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274022 WHITE — C�TV CLERK R r . PINK — FINANCE G I TY OF SA I NT PAUL Council p(q� CANARV - DEPARTMENT _ �<�'f r�� BL:.UE yMAVOR File NO. w `i �a `��A�'`'� Council Resolution Presented By Referred To Committee: Date Out of Committee By Date RESOLUTION ESTABLISHING A PRICING COMMITTEE TO ESTABLISH PRELIMINARY SIZE, NET INTEREST RATES AND NET SALE PRICE IN CONNECTION WITH THE RESIDEN'PIAL REHABILITATION REVENUE BOND TSSUE AND APPROVING A LETTER OF UNDERSTANDING WITH THE ISSUE UNDE RWRITERS WHEREAS, the Council of the City of Saint Paul, by its Resolution, C.F. No. 273339, adopted July 17, 1979 , gave preliminary approval to a below market home rehabilitation (BMHR) loan program and issuance of residential rehabilitation revenue bonds to finance the program, which issue it is estimated will be sold on November 29 , 1979 , upon final City Council approval; and WHEREAS, pursuant to said Resolution, the Department of Planning and Economic Development was authorized to negotiate for retention of underwriters to provide certain services in connection with the prog�am and to underwrite the issue which negotiations were undertaken with � Piper, Jaffray & Hopwood Incorporated and Dain Bosworth Incorporated, . resulting in the Letter of Understanding dated November 5 , 1979 , a copy of which is attached hereto as Exhibit A; and WHEREAS, in advance of final City Council approval of the bond sale, it is necessary to fix the size of the issue based upon lenders ' ' commitments, obtain a rating for the issue, establish preliminary prices snd to release the interest rate scale for sale of the issue to the underwriting syndicate; and WHEREAS, it is desirable to establish a Pricing Committee for these pu�poses and for the purpose of making price recommendations to the City Council upon it� consideration of the final bond issue _ resolution. COU[VCILMEN Requested by Department of: Yeas Nays Planning and Economic Deve1�mcant, [n Favor _ __ Against BY Form Approved by City Attorne Adopted by Council: Date � Certified Yassed by Council Secretary BY ` gy, t\pproved by Ylavor: Date _ Approved b or for Submission to Cou cil BY - – — BY WHITE - C�TV GLERK COI1t1C1I M�� PINK - FINANCE GITY OF SAINT PAUL CANqRV - DEPARTMENT BI.UE +- MAVOR File NO• Council Resolution Presented By Referred To Committee: Date Out of Committee By Date 2. NOW THEREFORE, BE IT RESOLVED by the Council of the City of Saint Paul that a Pricing Committee consisting of the Mayor, the President of the City Council, the Chair of the Council Finance , Management and Personnel Committee, and the Director of the Department of Finance and Management Services, or their designees , is hereby established with authority in consultation with City Staff and Bond Consultant and with the Underwriters to establish the size of the bond issue and preliminary prices for the issue being the net interest rates on the bonds and gross spread or underwriting discount, to release the proposed interest rate scale so established and preliminary Official Statement to the underwriter syndicate, and to make a recommendation to the City Council on prices for the bond issue on or before November 29 , 1979. BE IT FURTHER RESOLVED that the Letter of Understanding between the City, Piper, Jaffray & Hopwood Incorporated and Dain Bosworth Incorporated dated November 5, 1979 , is hereby approved for execution by the proper City officers. COU[VCILMEN Yeas Nays Requested by Department of: X� McMa.hon � (n Favor Planning and Economic Developnent � Hunt � Levine _ __ Against BY -, � Maddox Showalter Tedesco Form Approved by City Attorney Adopted by Council: Date ►�n\► �1 �197� Certified • s d by C unc.� . cre „ By � � B� /�1ppr v by lVlavor. a �ipV 19 �� Approve ayor for Submission to Council B `"�—'--_' — BY �� 1�'r_��.� ��u'� � � 1979 800 Multifoods Building 733 Marquette Avenue �� a--�,,. Minneapolis,Minnesota 55402 x�t�,�'�.