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HomeMy WebLinkAbout1986-207 CCR1 Member Gene Lhotka introduced the following resolution and moved its adoption: RESOLUTION NO. 86 -207 RESOLUTION ADOPTING A HOUSING BOND PROGRAM FOR THE ISSUANCE OF SINGLE FAMILY MORTGAGE REVENUE BONDS, AUTHORIZING SUBMISSION OF SAME TO THE MINNESOTA HOUSING FINANCE AGENCY WHEREAS, pursuant to the Minnesota Municipal Housing Act, Minnesota Statutes, Chapter 462C (the "Act the City of Brooklyn Center (the "City is authorized to adopt a housing plan and carry out programs for the financing of single family housing which is affordable to persons of low and moderate income; and WHEREAS, the Act requires adoption of the housing plan after a public hearing held thereon after publication of notice in a newspaper of general circulation in the City at least thirty days in advance of the hearing; and WHEREAS, the City has adopted a housing plan (the "Plan after at least thirty (30) days published notice and otherwise as required by the Act; and WHEREAS, the Plan provides for programs for the issuance of bonds to finance the acquisition of single family housing primarily by persons and families of low or moderate income in accordance with the goals, conditions and requirements of the Plan; and WHEREAS, the Act requires adoption of a housing finance program after a public hearing held thereon after publication of notice in a newspaper of general circulation in the City at least fifteen (15) days in advance of the hearing; and WHEREAS, the City has on this date conducted a public hearing on a single family housing bond program (the "Program after publication of notice as required by the Act; and WHEREAS, the Program was submitted to the Metropolitan Council at the time of publication of notice of the public hearing, and the Metropolitan Council has been afforded an opportunity 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 in an aggregate amount not exceeding $10,000,000 (the "Bonds to finance the acquisition of single family housing primarily by persons and families of low or moderate income and first -time homebuyers, all as more fully described in the Program attached hereto as Exhibit A; and 1 1 RESOLUTION NO. 86 -207 WHEREAS, the Act further requires submission of the Program to the Minnesota Housing Finance Agency (the "MHFA by January 2, 1987 in order to be considered for an allocation by the MHFA of authority to issue qualified mortgage bonds pursuant to Minnesota Statutes, Section 462C.09; and WHEREAS, the City on the date hereof has conducted a public hearing on the Report after publication of notice of such hearing at least fifteen (15) days prior to the date hereof in a newspaper of general circulation in the City. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Brooklyn Center: 1. That the program for the issuance of single family housing revenue bonds in an aggregate principal amount not exceeding $10,000,000 (the "Bonds is hereby in all respects adopted in the form attached hereto as Exhibit A. 2. That the City hereby approves issuance of the Bonds pursuant to the Program and hereby authorizes the staff of the City to cause the Program to be submitted to the MHFA, to do all other things and take all other actions as may be necessary or appropriate to carry out the program in accordance with the Act and any other applicable laws and regulatio ATTEST: 7) 1 Clerk a December 22, 1986 Date 7 The motion for the adoption of the foregoing resolution was duly seconded by member Celia Scott and upon vote being taken thereon, the following voted in favor thereof: Dean Nyquist, Gene Lhotka, Celia Scott, and Rich Theis; and the following voted against the same: none, whereupon said resolution was declared duly passed and adopted. 1 RESOLUTION NO. 86 -207 THE CITY OF BROOKLYN CENTER 1986 SINGLE FAMILY MORTGAGE REVENUE BOND PROGRAM December 1, 1986 1 1 1 e RESOLUTION NO. 86 -207 SINGLE FAMILY MORTGAGE REVENUE BOND PROGRAM FOR THE CITY OF BROOKLYN CENTER Minnesota.Statutes,, Chapter 462C,.as amended (the "Act authorizes a city, or a housing and redevelopment authority designated by and acting on behalf of a city to develop and administer programs of making or purchasing mortgage loans to finance the acquisition, by low and moderate income persons and families, of single family housing located anywhere within its boundaries. The City of Brooklyn Center (the "City will exercise all powers conferred on the City pursuant to Minnesota Statute, sections 462C.01 through 462C.07, provided that the City holds public hearings required by the Act and to approve any housing plan or program prior to submission to either the Metropolitan Council or the Minnesota Housing Finance Agency. In creating this single family housing finance program for the City, the City Council has found and determined that the perservation of the quality of life in the City is dependent upon the