264630 WHI7E +CITV CLERK � • ❑����0
P,17�K - FINANCE �
CANAR.X= DEPARTMENT GITY OF SAINT PALTL COl1IIC11 M
BLUE��� MAYOR � Flle NO.
` �
�� Y� � Council Resolution
Presented By
Referred To Committee: Date
Out of Committee By Date
WHEREAS, The Council of the City of Saint Paul, pursua.nt to
authority granted to it by Cha.pter 351, Laws of Minnesota for 1974,
is authorized to develop and administer a Housing Reha.bilitation
Loan Program with respect to property owned and occupied by persons
of low and moderate income located anywhere within the City' s
boundaries on such terms and conditions as the Council may deter-
mine, including provisions tha.t, in approving rehabilitation loan
applications, the following factors sha.11 be considered: (1)
availability of other governmental programs affordable by the
applicant; (2) the availability and affordability of private ma.rket
fina.ncing; (3) whether the housing is required, pursua.nt to an urban
renewal program or a code enforcement program, to be repaired, im-
proved, or rehabilitated; (4) whether the housing is required to
� be repaired, improved or rehabilitated pursua.nt to a court order
issued under Minnesota Statutes, Section 566.25, Clause (b), (c),
and (e) ; (5) whether the housing has been determined to be unin-
surable because of physical ha.zards after inspection ur sua.nt to a
statewide property insurance plan approved by HUD; (6� all reha.bil-
itation loans and grants shall be issued primarily for reha.bil.itating
housing so tha.t it meets applicable housing code; and further, tha.t
determina.tions to be ma.de as a condition precedent to the making
of loans comply, insofar as those sections are applicable, to the
provisions of Section 312 of Title III of the Federal Housing Act
of 1964 and acts supplemental thereto; and
� WI-�REAS, The Ma.yor of the City of Saint Paul ha.s prepared and
submitted to the Council pr�posed program concept and guidelines
for the said Housing Rehabilitation Loan and Grant Programs, con-
taining guidelines, terms and conditions for said Reha.bilitation
Loan and Grant Programs consistent with said Cha.pter 351, a copy
of the proposed program concept and guidelines is attached hereto
and sha.11 be ma.intained in the office of the City Clerk as a part
of this proceeding; and
COUIVCILMEN Requested by Department of:
Yeas Nays
- Christensen
Hozza In Favor
Levine
Roedler Against By
Sylvester
Tedesco
President Hunt
Adopted by Coun ' Date Form Approved by City A orn
i
Certifie a se y C ncil Secretary BY
i
Y
Approved by Mayor: Date Appro Mayor to C cil
By BY
. ' ' j�.�������
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2 •
WHEREAS, The proposed Housing Rehabilitation Loan and Grant
Program contemplates the City of Saint Paul issuing its general
obligation bonds from time to time so as to provide an aggregate
of $3,000,000.00, and tha.t these bond proceeds would be expended
for the following purposes:
1. Interest Differentials . To pa.y the difference between
t e interest rates on approved City reha.bilitation
loans and refina.nced indebtedness and the interest
rate incurred on monies borrowed or "leveraged" by
the Authority and used to make and issue City rehab-
ilitation loans and/or to refinance existing indebt-
edness, provided, however, that in no event shall
the payment of interest difference on any City
reha.bilitation loan exceed 2 points .
2 . Default Reserves . To be set aside and used, at a
percentage rate not to exceed 6% of the total amount
of monies used to make City rehabilitation loans,
and at a level and upon such terms and conditions
determined, as a result of negotiations with private
lenders and the MHFA, by the Authority, with the
consent of the Council, to pay for City rehabilitation
loans and refina.nced indebtedness defaults .
3. Administrative Costs and Technical Assistance. To
pa.y, in an amount approve y t e City ouncil, for
administrative and technical assistance costs incurred
by the Authority or its agents which are directly
related to the development, implementation, administra-
tion and carrying out the City $eha.bilitation loan
and grant program.
4. Rehabilitation Grants . To provide and ma.ke a ma.ximum
. o , in City rehabilitation grants, consis-
� tent with the provisions of Chapter 351.
5 . Rehabilitation Loans . To provide and ma.ke City rehab-
i itation oans consistent with the provisions of �
Chapter 351.
and
WHITE, , -�CITY CLERK- - t
PINK - FINANCE ��� COl1IIC11 `^- `^-
CANAR`C- DEPARTMENT GITY OF �SAINT PALTL �j (�
BLUE -M1pY�R . File �O. �`��`/��
�
-� �~ ' ouncil Resolution
Presented By
Referred To Committee: Date
Out of Committee By Date
3.
WHEREAS� It is contemplated tha.t the City will contract with
the Housing and Redevelopment Authority of the City of Saint Paul
tc��,-� the purpose of administering these programs for the City, and,
further, that the said Housing Authority, pursuant to legislative
authority granted it by Minnesota Statutes 1974, Section 462 .415,
et seq . , will borrow monies from private lenders or the Minnesota
Housing Fina.nce Agency to be used to ma.ke additiona,l reha.bilitation
loans and/or for refina.ncing of existing mortgages ("leveraga:ng");
now, therefore, be it
RESOLVED� Pursua.nt to the authority granted to the City of
Saint Paul� tha.t the Council of the City of Sair�t Paul does hereby
approve and adopt the Mayor' s recommended Housing Reha.bilitation
Loan and Grant Program, including the regulations contained therein
relating to the determina.tions to be ma.de as a condition precedent
to the ma.king of such loans and grants which comply substantially
with the provisions of Section 312 of Title III of the Federal
Housing Act of 1964, and in order to implement and administer the
said programs and fina.nce th� same, the Council Fina.nce Subcommittee
and the Director of the De.partment of Finance and Ma.na.gement Services
sha.11 proceed toward the sale of $1,500�000.00 of City general
obligation bonds as authorized by Chapter 351, Laws of Minnesota for
1974; and be it
FURTHER RESOLVED, Tha.t the Mayor be and is hereby authorized
and directed to implement the approved Housing Rehabilitation Loan
and Grant Program including the �.tering ir�to of the necessary
contractual relations with the Housing and Redevelopment Authority
as contemplated and set forth in said approved program concepts and
guidelines.
COUl�1CILMEN Requested by Department of:
Yeas Nays
Christensen
Hozza [n Favor
Levine ,�
Rcedler Against BY
Sylvester
Tedesco
President Hunt
Adopted by Cou Date
NOV 2 1 1974 Form Approved by ity Att ney
�
Certifi a y Co il Secretar�, BY
BY,� I ��
Appro d Mayor: ate Approve Mayor ub C nc
By By
PUBLISHED DEC �'71974
, �j
' � ,� ' - �`"�st��
APPENDIX I
AREA IMPROVEMEP!T PROGRAM FOR RESIDENTIAL REHABILITATION
Recognizing the importanc� of structural conditions throughout an area to an
individual property and the value of any investment in the rehabilitation of
a residential structure, the City of Saint Paul will establish a program to
encourage the concentration of rehabilitation resources in limited areas with
the following object�ives:
1 . Support and encourage cooperative neighborhood improvement efforts by
ensuring the availability of financing and technical assistance for area
improvement effoNts.
2. Achieve substantial , visible improvement sufficient to strengthen
neighborhood stability and encourage continuing private reinvestment in
residential areas with substantial rehabilitation needs.
3. Through concentrated assistance, ensure that as many rehabilitation needs
as possible are met, including those which can be met exclusivel,y through
the private market.
4. Reinforce existing sound neighborhoods and previous investment in
neighborhood improvement by extending improvement efforts to nearby areas
threatened by blight.
5. Coordinate completion of required public improvements and other community
development needs with area rehabilitation ef�Forts where pnssible to
strengthen area-wide impact.
6. Maximize public/private cooperation in neighborhood improvement so that
increasingly the efforts of private citizens, neighborhood organizations,
lending institutions, the City, the State and other public agencies
reinforce each other in reaching the common object�ve of a high-quality
residential environment in City neighborhoods.
Rehabilitation Plan
The City Planning Coordinator will prepare a general plan for residential
rehabilitation in Saint Paul . This plan will indicate generally th�t portion
of the City for which concentrated rehabilitation effort is particularly
appropriate. �fhe plar� will identify criteria for the evaluation of area
rehabilitatic;; project proposals, will indicate the range of activities which
should be ca _,i�ered for neighborhood or small area projects and will indicate
the specific ���formational requirements for a project plan.
The priority ar�as identified for rehabilitation activities will indica*e
those areas of the City where need exists for positive effort to encourage
rehabilitation interest and will provide a basis for the coordination of
public improvement activities with residential rehabilitation efforts.
Identified priority areas then will be considered in the evaluation of
rehabilitation projects proposed by neighborhood organizations; however,
projects will not be restricted to the priority areas identified.
'.� `, ' - � ��46��
0
APPFNDIH I Page 2
The. rehabilitation plan will also address the need for rehabilitation
assistance throughout the City outside of concentrated project areas;
measures which may be needed to ensure that resources are available t�oth
fcr area projects and for the remainder of the City; and measures other
than forrnally designated area projects which may be used to encourage
neighborhood cooperation or otherwise increase the effectiveness of
rehabilitation efforts throughout the City.
Neighborhood Rei�abi1itation Pro ram
The City Planning staff, working with the Housing and Redevelopment Authority,
will prepare a program of specific area rehabilitation activities to be
undertaken. The program wi11 be revised annually and forwarded to the City
Council by the Planning Commission. The program will include:
a. Neighborhood project plans and the estimated resources required for
each project. Each plan will specify how the technical assistance
and community organization assistance is to be provided and will
identify the local citizen organization with continuing responsibility
for the project.
b. Identification of any City and/or MHFA loan and grant funds to be
reserved or set aside for each project.
c. Identification of resources required for pre-project planning in some
areas and reservation to be made for potential projects.
d. Indication of demands which proposed projects can be expected to make
on City staff for building inspection.
e. Identification of ineasures other than rehabilitation ioans and grar�ts
which can be programed for area projects including public improvements,
urban homestead, recycling acquisitions , etc.
While the intent of the annual program will be to ensure that project needs
and available resources are matched for a given year, reservations of loan
and grant funds for longer periods of time may be indicated.
Neighhorhood Proj�ct Plans
Development of �roject proposals will be coordinated by the City Planning staff.
It is anticipated that potential projects will , in some cases, be initially
proposed by 1�?cal ne�ghborhood organizations. In any case, area residents will
be expected to play a major role in the development of a project proposal or
plan. In th�:��r� areas of the City where rehabilitation is identified as a high
priority need, ? positive effort will be made to ensure that information and
assistance are available to residents as required to identify area needs and
develop projeci; proposals.
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APPENi�I X I Page 3
Where desirable, loan and grant resources may be reserved for potential projects
in a given priority area for a specified perioc� of time less than one year to
encourage interest on the part of residents. If, after the specified time
period, an adequate plan has not been developed with strong community support,
such a reservation would lapse.
Pro�ect Implementation
Where a project is established, techr�ical and community organization assistance
and informational materials for rehabilitation will be provided to resident
groups as required to achieve broad participation and accomplish rehabilitation
work in a satisfactory and efficient manner. It will be the responsibility of
the Housing and Redevelopment Authority as the administrative ag�ncy for
neighborhood projects to ensure that the necessary technical and community
organization assistance is provided.
The City Planning staff will monitor and evaluate the progress of the rehabilita-
tion program and will propose revisions in the program as they become necessary.
