steff and others in the preparation of documents necessary to the marketing of your bond issue, including the bond resolution, the trust indenture, the mortgage origination agreements, the mortgage servicing agreement and other necessary documents. This will include our making suggestions as to bond issue structure, covenants to be made under the trust indenture, and security provisions. 4. Assist in the design and drafting of appropriate program guidelines for the implementation of the housing finance program. These documents, together with the mortgage origination agreements and the mortgage servicing agreements, will detail origination and servicing policies and procedures to be followed by the participating lenders and servicers. 5. Assist, as requested by the Authorities, in the preparation and submittal of the "Program" required by Minnesota Statutes, Chapter 462C. 6. It is understood (i) that the underwriters are assuming no responsi- bility for the PRELIMINARY OFFICIAL STATEMENT and FINAL OFFICIAL STATEMENT beyond that which is imposed upon them by the Securities Act of 1933 and the Securities Exchange Act of 1934; and (ii) that the Managing Underwriters and the HRA's will, on the date of delivery of the bonds, certify to the Trustee(s) on behal.f of the holders of the bonds, that nothing has come to their attention to cause them to believe that the information contained in the Official Statement contains any untrue or misleading statement of a material fact or omits to state any material fact necessary to make the statements contained therein, in light of the circumstances under which they are made, not misleading. 7. Submit the bond issue for consideration by the netional rating agencies and make presentations to such agencies in order to obtain the highest possible credit rating. 8. Conduct information meetings for institutional and other potential investors, if deemed necessary at appropriate times and in appropriate places. 9. Make, at the appropriate time, � firm proposal to the Joint Pricing Committee, appointed by the Authorities, wherein we wiU agree to purchase the entire principal amount of the bonds. Such proposal, in the form of a Bond Purchase Agreement, will specify an interest rate or rates, the purchase price, and the prices at which we will make bona fide offerings of such bonds to the public. If our proposal is accepted by you, we will Qurchase or p�ace the entire principal amount of the bonds at the agreed terms. Mr. Gary E. Stout, Executive Director, St. Paul Housing and Redevelopment Authority Mr. James R. Lemley, Executive Director, Minneapolis Housing and Redevelopment Authority Page Five 10. Merrill Lynch shall manage the i.mderwriting syndicate subject to final approval by the Joint Pricing Committee. ; Compensation for Investment Bankin� Services: The Bond Purchase Agreement will specify the purch�se price at whieh the bonds will be sold by the resQective Housing and Redevelopment Authorities and purchased by the underwriters. The difference between the purchase price of the bonds and the price at which the bonds are resold to the publie will constitute the entire compensation to the underwriters, and is generally referred to as the "gross spread." Such gross spread will be composed of four different elements or components, as follows: (i) a "management fee" for structuring the issue (which is compensation to Piper, Dain, and Merrill Lynch for performance of the duties set forth in 1 through 7 above); (ii) the "takedown" (which generally provides the selling commissions received by the full syndicate); (iii) net "underwriting fee" (which compensates the various syndicate members for the risk associated with joining the underwriting synid- cate); and (iv) "expenses" (which reimburses the underwriters for the expenses which they incur, as set forth below, in structuring and underwriting the bond issue). It is agreed that the "management fee" to be paid to Piper, Dain, and Merrill Lynch upon the successful sale and issuance of the bonds will be as follows: Management Fee Principal Amount of Bonds $3.50 per $1,000 Up to $30,000,000 $3.25 per $1,000 From $30,005,000 to $50,000,000 $3.00 per $1,000 From $50,005,000 to $75,000,000 $2.75 per $1,000 From $75,005,000 to $100,000,000 $2.50 per $1,000 From $100,005,000 to $200,000,000 $0 Over $200,000,000 Such "management fee" for a principal amount of bonds shall be $3.50 per $1,000 for the first $30,000,000, plus $3.25 per $1,000 for any amount from $10,005,000 to $50,000,000, plus $3.00 per $1,000 for any amount from $50,005,000 to $75,000,000, plus $2.75 per $1,000 for any amount from $75,OQ5,000 to $100,000,000, pl.us $2.50 per $1,000 for any amount from $100,005,000 to $200,000,000; plus there will be no Mr. Gary E. Stout, Executive Director, St. Paul Housing and ftedeveloQment Authority Mr. James R. Lemley, Executive Director, Minneapolis Housing and Redevelopment Authority Page Six management.fee paid for any amount in excess of $200,000,000; provided that; in no event shall the portion of the management fee paid to Merrill Lynch exceed ten percent of the total management fee. If the Program is financed with two separate bond issues, one by the Minneapolis HftA and one by the Saint Paul HRA, which are structured and marketed at substantially the same time, the princiQal amount of each will be aggregated and the schedule will be applied against the sum of both issues and allocated pro rata to each HRA. The amount of the remaining three components ("takedown", "net underwriting f ee", and "expenses") is currently unknown because of a possible change in market conditions and other variables, but will be broken down for your consideration (and will be examined by your �nancial consultants) at the time the Bond Purchase Agreement is submitted and the bonds are sold. The "expenses" component (which is separate and distinet from the other three elements) will equ� the amount then estimated to be necessary to pay the items set forth below. Syndicate and Pricing Approval The structure of and allocation within the underwriting syndicate, as well as all pricing of the bonds, shall be approved by a Joint Pricing Com mittee to be established by the Housing and Redevelopment Authorities of the cities of Minneapolis