03-1073Council File #
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Resolution # e�-�e�3
Green Sheet # � �� "
Presented By
RefeYred To
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APPROVING A SINGLE FAMII,Y HOUSING PROGRAM TO BE FINANCED BY
THE ISSUANCE OF SINGLE FAMII,Y MORTGAGE REVENUE BONDS AND
RESOLUTION
CITY OF SAINT PAUL, MINNESOTA
Committee: Date
MORTGAGE CREDIT CERTIFICATES
WHEREAS, pursuant to the Mixuiesota Municipal Housing Act, Miiuiesota Statutes, Chapter 462C
(the "Housing AcY'), the City of Saint Paul, Mimiesota (the "Cit}�') is authorized to adopt a housing plan
and carry out programs for the financing of single family housing for persons of low and moderate income;
and
WHEREAS, the Mimieapolis/Saint Paul Housing Finance Board (the `Board'�, a joint powers
board organized under a Joint Powers Agreement (the "Joint Powers AgreemenY') originally dated as of
December 1, 1984, and as subsequently amended, by and between the Minneapolis Community
Development Agency, the Housing and Redevelopment Authority of the City of Saint Paul, Minnesota (the
"Authorit}�') and the City of Minneapolis, Minnesota ("Minneapolis") and accepted by the City, and under
the laws of the State of Minnesota, proposes to undertake a single family housing program relating to the
Miuneapolis and the Saint Paul entitlement allocarions available in 2004 and certain recycling refixnding
bonds (the "Program"), to be financed by the issuance of one or more series of mortgage revenue
obligations, mortgage revenue refunding obligations and/or mortgage credit certificates ("MCCs") pursuant
to Minnesota Statutes, Sections 469.001 to 469.047, Chapters 462A, 462C and 474A and Section 471.59
(collecrively, the "Act"); and
WIIEREAS, pursuant to the Act, the Boazd is authorized to issue bonds from time to time and to use
the proceeds of its bonds to make or purchase mortgage loans or to purchase participations in mortgage
loans from lending institutions and to issue MCCs in order to finance the construction and rehabilitation,
and to facilitate the purchase and sale, of single family housing for eligibie persons or families under the Act
and to issue bonds to refund previously issued bonds; and
WHEREAS, the Program will provide below mazket interest rate mortgage loan financing or
income tax credits primarily to persons of low or moderate income purchasing single family homes to be
used as their principal places of residence and which aze located within the geographic lunits of the City or
Muuieapolis;and
WHEREAS, the Act requires adoption of the Program after a public hearing held thereon foliowing
pubiication of norice in a newspaper of general circulation in the City and Mimieapolis at least fifteen days
in advance of the hearing; and
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WHEREAS, the City Council has on the date hereof conducted a public hearing on the Program,
after publication of notice as required by the Act; and
WHEREAS, the Program was submitted to the Metropolitan Council at or before the time of
publication of norice of the public hearing on such Prograui, and the Metropolitan Council was afforded an
opportwuty to present comments at the public hearing, all as required by the Act; and
WHEREAS, the Program provides for the issuance of single family mortgage revenue bonds or
revenue refunding bonds in one or more series pursuant to the Act (the `Bonds'� to make or purchase or
cause to be made or purchased mortgage loans, or to purchase securities the proceeds of which would be
used to purchase mortgage loans, and the issuance of MCCs to finance the acquisirion, primarily by low and
moderate income persons and families, of single family housing located within the geographic boundaries
of the City or Minneapolis; and
WIIEREAS, it is proposed that the Program be approved and the Board be authorized to issue
Bonds and MCCs pursuant to the Program and the Joint Powers Agreement; and
WHEREAS, it appears that the Program and the issuance of Bonds and/or MCCs by the Board or
the Authority are in the best interests of the City.
NOW, THEREFORE, BE TT RESOLVBD BY THE CTTY COUNCIL OF THE CITY OF SAINT
PAUL AS FOLLOWS:
l. The Program is hereby approved in its entirety in substantially the form on file with the City.
The officers of the City and the Board are authorized to take all actions as may be necessazy or appropriate
to catry out the Program in accordance with the Act and any other applicable laws and regulations.
2. The issuance of the Bonds and/or MCCs pursuant to the Program is hereby approved subject
to agreement by the Board or the Authority and the purchasers of the Bonds, if any, and by the Board or the
Authority as issuer of the MCCs, as to the exact terms of the Program MCCs.