maintenance and provision of adequate, decent, safe and sanitary housing stock; that accomplishing the provision of such housing stock is a public purpose and will benefit the residents of the City; that a need exists within the City to provide in a timely fashion additional affordable housing to persons of low and moderate income residing and expected to reside in the City' that a need exists for mortgage credit to be made available for both existing housing and for the new construction of additional single family housing; and that many 1 1 1 RESOLUTION NO. 86-207 owners of single family housing units are unable to sell such units and Would=be purchaSer8 single family housing units either_canhot_afford mbrtgage credit at the market rate of interest or cannot_obtain mortgage credit because the mortgage market is severely restricted. -2- -E_:The Council,_in establishing this housing finance program for the City,Lhas considered:the_information contained in the Housing Plan particularly (3.) 'the availability and affordability of other: government housing programs; (ii) the availability and affordability of private marketfinancing for.the,acquisition of newly constructed single family housing units; (iii) an analysis of population and employment trends and projections: of population and employment needs)AiY)recent housing trends and future housing needs in the City; and (v) an analysis of how the program will_meet the needs of low and moderate income persons and families residing and expected to reside in the City. The City Council has further considered (i) the amount, timing and manner of sale of bonds to finance the estimated amounts of mortgage loans to be made under the program, to fund the appropriate: reserves and to pay the costs of issuance; (ii) the number and qualifications of lenders eligible to participate in the program; (iii) the method for monitoring the implementation by participants to insure that the program will be consistent with the Housing Plan; (iv) the administrative capacity of the City and other methods of administering, servicing and supervising the program; (v) the cost of the 1 1 1 RESOLUTION NO. 86-207 program to the City, including future administrative expenses; (vi) the restrictions on the purchase prices of housing units to be financed under the program; (vii) the limits on income of persons or families_receiving financing under the program; and (viii) certain other _limitations. Section 1; Definitions. to time amended. -3- The following terms when used in this Section shall have the following _meanings, respectively: :--(I) "Acquisition Fund" shall_ mean fund to be created by_an_indenture of trust_or similar agreement between the :City and a Trustee for holders ,of the Bonds into which shall be,credited certain proceeds of the Bonds and otheund if any, and from which the City shall purchase Mortgage Loans, or mortgage-backed securities backed by Mortgage Loans, qualified for purchase under the Program. (2) "Act" shall mean Minnesota Statutes, Chapter 462C as currently in effect and as the same may be from time (3) "Adjusted Gross Income" shall mean Gross Family Income, less $750 for each Adult in the family, to a maximum of two Adults, and less $500 for each other Dependent in the family. (4) "Adult" shall mean anyone who has attained a legal age of majority under Minnesota law but who is not a Dependent. 1 1 RE NO. 86 -207 (5) "Affiliate" of any specified Person shall mean any other Person directly or indirectly controlling or --:controlled by or under direct or indirect common control with -such specified Person. For purposes of this definition-,• control, when used with respect to any specified Person, shall mean the power to direct the management and policies of such Person, directly -or indirectly whetheI :through the ownership of voting securities, by contract or otherwise. (fi) "-Agency" shall mean the Minnesota Housing Finance Agency; -or any successor to -its-functions under the Act. (7) "Bonds" shall-mean the revenue bonds to be issued by the City to' finance the Program. (8) "City" shill mean the City of Brooklyn Center, State of Minnesota (9) "City Council" shall mean the governing body of the City. (10) "Commencement Date" shall mean the later of (a) first day on which the City has Bond proceeds available to purchase Mortgage Loans under the Program, or (b) for New Housing Units to be purchased with Mortgage Loan proceeds, the date on which pre -sale efforts to market New Housing Units has commenced. (11) "Dependent" shall mean dependent, as defined in Section 152 of the Internal Revenue Code of 1954, as amended, and the regulations thereunder. -4 1 1 1 RESOLUTION NO. 86 -207 (12) "Developer" shall mean any Person engaged in the construction for sale of Housing Units, and any Affiliate of such Person. (13) "FHA" shall mean the Federal Housing Administration, an agency of the United States of America within