-, 612/371-6111 4�,) Piper,Jaffray&Hopwood • INCORPORATED Esteblished 1895 Member New York Sfock Erchange,lnc. November 5, 1979 ' LETTER OF UNDERSTANDING The City of Saint Paul City Hall -• Saint Paul, Minnesota 55102 Attn: The Honorable Mayor George T. Latimer Re: City of Saint Paul Residential Rehabilitation Bonds Dear Mayor Latimer: Piper, Jaffray & Hopwood Incorporated and Dain Bosworth Incorporated welcome the opportunity to represent the City of Saint Paul as invest- ment bankers, for the City's Residential Rehabilitation Program to be financed with the proceeds of its Residential Rehabilitation Bonds (the "Bonds") in a principal amount to be determined within the next sixty days. We have been chosen by the City Council as the Managers of a �syndicate of Underwriters to make a public offering of the Bonds and we are prepared to work with you, your staff, your legal counsel, and such other advisors or consultants as you may choose to employ, to structure and market the Bond issue on your behalf for this Program. Our relationship with the City of Saint Paul would be an investment banker/client relationship, based upon a mutually agreed upon and under- stood list of duties. We will perform all of our duties in accordance • with the highest of standards. As your investment bankers, we expect to perform the following explicit functions and any others 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 condi- tions of this letter of understanding. Assuming the full and continuing cooperation of the representatives of the City and your advisors and con- sultants, we will: _. l. Attend meetings with your staff, your governing body and its committees, . including regular meetings of City Council members, meetings with State and Federal officials, meetings with participating lenders, insur rs, builder-developers, real estate agents and other groupa or indivi�uals deemed appropriate. �xH/.l3lT � � 2. Advise and assist, where appropriate, City staff and policy makers in the development and determination of relevant policy and program issues involved in this financing. 3. Woxk closely with Briggs and Morgan, P.A. , Bond Counsel, our counsel, Dorsey, Windhorst, Hannaford, Whitney & Halladay, and City legal staff 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 agreements and other necessary documents. This will include our making suggestions as to desired bond issue structure, covenants to be made under the trust in- denture and security provisions. 4. Assist in the drafting and desigii of the appropriate program guidelines for the implementation of the Program. These documents, together with the mortgage origination agreements and the mortgage servicing agree- ments, will detail origination and servicing policies and proce�ures to be fo�lowed by the participating lenders. 5. Coordinate and assist you in your preparation of the preliminary and the final Official Statement to be used in connection with the public offering and sale of the Bonds. 6. Submit the Bond issue for consideration by the national rating agencies and make presentations to such agencies in order to obtain the highest possible credit rating, 7. Conduct information meetings for institutional and other investors at appropriate times and in appropriate places. .8. Make, at the appropriate time, a firm proposal to you, wherein we will agree to purchase the' entire principal amount of the Bonds. Such pro- posal, in the form of a Bond Purchase Agreement, will specify an inter- est 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 purchase or place the entire principal amount of the Bonds at the agreed terms. The Bond Purchase Agreement will specify the purchase price at which the ' Bonds will be sold bq the City and purchased by the Underwriters. The dif- ference between the purchase price of the Bonds and the price at which the Bonds are resold to the public 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" (which is compensation to the Managers for performance of the duties set forth in 1 through 7 above); (ii) the "takedown" (which generally relates to the sales commis- � sions); � (iii) "underwriting fee" (which compensates the various Under- writers for the risk associated with joining the syndicate) ; and � (iv) "expenses" (which reimburses the Underwriters for the ex- penses which they incur, as set forth