In assisting neighborhoods with identification of desirable project ar•eas and
in evaluating proposals for an annual program of area improvement activities,
the following factors will be considered:
age of housing
structural condition of area housing
income profile of area population
incidence of home ownership
residential structure types
property values and value trends
area improvement needs that cannot be met through rehabilitation
nE�ighborhood improvement efforts which go �eyond rehabilitation and
increase the possibility of significant upgrading
public improvement and c�mmunity facility needs and proiects and
plans which may strengthen the improvement effort
other complementary improvement programs potentially or «ctually in
effect which would strengthen rehabilitation impact
commitment and interest of area residents
previous improvement activity
natural boundaries, adjacent sr���nd neighborhoods and blighting
influences
It is understood tha� organized projects for which funds are reserved under the
City program need not constitute the entire range of locally-organized rehabili-
tation acti<<ity. Residents are to be encouraged to work cooperatively in
whatever waS� t��ey find feasible and appropriate to ach.ieve neighborhood improve-
ment, making Gs;=: of available loan and grant assistance.
. � 1 s.
7/ll./"/4
/LI'I'EI�DIX II
T.YPICAL 1'.:?I1.l�ILITA'!'ION T,G^s1 PI:OCF.SS � �
SAINT PAUL I:E1-IAliILITATIGi�I YROGP.A24
lhe purpose of this Appendix i.s to describe a "typicaL" case and the proce��sres,
to be followed f�r a hom�o;,�ner to obtain a rehabilitation lonn under the pro�;raM
gui.c�c�lines th«L- ure outlined in th�� previous docur.i�.nts. Certain assumptians were
maue f.or purposes of descri`�ing t�i.s procedure. Those assumptions include the
existence ot a small "store-front" office in a neighborhood that has been iden�ifi.ed
and approved for a concentrated rehabilitation progr�.m. We further assu*ried the
oifice is staffed F�ith t��ao rehabiliL-ation advisors, a part-time comnunity or.�ani�er
and a part-time �ecretary. A rehabilitation loan affi�er would be loc<Ced at a
� central �dininistrative office.
Tli� process would be�in whetz the ho;n�o��mer contucts i.he co:rn�unity organ:izer (or
rehabilitati.an advisor) at the site o�iice. The contact ma}• result fro„ th� borae�-
ocaner obtainin; information about the program at a rehabilitation "block pa:�ty".
Duri_no t.his initi.al meeting, the organi.zer orould descrioe the general rules, pr�cedures
anc� guidclines ot the city reh.a.bilitation program, screen the homeo=.�mer for el.i�ibi2it�•
and attempt to determine ihe hor►eovrner's i.nterest in rehabilitatin� his property.
,
Assurnin� that posi.tive interest an:.3 cli�ibility are established during the initial
contact, t:he or�;ani::er would ask the homeowner to fill out a data sheet �nd :C(iP_C�ULE.
an inspection .�i the property by t}ie iull City Insp4ctxon Team. The data slleet �lould
bc ior�.arded tn �:t.e rch,�bilitation loan officer for rev.iew and a further UCtE'1'i:11II<<t?Oil
of eligibility ot the homeowner to receive a loan. During L-his tiine, the Ci.ty
lnspecCion Team will have completed their work and prepared a �aritten list �f al:
code viulations found on the property. A copy of the lisC �.otilu be senL to Ctie
lior.icowr�cr and t:hc� rehabi2itation advisor at tt;c site office.
. � �' ��.
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A neetin� bet�•�een the hamco-�ner and L-h�: rehlbiliLaLion advisor ti�ould be the next
� step in t.he ��rccess. ��,ftcr. determinino the scope of: general improvements desired
by the horneo�mcr and decidin� which code i.tems are to be corrected, the rehabilitation
sdvisor. will instruct the horneowner to have a contractor prepare a preliminary
scope oL �•:ork for biddin& p�irpose. The homeowner would subsequently select an approved
contractor an; o��tain zn inrormal bid fr.om him.
Af.ter receiving an inforrial. bi.d, the homeowner cvould review the scope of �•rork and
cost with the rehabilitation <3visor. Upon agreement by the homeowner to Che final
scape of worlc, the contractor's bid �ooulcl be obtained by the homeowner. . Auring the
tirL that final bids are bein� prepared by the contractor, the site office would
fill out a. preliminary loan application with the honieowner and the property w�uld bc
• �� ✓ � isai �ieui.��i�u�.ia� ii,cLi �.$�uLC n�^Ld.l.SGl• 111C i� t1
:rY.4��.... � y� l Y ZO�ili �.ei:i:u�e c::Gii�lsi.i.i�;
oi the fin�l bids and scope of work, loan application and appraisal are then deliverc�ct
to the loan officer at a central locatior. for processing. During this processin�,
the loan application �aould be reviewed and 2pprovecl (denied) by a Special Rehabili:.atic
Review Committce.
Assuming that the package is approved,. a closing would be set between the homeowner
and loan officer. Upon closi.n�, the contractor will be issued an order to proceed �:�;.tt�
the work. During the construction work, the rehabilitation advisor will coordina.te
with the homeowner in monitorinfi its progress. Completion of all construction work
the hoMeo�on�r,
would be fol.lo��cd by a final inspection by a group consisting of the/City I nspectors ,
and the rehabilitation advisor. Items found to not be in compliance o�ith city cocies.
. . .
� ',� �•; �b4��0
. . .
- 3 »
and the scopc of ���ork �aoul.d be ccrrected prior to final payout to the con�ractor
by the loan ofiicer. Lien W�?j.irClS will be obtainrd at the time of final payment.
�.
Partial payments may be arranged, if the ter.m of construction is anticipated to be
len�thy.
.,�:.
In order to provide yoa taitli a further tzncierstanding of the above process, a
graphical pres�ntation is attached hereto, lhe Srecial P.ehabilitation Co:n:nittee
referred to would be made up of. city st^.ff and represcnLaLives of ttie administrat-ive
agency designated by the ci.ty to impleinent the program.
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September 23, 1974
Caunci.l President_ Ruby rt. Hunt
�nd i�e�rt���r.s of the c.itv Coui7cil
CitS� of Saint Paul, Min.nesota
De�cr_ �'resident F1unt �.rs� Honorable Memhe"s of r[ze Couc�c�'!:
I am pleased ta submit to qou for yovr c�nsi.deration ttLe
Housing Re�abilitation Zuan ar�c� Grant Program for the Ci_ty o�
Saint Pau1. T am s�_ire tha.t you are alI we11 aware oi Y.}ie
tremendous amount cif sraf� time on the part of both th.e City
and the iiousing and REdevelapr:lent Au�hori�Y� c�hich h�s gone into
the preparation of this progr_-�m.
Since thu aocument T am sub�liit:t�ng to you today is n.o�:
substa��t-iai].;J dti'fer.er�t than t'tze on.e FTl.lich was outiin2d �o you
in a receiit :.nformational mec.ting, it doe� ttot �eem necessary
to disc�.�.ss tlie progr��n in detail_. Tf you do have ariy questions
or i.f you wealci like additional inic,rmatian, please feel free
to cantact me or members of �y staff at any tirr,e. .
Z lool�. forward to youl ta'�ing aIl legal actions ��ecessary ta
implement this prcgressive and thoughtful pro�rafn in tlxe iiear
tu�u-rae
Szncerelvg_
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���,�rr.rrc� �. �af.�F�r
Ma;=or
LDC/k1m
cc: Mr. :��ranlc D. 1�arziL-elli
N'ir. Fcogc�r Mattson
�+1r. RogPr l'.yar,
Mr. R, Sc��t-t Davies
T�z-. �c�ttaard PJ. i?=�?feld
r1r. Wi.l_li.;,r.. 2� Patton
d�jrs. Rrts� :Nfix
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` �:��6;�Q
AN OVERVIEW OF TI� ST. PAUL REHABILITATION PROGRAM
Introduction
A ma,jor goal of the 1°National Housing Act" is a safe and decent home
for every American family. To achieve this ob3ective, a variety of housing
programs pri�rily designed to encourage new construction have been developed
by the federal and more recently state governments. These programs were
developed at a time of rapid economic and population growth. While most of
this growth was located in the suburbs, the central cities were being
affected by federal housing policy. The cities were adversely affected by
the outmigration of families to the suburbs but did receive redevelopment
and renewal assistance.
Included in the package of redevelopment programs was a provision for
home rehabilitation loans and grants. The "rehab" program, however, was
available only in those neighborhoods designated as urban renewal or NDP
areas. Nevertheless, it is known that low cost hame rehabilitation loans
are needed throughout the city. In fact, approximately 67% of all housing
units in St. Paul are at least 35 years old. As a response to this need to
maintain the nation's housing stock, the Department of Housing and Urban
Development (HUD) initiated such a program in thirty selected cities,
including St. Paul. "Project Rehab" attempted to rehabilitate single family
and multiple-family units throughout the city. Inadequate funding and
stringent program regulations have hampered the program so that in most
cities anticipated goals have not been attained. Realizing the uncertainty
of federal housing policy and the need to improve urban housing, several
� � � . � �����p
states and cities implemented programs funded from local resources. Among
this group are the State of Minnesota and the cities of St. Paul and
Minneapolis.
In 1971, the Minnesota State Legislature approved legislation
establishing the Minnesota Housing Finance Agency (MHFA), which was
suthorized to issue up to $150.0 million in revenue bonds to finance new
homes for low and moderate income families. Three years later MEiFA was
authorized additional bonding and program authority. Now the agency was
empowered to operate a rehabilitation program state-wide. Also, during the
1974 legislature both St. Paul and Minneapolis received suthority to
locally fund and operate home rehab programs.
On March 27, 1974, Governor Wendell R. Anderson signed into law a
bill authorizing the City of St. Paul to issue up to $3,000,000 in general
obligation bonds to finance a housing rehabilitation loan and grant program.
This legislation combined with the existing federal and new state program,
provides the city with the tools to operate a program that will substantially
upgrade the city's housing stock.
The City Statute
The legislation authorizes the city to develop and administer a housing
rehab program. However, the statute does contain the following limitations:
1. The loans and grants are limited to persons of low and moderate
income who own and occupy property within the boundaries of the city;
2. That all loans and grants be issued primarily for rehabilitating
housing so that it meets applicable housing codes; and
3. That prior to the making of any rehabilitation loans, the City
Council or its designee shall adopt regulations which comply substantially
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with the provisions of the Federal 312 rehab loan program as relates to
the determinations to be made as a condition precedent to the making of
rehabilitation loans and grants.
The enabling legislation also sets forth the following factors that
must be cons�dered in approving applications for City loans:
1. The availability of other governmental programs affordable by the
applicant;
2. The availability and affordability of private market financing;
3. Whether the housing is required, pursuant to an urban renewal or
code enforcement program, to be repaired, improved or rehabilitated;
4. Whether the housing is required, pursuant to a Court Order issued
under Minn. Stat. 566.18-33 (Tenant's Remedies Law) to be repaired, improved,
or rehabilitated; and
5. Whether the housing has been determined to be uninsurable because
of physical hazards after inspection pursuant to a state-wide property
insurance plan approved by HUD under Title XII of the National Houaing Act.
In approving applications for grants, two additional factors shall be
considered:
1. Whether the housing unit is a single family dwelling or homesteaded
unit; and
2. Whether the applicant is a person of low income.
The dollar value of grants made under the City program may not exceed
five percent of the bonds issued for the total rehabilitati�n program ($150,000)
and the City Council must by ordinance set forth the regulations of the grant
program and must approve the entire act (with compliance to the provisions of
Minn. Stat. Sec. 645.021) before it becomes effective.