the United States Department of Housing and Urban Development, -.or any successor to its-functions. (14) "FHLMC" shall mean the Federal -Home Loan Mortgage Corporation, or any successor to its functions. (15) "FNMA" shall mean the Federal National Mortgage Association, or any succcessor to_its_functions.: (16) "Gross Family Income" shall mean the current annual income from all sources of the Mortgagor, his or her spouse, and any guarantor or co -owner of a fee interest in the Housing Unit to be financed with the proceeds of a Mortgage Loan as determined in accordance with the then current loan origination requirements of FHLMC, FNMA, FHA or VA as to Mortgage Loans originated under programs regulated by FHLMC, FNMA, FHA or VA, or as to a conventional Mortgage Loan by the Qualified Mortgage Guaranty Insurer insuring such Mortgage Loan, as the case may be, as verified by an Originator in accordance with such requirements and its customary underwriting practices. (17) "Housing Plan" shall mean the Housing Plan of the City, as adopted by the City Council on July 21, 1980, and any amendment thereof. -5- 1 1 RESOLUTION NO. 86 -207 (18) "Housing Unit" shall mean residential real property and facilities functionally related and subordinate thereto securing a Mortgage Loan, which shall be a private detached or attached one- two- three- or four -unit family dwelling, or a one family apartment under condominium ownership (as defined in Minnesota Statutes, Chapter 515A), not including a mobile home or trailer even if attached to a permanent foundation, including a New Housing Unit, owned and occupied by an individual or family as a principal residence (or, if the Housing Unit contains more than one dwelling unit, one of such dwelling units is owned and occupied by an individual or family as a principal residence), containing.complete living facilities and located within the geographical boundaries of the City. (19) "Lending Institution" shall mean any bank, trust company, savings bank, national banking association, savings and loan association, building and loan association, mortgage bank or other financial institution or governmental agency which customarily makes or services mortgage loans on owner occupied residential housing, or any holding company for any of the foregoing, provided, however, such Lending Institution is approved by FHA, VA, FNMA or FHLMC. (20) "Mortgage Insurer" shall mean the FHA, the VA or any Qualified Mortgage Guaranty Insurer. -6- 1 1 RESOLUTION NO. 86 -207 (21) "Mortgage Loan" shall mean -an interest bearing loan to a Mortgagor for the purpose of purchasing a Housing Unit, evidenced by a promissory note and secured by a mortgage or deed of trust on such Housing Unit. (22) "Mortgagor" shall mean an individual or individuals who have a Mortgage Loan. (23) "New Housing= Unit ",shall mean a:newly constructed Housing Unit, construction of which was completed on or. after_ June 30:,= 1983, and_ as to which the Mortgagor will be the first owner occupant. (24) Origination. Agreement"_ shall. mean .a"written.agreement between an Originator and the City under which the Originator agrees to originate and sell to the City and the- C4ty_agrees to purchase Mortgage Loans pursuant to this Program. (25) "Originator" shall mean a Lending Institution which executes an Origination Agreement. (26) "Originator Commitment" shall mean a written commitment by an Originator to the City, in a form acceptable to the City, by which the Originator agrees, upon certain terms and conditions, to enter into an Origination Agreement. (27), "Person" shall mean any individual, corporation, partnership, joint venture, association, joint -stock company, trust, unincorporated organization or government or any agency or political subdivision thereof. -7- 1 RESOLUTION NO. 86 -207 (28) "Pledged Savings Account" shall mean a savings account established in connection with a Pledged Savings Account Mortgage Loan, which savings account and the earnings thereon may be used to -make payments on the Mortgage Loan any time during =the'` initial years of its amortization period and which is pledged as security for the Pledged Savings Account Mortgage Loan. (29) "Pledged Savings Account Mortgage- Loan" Shall-mean a Mortgage Loan originated pursuant to any plan approved by the Program Administrator; for which a portion of the principal -and interest payments during the initial years of such Mortgage Loan are expected to be paid from a Pledged Savings Account. (30) "Programt -mean the single family housing finance program authorized and to be implemented by the City pursuant to the Act. (31) "Program Administrator" shall mean any Lending Insitutution which agrees in writing with the City to monitor the origination and servicing of Mortgage Loans sold to the City under the Program or to service all such Mortgage Loans, and to perform such other functions as are agreed upon by such