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HomeMy WebLinkAbout1985-208 CCRMember Celia Scottintroduced the following resolution and moved its adoption: RESOLUTION NO. 85 -208 ADOPTING A HOUSING BOND PROGRAM FOR THE ISSUANCE OF SINGLE FAMILY MORTGAGE REVENUE BONDS, AUTHORIZING SUBMISSION OF SAME TO THE MINNESOTA HOUSING FINANCE AGENCY, AND APPROVING A POLICY REPORT OF THE CITY OF BROOKLYN CENTER 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 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 WHEREAS, the Act further requires submission of the Program to the Minnesota Housing Finance Agency (the "MHFA by January 2nd, 1986 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 RESOLUTION NO. 85 -208 WHEREAS, in order to issue single family mortgage revenue bonds in 1986 the interest on which is exempt from federal income taxation, the City must submit to the Internal Revenue Service on or before December 31, 1985 a policy report (the "Report and such Report must be published by the applicable elected representative of the City; 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 15 days prior to the date hereof in a newspaper of general circulation in the City. 1 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 regulations. 3. That the City hereby approves and adopts the Report in substantially the form attached hereto as Exhibit B, and authorizes and directs the Mayor of the City to execute the Report on behalf of the City and authorizes submission of the Report to the Internal Revenue Service. ATTEST: Mayor adoption of the foregoing resolution was duly seconded Bill Hawes voted in favor thereof: November 18, 1985 Date The motion by member and upon vote being taken thereon, the following Dean Nyquist, Gene Lhotka, Celia Scott, Bill Hawes, and Rich Theis; and the following voted against the same: none, whereupon said resolution was declared duly passed and adopted. t,jchibit A solution No. 85 -208 TY OF Bgpov CENTEg T HE cI PgpGRAM MORTGAGE REVENUE BOND 19 85 SINGLE FAMILY 1 V r October► 1985 Resolution No. 85 -208 Exhibit A SINGLE FAMILY MORTGAGE REVENUE BOND PROGRAM 0 FOR THE CITY OF BROOKLYN CENTER Minnesota.Statutes, Chapter 462C, as amended (the "Act authorizes a city, or a housing and redevelopmen'; authority designated by and acting on behalf of a city to develop and administer programs of making or purchasing mortgage loans to s 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 "C:!ty 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 1:o 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 preservation of the quality of life in the City :.s 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 henefit 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 oxpected to reside in the City; that a need exists for mortgage credit to be made available for both existing housing and "or the new 1 'Resolution No. 85 -208 Exhibit A construction of additional single family housing; and that many owners of single family housing units are unable to sell such units and would -be purchasers of single family housing units either cannot afford mortgage credit at the market rate of interest or cannot obtain mortgage credit because the mortgage market is severely restricted. The City Council, in establishing this housing finance program for the City has considered the information contained in the Housing Plan, including particularly (i) the availability and affordability of other government housing programs; (ii) the availability and affordability of private market financing for the acquisition of existing and newly constructed single family housing units; (iii) an analysis of population and employment trends and projections of population and employment needs; (iv) recent housing trends and future housing needs in the City; and (vJ 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 insure that the program will be consistent with the Housing Plan; (iv) the administrative capacity of the City and other methods of administering, -2- Resolution No. 85 -208 Exhibit A servicing and supervising the program; (v) the cost of the 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 lim.ts on income of persons or families receiving financing under t1.e program; and (viii) certain other limitations. Section 1. Definitions. The following terms when used in this program shall have the following meanings, respectively: 1) "Acquisition Fund" shall mean that fur.d to be created under 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 1 of the Bonds and other funds, if any, and from which the City shall purchase 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 to time amended. 3) "Adjusted Gross Income" shall mean Gress 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. MLC Resolution No. 85 -208 Exhibit A 5) "Affiliate" of any specified Person shall mean any l 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 whether through the ownership of voting securities, by contract or otherwise. 6) "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 1 the City to finance the Program. 