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� • t
The legislation also requires that the city's program complement any
state-wide housing rehabilitation program.
Program Scope: Financing ,
While the statute contains explicit limitations as to the eligibility
of applicants, it permits the development of a program that could be more
flexible than the comparable federal "312" program. The proposed program
incorporates many of the technical aspects of the "312" program but
recoa�ends a financing process that utilizes the city bond proceeds as well
as state and private resources. The fina.ncing plan proposes that the city
funds be used as a "lever" to produce additional funds for rehabilitation.
Basically, leveraging is a method by which the Housing and Redevelopment
Authority (HRA) borrows funds from private financial institutions and the
Minnesota Housing Finance Agency (1�iFA) for the purpose of making loans. The
HRA is permitted by state statute to borrow funds for this purpose, while
the city does not have the authority to borrow funds in this manner. However,
the city would still issue the bond funds with possibly a portion of the
' proceeds being used for loans. The remaining proceeds would be used to
establish a default reserve, pay administrative costs and interest differential.
Leveraging is illustrated as follows:
1. HRA, with the approval of the City, would borrow funds from private
institutions and the I�iFA. The borrowed funds would be obtained at an
interest rate below the current market rate because of special laws governing
the borrowing of funds by a public agency.
2. From the bond funds an amount equal to not more than 6% of the total
funds leveraged would be placed in a default reserve trust fund which will be
used to cover loan defaults.
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� , �� . ���s���
3. Leveraged funds would be used to finance the loans. The number
of loans is dependent upon the amount of funds leveraged. As a general ---
guide, 200 loans at $5,000 each can be offered for each $1.0 million
leveraged. �
In contrast to a direct loan program, leveraging has the following
advantages:
1. Significant additional funds can be added to the program that
will result in more loans being made available. If the City decided to
implement a rehab program based only on the initial bond authorization,
at the maximum 580 $5,000 loans wi11 be available. This estimate assumes
that the necessary administration costs will be paid from other sources.
With leveraging, the number of loans is dependent upon the amount leveraged.
Thus, if $1.0 million of the bond funds are used for loans and $3.0
million is leveraged, approximately 800 $5,000 loans would be offered.
2. Unlike a direct loan program, lever�ing would actively involve
private financial institutions and the MHFA. The involvement of the private
aector will significantly increase the capacity of the program to meet the
� rehab needs of the city.
3. Leveraging would make it more feasible for the city to offer varying
interest rates and refinancing. The program proposes that loans be offered
at three different interest rates. The rates would be approximately 2 points
below and above the leveraged rate. Eligibility would be based on income
and family size. For some homeowners to afford rehab, it is necessary that
their home be refinanced. While refinancing could obligate a large portion
of the available funds, it is proposed that such a tool be available and
used when capital is sufficient.
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4. Leveraging would also enable the city to fulfill the legislative
mandate to compliment the state program. Complimenting would be achieved
by offering loans to a broader income range--low and above moderate income
persons.
Nei�hborhood Rehabilitation Program
The adequacy of a particular house for a family residence and the value
of an awner's investment in his property is highly dependent on the conditions
of surrounding structures. Because of the age of much of the housing in
St. Paul, rehabilitation of individual properties, while it can solve some
immediate problems, is of limited value to both the property owner and the
City unless improvement of surrounding structures can be assured. For this
reason, residential rehabilitation efforts in St. Paul must go beyond provision
of assistance to individual property owners. Wherever possible, areas,
preferably areas larger than a single block face, should be rehabilitated so
that each property owner's investment is reinforced by the efforts of his
neighbors and the position of the housing in the metropolitan housing market
� is strengthened.
However, it must be noted that a concentrated rehabilitation program is
only one of several tools necessary to improve a neighborhood. To successfully
accomplish neighborhood improvements, the city will need to provide or obtain
such services where required as the removal of hazardous buildings, planning
and prograffining of parks, street improvements and other public services and
citizen participation. In essence, rehabilitation alone will be the catalyst
for neighborhood improvement but the objectives of concentrated rehabilitation
will be accomplished more readily with the realization that other tools will
be needed.
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The city's rehabilitation program will not be limited to the neighbor-
hood areas but as stated in the statute, will be available to all low and
moderate income persons who are oraner-occupants. It is recommended that a
portion of the total funds be reserved for the neighborhood program. A
detailed discussion of this component is contained in the appendix.
Administering Agency
The passage of the City of St. Paul's loan and grant program by the
1974 Minnesota Legislature is the first time the City has proposed to expend
local funds for home rehabilitation. However, it is not the first time the
City of St. Paul has operated such a program. In 1968 the City received a
federal grant to conduct a code enforcement program that offered federal
loans and grants for home rehabilitation. At the same time, a similar loan
and grant program was available in the neighborhood development program
(NDP) and urban renewal areas. The City of St. Paul initially operated the
code enforcement program while the Housing and Redevelopment Authority
ran the program in NDP and urban renewal areas. In 1972, the City Council
transferred the operation of the code enforcement program to the HRA. Thus,
all aspects of home rehabilitation, including co�►unity organization and
public information related to rehab, have been developed by HRA.
Since HRA has the proven capability to operate rehab effectively, it
is recommended that the City designate HRA as the administering agency for
the city and state programs. It is further reconnnended that the City
negotiate with HRA a contract to define the roles, duties and responsibilities
of HRA and the City in relation to rehabilitation.
In the neighborhood rehabilitation component, it is recommended that
the City Council direct HRA to work closely with existing resident groups
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or assist in the establishment of groups to be involved primarily in the
rehabilitation program. The administering agency, at its own discretion,
can either develop citizen advisory groups itself or enter into agreements
with other agencies to accomplish this task. To avoid staff duplication, it
is reco�nended that the administering agency utilize existing neighborhood
staff and/or staff of other organizations working in that neighborhood to
the extent possible. The nature and scope of this inter-agency cooperation
shall be in the form of a contract between the administering agency and the
organization.
The contract shall contain and define the services to be performed by
both agencies and is subject to approval by the City.
Administrative Bud�et
Since the rehabilitation program will include a neighborhood component,
the proposed budget has been developed for a neighborhood project. The
budget would be able to service from 120 to 150 loans from both the neigh-
borhood and city-wide applicants. Assuming that the 150 loans are for
$5,000 each, a total of $750,000 in loan funds would be expended. The
administrative cost incurred by the City and HRA would be approximately
$79,800 or 10.6 percent. This annual budget includes salaries for rehabilita-
tion specialists, a coc�nunity organizer (half-time), clerical staff and
city inspection services. In addition to salaries, the budget includes funds
for office rent and supplies.
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PROPOSED BUDGET FOR CITY'S REHABILITATION PROGRAM
(Capacity 120 to 150 loans)
Half-time Organizer @ $12,000. . . . . . . . . . . . . . . . $ 6,000
Two (2) full-time Rehabilitation Advisors @ $12,000 . , , . 24,000
Half-time Secretary @ $7,000 . . . . . . . . . . . . . . . . 3,500
Two-thirds time Loan Officer @ $15,000 , . , . , . , . . , , 10,000
One-sixth time Program Supervisor @ $18,000 . , . , . , , , 3,000
One-tenth time Special Technical Assistant @ $15,000 . , . , 1,500
$48,000
Administrative Overhead (supplies, phone, etc.) . . . . . . 14,400 (30% x $48,000)
Office Space ($200/month x 12 months) . . . . . . . . . . . 2,400
$64,800
City Inspection Services ($100/home) . . . . . . . . . . . . 15,000
TOTAL $79,800
Therefore, for every million dollars used for loans, approximately
$106,000 would be needed for administrative costa. The source of funds for
this budget would be the bond proceeds. A legal opinion has been rendered
by the City Attorney that permits the expenditure of bond proceeds for this
purpose.
Rehabilitation and the Housin� Code
City rehabilitation loans, as defined by the statute, shall be used
primarily to finance rehab work that will put the property in cam-
pliance with applicable codes. In order to ensure that- expenditures
for rehabilitation represent a sound investment and contribute to the
quality of the City's housing stock and neighborhoods, it is reco�nended
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� that campliance with the City's housing code be required for properties .
rehabilitated under the program except in certain cases wher� this
requirement would make desirable improvement work impossible.
Instances may arise where a homeowner in an otherwise eligible
property in need of rehabilitation cannot qualify for a loan large
enough to allow correction of all code deficiencies due to his own
limited income. It is reco�nended that provision be made for loans
to cover as much work as can reasonably be done in such situations.
It is reco�ended that as much as 40 percent of a loan be allowed
for general improvements or work which is not necessarily required for
code compliance. As reconanended, 20 percent of a loan could be used for
general improvements where full code compliance cannot be realized except
that certain basic code requirements-�-minimum health and safety items---
must be met before any money is used for general improvements.
�ao measures are important to ensure that the housing code campliance
requirement is reasonableo First, the code must truely represent minimum
standards. The Saint Paul housing code is currently being studied for the
purpose of identifying any requirements which are unnecessary, and revisions
will be proposed if any are indicated, Secondly, the appeals process for
housing code requirements is an established means of allowing some flexi-
bility in enforcement by providing for the waiver of particular requirements
which may �ot be essential and which may represent undue hardship in
specific situations, It is important that the appeals process work effec-
tively and be recognized as the proper mechanism for the alleviation of
any unnecessary hardship caused by code requirements for rehabilitation.
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9/6/74
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PROPOSED PROGRAM CONCEPT AND GUIDELINES
Definitions �
For purposes of these guidelines, the terms defined in this secti:on have the
meaning ascribed to them.
1. Housing related expenses. Means the normal and ordinary expenses related
to homeownership, including but not limited to, principal and interest
paid on any outstanding indebtedness, including the principal and interest
paid on a City rehabilitation loan, used to finance the purchase, construc-
tion, improvement, or rehabilitation of residential housing and related
taxes, special assessments, insurance, maintenance costs, utility expenses
and the like.
2. Neighborhood rehabilitation project plan. Means a plan developed in whole
or part by a neighborhood organization or association or a non-profit or
redevelopment corporation for the concentrated rehabilitation of a
specified neighborhood area within the City of Saint Paul and approved by
the Planning Cammission and the City Council. For further explanation
see Appendix I.
3. 1deiQhborhood rehabilitation vroQram. Means a program, prepared and/or
considered by the City Planning Department and approved by the Planning
Commission and the City Council, for concentrated rehabilitation within
specific geographic areas. Such a program may be based in whole or part
� on approved neighborhood rehabilitation project plans. For further
explanation, see Appendix I.
4. Authoritv. Means the Housing and Redevelopment Authority, as designated
by the City Council, pursuant to Minnesota Laws, 1974, Chapter 351, Minn.
Stat. 462.445 (4) (2) and 462.581 (8) , and other provisions of Minn. Stat.
462.415 to 462.711 to cooperate with and act as an agent for the City of
Saint Paul in implementing, administering and carrying out the provisions
of the City of Saint Paul rehabilitation loan and grant program as
authorized by and consistent with Chapter 351 and these program guidelines
as adopted by the City Council.
5. Owner-Occunant. Means persons or families who are the fee owners or
contract for deed purchasers of eligible properties and who occupy and
pursuant to, Minn. Stat. Ch. 273, homestead such property.