below, in structuring and underwriting the Bond issue) . It is agreed that the "management fee" to be paid 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 Privided, ttrat such "management fee" for a principal amount of Bonds in excess of $30,000,000 shall be $3.50 per $1,000 for the first $30,000,000 and $3.25 per $1,000 for any excess amount to $50,000,000, and $3.00 per $1,000 for any excess amount to $75,000,000. The amount of the remaining three components ("takedown", "underwriting fee" 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 financial consultants) at the ,. time the Bond Purchase Agreement is submitted and the Bonds are sold. The "expenses" component (which is separate and distinct from the other three elements) will equal the amount then estimated to be necessary to pay the items set forth below. Upon execution of the Bond Purchase Agreement (and such Agreement will so state) 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 Official Statement, the final Official Statement, the Bond Purchase Agreement, the Letter of Instxuctions, the Agreement Among Underwriters, the Legal Investment Survey and the Blue Sky Memorandum, the registration or filing fees with the various states, any advertising expenses, the fees of the Municipal Securities Rulemaking ' Board, the fees of the Minnesota Municipal Advisory Council, Bond Clearance fees, telex or telecopy charges, computer charges (other than for the veri- fications set forth below) and anq out-of-pocket e�cpenses of the Under- writers. There shail be paid by the City out of the proceeds of the Bonds the following: the fees and disbursements of Bond Counsel and counsel for the City or the Housing and Redevelopment Authority, the costs of prepara- tion and any printing of the Bond Resolution, the Ordinance, the Indenture and the Program Administration Agreement, the fees and disbursements of your financial advisor, the fees and disbursements of the firm of certified • public accountants which wi11 verify the cash-flow of the Program and the yield on the Bonds and mortgage loans for arbitrage purposes, the ini ial fees of the Program Administrator, the Trustee and the Paying Agents,�the cost of printing of the Bonds, the fees and expenses of Moody's Investors ; � y �� Service and Standard & Poor's Corporation for rating the Bonds and any out- of-pocket expenses of representatives of the City or the Housing and Rede- velopment Authority. If for any reason the Bonds are not issued, the Underwriters and the City agree to pay the respective items listed above which they would have been liable to pay if the Bonds had been issued. It .is understood that this "Agreement" will be in effect until revoked by either party upon thirty days' notice. It is further understood and agreed that the City is under no obligation by this Agreement to execute or de- liver the Bond Purchase Agreement Respectfully submitted, PIPER, JAFFR.AY � HOPWOOD INCORPORATED DAIN BOSWORTH INCORPORATED - By: Piper, Jaffray & Hopwood Incorporated sy DeLos V. Steenson Senior Vice President Public Finance Department This proposal is hereby accepted on behalf of the City of Saint Paul on this day of , 1979. Mayor George T. Latimer Bernard Carlson Approved by: City Attorney � j . i _ . ��`��:�� :�� BELOW MARKET HOME REHABILITATION LOAN PROGRAM To: The Council of the City of Saint Paul Tne program was given preliminary approval by the City Council on July 17, 1979. Program specifics are set forth in the attached advertisement copy and were considered by the City Council on October 1, 1979. On November 14, 1979 PED staff received lenders ' commitments in the amount of $51,000, 000 for program participation. On the basis of these commitments and the underwriters ' market analysis , the amount of the issue will be sized for presentation to the rating agencies on November 19, 1979. Preliminary pricing of the issue and release of this information and the preliminary Official Statement to the underwriters syndicate is scheduled for November 27 , 1979. Council consideration of the bond sale authorization would be November 29 , �1979 , with an optional date of December 6 , 1979. It is recommended that the City Council establish a Pricing Committee consisting of the Mayor, Council President, Finance Committee Chair, and the Director of the Department of Finance and Management Services, or their designees, to size and price the issue in consultation with the City's Bond Consultant, and by negotation with the underwriters make recommendations to the City Council in connection with final bond issue approval. The Letter of Understanding with the underwriters fixes the Management Fee at $3. 