3. The Bonds may be issued in one or mare series at the time or times and pursuant to terms
deterxnined by the Boazd, and be structured so as to take advantage of whatever means are available and are
permitted by law to enhance the security for, or marketability of, the Bonds, provided that any such
financing shucture must be approved by the Board. The MCCs may be issued at the time or times and
pursuant to terms deternuned by the Board. All such deterxninations by the Board must comply with the
applicable provisions of the Act and the Intemal Revenue Code of 1986, as amended, and regulations
promulgated thereunder.
4. The Board is authorized to take all acfions which may be necessary or desirable in
connection with the issuance of the Bonds and the MCCs, acting on behalf of the City, and no further
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approval or consent of the City shall be required prior to the issuance of the Bonds or the MCCs by the
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Board, or prior to the taking of any action by the Board to undertake and 'unplement the Prograzn.
78 5. Nothing in this Resolution or the documents prepared pursuant hereto shall authorize the
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expenditure of any municipal funds on the Program other than as specified and authorized by sepazate
actions of the City and other than the revenues derived from the Program or otherwise granted to the City
for this purpose. The Bonds shall not constitute a charge, lien or encumbrance, legal or equitable, upon any
property or funds of the City except the revenues and proceeds pledged to the payment thereof, nor shall the
City be subject to any liability thereon. The holders of the Bonds shall never have the right to compel any
exercise of the taacing power of the City to pay the outstanding principai on the Bonds or the interest
thereon, or to enforce payment against any property of the City. The Bonds shall recite in substance that the
principal and interest thereon, are payable solely from the revenues and proceeds pledged to the payment
thereof. The Bonds sl�all not constitute a debt of the City within the meaning of any constituUonal or
statutorylnnitation ofindebtedness.
89 6. Any one or more series of the Bonds or the MCCs may be issued by the Authority in lieu of
90 issuance by the Board, at the discretion of the Authority.
Requested by Department o£:
Plannin Economic Develo�ment
By: �
Approved by Financial Services
By: d_lce�G�� i l.b'�in.
Adoption Cer
By:
Approved by
Byc
Adopted by Council : Date //P� .a� �'�d.3
� Green Sheet Green Sheet Green Sheet Green Sheet Green Sheet Green Sheet �
�3-ier3
Departrnentlo�ce/council: Date i�itiated:
PE -p��,�n ,�-NO�-03 Green Sheet NO: 3007958
Co�d Person 8 Phone: Deoartment Sent To Person InitiaVDate
JennyWolfe - � 0 lanniu &EcnomicDevelo
6-G555 q 1 lannin &EconomicDevelo De armientDirector �
Must Be on Council Agenda hy (Date): Number 2 � [tarne �
03DEG03 For "
Routing 3 vor's Otlice Ma or/Assistant
Order 4 ouncii
5 Clerk Gti Clerk
Total # of Signature Pages _(Clip All Locations for Signature)
Action Requested:
Signature on attached Resolution for adoprion at a Public Hearing on December 3, 2003.
Recommendations: Approve (A) or Reject (R): Personal Service Contracts Must Answer the Following Questions:
Planning Commission �. Has this person/firm ever wwked under a contract for this department?
CIB Committee Yes No
Civil Service Commission 2. Has this person/firtn ever been a city employee?
Yes No
3. Does this person/firm passess a skill not normally possessed by any
current oity employee?
Yes No
Expiain all yes answers on separate sheet and attach to green sheet
Initiating Problem, Issues, Opportunity (Who, What, When, Where, Why):
Approving a 2004 Single Family Aousing Program to be fmanced by the issuance of Single Family Mortgage Revenue Bonds and
Mortgage Credit Certificates. Bond proceeds will be used to provide loans for low or moderate income persons and fauulies.
AdvantapeslfApproved: �
The City is able to provide loans at lower interest rates through the issuance of tax-free bonds. The progxam allows the City to better
serve first time home buyers.
Disadvantapes If Approved: ,
None
Disadvanqqes If Not Approved:
Loan funds at lower interest rate would not be available for low or moderate income persons.