6. Persons and families of low and moderate income. Means those natural
persons or families whose incor�e is within the following income limits
and categories. For purposes of this Act, families shall include non-blood
related adults and tenant cooperatives.
Rev. 9/12/74
ANNUAL ADJUSTED GROSS HOUSEHOLD INCOME CATEGORIE S
Low Interest Middle Interest Upper Interest
Loan (%) Loan (%) . Loan (%)
Family Size SLow Income) (Low-Moderate Income) (Moderate Incame)
1 person up to $ 7,200 $ 7,201 to $13,650 $13,651 to $14,500
2 persons up to 8,750 8,751 to 13,650 13,651 to 15,000
3 persons up to 10,000 10,001 to 13,950 13,951 to 15,500
4 persons up to 10,300 10,301 to 14,250 14,251 to 16,000
5 persons up to 11,850 11,851 to 14,550 14,551 to 16,500
6 persons up to 12,150 12,151 to 14,850 14,851 to 17,000
7 persons up to 12,500 12,501 to 15,150 15,151 to 17,500
8 persons up to 12,800 12,801 to 15,450 15,451 to 18,000
9 persons up to 13,100 13,101 to 15,750 15,751 to 18,500
10 persons (or more) up to 13,400 13,401 to 16,050 16,051 to 19,000
7. Income. Means for purposes of these guidelines the term "annual adjusted
gross household income"(see definition 6 above) and includes the gross
annual income from all sources and before taxes or withholding of each person
or member of the family residing in the household expect that there shall be
exclucled:
a. The income of any family member (other than the head of the household
or his or her spouse) who is under eighteen years of age or is a full
time student;
b. The first $300 of the income of a secondary wage earner who is the spouse
or head of the household;
c. An amount equal to $300 for each member of the family residing in the
household (other than the head of the household or his or her spouse)
who is under eighteen years of age or who is eighteen years of age or
older and is disabled or handicapped or a full time student.
d. Nonrecurrin� income, as determined by the authority;
e. 5 per centum of the person or family's gross income (10 per centum in
the case of elderly persons or families) ;
f. Such extraordinary medical or other expenses as the Authority approves
for exclusion;
g. An amount equal to the sums received by the head of the household or his
or her spouse from, or under the direction of, any public or private
non-profit child placing agency, for the care and maintenance of one or
more persons who are under eighteen years of age and were placed in the
housel:old by such agency.
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8. Elir�ible loan recinients. Means those persons or families of low and
moderate income who are owner occupants of eligible properties and meet
other requirements and qualifications for a City rehabilitation loan as
set forth in these guidelines.
9. Elirzible grant recivients. Means those persons or families of low income
who are owner occupants of eligible properties and meet other requirements
and qualifications for a City rehabilitation grant as set forth in these
guidelines.
10. Citv rehabilitation loan. Means a loan made to eligible loan recipients
for eligible improvements and/or refinancing of existing indebtedness
under the City rehabilitation loan and grant program and includes loans
financed by "leveraging" and the use of bond proceeds, but does not include
those loans financed by "reserving."
11. Citv rehabilitation r�rant. Means a grant to an eligible grant recipient
for eligible improvements under the City rehabilitatiun loan and grant
program.
12. Eliszible proverties. Means residential housing and real property which
contains eight (8) dwelling units or less; meets the requirements set forth
in the "Eligible Properties" section of these guidelines; and is owned and
occupied by an eligible loan or grant recipient.
13. Eliaible im�rovements. Means the repairs, rehabilitation, reconstruction,
conversions, modernization, replacement, remodeling, alternation or
improvemeats to eligible properties which are authorized to be made under
a City rehabilitation loan or grant as set forth in the "eligible improve-
ments and expenditures" section of these guidelines.
14. I�ediate health and safetv hazards. Means those violations of applicable
codes which materially and immediately endanger the health and safety of
occupants of the building involved. Such violations include, but are not
limited to:
a. Heating systems that are unsgfe due to: burned out or rusted out
heat exchanges (fire box) ; burned out, or plugged flues; not beiag
vented; being connected with unsafe gas supplies; or being incapable
of adequately heating the living space.
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b. Water heaters that are unsafe due to: burned out or rusted out
heat exchanges (fire box) ; burned out, rusted out, or plugged
flues; not berng vented, being connected with unsafe gas supplies;
or lack of temperature and pressure relief valves.
c. Electiical systems that are unsafe due to: dangerous overloading;
damaged or deteriorated equip�nt; unproperly tapped or spliced
wiring; exposed uninsulated wires; distribution systems of extension
cords or other temporary methods; ungrounded systems, ungrounded
appliances in contact with earth.
d. Plumbing systems that are unsanitary due to: leaking waste systems,
fixtures and traps; lack of a water closet, iack of washing and
bathing facilities; or cross connection of pure water supply with
fixtures or sewage lines.
e. Structural systems, walls, chimneys, roofs, foundations, ceilings,
and floor systems, that will not safely carry imposed loads.
f. Refuse, garbage, human waste, decaying vermin or other dead animals,
animal waste, other materials rendering it unsanitary for human
occupancy, including lack of light or air.
g. Infestation of rats, insects, and other vermin.
h. All existing handrails that are not permanently and solidly mounted
to provide safe service.
i. Lead paint that is peeling, chipping or exposed in areas that may be
hazardous to children and others.
j. Conditions of windows, doors and other electrical, mechanical and
structural items that are condusive to fire and safety hazards.
15. General Imvrovements. Sha11 only include additions, enlargements,
renovations or remodeling of existing rooms or structures, interior
and exterior painting, decorating and outdoor remodeling, or the
provision for a garage or fence; and the finishing of spaces within
the property such as an attic, porch or basement. The addition of a
complete new function or room will only be permitted where required
by Code. Except as provided above, general improvements shall not
include materials, fixtures, equipment or landscaping of a type or
quality which exceed that customarily used in the locality for
properties of the same general type as the property to be rehabili-
tated. General improvements shall also include kitchen equipment of
a permanent nature, including stove and refrigerator and the acquisition
of contiguous property, necessary to provide an adequate site for the
structure.
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16. Codes. Means applicable state, county or city health, housing, building,
fire prevention, housing maintenance, and zoning codes and other public
standards applicable to housing, as determined by the City Council and the
Authority. ,
17. Leveraging. Includes, for purposes of these guidelines, the terms "leverage”
or "leveraged" and refers to the process, whereby the Authority borrows
monies from private lenders or the Minnesota Housing Finance Agency (herein-
after 1�iFA) to be used to make City rehabilitation loans and/or for
refinancing of existing indebtedness under the City rehabilitation loan and
grant program.
18. City rehabilitation loan and grant program. For purposes of these guide-
lines refers to the City of Saint Paul rehabilitation loan and grant program
suthorized by Minnesota Laws, 1974, Chapter 351.
19. Reservin�. Includes, for purposes of these guidelines, the terms "reserve"
or "reserved" and refers to the process, whereby the Authority acting on
behalf of the City of Saint Paul and with City Council approval, requests
that a portion of rehabilitation funds, available through the MHFA
rehabilitation loan and grant program, be set aside for use in a specific
geographic area. Such geographic area may include the entire dity of
Saint Paul and/or specific neighborhood areas identified as part of an
approved neighborhood rehabilitation program.
20. Bond proceeds. Means those monies, to be used to assiat in financing the
City rehabilitation loan and grant program and available as a result of the
issuance and sale of general obligation bonds of the City of Saint Paul,
pursuant to Minnesota Laws, 1974, Chapter 351.
21. Redevelopment Corporation. Means limited dividend corporations created
pursuant to Minn. Stat. 462.591 to 462.711.
22. Contract. Means a written agreement to perform eligible improvement
work.
Eligible Persons and Families
1. To be eligible for a City rehabilitation loan, applicants muat be p�rsons
or families of low or moderate income; owner-occupants of residential
housing; must have the ability to repay the loan; and are "acceptable credit
risks" as determ�ned by the Authority or its designee. ApplicanCs with
poor credit histories may be eligible if screening show sufficiently
extenuating circumstances in an applicant's credit behavior and income
patterns to give reasonable assurance of ability to repay the loan.
2. To be approved for a City rehabilitation loan or grant, the Authority
must first of all determine that the applicant is unable to afford and
secure rehabilitation funds from other sources, including private lender
programs at market interest rates, the Federal 312 and 115 rehabilitation
_ 5 _
loan and grant programs and the Minnesota Housing Finance Agency
rehabilitation loan and grant program. This determination shall be
based on the availability of rehabilitation funds from such other �
sources; the eligibility of the applicant for such funds; and shall
be further based on sufficient data showing that a rehabilitation
loan, for comparable correction of code violation work, from other
sources, would result in the applicant's housing related expenses
being beyond 25% of his or her income. If it appears that an applicant
is able to afford and secure rehabilitation funds from other sources,
the Authority shall refer the applicant to the appropriate source or
sources. After referral, if an otherwise eligible applicant can
demonstrate that he or she is not able to secure rehabilitation funds
from other sources, such applicant may then be approved for a loan
and/or grant.
Eligible Properties.
1. The property must not be a non-conforming use under the City's Zoning
Ordinance and the use must be permitted under an Urban Renewal or
Development District Plan if located in such an area.
2. A property shall not be eligible if it has been identified for public
acquisition for which funding is presently available unless that
property is being formally re-examined for potential rehabilitation,
in which case waivers shall be considered. Upon request by the owner
of such property and with the consent of the acquiring agency, the
property may be forma.11y re-examined for potential retention in which case
waivers shall be also considered. Properties which are identified for
conditional or possible acquisitions are eligible.
3. The property must be at least ten years of age or in need of repair to
correct damages resulting from a natural disaster.
4. After rehabilitation, the property must be insurable through an established
public or private insurance program.
Eligible Improvements and Expenditures.
1. City rehabilitation loans shall be made primarily to rehabilitate eligible
properties so that they are iri compliance with applicable code requirements.
2. Bringing an eligible property into full compliance with applicable codes
shall be required as a condition to making a City rehabilitation loan or
grant, except if an applicant cannot afford to correct all code violations.
This determination shall be based on sufficient data showing that a City
rehabilitation loan and �rant, to the extent an applicant is eligible, for
correction of a11 code violatiori wor� and eligi�le general impro�emerits
allowed in item �k5 below, would result in the applicant`s related expenses
being beyond 25% of his or her income.
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3. As a condition for receiving financial assistance under the City
rehabilitation loan and grant program or any other public program,
including, but not Limited to, the Federal 312 and 115 rehabilitation �
loan and grant program and the MHFA rehabilitation Loan and grant pro-
gram (including funds "resexved" by the authority), administered in
whole or in part by the Authority, the applicant shall call upon the
Authority in conjunction with Co�nunity Service Hnusing Code Inspection
Department to provide an inspection and written evaluation assessing
and outlining all violations of applicable codes, necessary to be
corrected if the property is to be in full compliance with applicable
codes and further assessing and outlining, when requested by the
applicant, other repair, rehabilitation or improvement items that are
eligible improvements under the Cfty rehabilitation loan and grant pro-
gram or any other public program administered by the Authority. This
inspection and evaluation shall not be a mechanism which will require t'�
applicant, except as• provided in item 2 above, to bring property into full
compliance with applicable codes and legal action and assistance will be
taken only on those violations of applicable codes that immediately and
materially endanger the health and safety of the occupants of the
eligible property, as this standard is defined and interpreted in Minn.