8) "City" shall 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- Resolution No. 85 -208 Exhibit A (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 AmerLca within the United States Department of Housing anti Urban Development, or any successor to its fznctions. (14) "FHLMC" shall mean the Federal Home Loaan Mortgage Corporation, or any successor to its f nctions. (15) "FNMA" shall mean the Federal National Mortgage Association, or any succcessor to its functions. (16) "Gross Family Income" shall mean the ct.irrent annual income from all sourses of the Mortgagor, his or her spouse, and any guarantor or co -owner Pf a fee interest in the Housing Unit to be fin lanced 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 cn September 20, L 1982 and any amendment thereof. -5- 'Resolution No. 85 -208 Exhibit A (18) "Housing Unit" shall mean residential real property and facilities functionally relate.d 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 mortgage lender 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 or is approved by the City. (20) "Mortgage Insurer" shall- mean .the FHA, the VA or any Qualified Mortgage Guaranty Insurer. kesolution No. 85 -208 Exhibit A (21) "Mortgage Loan" shall mean an interest bearing loan to a Mortgagor for the purpose of purchasing a Housing Unit, evidenced by a promissor:,r note and secured by a mortgage on such Housing Unit. (22) "Mortgagor" shall mean an individual oi. individuals who have received a Mortgage Loan. (23) "New Housing Unit" shall mean a newly constructed Housing Unit, to which the Mortgagor w:'.11 be the first owner occupant. (24) "Origination Agreement shall mean a written agreement between an Originator and th(� City under which the Originator agrees to origina':e and sell to the City and the City agrees to purchase Mortgage Loans pursuant to this Program. (25) "Originator" shall mean a Lending Inst:.tution which executes an Origination Agreement as an originator. (26) "Originator Commitment" shall mean a written commitment by an Originator to the Cite, 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- Resolution No. 85 -208 Exhibit A (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) "Program" shall mean this 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 I Units, including condominiums or townhouses constructed by a Developer, and including Resolution No. 85 -208 Exhibit A L condominiums or townhouses constructed by a Developer for individuals who may sell their existing Housing Units to persons who will finance the purchase of such existing Housing Units with Mortgage Loans made available by the Program. (33) "Qualified Mortgage Guaranty Insurer" ;hall 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 ::atin'g then given insurers issuing mortgage guaran:y insurance policies, so long as such agency rates such insurers on the basis of claims payment ability. (34) "Target Area" shall mean a targeted aroa as defined in Section 462C.02, Subdivision 9 of the Act, as such Target Areas may exist on the Commencement Date, or as may thereafter be established. (36) "VA" shall mean the Veterans Administration, an agency of the United States of America, or any successor to its functions. Section 2. Proqram for Acquisition of Mortqaqe roans. The City hereby establishes a Program to acquire Mortgage Loans by contracting with Originators to purchasa Mortgage -9- Resolution No. 85 -208 Exhibit A Loans from Originators at such purchase prices and upon such other terms and conditions described herein or as shall be determined by the City 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 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 or will contract with underwriters, financial advisors, legal counsel, 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 necessary to implement the Program, nor is it expected that any additional staff costs need be paid from the City's budget. The Program Administrator will 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 Loans or will itself service the Mortgage Loans. The City will select a trustee for the bondholders who will be required to be 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 Coordinator 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- -10- Y2esolution No. 85 -208 Exhibit A Program. Prior to the adoption of the resolution authorizing the sale of Bonds to finance the Program, the Ci:y Coordinator shall report to the City Council his findings as to the consistency of the Program documents with the Housing Plan and the policies of the City contained in this Program. Section 3. Non -Bond Proceeds to be Contributed to the Program. To assure the financial feasibility of the ?rogram and to assure that interest rates on the Mortgage Loans will be as favorable as possible to purchasers of Housing Ulits, as well as to assure the completion of Projects intended to be benefited by the Program, the City may commit various revenues and other resources to the Program. Section 4. Standards and Requirements Relating to Mortgage Loans Pursuant to the Proqram. The following standards and r.equirements shall apply with respect to Mortgage Loans acquired by the City pirsuant to the Program: 1 A Mortgage Loan may be made only to finance the purchase of a Housing Unit existing at the time such Mortgage Loan is made. Construction leans shall not be made, but an Originator may enter i1to an agreement with a Mortgagor to make a M Loan to him or her upon the completion of the .