Total Amount of CosURevenue Budgeted:
Trensaction: -
Fundinp Source: � Activity Number:
Financiallnformation: �
(Explainj ,
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MINNEAPOLIS/SAINT PAUL
2004 SINGLE FANIII.Y HOUSING FINANCE PROGRAM
The City of Minneapolis, Mivnesota ("Minneapolis"), the City of Saint Paul, Minnesota
("Saint Paul") and the Housing and Redevelopment Authority of the City of Saint Paul, Minnesota
(the "Authorit�'), acting individually or jointly through the Minneapolis/Saint Paul Housing
Finance Board (the "Joint Boazd") (all together, the "Issuers") propose to issue mortgage credit
certificates ("MCCs'� under Secrion 25 of the Intemal Revenue Code of 1986, as amended (together
with regulations promulgated thereunder, the "Code"), or new money mortgage revenue bonds and
certain mortgage revenue refunding bonds under Section 143 (or prior applicable sections) of the
Code in one or more series, in either case to finance the single family housing finance program
described herein (the "Progratn") pursuant to authority conferred by Minnesota Statutes, Chapters
462C, 462A, 469 and 474A, all as amended, (and any other general or special law authority for the
issuance of obligations to finance a singie family housing program ar development) (all together, the
"Act"). Any action specified herein to be made by the Issuers may be made by one or more of them
acting in concert or individually.
In creating this Program, the Issuers find and detennine:
■ that the preservation of the quality of life in Mimieapolis and Saint Paul (the "Cities") is
dependent upon maintaining an adequate, decent, safe and sanitary housing stock;
■ that maintaining such housing stock is a public puxpose and will benefit the residents of
the Ciries;
• that a need exists within the Cities to provide addirional affordable owner-occupied
housing for low and moderate income persons and families and for other persons and
families to the extent necessary to promote economic integration as provided in the Act; and
■ that a need exists for mortgage credit to be made auailable for both existing and new
owner-occupied housing, for rehabilitarion of existing single family housing and for home
improvements.
To meet such needs, the Issuers intend to issue one or more series of single family mortgage
revenue bonds and single family mortgage revenue refunding bonds (`Bonds") to cause the
origination of mortgage loans to finance the acquisition, construction, rehabilitation or improvement
of single family housing in the Cities (or either of them). In addition to or in lieu of issuing Bonds,
the Issuers (or any one or more of them) may undertake a MCC program to issue MCCs to
mortgagors who obtain mortgage loans to finance the purchase, construcrion, rehabilitation or
improvement of single family housing in the Cities (or either of them). The Issuers may issue
Bonds, or will elect not to issue bonds in fauor of MCCs, in an aggregate principal amount of
approximately (a) $33,690,000 for Minueapolis and $25,390,000 for Saint Paui, representing certain
2004 entitlement bond allocation of Minneapolis and Saint Paul; (b) an amount estimated to be
$135,000,000, but which in any event shall be an amount sufficient to refund outstanding mortgage
revenue bonds and to recycle refund prepayments and repayments of certain outstanding bonds; and
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(c) such principal amount of taacable bonds as may be necessary or convenient to fiirther the
purposes of this Program.
Mortgage loans financed through the issuance of the Bonds and those in connection with
which the MCCs will be issued, will be subject to the following terms (or, for Bonds as to which
these requirements do not apply as a matter of law, to such other terms approved by the Boazd):
nurchase rorice - the ma�cimum purchase price for finauced homes shall not exceed
the lesser of (a) 90% (110% in "targeted areas" or azeas treated as targeted azeas) of the
applicable "average area purchase price" determined by the United States Department of the
Treasury or by the Issuers on the basis of more complete informafion, or (b) 3 times the
applicable income limit for the Progruii nnposed by Mimiesota law (except that in certain
areas the purchase price shall not exceed 4 times the applicable income limit to the extent
consistent with applicable federal law);
income limits - the maacimum income of the mortgagors sha11 be the lower of (a) the
income restrictions unposed by federal taac law or (b) the income restricrions imposed by
Minnesota Statutes, Section 462C.03, Subd. 2, including the reshiction of Subd. 7 that for
the first six months of the Program, 50% of the money a�ailable to make mortgage loans or
the "non-issued bond amounY' of MCCs must be reserved for persons and families with
adjusted incomes not greater than 90% of the general Program income limits. Income lnnits
under Section 462C.03, Subd. 2 shall be adjusted for family size by deducting $1,000 per
adult and $1,200 per child in the family.