Program Administrator and the City. (32) "Project" shall mean a development of New Housing Units, including condominiums or townhouses constructed by a Developer, and including condominiums or townhouses constructed by a Developer for 1 1 1 RESOLUTION NO. 86 -207 individuals- who may sell their existing Housing Units to persons who will finance the purchase of such existing Housing Units with Mortgage Loans made avai lable by the Program. (33) "Qualified. Mortgage Guaranty Insurer" shall mean any mortgage- guaranty insurance company approved by FNMA or FHLMC, which is -licensed to do business in the State of Minnesota and (i) whose insurance policies would not adversely affect the rating on the Bonds with the rating agency which initially rated the Bonds or. -(ii) is rated by such agency on the basis of claims payment ability at the highest rating then given insurers issuing mortgage guaranty insurance policies, so long as such ;agency rates such insurers on the basis of claims payment ability. (34) "VA" shall mean the Veterans Administration, an agency of the United States of America, or any successor to its functions. Section 2. Program for Acquisition of Mortaaae Loans. The City hereby establishes a Program to acquire Mortgage Loans by contracting with Originators to purchase Mortgage Loans from Originators at such purchase prices and upon such other terms and conditions as shall be determined by the City in this Program document and in Origination Agreements to be entered into between the City and Originators. In establishing and carrying out such Program the City may exercise, within the -9- 1 1 1 RESOLUTION NO. 86 -207 corporate limits of the City, any of the powers the. Minnesota Housing Finance Agency may exercise under the provisions of Minnesota Statutes, Chapter 462A. Insofar as the City has contracted with underwriters, financial' advisors, legal counsel, and will be executing a contract with a_Program Administrator and a trustee, all of whom will -be reimbursed from. Bond_ proceeds and continuing Program revenues, it: .is not expected that additional staff will be assigned to the Program, nor- is expected that any additional staff costs need be paid from the City's budget. The Program Administrator wi1 administer the performance of the Originators with respect to the limitations set forth in this Program, and will monitor the Originators' servicing of the Mortgage Loanszor will-itself service the Mortgage Loans. The City will select a trustee for the bondholders who is experienced in trust management and has a large corporate trust portfolio. The trustee will administer and maintain the Bonds sold to finance the Program. The City Council hereby authorizes and directs its City Administrator to monitor all negotiations between the various parties taking part in the. Program to insure that the Program documents are consistent with the Housing Plan and the Program. Prior to the adoption of the resolution authorizing the sale of Bonds to finance the Program, the City Adminis- trator shall report to the City Council his findings as to the consistency of the Program documents with the Housing Plan and the policy of the City contained in this Program. -10- 1 RESOLUTION NO. 86 -207 Section 3. Non -Bond Proceeds to be Contributed to the Proaram. To assure-the financial feasibility of the Program and to assure that interest _rates on the Mortgage Loans will be as favorable as possible to purchasers of Housing Units, as well as to `assure -the completion -of- Projects intended to be benefited by the Program, the City intends to commit or has committed various revenues and other resources to the Program. Section 4. Standards and Reauirements Relatina to Mortaaae Loans Pursuant to the Proaram. The following_ standards and requirements shall apply with respect to Mortgage Loans acquired by the City pursuant to the Program: (1) A Mortgage;_Loa may be made only to finance the purchase of a Housing Unit existing at the time such Mortgage _Loan _is made. Construction loans shall not be made, but an Originator may enter into an agreement with a Mortgagor to make a Mortgage Loan to him or her upon the completion of the construction of a New Housing Unit to be financed by such Mortgage Loan, subject to the "first -come, first served" and nondiscrimination basis requirements of Section (2) hereof, and subject to the receipt of a certificate of a City building inspector stating that the New Housing Unit complies with the building code requirements of the City and with the state building code, set forth under Minnesota Statutes, Sec. 16.83 et seq., as they are then in effect. 