50 per $1,000 up to $30,000 ,000; $3.25 per $1,000 from $30-50,000,000; and $3. 00 per $1,000 from $50-75, 000,000. The amount of the gross spread or underwriters ' discount will be negotiated in the process of sizing, rating, subscription and pricing of the issue by the Pricing Committee, with assistance of the City Staff and Bond Consultant. It is recommended that the Letter of Understanding be approved. November 15, 1979. � �� James T. Hart � C r Mc e is � _ __ ___ __ _ __ ___ �:�:..�,:. . ; - �: ~�..�. .' 'F .,wa�... -. �^ �� w� �l � '- '8 � .��i1 S ;� _� �9 � .P t . .A��;�"�; / 'y � � .. .yvi# 1. �.?. 1 ��3y�,� �� _i�� .,� � ' �.�,, "�,� 'i _� � �j��";i ;� �;� . rtw�y`Q -_ �� W `� � �� '� ii :! ►.:t' _e::,�`.: :, .,. �i. . ' : ��..5�. ..ti�N-��— P 1 . . . ' ' � �.:✓.�..... �°�•.. . �t � . {[��J .. . . .. y . } �' _ . _��j 1` � 'f ., �.7 � +t� f� <� , :1 . Y}*'.� :'' ` ' �� '�•�i� �: �� '.� t� # ��k �� ~ . .r,: :?!� .�j�`�.7. '�� Y� . .. � .. ... . i _; ... , :,.:._... .._ .. �.� . � �:; �.,,- . Y` "�� - '� T�e Ci�y of St. Paut wili soon be offering o tow-interest home rehabil�4a• { �� -` ; fii�n l�an program for the Ru.chase and/or imprcvement af si��E�-farnily � ��r-� ' t�omes v,rithin the City of St. Paul. The {ocns wiil be avaitcbie to owner- `� t�;�•�.�,s<:,� �� A��::.� cccvpants and pu�chasers of dweltings that are at {east 20 years Qld. it is �a �''� :` ;�:� � �-s or��icipcted that the interest reste for eligible cpplicants wiN be approxi- 4 ��.r . �"�`�"� `K� mately 8�h% to 9�/z%. - '� � :��,K�s; � a� � ,l��a4:i d b .. �. •' j' �fi�a::...7 / . ,� }4.+�Y F . _ � J Nv �a 4.'�e"�.? �- -, . . . • ', �.. Y,�� .. �o �� t ��s: � � �-`�� r�� .�».�-� >,�� . : - �:-. . �� 1.) The mbximum available (oan for home improvements is anticipated to be � �' ' � -: ��;� ; ��-�.' ` $25,000. , : . . . • � -. ��:�'��,�: 2} The repayment period is one to twenty�yeors. , � "�� . �� - ,�, 3) 7f�e borrower's onnual adjusted gross income cannot exceed $24,000. �=�.� T� �. � Bcsicclly; deductions of $750.00 for each adult (maximum of two) and ' �-� S. � $500.00 for each child are allowcble. � �`"' � b��a��io� mart � �� e l��: �: �� . �� g � . ... _ � . :. � 1) The .program is directed toward dwellings that are in need of substantia! ��-�,�-. - rehobilifiation. :• � , � �. _R :�. ��. : �.= ' '. � `�. . � -� �' 2)Ti�e maximum available mortgcge loan for^o home in need of substcntia) : - �,��,_. - rehabilitation is onticipated to be $72,000. �`; x ? - . - : . , �- � 3). 7he borrower's cnnual cdjusted gross mcome cannot`exceed $24,000.. � _ . � ,, .,�. , (see cbove , �, , - � - �: � �.;� , ;; .�, � 4) Forms of financing avcilable= _- � ' �� ' _ � :- , . .. � � � � . .. , o�} /Vlortgage �incncing o��the 'cost of acquisition cnd substanticl .reha- bilitation. �>� , �_. � f � . , :,. . . ,. ,. . : . �: b} Refinancing of ex�sting�mortgages or contrccts for deed of dwellings � . ;��.: : �.� : .. . � � . : tanticl rehabilita#ion: " . ' wlien�necessary to ochieve,"subs • � - � . i� Purchase of a home;that h�cs been substcntially rehabilitcted, provid- _ � � � ed the borrower is tl�e first occupant of�#he newly rehabilitcited dwell- ' -� � ing. . . . . -:� ��,_ . .�.. . : ` . . �r . , , ... .. _ ,. y.+i" .:.-.._. : : :'� ..a. . .. . ' - '. . . , � ��. �R�e��r��t 1o��s: .,. , . _ .�� t . . . � _. "' I • ..a,. z�:e,..�...,,... E. �1} If the cost of rehabilitation exceeds the lesser of $25,000 or 100% of the • .-.� ` ' '`�' � � � -is value of the dwe{lin there are no income limits. � ' "�"`° �"� , � aPPrased as 9 ��.:,. t f} �' ' 2) The maximum available mortgage'locrn is enticipated to be $96,000. . ,�,r . ��} ;y 2�T s"" �� ':?'