In connecrion with this Program:
(i) (a) in connection with any mortgage loans finauced with the proceeds of
mortgage revenue bonds, any financial institutions described in Section 462C.03,
Subd. 4, and other mortgage lenders with offices located in the Cities and which are
FHA/VA approved sellers of mortgage loans as well as other financial institutions
and mortgage lenders which aze FHA/VA, or FNNfA/FHLMC approved sellers of
mortgage loans and are reasonably acceptable to aay master servicer acting on behalf
of the Issuers, will be eligible for considerafion for originarion of such loans; the
Cities will not limit participation in the Progratn to a single lender unless other
lenders aze not willing to participate for the considerarion offered; the Authority shall
be eligibie for considerarion for origination of loans;
(b) in connection with issuance of MCCs, MCCs will not be limited to
loans originated by particular lenders but will be available with respect to the
origination of qualifying mortgage loans by any participating lender;
(ii) loans will not be made auailable or set aside for the exclusive use of
developers or builders except, in the case of mortgage loans financed with the proceeds of
mortgage revenue bonds, for new housing described in Secfion 462C.071, Subd. 2;
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(iii) the Issuers expect to act as, or to contract witYi, a prog�atn aduvnistrator and a
servicer to provide services to ensure that the Program will be consistent with this Program,
the Act and applicable federal law;
(iv) as indicated above, the Cities respecrive 2004 entitlement allocarions may be
used in the Program, provided, however, that no provision of this Program shall in any way
prevent either Minneapolis or Saint Paul from using all or a portion of its respecrive
entitlement allocation(s) for multifamily housing or any other authorized purpose. In
addition, any election made by the Cities to issue MCCs in lieu of Bonds may be revoked in
whole or in part, at any time during the calendar yeaz in which the election was made as
permitted by Section 25 of the Internal Revenue Code and Section 1.25-4T(c)(3) of the
Treasury Regulafions. The resulting unused entiUement allocation may be used to issue
bonds for single family housing or other authorized purposes;
(v) the Progi�am will meet the needs of low and moderate income families by
providing below-market rate financing far the acquisition or rehabilitation of single family
homes or by providing a tax credit for mortgage interest paid, thereby enabling such persons
to qualify for mortgages which would be unauailable at market rates;
(vi) no homes which are located in previously unincorparated reai properry
annexed by the Cities within one year prior to the date of adoption of this Program will be
financed under this Program;
(vii) prohibitions or limitations on assumption will be imposed to the extent
required by federal law relating to the t� exempt status of Bonds or to the continued validity
of MCCs issued pursuant to the Program; provided that the Issuers may impose more
stringent limitations at their discre6on;
(viii) the estimated amount of mortgage loans to be made or purchased pursuant to
this Program is approxunately equal to the aggregate principal amount of Bonds issued and
the amount which either of the Issuers may elect not to issue in favor of MCCs;
(ix) the estimated aggregate principal amount of the Bonds, or estimated `hon-
issued bond amounY' (as such term is used in Section 25(d)(2)(B) of the Code) of MCCs
issued in lieu of the Bonds, is set forth above;
(x) the Bonds, if issued, may be issued in one or mare series timed for sale
consistent with the needs of the Cifies in 2004, or, if any bond alloca6on is carried forward
for single family purposes, in 2005;
(xi) refinancing of existing indebtedness will be pemutted only where the
mortgage loan aiso finances substantial `Yehabilitarion" as that terxn is defined under
Minnesota Statutes, Section 462C01 and Section 462C.03, Subd. 11 and under Secrion 143
ofthe Code;
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(xii) to the extent required by the Act, during the first ten (10) months of the
origination period, loans fivauced by the Bonds (but not mortgage loans assisted by MCCs)
will be made for e�cisting housing;
(xiii) the following addirional provisions shall apply only to issuance of MCCs
pursuaut to 8us Program:
(1) the "certificate credit rate" (as used in Section 25 of the Code) will be
20%;
(2) a copy of the form which will be used to elect the nonissued bond
amount is attached hereto as E�ibit A; and
(3) the Issuers will ensure compliance with the requirements of
Section 25 of the Code by use of an MCC procedural manual far the Program and by
use of the program administrator referenced in item (iii) above.
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EXFIIBTT A
TO
70INT BOARD PROGRAM
MORTGAGE CREDIT CERTIFICATE ELECTION
(Pursuant to Temp. Reg. § 1.25-4T)
(i) Issuer name:
[Name]
[Address]
TIN:
[Number]
(ii) Issuer's Applicable limit, per § 146 of the Intemal Revenue Code of 1986:
[ALLOCATION FOR 2004: $ �
[CARRYFORWARD ALLOCATION FROM PREVIOUS YEAR: $ 1
(iii) The aggregate amount of qualified mortgage bonds issued during the caIendar year::
[Amount]
(iv) The amount of the Issuer's applicable limit that it has surrendered to other issuers
during the calendaz year:
[Amount]
(v) The date and aznount of any previous elections under 1.25-4T(c) for 2004:
[Date and amount]
(vi) The amount of qualified mortgage bonds that the issuer elects not to issue:
[Amount]
State Certification attached.
Dated: , 2004.
CITY OF [CITY]
By
Mayor
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