-onstruction of a New Housing Unit to be financed by sick Mortgage Loan, subject to the "first -come, first- served" and -11- Ikesolution No. 85 -208 Exhibit A nondiscrimination basis requirements of Section 4 (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 state building code, set forth under Minnesota. Statutes, Sec. 16.83 et seq., as they are then in effect. 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 location 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 mo,re than one dwelling unit, one of such dwelling as his or his principal place of residence. -12- Resolution No. 85 -208 Exhibit A 4) At least ninety percent (90 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. Up to ten percent (10 of the moneys available to make Mortgage Loans may be used to purchase Mortgage LoanE made to persons or families who are not first -time homebuyers including those who have owned a home during some part of the three (3) years prior to the date of closing of the Mortgage Loan, provides they meet all other requirements of the Program. 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 horses 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 lim:Lt on Adjusted Gross Income of the Mortgagor set for in Section 4 (12) (b) four times the Adjusted Gro:5s Income of the mortgagor if the Housing Unit is located within a Tartlet Area or (c) 110% of the average area purchase price for residential housing in the ;Minneapolis -St. -13- 'Resolution No. 85 -208 Exhibit A Paul Standard Metropolitan Area computed as provided under the Proposed Treasury Regulations 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) 750 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: 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 Area; or ii) 100 percent of the income limit established by the Minnesota Housing Finance Agency for the City. (iii) Provided that, beginning six (6) months-after the Commencement Date, up to twenty percent' (200) of the amount of bond proceeds deposited in the Acquisition Fund may be used to purchase -14- 'Resolution No. 85 -208 Exhibit A Mortgage Loans made to Mortgagor:; with Adjusted Gross income in excess of the amount set forth above who are purchasing Housing Units located within a Target Area. (11) For the first six (6) months after the Commencement Date, 100% of 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 percen': (80 of the limit set forth in Section 4 (11). (12) To the extent required by the Act or o 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 Sections 4(4), 4(8;, and 4(3) are met with respect to the assumption. (13) An Originator may be` to retain from a Mortgagor or seller an origination fee not exceeding one and one -half percent (1 -1/2%) (or :iuch 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 lessi:r amount as shall be specified by the City, all or a portion -15- Resolution No. 85 -208 Exhibit A 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, amortized expenses of issuing the Bonds, the City's 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 103A of the Internal Revenue 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 -16- kesolution No. 85 -208 Exhibit A 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. (17) Sellers of existing homes will be required to pay to have their homes inspected by a licensed truth in housing evaluator in accordance with the City of Brooklvn Center's regulations,.as they exist at the time of sale. Section 5. Set Asides and Restrictions Relatinq to the Accruisition of Mortqaqe Loans. Notwithstanding anything in Section 3 to tr.e contrary, the following restrictions shall apply with respect to Mortgage Loans acquired by the City pursuant to the Program: 1) The City may permit commitments to bE! made by Originators to (a) Developers to provide Mortgage Loans on New Housing Units to be constructed by such Developers, or (b) Developers who wi:.l provide Mortgage Loans for homebuyers purcha:aing existing Housing Units owned by the purchaser:; 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 -17- Resolution No. 85 -208 Exhibit A 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 City will enter into an Origination Agreement 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 which is an FHA /VA approved or FNMA /FHLMC approved lender shall be offered an opportunity to participate in the Program as an.Originator. 