+� . . :.. � r '+1 "�S!� _ ��°��:�� .� -r�o �� f � s �� r��": � � �r �- ,_.. � �� .�.� ��»�cw..vt��=r . :N� x # t' 1) For owner-occupants wishing to re�finance existing indebtedness — Reha- a ,, .��y f�.��: � bilitation cost must totc►I et leost 25 /o of the approised as-is, value of ihe y '; . `r" ,�: ,.��.�� dweiling.� -� , � , a#� `'= n�F� �� 2) For purchasers of substantially rehabilitated property — Rehabilitation � � W47�� costs must total 25% of the after-rehabilitation appraised value of the � ��.� ,'�` dwelling. • .� _ � � :. c �z�.��::: i�; 4�:��r� ��:l��:E.a�to��wi s � � � i� 1) Elig;�aie improvements indude the correction of ail health and safety ' �"� � � �� deficiencies and the installation of energy conservation measures (attic insu- � � f� �: !� (ation, proper ventilation, caulking cnd weatherstripping, combination win- .�, - ►K dows and aoors). . � � "=ix�-- �j 2) G��er general improvements may be included after health, safety and � ,:, . - �� energy requirements are completed. � i -._ � !;� � , � ,; ; �,:: . :. �� , « ��r � � ' + R , : ��t. �� `��`l��i . . ' �` ' '` 1) All loans must be made to finance the rehabilit�tion or purchase of � H ir �. �� ' ` owner occupied one-to-four family residential housing, including condomini- �,_,. :.. � ums, and townhouses within the geographical boundaries of the City of St. � �:��,�.,,. I � !�� Pavl to be occupied by the mortgagee as his/her prin�ipol place of resi- .��.:w�. ir° . � !�' dence. • ; .,.�.,..�»... . -- �c:. � �.� ,� �� . • �y'�� iE: ��G■ ��:�� 'i ��l�i .� � ��; � -� s�� fu 1) Single-family — The city is concerned with the potential displaceme�t of �; �� (ow and moderote income renters and onticipates developing some limita- - �� : � tions on the amount of funds used to purchase prope that will dis (a �-�� -� ' � renters. _ . �Y p ce ,� � � � ' •2) Condominium conversion — Conversion of multi-famil ro erti ��''"� �" Y p p es will �`: �, ;:� not be allowed unless it creates new homeownership opportunities for (ow ��,� :� and moderate income families ' }:- ��,.�� :. � (�.e. sales price not to exceed $50,000) with - �� =; priority for purchasing given to the present occupant or if the building is 7�- �:�.�. � vocant or in the process of being vccated (i.e. vacate orders written by the - - �: �,� X � Housing Building Codes Division prior to September 1, 1979). �.� . � r , :,� 2 _ � �� I. � �ica��On _ . ■ = �-.�w Pp proce ur�. , : � }� 1) In the next several weeks the participafing lenders listed below will be in � 9 , cccepting applications. _� �:.. �� `�'� libe Stats E��k -� ' ` F'ast da�k St.h�l .. - 6nar�rry State 8=ak of St.P:�I '" 'y" "�� . 176 Sn�elling Avenue . ' �'. , 332 Minnewlo$lree►' 2475 West 7th Sheet "`" ` �� g� P.O.Box 43075 � - r . Sf.Paul,MN.35104 St.Paut,MN SSt 16 �' ':�I " r� St.Poul,MN 35164 •291-5231—Home Imptovement Loans 696-0787 - - . . ��' Firtt Bask Securif�r _ �t-ssai=�R��o�� , ; .,�,.:�"�`".! 2383 Universily Avenue T�111 C' Fe ltorthrue:tee�Shts Ba�k � ��, .�.�' St.Paul,MN 55114. .. � dOf�� , � . , : g Tre�compaer - �_ . .�t.':t' . .�`: ��' .; Si�l1�!��.OiA�tt w.' Ffth 8 Minnesota Strce1� . . ,,,• ,, bfh and Roberr Stroels - St.Paul,N1N 55101 ' `� .,��.�e� qoef�wesion Natiowl Baak s�.�i,n�w ss�o� _ ,�• ��'"�'��.=� 55 East Sth Stroet 291,4142 : NOff�tl�0a�Qflgi�!COIp <' =�.� St.Faul,MN.SS101 . . . d043 Hudson Rood.Suite I50�pr `'��"` 291-2288•Home Rehob Mortgoge loara Flf�8i�k 6Ti� St.Poul.MN 55119 �' ` r�a°-�"' 291-2331•Home Improvement loons 1071 Cxand Avenue '`''� . '�� s ` St.Paul.MN 55105 739•5000 vs=- ��d,v Fent Baok Yu�kaMs 2s2-�o�i . • Ri�arect Federal Saria�t�te�n Ats'a,* .; .� 879 Eost Ah Streef i Sf.Poul,MN 55106 I��pp�4 0��d 801 Nicollet Mall � �'"�" 778-2500 ' ��► Minneapolis,MN 55402 y r � ' �II�IICIiI C01'R0�109* 372-6394 '"' �` � *� First St�!a Bank of St.Panl 1705 Cope Avenue Eost ��" ��j 1 W P AvenuE �r..�- �+R**�'�� ^�--T y °�'"e NoAh St.Paul,MN 55109 GQ�yO[V8�IY8�Ot'F$��E CaRipB�� $ _: `� y„;' �_.�� S t.P o u l,M N 5 5 1 0 0 7 7 p.y q g 7 � , Rose da l e Towerz � r, b��;> _ F� 778-2600 - 1700 W.Highwa 36 C°-��: : �� rst Federai Sarins:d�Loan Au'n. sr.Pa„i,MN SS113 �''" ` ;�.