Stat. Sec. 566.18 (6).
4. To the extent an applicant is eligible for, can afford, and requests a
City rehabilitation loan and is eligible for a City rehabilitation grant,
such loan and grant proceeds shall first be used to correct violations
of applicable codes which �onstitute immediate health and safety hazards.
5. If all violations of applicable codes which constitute fmmediate health
and safety hazards are corrected under Cfty rehabilitation loan and/or
grant then eligible recipient may use up to 20% of the total loan amount,
he or she is eligible for, can afford and requests under this program,
for eligible general improvements. The remainder of any such loan
amount must be expended to correct violations of applicable codes. If
all code violations are to be corrected under a City rehabilitation loan
and/or grant, then the eligible recipient may use up to 40% of the total
loan amount he or she is eligible for, can afford and requests, for
eligible general improvements.
6. Upon the request of an eligible loan and/or grant recipient, the Authority
may make City rehabilitation loans (including refinancing) that will
result in the recipient's housing related expenses being beyond 25% of
his or her income, if the Authority determines that the recipient can
reasonably afford such loan amounts.
7. City rehabilitation grants shall only be approved to provide financing for
the correction of violations of immediate health and safety hazards.
8. All work performed must meet applicable codes.
9. Preference shall be given to rehabilftation work that decreases or does
not significantly increase consumption of energy and natural resources.
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Rehabilitation Loan and Grant Terms.
1. The interest rate of a City rehabilitation loan shall be deterniined by
applying the "adjusted gross annual household income" categories to the
income of the eligible loan recipient. The Authority, from time to time, '
based on the interest rate incurred on monies "Leveraged" by the Authority
and the availability of bond proceeds to pay "interest differentials" as
that term is used in this Act, shall determine what the interest rate
will be for each of the "adjusted gross annual household income" cate-
gorfes but in every event such interest rate shall be established at a
2 point interest differential between each category with the "low income"
category receiving the lowest interest rate; the "low-moderate" income
category receiving the second lowest interest rate; and the "moderate
income" category receivfng the highest interest rate. The Authority
shall review these "annual adjusted gross household" income figures from
time to time in order to reconmtend adjustment to the City Council.
2. In the event the housing related expenses, including the payment required
for the principal and interest of a City rehabilftation loan, of zhe
eligible loan recipient exceed 25% of the recipient's income, the interest
rate of the rehabilitation loan shall be reduced to the next lowest
interest rate category. Eligible loan recipients, whose incame is in
the "upper interest loan-moderate income category," shall not however be
eligible to have the interest rate on their rehabilitation loan reduced
to lower interest rate categories.
3. Maximum loan terms, except in the cases of refinancing, shall be for
twenty years or the remafning economic life of the eligible property,
whiehever is less, as detexmined by the Authorfty. In all cases,
approved loan recipients shall be e�couraged to retire loans as rapidly
as their incanes wfll allow.
4. There shall not be any prepayment penalty in the event a City rehabilftation
loan is prepaid at a date earlfer than scheduled in the loan agreement.
5. Except as provided below, all City rehabilitation loans mus•t be secured by
a mortgage or other recorded lien or appropriate document against the
eligible property. Rehabilitationloans to contract for deed purchasers
must either be:
a. Included as part of the refinancing of exfsting indebtedness as
provided for fn these guidelines, with a mortgage as security;
b. Secured by t'he contract vendor's written agreement, included in the
written texms of the apprvpriate lien or other document,. to sub-
ordinate his or her legal and equitable interest in the property to
that of the Authority;
c. Secured by a note, lien or other appropriate document on the contract
vendee's equitable equitable interest in the eligible property.
If the eligible loan recipient is providing a land sales contract as
security, it must be recorded. An approved loan recipient shall not
transfer the property during the term of the loan without the consent
of the Authority. Notwithstanding any of the above provisions to the
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.•
contrary, the Authority may make unsecured City rehabilitation loans of
up to $3500, in order to permit eligible improvement work which could not
otherwise be secured by an otherwise eligible applicant because of the
impossibility of providing security for a City rehabilitation loan, but
only after all reasonable efforts have been made to provide the necessary
security as outlined in "a - c" above.
6. The maximum amount of a City rehabilitation loan except in the case of
refinancing shall be the lesser of and not exceed:
a. $17,400 per dwelling unit as set forth in the Department of Housing
and Urban Development's (HUD) Rehabilitation Financing Handbook 7375.1.
The Authority shall review this limit from time to time to recommend
potential adjustments to the City Council; ____
b. The actual cost of the eligible improvement work;
c. That amount which, when added to other debts secured by the eligible
�roperty, would exceed the market value of the eligible property after
the eligible improvements are completed plus 10 per centum.
7. The following costs may be included in a City rehabilitation loan or grant:
a. Building permits and fees;
b. Architectural and other design services;
c. Loan origination and servicing fees, fees and incidental costs, such as
appraisal fees, inspection fees, title reports, credit reports, record-
ing and filing fees, etc.
8. City rehabilitation grants may be approved in conjunction with City
rehabilitation loans, but if an applicant can afford a City rehabilitation
loan that would cover the entire cost of the proposed eligible improvement
work, including the correction of immediate health and safety hazards,
within 25% of the applicant's income, then such applicant will not be
eligible for a grant.
9. To be eligible for a City rehabilitation grant, an applicant must have
limited assets available to pay for eligible improvements and an income
not to exceed the income limits of "very low-income families" for public
housing as that term is defined in the Title II of the Housing and Com-
munity Development Act of 1974, amendments to the United States Housing Act
of 1937, Sec. 201 (a) , Sec. 3 (2) , and approved by the Department of Housing
and Urban Development. The Authority shall review this income limit from
time to time to recommend potential adjustments to the City Council.
10. The maximum amount of a City rehabilitation grant shall be the lesser of
(1) $5,000; (2) the actual cost of the eligible improvement work; (3) the
amount necessary to reduce the City rehabilitation loan principal and
interest and/or other housing related expenses to 25% of the eligible grant
recipient's monthly income.
11. City rehabilitation grants are provided under the condition that, if the
eligible property is sold or transferred within three years of the date on
which the grant is made, the grant must be repaid in one of the following
amounts:
a. In full if sold or transferred within the first year;
b. �ao-thirds (2/3) if sold or transferred during the second year;
c. One-third (1/3) if sold or transferred during the third year.
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In making grants, the Authority shall require a Lien or other
appropriate document to be filed on the property to reflect the
above provisions. The Ac�thority shall adopt further administrative
guidelines to provide for hardship exceptions to these provisions,
where there is no evidence of abuse by grant recipients, €orced by
circumstances beyond their control, to sell or transfer the eligible
property within three years fr an the date on which the grant was made.
Re f inanc i.n g
To the extent capital is available, as determined by the authority,
refinancing may be used to permit eligible improvement work which could
not otherwise be afforded or secured by an applicant. The Authority shall
closely monitor refinancing to insure that capital available to make City
rehabilitation loans is being primarily expended on eligible improvement
work. Also, the Authority shall take precautions to insure that refinanc-
ing is not used for the purpose of financing the purchase price for a
property. Therefore, in all cases involving refinancing of existing
indebtedness secured by eligible properties that have been recently pur-
chased by the applicant, the Authority shall, as a condition to making a
City rehabilitation loan, satisfy itself that the applicant has nor made
collusive pre-arrangements in order to obtain refinancing, which is in
reality purchase price finar.cing.
The following provisions shall be used in implementing a refinancing
program:
1. Refinancing of existing indebtedness secured by eligible single-family
or duplex properties at an interest rate affordable to the eligible
loan recipient, but not lower than 5%, will be permitted when such
recipient's principal and interest payments on existing indebtedness,
combined with the payment required for the principal and interest of
a City rehabilitation loan, exceed 20% of the recipient's monthly
income, provided that the recipient obtains fee title �y the time
the refinanced loan is closed and a satisfactory title insurance
policy is obtained for the property.
2. To be approved for refinancing, the Authorfty must first of all
deterniine that the applicant is unable to afford and secure refi-
nancing funds from other sources, including private lender programs
at market interest rates, federal homeownership programs and the
MHFA single family residence program. If it appears that an
applicant is able to afford and secure refinancang from other
sources, the Authority shall first refer the applicant to the
appropriate source or sources. After referral, if an otherwise
eligible applicant can demonstrate that he or she is not able to
secure refinancing from other sources,such applicant may then be
approved for refinancing.
- 10 -
3. To be approved for refinancing, the cost of eligible improvements must be
equal or exceed 33% of the principal of the existing indebtedness of the
eligible property. ' .
4. Refinanced loan terms may not exceed 30 years, or the remaining economic
life of the eligible property, whichever is less, as determined by the
agency.
5. The Authority, with the consent of the eligible refinancing recipient, may
provide for a front end deposit by the recipient of up to 3 points, to be
placed in an interest bearing escrow account for a specified period of years,
to be used by the recipient for maintenance and repair of the eligible
property over the specified period of years. Any monies remaining in the
account after expiration of the specified period of years will be returned
to the recipient.
6. All other provisions of these guidelines shall apply to City rehabilitation
loans or grants made as part of a refinanced mortgage or cuntract for deed
as set forth in this sectio�.
Sweat Equity.
1. Performance and completion of eligible improvements by eligible loan and
grant recipients ("Sweat Equity") will be permitted. However, close
scrutiny shall be maintained to insure that such work is carried out in
a timely manner, without providing delays for the entire rehabilitation
process.
2. All eligible improvements work approved under a City rehabilitation loan or
grant must be covered by a contract requiring full completion of such work,
including work being done directly by the eligible loan or grant recipient,
("Sweat Equity") , and the approved loan or grant amount must be based on
that figure. The contract must identify work being done by the recipient;
allow specific credit for this work; specify the time for completion of work
done by the recipient; and provide for the contractor's completion of work
not completed, within the specified time, by the recipient. Recipients
performing work through "sweat equity" shall be permitted to draw upon their
escrow account in order to pay for required materials.
_ 11_
Contractor Performance.
1. Nothing in these guidelines shall be construed to limit or restrict the �
applicability of state or city laws relating to the home improvement
business or the repair, rehabilitation and improvement of residential
housing and real property and all persons and contractors performing
eligible improvements work under a City rehabilitation loan or grant
must be "licensed" as required by such laws.
2. To be eligible to be awarded a contract under the City rehabilitation
program a contractor must:
a. First, be identified and placed on a list of eligible contractors
developed and maintained by the Authority. To be eligible for
such a list, contractors must attend a pre-qualification seminar
conducted by the Authority. The purpose of this seminar is to
inform contractors about the City rehabilitation loan and grant
program and to specifically instruct contractors concerning the
following:
1. The quality and worlananship standards required;
2. The contractors' role and the various contractor requirements
and procedures contained in the City rehabilitation loan and
grant program;
3. The business ethics required while under contract;
4. The proper method of bidding contracts covered by this program;
5. The arbitration policy for resolving disputes arising from
contract execution.
b. Must demonstrate that they are equal employment opportunity employers.
3. All contractors being awarded a contract under a City rehabilitation loan
or grant must provide the eligible loan or grant recipient and the Authority
with evidence of a 100% performance bond, in the full amount of such
contract, effective for two years beyond the date of completion and accep-
tance by the recipient and the Authority of the work. To the extent legally
permissible, these bonding requirements may be waived, or modified if the
Authority determines that the contractor is "bondable" and that such bonding
requirements will be met within 12 months of the date of the loan or grant.