4) For the first 12 months or such greater or lesser time as shall be specified by the City after the Commencement Date, ten percent (10 of the amounts deposited in the Acquisition Fund may be reserved for non first -time homebuyers who purchase a Housing-Unit in a Project. If, after 12 months or such greater or lesser time as shall be specified by the City, any funds so, set aside_ have not been used to Mortgage Loans, they may be used by non first -time homebuyers purchasing any Housing Units in the City. 5W 'Resolution No. 85 -208 Exhibit A 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 tD the City of the ability and intention of such Originator to hake Mortgage Loans and sell them to the City under such;agreenent, 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 the City intends by resolution to authorize, issue and sell by December 31, 1986 its Single Family Mortgage Revenue Bonds in an aggregate principal amount up to $10,000,000, of which approximately $9,000,000 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 the Bonds shall be payable solely from the proceeds of the Bonds and the revenues of the Program. The City shall enter into an indenture of trust with f an institution authorized to accept such trusts and which is -19- 'Resolution No. 85 -208 Exhibit A 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. Severability. 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. 0050E -20- Resolution No. 85 -208 Exhibit c� THE CITY -OF BROOKLYN CENTER 41- 6005011 Dated: November, 1985 I ,I POLICY REPORT UNDER SECTION 103A Resolution No. 85 -208 (A) GENERAL Exhibit B On July 18, 1984, Congress enacted into law the Tax Reform Act of 1984. This Act imposes certain requirements on issuers of qualified single family mortgage bonds and.mMgage credit certificates. One of these requirements is that issuers publish a statement of their policies with respect to housing, development, and low- income housing assistance and report on their compliance, for the one -year period preceding the date of the report, with the intent of Congress that qualified mortgage bond issues and mortgage credit certificates assist lower income families to afford home ownership before ssisting higher income families. In order to qualify for a federal tax exemption for interest on qualified mortgage bonds to be issued in 1986, this statement must be published prior to December 31, 1985. As The City of Brooklyn Center, (the "Issuer") plans to issue qualified single family mortgage bonds or mortgage credit certificates in 1986, the following report is being published in order to comply with the requirements of the .ax Reform Act of 1984 and the Regulations thereunder. (B) POLICIES AND GOALS (1) Housinq Policies and Goals. The Minnesota State Legislature has found and declared that as a result of public actions involving highways, public facilities and urban renewal activities, and as a result of the spread of deteriorated housing and blight to formerly sound urban and rural neighborhoods, and as a result of the inability of private enterprise and investment to produce without public assist nce a sufficient supply of decent, safe and sanit ry residential dwellings at prices and rentals which perso s and families of low and moderate income can afford, ther exists within the State of Minnesota a serious shortage o decent, safe and sanitary housing at prices or rentals within the means of persons and families of low and moderate income. Minnesota Statutes, Section 462A.02 Subdivision 1 The Minnesota State Legislature has additionally found and declared that this shortage of housing for low and moderate income families is inimical to the safety, health, morals and welfare of the residents of the state and to the sound growth and development of its communities. An adequate supply of housing of a variety of housing types serving persons and families of all income levels and properly planned and related to public transportation, public Resolution No. 85 -208 Exhibit B facilities, public utilities and sources of employment and service is essential to the orderly growth and prosperity of the state and its communities. Present patterns of providing housing unduly limit the housing options for many people in the state's urban centers, smaller communities and non metropolitan areas. Minnesota States, Section 462A.01 Subdivision 2 The shortage of safe and sanitary housing for low and moderate income persons recognized by the Minnesota legislature is exacerbated during periods of high interest rates. It is the policy of the Issuer to promote the development of safe and sanitary housing and to enable low and moderate income persons to own their own homes by providing long -term low income loans to low and moderate income persons to finance the construction, rehabilitation and acquisition of homes. The Issuer plans to issue qualified single family mortgage bonds or mortgage credit certificates (the "Bonds /Certificates in 1986 in furtherance of the above stated policies and in conformance to the following policies and goals: i Use of Proceeds. The proceeds of the Bonds /Certificates will be used to finance the acquisition of residences. ii) Tarqetinq of Proceeds to Housinq Tvpe. The proceeds of the Bonds /Certificates will be targeted to newly constructed housing and existing housing for low -to- moderate income households. For the first six (6) months of the Program, 100% of the available proceeds will be set aside for families whose incomes does not exceed 80% of the Program income limits. (iii) Determination of need for Targeting. The Issuer has determined the need for the availability of affordable newly constructed and existing homes to low and moderate households. iv) Method of Tarqetinq Proceeds. Commits