-. , {�; �8if@1'I!.S�!Bt�l� 17 West Counfy Rd.64 ,.. 633-5350 ` . Avenue F Jfe,MN.55113 °�?� s,.Po�i,MN.55104 6 T800 ^— Yorthetn E�der�l S�vi�gs - � � M �-� ' '� ��erican I�atioRa!�ank t Trust Ca. Capita{City State Bank &Laa��s:'n*'* ` '�� ' Sah 8 Mi�oesota Slreets 1020 Rice St. 386 Wobasho ; - ' � St.Paul,MN 55117 St.Poul,MN 55102 �� , F St.Paul.Mn.55101 488-2516 222-7771 , 298•6043 w ; .. .��'x` ��' 'Home Rehab Mortgage Loans Only **Home Improvement loans Only �2 <.;;a.� , ,�.-�,�: _ � ` ._.__v.. __ .. . �-°-- . �- .. • i 800 Multifoods Building 733 Marquette Avenue Minneapolis,Minnesota 55402 612/371-6111 _�'_,) Piper,Jaffray&Hopwood ' INCORGORATED Established 1895 Member New York Stock Exchange,Inc. November 5, 1979 ' LETTER OF UNDERSTANDING The City of Saint Paul City Hall � Saint Paul, Minnesota 55102 Attn: The Honorable Mayor George T. Latimer Re: City of Saint Paul Residential Rehabilitation Bonds Dear Mayor Latimer: Piper, Jaffray & Hopwood Incorporated and Dain Bosworth Incorporated welcome the opportunity to represent the City of Saint Paul as invest- ment bankers, for the City's Residential Rehabilitation Program to be financed with the proceeds of its Residential Rehabilitation Bonds (the ' "Bonds") in a principal amount to be determined within the next sixty days. We have been chosen by the City Council as the Managers of a 'syndicate of Underwriters to make a public offering of the Bonds and we are prepared to work with you, your staff, your legal counsel, and such other advisors or consultants as you may choose to employ, to structure and market the Bond issue on your behalf for this Program. Our relationship with the City of Saint Paul would be an investment banker/client relationship, based upon a mutually agreed upon and under- stood list of duties. We will perform all of our duties in accordance • with the highest of standards. As your investment bankers, we expect to perform the following explicit functions and any others 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 condi- tions of this letter of understanding. Assuming the full and continuing cooperation of the representatives of the City and your advisors and con- sultants, we will: 1. Attend meetings with your staff, your governing body and its committees, . including regular meetings of City Council members, meetings with State and Federal officials, meetings with participating lenders, insur rs, builder-developers, real estate agents and other groups or indivi�uals deemed appropriate. � 2. Advise and assist, where appropriate, City staff and policy makers in the development and determination of relevant policy and program issues involved in this financing. 3. Work closely With Briggs and Morgan, P.A. , Bond Counsel, our counsel, Dorsey, Windhorst, Hannaford, Whitney & Halladay, and City legal staff in the preparation of doc�ents necessary to the marketing of your bond ' issue, including the bond resolution, the trust indenture, the mortgage origination agreements, the mortgage servicing agreements and other necessary documents. This will include our making suggestions as to desired bond issue structure, covenants to be made under the trust in- denture and security provisions. 4. Assist in the drafting and desigii of the appropriate program guidelines for the implementation of the Program. These documents, together with the mortgage origination agreements and the mortgage servicing agree- ments, will detail origination and servicing policies and procedures to be fo�lowed by the participating lenders. 5. Coordinate and assist you in your preparation of the preliminary and the final Official Statement to be used in connection with the public offering and sale of the Bonds. 6. Submit the Bond issue for consideration by the national rating agencies and make presentations to such agencies in order to obtain the highest possible credit rating. . 