4. All eligible improvements work performed pursuant to a City rehabilitation
loan or grant must be covered by an Authority approved warranty concerning
the quality of materials used and worlananship in performing such work. The
warranty system will be monitored and enforced by the Authority in coordin-
ation, where appropriate, with the MHFA.
_ 12 _
5. All contractors performing eligible improvements work under a City
rehabilitation loan or grant must:
a. Carry all, adequate and required by law, insurances;
b. Possess all, necessary and required by law, licenses and permits
to perform contracted eligible improvements work.
6. Final payment cannot be made to a contractor until the eligible loan or
grant recipient and the Authority have accepted the completed eligible
improvements work in writing. If the contractor requests periodic draws
on completed eligible improvements work, during the period of such work,
such draws must be accompanied by appropriate lien waivers concerning
the work completed and will be subject to a 10% holdback on the overall
eligible improvements work contract. Lien waivers must also be provided
prior to making final payment on the eligible improvements work contract.
7. The holdback shall be used to correct unsatisfactory eligible improvements
work and to defray any costs required to be incurred by using a replace-
ment contractor, should the first contractor be removed from the job.
8. The Authority shall provide necessary administrative assistance and
procedures so that minority contractors and sub-contractors are provided
equal opportunity to be awarded contracts to perform eligible improvements
work under the City rehabilitation loan and grant program.
Additional Administrative Responsibilities.
The Authority, in implementing, administering and carrying out the provisions
of the City of Saint Paul rehabilitation loan and grant program shall, in
addition to the duties, responsibilities, determinations, functions and other
provisions contained in these guidelines, be responsible for and carry out
the following duties and functions:
1. Administer the City rehabilitation loan and grant program, in such a manner
so as to complement other public rehabilitation and related programs, and
not be competition with or as a substitute for any other public program.
Particular administrative emphasis shall be placed on encouraging lower-
income homeowners, who live in neighborhoods where the need for rehabilita-
tion is recognized, to avail themselves of the City rehabilitation loan
and grant program. To this end, based on the income limits being adopted
in these guidelines for various loan interest rate categories, the Authority
shall adopt procedures that will insure a loan approval ration of 2-1-1
(lower interest rate - middle interest rate - higher interest rate) over
the length of the program. This guideline, however, shall be adjustable
by the Authority based on rehabilitation needs and in reference to approved
neighborhood rehabilitation programs. Also, the Authority shall establish
a monitoring system, particularly during the early stages of implementation,
that will detect and advise the Authority, steering co�nittee, and the City
Council of any trends inconsistent with the intent of Minnesota Laws 1974,
Chapter 351.
_ 13 _
2. Adopt, consistent with the provisions of Minnesota Laws, 1974, Chapter
351 and the provisions of these guidelines, further administrative guide-
lines, procedures and/or rules and regulations necessary to implement
and administer this program. To this end the program shall be implemented .
by the Authority with as few administrative rules and procedural steps
as possible and should be a corresponding flexible program which meets
real rehabilitation needs and satisfies the intent of Chapter 351. In
this regard, the Authority shall recommend to the City Council necessary
changes in these guidelines on a continuing basis. These administrative
. guidelines, procedures and/or rules and regulations shall include
provis�ons designed to insure that financing of rehabilitation through
this program will be available to eligible persons or families on a city
wide basis and in addition will be available to:
a. Eligible persons or families required to repair, improve, or rehabil-
itate housing because of an urban renewal or code enforcement program;
or if under court order;
b. Eligible persons or families unable to receive property insurance
because of physical hazards;
c. Eligible persons or families who have agreed to rehabilitate their
property in conjunction with and pursuant to an approved neighborhood
rehabilitation project, plan or program;
d. Eligible persons or families unable to afford rehabilitation loans
at a market rate of interest;
e. Eligible persons or families whose home contains violations of
applicable codes which constitute immediate health and safety hazards;
f. Eligible persons or families who have acquired property through or
pursuant to an urban homesteading program;
g. Eligible persons or families required to rehabilitate their homes
under or pursuant to approved relocation plan.
3. Coordinate with the Mayor and City Council in their establishment of an
advisory committee composed of community group representatives, private
citizens, and public officials to act in an evaluation and advisory
capacity after implementation of this program.
4. Borrow or leverage monies pursuant to Minn. Stat. 462.415 to 462.711
and Minnesota Laws, 1974, Chapter 351, from private lenders and the
MHFA to be used to make rehabilitation loans and to refinance existing
indebtedness under the City loan and grant program, in such amounts,
and under such te�ns and conditions, as the Authority, in coordination
with the City Council deems appropriate.
5. Make available, on a coordinated and comprehensive basis, other related
housing programs administered in whole or part by the agency, such as
urban homesteading, the hazardous building act (Minn. Stat. 463.15-.261)
spot renewal, federal rehabilitation loan and grant and homeownership .
programs and the MHFA rehabilitation loan and grant program (including
"reserved funds") to compliment approved neighborhood rehabilitation
programs.
_ 14 -
6. Provide necessary administrative and technical assistance in carrying
out the provisions of the City rehabilitation loan and grant program.
7. Coordinate with the City Planning Department and the City Council in the .
preparation and implementation of neighborhood rehabilitation programs
and upon direction of the Council:
a. Prepare appropriate documentation and submit reservation requests to
the MHFA for the reservation of MHFA rehabilitation funds to be
available on a City-wide basis and/or to be available for approved
neighborhood rehabilitation programs;
b. Set aside funds available through or as a result of the City
rehabilitation loan and grant program including bond proceeds or
"leveraged" funds for approved neighborhood rehabilitation programs.
8. Coordinate with and, to the extent legally permissible, contract with other
state public bodies as that term is defined in Minn. Stat. 462.421 (4)
such as the Community Services Housing Code Inspection Division and the
City Planning Department concerning the delineation of responsibilities
and functions in carrying out the provisions of Minnesota Laws, 1974,
Chapter 351 and these guidelines including but not limited to the exercise
of powers relating to the repair, closing, acquisition, or demolition of
hazardous, unsafe, unsanitary or unfit buildings; the inspection of
residential housing; and the authorization and delivery of public and
other related improvements.
9. Coordinate with, and to the extent possible, provide assistance, in
con3unction with the City Planning Department, to neighborhood organiza-
tions or associations to assist such groups in assessing the potential
for, in organizing, and in developing and formulating neighborhood
rehabilitation project plans; and in conjunction with the City Planning
Department, inform interested neighborhood organizations and citizens
on the specifics of the City and MHFA rehabilitation loan and grant
program and disseminate information concerning these programs on a City-
wide basis.
10. Coordinate and contract with neighborhood organizations and associations
and non-profit and redevelopment corporations concerning the delineation
of authority, organization, association or corporation functions and
responsibilities as regards an approved neighborhood rehabilitation program.
To the extent legally and economically permissible, such a contract may
include an agreement by the Authority to reimburse such associations and
corporations for expenses and salaries incurred in carrying out such
functions and responsibilities.
11. Coordinate and contract with local lending institutions concerning their
involvement in the origination and servicing of City rehabilitation loans
and grants, but in all cases the final decision concerning the making of
a City rehabilitation loan or grant rests with the Authority.
12. Coordinate and contract with the City of Saint Paul concerning the receipt
and use of bond proceeds, authorized by Minnesota Laws, 1974, Chapter 351,
and made available to the Authority pursuant to Minn. Stat. 462.415 to
462.711 and Chapter 351.
- 15 _
. ' +.
13. Provide an adequate information and referral system, whereby persons and
families who are potentially eligible for and desire to avail themselves
of other public and private programs and funds relating to rehabilitation .
and homeownership including "reserved" or (excluding "leveraged" MHFA
funds) otherwise available MHFA rehabilitation and refinancing funds,
(instead of City rehabilitation loans and grants) are given full informa-
tion concerning the use and availability of such funds and programs and
proper referral to rehabilitation programs and administering entities.
14. Provide, upon completion of and acceptance by the eligible loan or grant
recipient and the authority of eligible improvements work, a "Certificate",
setting forth what violations of applicable codes and immediate health
and safety hazards have been corrected by the eligible improvements work
and what other eligible improvements work has been completed, and stating
that the completed eligible improvements work is in compliance with
applicable codes.
15. Provide,an appeal or review process and procedures and information so con-
cerning,wherein any person who feels he or she is aggrieved by the
application of these guidelines may appeal such grievance for independent
review and determination.
Use of Bond Proceeds.
1. Consistent with the provisions of Minnesota Laws, 1974, Chapter 351, and
these guidelines, bond proceeds shall be utilized by the Authority to pay
the follaaing costs and for the following purposes:
a. Interest Differentials. To pay the difference between the interest
rates on approved City rehabilitation loans and refinanced indebtedness
and the interest rate incurred on monies borrowed or "leveraged" by
the Authority and used to make and issue City rehabilitation loans and/or to
refinance existing indebedness, provided, however, that in no event
shall the payment of interest difference on any City rehabilitation
loan exceed 2 points.
b. Default Reserves, To be set aside and used, at a percentage rate not
to exceed 6% of the total amount of monies used to make City rehabili-
tation loans, and at a level and upon such terms and conditions
determined, as a result of negotiations with private lenders and the �
MHFA, by the Authority, with the consent of the Council, to pay for City
rehabilitation loans and refinanced indebtedness defaults.
c. Administrative Costs and Technical Assistance. To pay, in an amount
approved by the City Council, for administrative and technical assistance
costs incurred by the Authority or its agents which are directly related
to the development, implementation, administration and carrying out the
City rehabilitation loan and grant program,
d, Rehabilitation Grants. To provide and make a maximum of $150,000 in City
rehabilitation grants, consistent with the provisions of Chapter 351.
e. Rehabilitation Loans. To provide and make City rehabilitation loans,
consistent with the provisions of Chapter 351.
-1�-
, s
2. Any interest charged and received under a City rehabilitation loan that is
in excess of Authority costs, as regards that loan, may be used by the
Authority in making additional City rehabilitation loans or for any of the
purposes specified in (1) above. .
-1�-
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. � MEMO T0: Interest,ed Ci�izens, Cor�munity Groups, and Press
' FROM: Ruhy Hunt, Council Presi.dent � �-
SUBJECT: Hearing on St. Paul 's Kousing Rehabilitation Loan and Grant Program
The City of St. Paul was autfiorized 6y the 1974 State Legislature to
develop and administer a housing reha6ilitation loan and grant program to assist
home own�rs of low and moderate income to re(�abilitate their residences. A bond
issue of $3 hiillion was authorized to finance t�iis program.
A proposed program and guidelines for implementation have been prepared
by a staff task force wor[cing with representatives of citizen groups. This
proposal has been approved 6y the Mayor, submitted to the City Council , and will
be the subject of a pu6lic hearing on iVovem6er 21 , 1974, 7:30 P.M. , Council Chambers.
Under the proposal , tf�e City would contract u��ith the Housing and Redevelop-
ment Authority to administer tE�e program. The HRA would make loans dlrectly from
the bond funds, and would also 6orrow money from private lenders and/or the Minnesota
Housing Finance Agency for the purpose of ma[cing additional loans. The process of
HRA 6orrowing to increase the amount of funds available for ]oans is termed
"Leveraging" .
The City's $3 Million in authorized bond funds would be used for the
following purposes:
1 . Interest Differentials: To reduce interest rates on city �
rehabilitation loans 6y absorbing up to 2% of the cost of
6orrowing "leveraged" money.