to purchase qualifying loans made to particular lending institutions who will originate loans in each of the Cities will be restricted as to the number of loans to be made for new homes and existing homes during the periods of such targeting. -2- Resolution No. 85 -208 v) Other Pertinent Information. None Exhibit B vi) The need to provide decent and affordable housing to persons of low and moderate income is the main goal of the Issuer.' The Issuer hopes to achieve this goal and at the same time to provide a variety of housing choices for low and moderate income persons. (2) Development Policies and Goals. The Minnesota State Legislature has found and declared that as a result of public actions involving hi hways, public facilities and urban renewal activities, a i d as a result of the spread of deteriorated housing and light to formerly sound urban and rural neighborhoo s, and as a result of the inability of private enterprse and investment to produce without public assis ance a sufficient supply of decent, safe and sani ary residential dwellings at prices and rentals which pers ns and families of low and moderate income can afford, the e exists within the state of Minnesota a serious shortage decent, safe and sanitary housing at prices or rentals within the means of persons and families of low and moderate income. Minnesota Statutes, Section 462A.02 Subdiv�sion 1 The Minnesota State Legislature has additionally found and declared that this shortage of housing for low and moderate income families is inimical to the safety, health, morals and welfare of the residents of the state and co the sound growth and development of its communities. An adequate supply of housing of a variety of housing ypes serving persons and families of all income levels nd properly planned and related to public transportat i n, public facilities, public utilities and sources oi employment and service is essential to the orderly growth and prosperity of the state and its communities. Present patterns of providing housing unduly limit the housing options for many people in the state's urban centers, smaller communities and non- metropolitan areas. Minnesota States, Section 462A.01 Subdivision 2 The shortage of safe and sanitary housing for low and moderate income persons recognized by the .Ainnesota legislature is exacerbated during periods of high interest rates. It is the policy of the Issuer to promote the development of safe and sanitary housing and to enable low -3- Resolution No. 85 -208 Exhibit B and moderate income persons to own their own homes by providing long -term low income loans to low and moderate income persons to finance the construction, rehabilitation and acquisition of homes. The Issuer plans to issue the "Bonds /Certificates" in 1986 in furtherance of the above stated policies and in conformance to the following policies and goals: i) Tarqetinq of Proceeds. A portion of the lendable proceeds of the Bonds /Certi may be targeted to specific areas, ii) Description of Tarqet Areas. Specific Target Areas have not yet been determined. (iii) Selection of Tarqet Areas. It has not yet been determined how target areas will be selected. iv) Use of Proceeds in Target Areas. The proceeds of the Bonds /Certificates will be targeted to specific areas. v) Other Pertinent Information. None vi) The need to provide decent and affordable housing to persons of low and moderate income is the main goal of the Issuer. The Issuer hopes to achieve this goal and at the same time to provide a variety of housing choices for low and moderate income persons. (3) Low Income Housinq Assistance Policies and Goals. Minnesota law provides that issuers of single family mortgage revenue bonds prepare a financing program which establishes limits on the adjusted gross income of persons and families to be served by the program. Adjusted gross income is defined by Minnesota law as gross 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. The adjusted gross income may not exceed the greater of (a) 110% of the median family income as estimated by the United States department of housing and urban development for the non metropolitan county or metropolitan statistical area in which the Issuer is located, or (b) 100% of the income limits established by -4- Resolution No. 85 -208 Exhibit B the Minnsota Housing Finance Agency (MHFA) for tie geographical area in which the issuer is located. Up to 20% Df all loans provided under all of an issuer's single family zousing programs may be provided to persons and families without regard to income limits in certain circumstances. Minnesota law also provides that in order to be eligible to obtain an allocation of authority to issue qualified mortgage revenue bonds a program must provide that all loans will be reserved for at least six months for persons and families whose adjusted family income is below 80% of the limits on adjusted gross income specified above. The Issuer plans to issue the Bonds Certificats in 1986 in furtherance of the policies of the Minnesota Legislature evidenced by the above stated statutory limitations on the adjusted gross income of persons and families served by single family