1 1 RESOLUTION NO. 86 -207 (2) Each Originator shall accept and process applications for Mortgage Loans for the purchase or construction of Housing Units on a nondiscriminatory "first -come, first- served" basis, subject to the other provisions of the Program, including any set asides and restrictions imposed by Section 5 hereof, and will not arbitrarily reject an application for a Mortgage Loan for a Housing Unit within a specified geographic area because of the Locat.ion_and /or -age of the property, or,:_ in__ the case of a proposed Mortgagor, arbitrarily vary the terms of a loan or the application procedures therefore because of race, color, creed, religion, national origin, sex, marital status, age or status with regard to- public assistance or disability. (3) The Mortgagor of each Housing Unit must be the fee owner of such Housing Unit and must occupy such Housing Unit or, if the Housing Unit contains more than one dwelling unit, one of such dwelling units as his or her principal place of residence. (4) One hundred percent (100 of the moneys available to make Mortgage Loans shall be used to purchase Mortgage Loans made to first -time homebuyers, including Mortgagors who have not owned a home during any part of the three (3) years prior to the date of closing of the Mortgage Loan. -12-- 1 1 RESOLUTION NO. 86 -207 (5) Mobile homes and trailers are =not Housing Units for purpose of the Program, -even if such mobile homes and trailers are attached to permanent foundations. (6) Each Housing Unit must be located within the corporate limits" of the City. (7) Loans: must be made only to finance homes that are serviced by municipal water and sewer utilities. (8) The purchase price of a Housing Unit may not exceed the lesser of (a) three times the limit on Adjusted Gross Income of the Mortgagor set forth_in Section 4 (12); (b) 90% of the average area purchase price for residential housing in the Minneapolis -St. Paul StandardaMetrapelitan Area computed as provided under the Proposed Treasury Regulation or any final regulations promulgated under Section 103A of the Internal Revenue Code of 1954, as amended. (9) Each Mortgage Loan must, at a minimum, be insured or guaranteed if the original principal amount of the Mortgage Loan exceeds (or is expected at any time to exceed) 75% of the lesser of the purchase price or appraised value of the property subject to the related Mortgage, with either (i) FHA Insurance, (ii) a VA Guaranty or (iii) a Mortgage Guaranty Insurance Policy. (10) The Adjusted Gross Income of a Mortgagor at the time of application for a Mortgage Loan shall not exceed the greater of: -13- 1 1 RESOLUTION NO. 86 -207 i) 110 percent of the median family income as __estimated by the United States Department of Housing and Urban Development for the Minneapolis -St. Paul Standard Metropolitan Statistical Area; or (..:ii) 100 percent of the income limit established by the Minnesota Housing Finance Agency for the City: In addition, the program will comply with any additional federal reserve limitations necessary to preserve the tax exempt status of the bonds. (11) For the first six (6) months after the Commencement Date, 100 %Eof�the funds provided for the purchase of Mortgage Loans may be made or committed only to Mortgagors with Adjusted Gross Incomes at the time of application of less than eighty percent (80 of the limit set forth in Section 4 (10) (i) or (ii). (12) To the extent required by the Act or other applicable laws or to preserve the exemption of interest on the Bonds from federal or state income taxation, the assumption of a Mortgage Loan from a Mortgagor by any other person or persons shall be permitted only if the requirements of Section 4(4), 4(8), and 4(3) are met with respect to the assumption. -14- 1 RESOLUTION NO. 86 -207 (13) An Originator may be allowed to retain from a Mortgagor or seller an origination fee not exceeding one and one -half percent (1 -1/2 (or such greater or lesser amount as shall be specified by the City in the Origination Agreements) of the principal amount of the Mortgage Loan. In addition, each Mortgagor may be charged a program participation fee of two percent (2 of the original principal amount of a Mortgage Loan, or such greater or lesser amount as shall be specified by the City, all or a portion of which may be deferred and made payable with (and in addition to) the last installment of principal and interest due on such Mortgage Loan, whether at the scheduled final maturity :Of such Mortgage Loan or at its prepayment in full prior to its final maturity. A Developer and /or Seller of a Housing Unit may also be charged an additional origination fee, which fee may be used to defray Program costs. (14) The City hereby requests a waiver by MHFA of the restrictions of Section 462C.03, Subdivision 5 of the Act. Failure by the MHFA to reject this program will be deemed to constitute approval of such waiver. (15) The difference between the interest rate on Mortgage Loans and the interest rates on the Bonds issued to acquire such Mortgage Loans shall represent only the costs of insurance premiums or guaranty fees, amortized expenses of issuing the Bonds, the City's 1 1 RESOLUTION NO. 86 -207 