7. Conduct information meetings for institutional and other investors at appropriate times and in appropriate places. .8. Make, at the appropriate time, a firm proposal to you, wherein we will agree to purchase the entire principal amount of the Bonds. Such pro- posal, in the form of a Bond Purchase Agreement, will specify an inter- est rate or rates, the purchase price, and the prices at whfch we will make bona fide offerings of such Bonds to the public. If our proposal is accepted bq you, we will purchase or place the entire principal amount of the Bonds at the agreed terms, The Bond Purchase Agreement will specify the purchase price at which the ' Bonds will be sold bq the City and purchased by the Underwriters. The dif- ference between the purchase price of the Bonds and the price at which the Bonds are resoid 'to the public 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" (which is compensation to the �Ianagers for performance of the duties set forth in 1 through 7 above) ; (ii) the "takedown" (which generally relates to the sales commis- sions); � i � A i (iii) "underwriting fee" (which compensates the various Under- writers for the risk associated with joining the syndicate); and (iv) "expenses" (which reimburses the Underwriters for the ex- penses which they incur, as set forth below, in structuring and underwriting the Bond issue) . It is agreed that the "management fee" to be paid 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 $30,000,00� $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 Privided, that such "management fee" for a principal amount of Bonds in excess of $30,000,000 shall be $3.50 per $1,000 for the first $30,000,000 and $3.25 per $1,000 for any excess amount to $50,000,000, and $3.00 per $1,000 for any excess amount to $75,000,000. The amount of the rema.ining three components ("takedown", "underwriting fee" 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 financial consultants) at the , time the Bond Purchase Agreement is submitted and the Bonds are sold. The "expenses" component (which is separate and distinct from the other three elements) will equal the amount then estimated to be necessary to pay the items set forth below. Upon execution of the $ond Purchase Agreement (and such Agreement will so state) the Underwriters will pay the following expenses from tYee "expense" portion of the gross spread: the fees and disbursements of its counsel, the costs of the printing of the preliminary Official Statement, the final Official Statement, the Bond Purchase Agreement, the Letter of Instructions, the Agreement Among Underwriters, the Legal investment Survey and the Blue Sky Memorandum, the registration or filing fees with the various states, any advertising expenses, the fees of tfie Municipal Securities Rulemaking ' Board, the fees of the Minnesota Municipal Advisory Counctl, Bond Clearance fees, telex or telecopy charges, computer charges (other than for the veri- fications set forth below) and any out-of-pocket expenses of the Under- writers. There shail be paid by the City out of the proceeds of the Bonds the following: the fees and disbursements of Bond Counsel and counsel for the City or the Housing and Redevelopment Authority, the costs of prepara- tion and any printing of the Bond Resolution, the Ordinance, the Indenture and the Program Administration Agreement, the fees and disbursements of your financial advisor, the fees and disbursements of the firm of certified • public accountants which will verify the cash-flow of the Program and the yield on the Bonds and mortgage loans for arbitrage purposes, the ini ial fees of the Program Administrator, the Trustee and the Paying Agents,�the cost of printing of the Bonds, the fees and expenses of Moody's Investors . i Service and Standard & Poor's Corporation for rating the Bonds and any out- of-pocket expenses of representatives of the City or the Housing and Rede- velopment Authority. If for any reason the Bonds are not issued, the Underwriters and the City agree to pay the respective items listed above which they would have been liable to pay if the Bonds had been issued. It .is understood that this "Agreement" will be in effect until revoked by either party upon thirty days` notice. It is further understood and agreed that the City is under no obligation by this Agreement to execute or de- liver the Bond Purchase