housing programs and in conformance to the following policies and goals: i) Targetinq of Proceeds Accordinq to Income,. All of the proceeds of the Bonds /Certificates will be targeted to low- income (i.e., 80% of rogram income limits) persons or families for the f�lrst six (6) months of the Program. Median income is determined by the Secretary of Housing and Urban Development and means $32,800 for the non- metropolita county or metropolitan statistical area includ Ng the Issuer as of November 12, 1985; All of the proceeds of the Bonds /Certificates will be targeted to moderate income (i.e. 1101 of median income) persons or families. The effective limits on adjusted gros income for persons and families benefiting from he program will be not greater than the greater of 11 of median income or the limits established by t MHFA. The MHFA limitations assuming an 10 -10.5% mortgage loan interest rate would currently be $35,000 and $32,000 for new and existing homes, respectiv ly). All loans will be reserved for persons and fami ies with adjusted gross income less than 80% o. the program income limits for six months from the time when mortgage loans will first be made ava from Bond proceeds. Up to twenty percent of th mortgage loans pruchased with Bond proceeds may be m de without limitations as to income, but with re pect to homes located in targeted areas, as describ d in Minnesota Statutes, Section 462C.02, Subdivisioi 9. 1 -5- Resolutions No. 85 -208 Exhibit B ii) Method of Tarqetinq Proceeds. Bond documents will permit the purchase of loans.only if such loans meet all requirements of the bond program, including the requirements that loans be made to finance the acquisition of homes made only to households which meet the income restrictions set forth above. (iii) Other Pertinent Information. None iv) The need to provide decent and affordable housing to persons of low and moderate income is the main goal of the Issuer. By imposing the income limits set forth above on persons and families obtaining financing under the program, the Issuer hopes to achieve this goal and at the same time to encourage development of new housing and provide a variety of housing choices for low and moderate income persons and families. (C) COMPLIANCE WITH PREVIOUS REPORT The Issuer has not published a Policy Report under Section 103A prior to this Policy Report. (D) COMPLIANCE WITH INTENT OF CONGRESS On December 19, 1982, the Issuer issued its Single Family Mortgage Revenue Bonds in the aggregate principal amount of $7,700,225 (the "1982 Bonds in an effort to assist lower- income families to afford home ownership. As of November 30, 1985, $3,562 of the bond proceeds remained available for use. The following information is provided with respect to the 1982 Bonds: (1) Method of Distributinq 1982 Bonds Proceeds. The lendable proceeds of the 1982 Bonds have been allocated to the purchase of loans made to finance the acquisition of new homes constructed by particular developers participating in the bond program and constructing homes in the City of Brooklyn Center as well as to purchase loans to finance the acquisition of existing homes, and purchased by first -time homebuyers who meet program income requirements. __1 Resolution No. 85 -208 Exhibit B (2) Assistance to Lower Income Families. The 1982 Bond documents required that for the first six months all mortgage loans purchased must be made to persons or families with an adjusted gross income not exceeding 80% of the program income limits. After such six -month period any mortgagor must have a family income not greater than the program income limits described below, provided that up to 20% of the mort age loans could be made to mortgagors within income restrictions for the acquisition of homes located in targeted areas as described in Minnesota Statutes, Section 4(2C.04, Subdivision 9. Accordingly, the Issuer hazc, complied with the intent of Congress that State and local. governments are expected to use their authority to issue qualified mortgage bonds to the greatest extent feas:,ble (taking into account prevailing interest rates and conditions in the housing market) to assist lower income families to afford home ownership before assisting higher income families. (3) Income Levels. The income limits applicable to the 1982 Bonds are the same income limits described in Section (B)(3)(i) of this Policy Report. The applicable MHFA income limits currently are $35,000 for new homes and $3,'.,000 for existing homes. (E) SUMMARY OF HEARING COMMENTS A public hearing on the proposed Policy Report was duly held on ,1985, following publication of notice of such hearing on 1985. The following comments were received: Insert here a summary of the comments on the Proposed Policy Report which were received at the P'iblic hearing. If none, insert the following sentence: No comments on the proposed report were made at the Publi hearing.] -7- Resolution No. 85 -208 Exhibit B This report is submitted by the undersigned elected representative of the Issuer [and the undersigned elected representatives of the City of and the City of l [SEAL] ATTEST: [Title] 0128E [Applicable Elected Representative] [Title] -8-