ongoing costs for the administration of the Program, fees of originating, servicing, and administering the Mortgage_Loans and trustee and paying agent fees, computed so as to provide that the Bonds shall not be deemed to be "arbitrage bonds" under the Proposed Regulations or any final regulations promulgated under Section 103Acof the Internal Code of 1954, as amended. (16) In -the event that the City acquires any existing residences in the City, with the intention of demolishing such residences and making the cleared sites available for the construction of New Housing Units, the City will make available to qualified residents of =the residences so acquired any relocation assistance and benefits required to be provided pursuant to Minnesota Statutes, Section 117.52 et seq. Section 5. Set Asides and Restrictions Relating to the Acquisition of Mortgage Loans. Notwithstanding anything in Section 3 to the contrary, the following restrictions shall apply with respect to Mortgage Loans acquired by the City pursuant to the Program: -16- RESOLUTION NO. 86 -207 (1) The City may permit commitments to be made by Originators to Developers to- provide Mortgage Loans on New Housing Units to be constructed by such Developers or to Developers who will provide Mortgage Loans for :first -time homebuyers purchasing existing Housing Units owned by the purchasers of Housing Units in the Developer's Project.. _-Developers -and Originators may be charged a commitment fee for such set asides, which fee may be used to defray Program costs. No more than seventy -five percent (75 of the moneys deposited in the Acquisition Fund may be used to purchase Mortgage Loans for New Housing Units built or sold by any one Developer. (2) The City3w111e,enter into Origination Agreements with each Originator proposing to originate Mortgage Loans pursuant to the Program. Each Origination Agreement shall specify the dollar amount of the Originator Commitment, provided that no more than seventy -five percent (75%) of the moneys deposited in the Acquisition Fund may be used to purchase Mortgage Loans from_any one Originator, unless other eligible Lending Institutions are not interested in participating. (3) Any Financial Institution, as defined in Minnesota Statutes, Section 47.0151, doing business in the City and which is an FHA/VA approved or FNMA /FHLMC approved Lending Institution shall be offered an opportunity to participate in the Program as an Originator. -17- 1 1 1 4 RESOLUTION NO. 86 -207 Section 6. Evidence of Compliance. The City may require from each Originator, at or before the time an agreement to originate Mortgage Loans is entered into by such Originator, evidence satisfactory to the City of the ability and intention of such Originator to make Mortgage Loans and sell them to the City under such agreement, and, at the time the City acquires a Mortgage Loan, evidence satisfactory to the City of compliance with the standards and requirements for the making of Mortgage Loans established by the City herein and in any agreement entered into between the City and the Originator; and in connection therewith, the City or its representatives, including the Program Administrator, may inspect the relevant books and records of such Originator in order to confirm such ability, intention and compliance. Section 7. Issuance of Bonds. To finance the Program authorized by this Section, the City Council intends by resolution to authorize, issue and sell by December 31, 1987 its Single Family Mortgage Revenue Bonds in an aggregate principal amount up to $10,000,000, of which approximately $9,800,000 will be available to purchase Mortgage Loans. The balance of Bond proceeds will be used to pay underwriting costs, to fund a reserve fund for the Bonds and to pay Bond issuance costs. Principal of and interest on these Bonds shall be payable solely from the proceeds of the Bonds and the revenues of the Program. The City shall enter into an -18- 1 1 1 RESOLUTION NO. 86 -207 indenture of trust with an institution authorized to accept such trusts and which is experienced in trust management and has a large corporate trust portfolio, upon such terms and conditions as the City Council shall determine, being advised thereon by bond counsel. In issuing Bonds, the City may exercise, within the corporate limits of the City, any and all of the powers the Minnesota Housing Finance Agency is authorized to exercise under the provisions of Minnesota Statutes, Chapter 462A, without limitation under the provisions of Minnesota Statutes, Chapter 475. Section 8. Severabilitv. The provisions of this Program are severable, and if any of its provisions, sentences, clauses or paragraphs shall be held unconstitutional, contrary to statute, exceeding the authority of the City or otherwise illegal or inoperative by any court of competent jurisdiction, such defect shall not affect or impair any of the remaining provisions.