2. Defauit Reserves: To fund a reserve of up to 6% of the
total amount of city loans outstanding, to finance possible
loan defaults.
3. Administrative cost and tec6nical assistance: To finance
costs incurred by the Housing and Redevelopment Authority
in carrying out the program.
4. Re�abilitation Grants: A maximum of $150,000 for rehabili-
tation grants to low income persons (State law limits grants
to 5% of bond funds� .
5. Reh�biiitation Loans:
a� Loans will be rrade to persons and fam�lies of low or
moderate income as defined in the guidelines, pro�iding
tF�at other funds are not affordable or available.
b� Loans must b� used first to correct code violations which
are immediate heaith and safety hazards. Once these
f�azards are corrected, additional amounts may be avai]able
for general improvements.
It i.s proposed t�at the C�ity encourage concentration of r�habilitation
efforts in areas w�ere substantial need exi�sts. Priority areas �rould be identified,
and the Ctty would r�ioric �iitf� neigf�5orhood gr�ups to establish annual programs of
area im�rovement activit�es.
�+r�.w�._ .P.�._.. ' - �
, ___ _ ..._.. . ,..r.
' ,- _.��
,.. . � ���� � � �
�
The following persons have indicated a desire to testify at the public ' ,
hearing on the housing rehab program:
1. Ma.yor Lawrence D. Cohen '
2. Mrs. Edith Lallier, Ramsey Action Programs 1i
3. Mr. Bill Rupp, Planning Commission and Joint PAC
4. Ms. Drew Osterud, League of Women Voters
5. Ms. Imogene Treichel, Citizens League
6. Mr. Joseph Easley, Community Housing Corporation
7. Ms. Dixie Hartma.nn, Dayton's Bluff Conanunity Council
, �. Mr, Ed TCramer, Dayton's Bluff CoIImnunfty Council
�, Ms. Anne Connally, Hamline-Lexington Co�nunity Council
10. Ms. .�fary Tingerthal, Narth End Gommunity Organization
I1. Ms. Angie Blees, Phalen Area Coumiunity Council
At tne conclusion of Mrs. La.11ier's presentation, steff will explain
the proposal and the suggested amendments. Mr. Alan Block and Mr. Ren Forci
will make the presentation.
_ � �
_ __
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t:j: /'�'i ff7��`�
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. f� �' .'�� l'�J I�/ . I I-����
_ _ ..,. . --- . __ _ �f�EST-S TH STf��ET R 1��101� .
� sTRE�' for Neighborhood Development, lnc.
- �� �St.Paul,Minnesota 55102 ■Telephone 224-5461
�
Mrs. Ruby Hund
President, City Council
City of Saint Paul
Madame President:
The West Seventh Street Association heartily endorses the concept of housing
rehabilitation for the City of Saint Paul.
West Seventh has rehabilitated over 350 dwelling units which has ena�led our
residents to live in a standard, decent home.
With the expiration of the federal loan and grant program in June of 197g, no re-
apportioning of unexpended regional funds, the new loan program in the amount of
$2 million dollars not beinq released, and then the program being dissolved in
August Of 1975, the need for the City to undertake a rehabilitation loan and grant
program is imperative.
In this time of inflation, the cost of new construction is beyond the reach of the
majority of the city's residents, and therefore to afford these people a safe
home, we strongly urge your immediate passage and implementation of the Housing
Rehabilitation Loan and Grant Program.
Joseph P. Barrett ,
President, West 7th Street Assn;
'1'0: rtembers of the City �ouncil � s� Z.�"_'� �
Fror�: Lexin�ton Y�amline Co�snunity Council G.�
:te: St. raul's Housing Rehabilit�.tion Loan and, c�rant 1�ro�ram
Date: Nov. 21 , �974 �
Z,IE FEEL '1'IiA'1' `1'H�� COr�iUNITY ORGA1dIZER IrT THE CO.T:C��T1�T�D REIiABILITATIOi�T
I�TEIGHBORHOOD SHOULD BE SELECTED BY TFIE N�IGIiBORH00D OIZG�'�.NTZi1TI0N IN TH1�T AR:�A.
Tnerefore we ase o�iering tonight wn amendment to the Overview of the program.
On pa�e 7 and 8 the Overview reads: "In the neighborhood reh�.bilitation
conponent, it is reconmended th�t the City e;ouncil direct HR1'� to work closely
with existir� resident �roups. . . .The nature �.nd scope of this inter-agency
cooperaticn shall be in the forna of a contract between the administering agency
and the or�anization."
The amendment would i�mediately follow the above sentenae� and would read . . .
"IInder the terms of this contractual agreement the existin� neighborhood in
a concentrated rehabilitation are�, shall be empowered to interview and
select the �pplicant to fill the position of community or�anizer, subject to
approval by the administerir� agency."
1'he PROPOSID PROGiil�;�; CONCEPT Ai?D GUID�,L��TliS s�3ould be �mended on pa�e .15 to
include after point 10, an additional point 10a which would re�d:
"Under the terms of this contractual agreement such associaticns a.�d
corporations shall be empowered to interview and select the applic�nti to
fill the position of community organizer, subject to approval by the adninistering
zgency."
� , •
' � � -Z�'1 ��
' Citizens League
S30 Syndicate Building
Minneapolis, Minnesota 55402
Telephone: 338-0791 June 18, ].974
� CITIZENS LEAGUE STATEMENT ON NEW REHAB LOAN AND GRANT PROGRAMS
With passage of the new state-local loan and gxant programs, Minnesota has a
great chance to show what inno�tative �tate and 1QCa1 government can do to maint,ain
housing and to revitalize and presexve the central cities. We commend state and
local officials for their cpmmitment to:
-- Investment of sizeab�e dollars. The funds authorized may cover perhaps
12,000 units in Minnea�olis and 5t. Pau1 alone, �,ssuming an avera$e loan
in the vicinity of $5,000. While not adequate to cover all homes need-
ing rehab (the total in need may be 3 or 4 times as many), it is certain-
ly a major step forward.
-- Maintaining the existing stock of housi,ng. Federal programs have usually .
emphasized, pri.marily, new construction. State and local officials recog-
nize the importance of retain3.ng quality older neighborhoods. Probably
8 to 10 times as manq persons move into existing housing each year as do
into newly-constructed housing
-- Decentralized decision�making. State officials are allowing cities to
exercise a maximum amount of discretion in establishing priorities. De-
tailed guidelines on allocation of funds are being wri�ten at the ZocaZ
not the state level.
-- Encouraging homeowner/resident participation. State guidelines, for ex-
ample, are encouraging cities to include prnvision fpr a neighborhod em-
phasis on priorities.
BACKGROUNLI
In the summer of 1973, the Citizens League Board of Directors approved the
report "Building Confidence in 01der Neighborhoods." A central conclusion of that
report was that a house-by-house approach to maintenance and rehab is not suffici�nt
to keep neighborhoods strong. It is essenti�l the League said, that the emphasis
be on neighborhood maintenance an�d r�hab. The value of a house is not determined by
what is done to that dwelling alone, but what happens to the entire neighborhood of
which it is a part.
Prospective residents, if they are to be attracted to older housing in central
cities, must have solid evidence that almost aZt houses ia the neighborhood are
going to be maintained for the forseeable fu�.ure, the League said,
The Le�ague urged that residents on a block or a group of blocks, covering, per�
haps, an area of about 100 homes� banrl together in neighborhood maintenance assoc�.a�
tions to enabTe cooperative action to maintain pxoperties.
The report also called on city offic3,als to recognize the importance, in city
programs, of establishing a naighborhQOd, rather than a house-by-house, approach.
• , �
-2- -
The report specifically urged, in the event additional funds far rehab are made
available, that such funds be allocated �o maxim3ze the maintenance and renewal
of entire blocks or a series of blocks, not just houses here and there.
The new laws providing for s�ate and local rehab fund�, passed by the Legisla-
ture in 1974, had not even been proposed at the tim� the League 'report was issued.
The cities of Minneapolis and St. Paul and the Minnesota Housing Finance Agency �urT
� rently are developing guidelines fo�c the allocation of newly-approved state and
local funds for housing rehab loans and gXants. Some $100 million is authorized
�t the state level, of which approximately $50 million is earmarked for the ltain
�ities metropolitan area, with Minneapolis and St. Paul likely to be eligible for
a clear ma�ority of these funds. Tn addition, special legislation authorized
another $10 million for Minneapolis and $5 million for St. Paul.
� RECOMMENDATIONS
A. Consistent with our 1973 report, Building Confidence in Older Neighborhoods,
we now recommend that the cities of Minneapolis and St. Pau1:
1. Stimulate and assist resident$ in the same �e�eral area tp prepare�
and submit rehab applications together, to maximize 'the potential
of larger scale impxovements bein� made in the same area at the
same time. �
2. Guarantee that a o�rtion�f r�hab loan and �rant funds wi11 be
reserved for group applicatiqns, that is, applications for loans
and/or grants which would be submitted, simul�aneously, by several
,
residents on the same block or blocks nearby.
3. Offer to assemble ,applications T- even where submitted individually
and from. differenit l,ocations -- in �ou�s for purpos�s of joint
bidding by contractors, �o enab—le ore work wi�h 133nited dollars
than would li.kely b� pos�ible if each ap�licant's �ob were �ontracted
for sepa�ate�y. �
4. Test at least two a�prqack�es for o�anizi�the rehabilitation work:
let the app�opriate ci�y agency function as a genex'al contr�czor in t
some cases, securing sub-�contractors for res�.dents who choose not to
do this for themselves; �and in other cases, seek out and use the ser-
vices of established and repuCable general contractors. ' �
� . � .. .� _ .i�� T . � . -
B. We recommend that neighbo�hood organ�zati.ons in Minneapolis and St. Pau�.:
1. Encourage all who need improvements to apply for loans and grants,
if eli�ible. �
2. Assist several residents on a single block to submit, where possible,
their application� together, so that improvements can occur simultan-
eously, thereby giving qu�ck evidence of an area qn the u�swing.
. � �
3. Point out to their residents the poteneial which joint bidding of
contracts affords for stretching the available rehab dollars, and
assist residents in�ra�ping their j obs for �oint bidding.
�
� .
' -3-
C. We recommend that the Minnesota Housing F3�nance Agency:
1. Accept the responsibility for monitoring the state rehab loan a�d
grant programs and present to the 1975 Legislature a full and public
evaluation of the differing approaches used in apportioning the
funds and in carrying out the rehab work. �
� D. We recommend that private contractors:
i. Take the initiative with indiv�dual residents on a block to urge them
to assemble their work for 3oint bidding, by pointing out cast savings
plus the benefits of improvements occurring simultaneously on many
houses on a single block.
� DISCUSSION OF RECOMMENDATIONS
The test of success will be the ability of this program for the rehabilitation
of houses to become a program that accomplishes the rehabilitation of neighborhoods.
The key to maintaining and enhancing an older neighborhood as a place to live
is confidence about the future. Families are unlikely to buy, and lenders are un-
likely to l�nd, in residential areas where there is a sense of uncertainty and dis-
couragement about the future.
Confidence in the future depends not on the condition of an individual house,
but on the condition, and the direction of change, of a neighbprhood. A successful
rehabilitation program, therefore, will be one that:
-- Gets improvements started in aZZ houses needing work in a block.
-- Stimulates neighbors to begin additional impxovements on their own houses,
out of their own, private, resources.