Agreement Respectfully submitted, PIPER, JAFFR.AY & HOPWOOD INCORPORATED DAIN BOSWORTH INCORPORATED - By: Piper, Jaffray & Hopwood Incorporated By DeLos V. Steenson Senior Vice President Public Finance Department This proposal is hereby accepted on behalf of the City of Saint Paul on this day of , 1979. Mayor George T. Latimer Bernard Carlsan Approved by: City Attorney . ! I — _ � ��HITE - C�TY CLE�tK PINK - FI`:AN�E �tN4F� - �EFA.t '�E"T CiITY OF SAI �'T �AUL Council p�J- _ U��H File NO. ��`��''`'� �'o�ncil Resolution Presented B�� Referred To Committee: Date Out of Committee By Date RESOLUTION ESTABLISHING A PRICING COMMITTEE TO ESTABLISH PRELIMINARY SIZE, NET INTEREST RATES AND NET SALE PRICE IN COivN�CTION WITH THE RESIDENTIAL REHABILITATION REVENUE BOND ISSUE �iD APPROVING A LETTER OF UNDERSTANDING WITH THE ISSUE UNDE R6VRI TERS � WHEREAS, the Council of the City of Saint Paul, by its Resolution, C.F. No. 273339 , adopted July 17, 1979 , gave preliminary approval to a below market home rehabilitation (BMHR) loan program and issuance of residential rehabilitation revenue bonds to finance the program, which issue it is estimated will be sold on November 29 , 1979 , upon final City Council approval; and WHEREAS , pursuant to said Resolution, the Department of Planning and Economic Development was authorized to negotiate for retention of underwriters to provide certain services in connection with the program and to underwrite the issue which negotiations were undertaken with Piper, Jaffray & Hopwood Incorporated and Dain Bosworth Incorporated, resulting in the Letter of Understanding dated November 5 , 1979 , a copy of which is attached hereto as Exhibit A; and ' WHEREAS, in advance of final City Council approval of the bond sale, it is necessary to fix the size of the issue based upon lenders ' commitments, obtain a rating for the issue, establish preliminary prices and to release the interest rate scale for sale of the issue . to the underwriting syndicate; and WHEREAS , it is desirable to establish a Pricing Committee for • these purposes and for the purpose of making price recommendations to ' the City Council upon its consideration of the final bond issue resolution. COUNC(L'11EN �'eas tia}•s Requested by Department of: . In Favor _ Against BY � Adopted b�� Council: Date Form Approved by City Attorney Certified Passed bt� Council Secretary By i B�. � ;��_• ,. . ' •: . •' ,-• fl;,rF _ _.__ --.-_-__.__-__.._.-_-- _ Approved by Mayor for Submission to Council � . _ __ - — -. . . _--- _ — - _ — --- — - -----_ --- _ __ � _. - ��^ - ,' ��_1.']` •1'P wNISE - C�TV C�EtiK ��K _ F��,A�,�E G I TY OF SA I NT �AU L Council .'G..LhiAC�Y - L�EFqqTME�vT BLUE - MpYpR File �O. . Co�ncil �esolution Presented B}� Referred To Committee: Date Out of Committee By Date 2. NOW THEREFORE, BE IT RESOLVED by the Council of the City of Saint Paul that a Pricing Commi.ttee consisting of the Mayor, the President of the City Council, the Chair of� the Council Finance , Management and Personnel Committee, and the Director of the Department of Finance and Management Services, or their designees, is hereby established with authority in _consultati�on with City Staff and Bond Consultant and with the Underwrit_ers to establish the size of the bond issue and preliminary pricPs for the issue being the net interest rates on the bonds and gross spre�d or underwriting discount, to release the proposed interest rate scale so established and preliminary Official Statement to the underwrite= syndicate, and to make a recommendation to the City Council on prices for the bond issue on or before November 29 , 1979. BE IT FURTHER RESOLVED that the Letter of Understanding between the City, Piper, Jaffray & Hopwood Incorporated and Dain Bosworth IncorporateG dated November 5, 1979 , is hereby approved for execution by the proper City officers. COUNCILI�IEN Yeas Nays Requested by Department of: Butler [n Fa��or H�zza Hunt I,:vine _ Against BY �.�ddox Sho�:�alter Tedesco Form Approved by City Attorney �doptc�d h�; Cotincil: Date Cen�t�ed Y,��,•d by Council Secretary , BY I R�: . a _. .. , Approved bv Mavor for Submission to Council