and St. Paul for such purposes. Allocation and Payment of Expenses Upon execution of the Bond Purchase Agreement, such agreement shall state that the underwriters will pay the following expenses from the "expense" portion of the gross spread: the fees and disbursements of its counsel, the costs of the printing of the Preliminary Of�cial Statement, the final Official St�tement, the Bond Purchase Agreement, the Letter of Instructions, the Agreement Among Under- writers, the Legal Investment Survey and the blue Sky Memorandum, the regis- tration or filing fees with the various states, any advertising expenses, the fees of the Municipal Securities Rulemaldng Board, the fees of the Minnesota Municipal Advisory Counci�, bond clearance fees, telex or telecopy charges, computer charges (other than for the verifications set forth below), and any out-of-pocket exQenses of the Underwriters. There shall be paid by the respective Housino and Redevelopment Authorities or Cities, out of the proceeds of the bonds or other funds, the following: premiums for mortgage pool insurance and special hazard insurance, the f ees and disbursements of bond counsel and counsel and staff for the respective City or Housir�g and Redevelopment Authority, the costs of preparation and any printing of the bond resolution, the ordinance, the indenture, the program administration agreement, the mortgage oriaination and mortgage servicing Mr. Gary E. Stout, Executive Director, St. Paul Housing and Redevelopment Authority Mr. James R. Lemley, Executive Director, Minneapolis Housing and Redevelopment Authority Page Seven - -- agreements and similar documents, if any, the fees and disbursements of your financial advisor(s), the fees and disbursements of the firm of verified public accountants which will verify the cash-f,low projections for the program and the yield on the bonds and mortgage loans for'arbitrage purposes, the initial fees of the program administrator, if any, the trustee and the paying agents, the cost of printing of the bon�, any f ees associated with filing the housing plan and program with the Metropolitan Council and the Minnesota Housing Finance Agency, the fees and expenses of Moody's Investors Service and Standard & Poor's Corporation for rating the bonds, and any out-of-pocket expenses of representatives of the respective City or Housing and Redevelopment Authority. If for any reason the bonds are not issued, the Underwriters and the HRA's agree to pay the respective items listed above which they would have been liable to pay if the bonds had been issued. Effect of Pending Federal Tax Legislation It is understood that, as of the date hereof, H.R. 5741 (which has been approved by the United States House of Representatives), if enacted in its current form, would greatly restrict the principal amount and application of'`mortgage subsidy bond proceeds. It is unknown at the present time whether a financing structured under the "permanent Qrovisions" of H.R. 5741 would even be marketable or whether any compensation would be paid to underwriters of such bonds directly or indirect.ty. It is also recognized that the Senate finance Committee has apporoved e resolution, introduces by Senator Long of Louisiana, recommending that the full Senate express its "sense of the Senate" to the effect that any mortgage subsidy bonds issued before December 30, 1980 would be exempt from federa� income tax if substantially all of the spendab�e proceeds are committed to the purchase of mortgage loans within 12 months of the date of issuanee. The full Senate has recently acted upon this recommendaton, but it is presently unclear what effect this will have on this issue. With respect to such developments, it is understood that: (i) Piper, Dain, and Merrill Lynch are prepared to proceed immediately with the structuring of the Program (without any Federal limits), so as to be in a pasition to market the bonds when and if the Long proQosal is adopted by the full Congress; such work will continue unti� the earlier of (a) the announcement set forth in c�ause (ii) below is made, or (b) the day on which Congress is scheduled to recess for the year; (ii) if Mr. Long publicly announces that he will not pursue such measure any further but will instead commence hearings on a mortgage subsidy bond bill, the financirg will be "put on the shelf" to await the final applicable rules, unless we mutually agree to continue; Mr. Gary E. Stout, Executive Director, St. Paul Housing and Redevelopment Authority YIr. James R. Lemley, Executive Director, Minneapolis Housing and R.edevelopment Authority Page Eight (iii) if such final rules, incorporated in a bill agreeable to both the Senate and the House, provide a mechanism by which the bonds may be issued to finance the Program and additonally may be sold through a public offering with sufficient compensation to the underwriters, Piper, Dain,�and Merrill Lynch will immediately commence work on restructuring the financing in compliance with such permanent rules and proceed to an anticipated sale of the bonds as aforesaid; (iv) If no bond issue is ever completed, the HRA's shall have no obugation to compensate Piper, Dain, or Merrill Lynch for structuring the issue or to pay or reimburse any expenses incurred by Piper, Dain, and Merrill Lynch It is understood that this Agreement will be in effect unless revoked by either party upon thirty days' written notice, with payment by each of the parties of costs incurred by them to that date, in the manner herein provided. Respectively submitted, PIPER, JAFFRAY ac HOPWOOD INCORPORATED : ; BY _ ��i : DAIN BOS4V0 H INCORPORATED � By � , � MERRILL LYNCH, PIERCE, FENNER L�c SM1TH, INCORPORATED By J Mr. Gary E. Stout, Executive Director, St. Paul Housing and ftedevelopment Authority Mr. James R. Lemley, Executive Director, Minneapolis Housing and Redevelopment Authority Page Nine This proposal is hereby accepted on behalf of the Minneapolis Housing and R.edevelopment Authority on this day of , 1980. ; By And �� i�� This proposal is hereby accepted by the Housing and Redevelopment Authority of the City of Saint Paul on the day of , 1980. By And . - Approved by: /.' " � %'� �' --- . �, L y�� -��,'�-, --�;,� � Minneapolis HKA Staff Attorney Saint Paul City Attorney