-- Creates, along the way, new and permanent systems of cooperative action by
resider�ts and homeowners for the maintenance of their local areas.
City guidelines should stimulate, and support, the neighborhood emphasis. .
The cities of Minneapolis and St. Paul currently are drafting detailed guide-
lines on eligibility for grants and loans and procedures for applicants to follow.
A major amount of the effort is to get the money moving and the work started early,
with a minimum of. complications.
Early drafts of guidelines in both. cities have talked chiefly in terms of
dealing with individuals' applications, in the ordez in which they are received.
Early drafts of the guidelines in St. Paul talk of allocations to neighborhoods.
Such language has been absent from the Minneapolis dra£ts.
Irrespective of the questio� of allocation to neighborhoods, however, are two
critical issues which need more attention in both cities: (1) encouraging several
individuals on a block to submit their individual applications together, and (2)
making it possible for improvement pro3ects in different homes to be let out for bids
as a single package.
�
� .
�
The fixst issue relates to the need to show, at the one time, evidence of a
great deal of activity on a given bloek or nearby blocks. Such evidence is more
likely to stimulate additional private investment on ,ttte part of the other residents
in the immediate area ti�an if only one house on the block were improved in a given
year. The result, thereby. is stretching the imgact of the public funds by stimu-
lating additional private investment.
� - �
The second issue relates to getting the most mileage fram l�.mi,ted state and £
local pubZic dollars. �f each app.l�.cant is. t-reat�d individually, and separately,
from the standpoint of wo.r.k to be done, it will not be possible for economies of
scale to be realized. If, for example, six homeowners in the same general area all
plan new roofs, how much better if they seek bids together, from the same contractor,
than if they dealt independently, by themselves:
We do not believe ma�or changes in guidelines are needed to accommodate these
concerns. With respect to group applications, some officials believe no problem is
present, because it is likely that group applications will be among the first re-
ceived. Others are less certain. Consequently, the guidelines might need only
guarantee that, if necessary, a portion of the funds would be held in reserve for
group applications. .
With respect to �oint bidding, we urge the responsible administrative agency
in each city, whether the Housing and Redevelopment Authority, or some other desig-
nated body, to design application forms so that individuals can exercise the option
to have their improvements let as part of �oint bidding, and, further, that such agen-
cies handle the necessary administrative details for such bidding.
But action at the neighborhood level is critical, too.
It is not likely that the full potential of group applications and group bidding
will be realized in the absence of initiative by neighborhood residents. Neighbor-
hoods, thraugh existing or yet-to-be-formed associations, should help their residents
assemble several applications on a single block. This probably will involve stimulat-
ing some residents to take advantage of the program who would not otherwise be so
motivated. Aside from whatever city guidelines provide with respect to grouping ap-
plications on a single block, neighborhoods should take the initiative in submitting
such proposals. •
Neighborhood leadership, too, will be needed to maximize the potential of �oint
bidding to hold down costs. In some cases, neighborhood residents may exercise the
option to make their own arrangements with contractors, and not work through city
officials. Or city officials may choose not to organize applications for joint bid- ,
ding to the maximum extent feasible. Here again, the neighborhood can take initiative
itself, by stimulating its residents to group their work for joint bidding. In fact,
at the neighborhood level, it would be possible to obtain joint bidding for projects
which are financed both with publicly-assisted loans and grants as well as those finan-
ced exclusively in the private sector.
Nor should the notential role of the private contractor be overlooked. They
th.emselves should undertake to encourage grouping of applications beeause of the op-
portunity this presents for a single contractor to have several jobs going on a single .
block at the same time, which is more efficient for him and cheaper for the residents.
� .
.
, 'S�
An effective statewide mqnitorin� and evalua[iwn prog�am must be ass�red.
.-., ,-� 1 , �' �
The 1974 state loan a�d gra,�nt legislation is a landmark. It is the state's
first re�l comtuitment i� an area fQrmexly pre-empt�d (but with limited success) by
the federal �overzunent.
' Quite elearly all, Che answer�' are not y�t available as to what arrangements
work best. Many options need ta be triec� fo� all.ocation of �u�ds, ,
If, however, the Legislatu�re is to gain canfidence in this program, to be will-
ing to expand it in �oming years, it will need goAd infoxmation on what has trans-
pired,
Manitoring and evaluat�on must go far bepond simply �ceporting ,that all parts
of �he state wers treated #airly fn the alloeati.o� of funds. Monitor�.ng an� evalu-
ation mu�t get to the i$sues of what �a� a�cowplish�d with the money. What methods
worked better Chan ot��rs?
The statQ should not fear such a program. In fact, it probably will be the best
insurance against the widespread cynieism which has developed with xegard to federal
programs.
t * .
� � � f a� `� 1°� '}� ��
CENTRAL MANOR
� ���r�� 26 EAST EXCHANGE STREET
�� LEAGUE OF WOMEN VOTERS ST PAUL, MINNESOTA 55t01
222-3178
November 21, 1974
T4: St. Pe,ul City Council
FROM: League of Women Voters of St. Paul, Mertyce Mayne, President
Dru Osterud, Housing Committee
T�e League of Women Voters of St. Faul supports this proposed loan and
grant reY?abilitation program. As our chaxming older homes deteriorate the
quality of life in the city is endangered. This problem is not confined to
the 1Veighborhood Development Program areas where the attention has been
concentrated. Pro�ect Rehab has made inroads in other sections of the city
but much remains for a program o�' this nature to work on.
This plan has been carefully and closely tied to other rehsbilit�,tion
programs, both federal and state, with the specific intent of makin� the
maximum use of all available resources. By bringing other programs together,
coordinating the benefits and acting as a backstop to fill the untouched
needs and reach people previously excluded, St. Paul's rehabilitation program
can have a far greater impact than the actual dollar amount involved would
indicate.
Flexibility is this program's most impressive chaxacteristic. Its
innovative financing plan not only makes the most extensive use of the bond
f�znds possible but has the added benefit of involving the private financial
sector. The financin� arrangement also permits the city to offer loans at
diPferent interest rates, which means a wider range of needs can be met,
particularly among low income families. While income limits have been set,
the ability of the plan to consider all factors involved in a family's
financial situation and to make ad�ustments for special problems, such as the
consideration of a family's total housing cost in determinin� the applicable
interest rate is a very positive paint. The use of loans and grants together
to tnake a pro,ject possible and the willingness to consider those who have
been termed "poor credit risks" in the past should encourage paxticipation.
The "sweat equity" provisions recognize the value of the work performed by
the recipient. This is paxticulaxly beneficial where the total cost of work
to be performed is greater than the maximum loan amount. The inspection,
warranty and bonding requirements should protect both the contractor and the
consumer and help ease any conflicts that may axise.
Under certain circumstances, som.e refinancin� of mortgages may be
possible. Finding another way to include the important group oP "contract-
for-deed" buyers does much to make this program accessible to those who need
it. Inclusion of tenant cooperatives and non-blood related adults as families
may ena.ble large older homes to rema.in as housing, preventing their demo�.ition
and possible ensuing commercial development in a neighborhood.
1
-2-
Cod.e enforcement is the underpinning of this program. These minimum
standaxds are necessary to keep the vitality and sense of future value alive
in our city. However, �he natural desire oP a homeowner to make additional
improvements which mey ma.ke his home more pleasant for him has been recognized
and included.
The main thrust of this program is towaxd concentrated rehabilitation of
neighborhoods. Though the administrative budget includes funda for organiza-
tional and technical help for interested neighborhoods, it is the residents
themselves who will make this program a success. Their sustained interest,
action and support are essential factors.
The plan calls Por the establishment of an advisory committee composed
of ca�nmunity group representatives, private citizens and public officials to
act in an evaluation and advisory capacity. This committee can serve a
useftiil ftii.nction as a forum for review of procedures. It could also act
effectively as a review board for complaints and grievances. The league
reco�nends tha.t a formal grievance procedure be established at the inception
of this program so that there is an orderly meana of handling the difficult
ma.tter of misunderstandings before any such situation arises.
We urge implementation of this program at the eaxliest possible date.
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WM. PATTON SHERMAN EAGLES
, 918 CITY HALL S0. ST. ANTHONY PAC
ST. PAUL, MN. 55102 2380 NAMPDEN
ST. PAUL, MN. 55114
tEN FROST FRANCES BOYDEN KAREN CHRISTOFFERSON
PAUL HRA 720 CI7Y HALL L/A DAVID HOZZA
:. FIFTN ST. ST. PAUL, MN. 55102 721 CITY HALL
PAUL, MN. 55101 ST. PAUL, MN. 55102
1 BISCHOFF KFN FORD ANNE CONLEY
CITY PLANNINr, LEXINGTON—HAMLIPJE COMMUNI'
LAUREL GRACE BLDG.-421 WAQASHA COUNCIL
PAUL, MN. 55104 ST. PAUL, MN. 55102 1184 ASHLAND AVE.
ST. f'AUL, MN. 55104
;E BENEKE GLEN HANGGI JUDY WILLIAMS
LAUREL AVE. �II2 E. HAWTFIORNE LCXINGTON—HAMLINE COMMUNII
PAUL, MN. 5510� ST. PAUL, MN. 55106 COUNCIL
1245 CARROLL /IVI:NUE
ST. PAUL, MN. 5�104
1N BLOCK QARQARA �OULGE� M11RY ELLEN GRIYJ�
PAUL HRA 1189 ASHLAND AVE. CITIZENS LEAGUE
:. FIFTH ST. ST. PAUL, MN. 55104 2741 COLFAX /1VE. , S.
PAUL, MN. 55101 MINNE�1POLIS, MN. 55408
: RA�IERI JOSEPN L. EASLEY PAT EUANS
CITY HALL COMMUNITY I�OUSING CORP. W. 7TH ASSOCIATION
PAUL, MN. 55102 290 METRO SQUARE 305 GOODRICFI AVE.
ST. PAUL, MN. 55101 ST. PAUL, MN. 55102
'D HOZZA LORRAINE W000 TOP� HAUGFN
GOOURICH AVE. 9U4 LINCOLN AVE. 9 NORD CIP,CLE RD.
PAUL, MN. 55105 ST. PAUL, MN. 55105 ST. PAUL , MN. 55110
dIE MIIRY,ER JOSEPH A.L. ERIGGO, JR. CAROLINE EMMET
� PI.ANNING ASSO. DI{t. , URQAN AFFAIRS CI7Y PLANNING
;E BLDG.421 WABASHA COMMISSION 421 WAQASIIA
PAUL, MN. 55102 240 SUMMIT AVE. ST. PAUL, MN. 55102
ST. �'AUL , MN. 55102
PAUL GILLILAND DIXIE OTLEY
OSKERUD RAMSEY /ICTION PROGR/IMS DAYTON'S LLUFF IIOUSING
� QAYARD DAYTON'S [31_U1=F �I::IlVICE CENTER COMMITTEL
PAUL, MN. 55116 909 E. SEVENTH ST. 913 E. T11IRD ST.
ST. PAUL, MN. 55106 ST. pAUL, MN. 55106
�A LAMQERT KEN GAUTHICR GRANT WEST
ON'S aLUFF HOUSING ST. PAUL HRA c/o ST. PAUL UR�AN LEAGUE
COMMITTEE 1001 PAYNE AVE. �101 SEL13Y AVE.
F. THIRD ST. ST. PAUL , MN. 5510G ST. PAUL, MN. 55104
PAUL, MN. 5510G '