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HomeMy WebLinkAboutAug 31, 1982PUBLIC HEARING Columbia Heights City Council August 31, 1982 7:30 p.m. The Public Hearing was called to order by Mayor Nawrocki at 7:55 p.m. Roll Call: Hovland, Petkoff, Norberg, Hentges, Nawrocki -- present. Also present: Roger Jensen, Robert Bocwinski, Douglas Peterson, John Utley, Timothy Long. Purpose of this Meeting: This public hearing is being held to consider the issuance of Homing Revenue Bonds by the City in order to provide below mrket interest rate mortgages on new and existing housing mits in Coltmbia Heights. Mr. Jensen informed the Council. the availability of the Housing Revenue Bonds became known to the Housing Authority only a couple of days before the publication requirement and deadline. He noted that approximately 30 to $0 million dollars will be available and that the deadline for submission of an application to the Minnesota Housing Finance Agency is September 1, 1982. Mr. Jensen stated five other comities are in competition for the right Oo issue these housing revenue bonds. Mr. Jensen informed the Council that a non-refundable $1,000 application review fee must accompany the application to the Minnesota Housing Finance Agency- Mr. Jensen noted that the program would provide below market interest rate mortgages to homeowners interested in purchasing a ne~ home or existing homes being sold in the City. He noted the Housing Authority would reco~J~end an issue of 10 million dollars with roughly one half designated for new mits and one half for existing mits. Mr. Jensen informed the Council members that P.J. Gaughan, Inc. has indicated that if this program becomes available in Columbia Heights, he would ask to develop the third site as a condominium project rather than an apartment building as originally planned. Mr. Jensen also noted these mortgages could be used for mits remaining in LaBelle Park II. Discussion and review of various information regarding the Single Family Mortgage Revenue Bond Program followed. Several sections that were noted or discussed in detail are as follows: Subsection 3 - Local Contributions to the Program. This section requires that in order to assure the financial feasibility of the program, a local contribution is necessary. To assure the mrketability of the bonds there must be enough up-front money in the project (local contribution) as to assure that the program works even if no loans are made or all loans are prepaid. Local contributions can come from a variety of sources, such as the City, benefiting developers, lending institutions. The local contribution stated in our application identifys our sources as developer P.J. Gaughan, Inc. Originations, i.e. participating lending institutions, 3% (to be returned to lenders upon closing of mortgages), sellers, 1%, etc. Subsection 4 - Standards and Requirements 'Relating to Mertgage Loans Pursuant ~o the Program. These standards note that a mortgage loan may be made only to finance the purchase of a housing mit existing at the time such mortgage loan is made. This also states construction loans shall not be made, Page 2 but that an Originator may enter into an agreement with a ~4ortgagor to nmke a ~ortgage Loan to him upon the completion of the construction of a ne~ housing unit. The standards state the mortgage loans are subject to a "first-come, £irst- serve" basis on a nondiscrimination basis. It also states any new housing units must co~ply with the building code as determined by the City Building Inspector. Also noted; the Originators shall accept and process applications for Mortgage Loans for the purchase or construction of housing units on a non-discriminatory basis; an application will not be rejected due to the age and location of the property, or because of race, creed, color, religion, national origin, sex, ~arital status, age or status with regard to public assistance or disability, in the case of a mortgagor. This section also states that ninety percent (90%) of the moneys available to make mortgage loans shall be used to purchase mortgage loans made to first time home buyers or mortgagors who have not o~ned al,home for three years prior to the co~nencement date. The remaining 10% can be used to purchase mortgage loans for housing units to be acquired by persons or families who are not first time home buyers, provided they meet all the other requirements of this program. Mobile homes and trailers are not eligible for participation under this program, regardless if they are attached tO permanent foundations. No housi~.g units may be in violation of any zoning ordinances or other land use regulations. This also states each housing unit under the program must be located within the City of Columbia Heights. Discussion followed regarding the information presented on the program. Mayor Na~rocki questioned as to who ~ould be the o~ner of the mortgages. ~ir. Jensen informed him that the City of Columbia Heights would be the o~ner of these mortgages. Mayor Na~rocki noted a letter contained in the material which certifies the Local Contribution. He noted this letter states the City Council comits that lenders participating in the program co, nit at least 5% of the amount of loans to be originated; that developers connit at least 5% of the amount of loans allocated for developers, and that all sellers contribute 1% to the program. Discussion followed. Noted were items concerning the target area for a portion of the housing revenue bonds. It was stated that the target area for the housing revenue bonds would be the Columbia Heights l~edevelopment District. Discussion followed regarding income limitations. It is noted in Subsection 4 of the information that the adjusted gross income of a mortgagor may not exceed 110 percent (110%) of the family income as estimated by the U.S. Department of Housing and Urban Development, or 100 percent (100%) of the income limit established by the ~linnesota Housing Finance Agency. Also noted in Subsection 4: a statement regarding the assumption of a mortgage loan. It is noted that an assunable mortgage may be permitted only if the Program meets the State and Federal requirements and that the purchase price of the housing unit meets the requirements stated in this in~omation. Public Hearing August 31, 1982 page 3 A resolution regarding the approval of the 1982 Single Family Housing Bond program was idiscussed. Discussion followed regarding a paragraph in the resolution in regard to receiving letters of intent from lenders to originate loans under the program. This state "WHEREAS, the City has received letters of intent from local lenders to originate loans under the Program to deposit an origination fee with the City in an amount equal to at least 3% of the amount of loans to be made." This statement was changed to read as follows: "WHEREAS, the City will require letters of intent from local lenders to originate loans under the Program and to deposit an origination fee with the City in an amount equal to at least 3% of the amount of loans to be made." Discussion followed in regard to items in the resolution pertaining to the amount of cont- ributions to be required by the City. The resolution states that the City will require all lenders who participate in the program to contribute 3% of the dollar amount of the loans to be originated, that each developer shall contribute at least 3% of the amount of loans to be allocated and that all sellers of housing units under the Program shall contribute at least 1% of the loan for the housing unit. The last statement reads in regard to a contribution from the City. After considerable review, it was the consensus of the Council to delete item #6 as stated in the resolution ("That the City will contribute $--- to the Program"). This item will now read "The total non-bond proceeds contributed to the program will not be less than 3% of the principal amount of the bond". Motion by Petkoff, second by Hovland to dispense with the reading of the resolution there being ample copies available to the public. Roll call: All ayes Councilman Norberg felt this type of program would not be beneficial as it would cause market interest rates to rise in the future. Mayor Nawrocki felt, in his opinion, there were certain aspects to this program he did not feel comfortable with; he stated however, this program will help meet the needs of people with modest incomes, to get into decent and affordable housing. He felt this program would meet those objectives. Mayor Nawrocki also stated the cause for rising market interest rates is due to many factors bcsldes the housing bond program being implemented in the community. RESOLUTION 82-54 Approving the 1982 Single Family Housing Bond Program WHEREAS, Minnesota Statutes Chapter 462C (the "Act") authorized the City of Columbia Heights (the "City") to develop and administer programs of making or purchasing mortgage loans to finance the acquisition of single family housing units located anywhere within its boundaries for occupancy primarily by persons of low and moderate income; and WHEREAS, the City has prepared a 1982 Single Family Housing Bond Program (the "Program"); and WHEREAS, the City, after published .notice and public hearing in conformance with the re- quirements of the Act, on September 22, 1980 adopted the Housing Plan for the City (the "Plan");and 'WHEREAS, the City submitted the Plan to the Metropolitan Council for review and comment; and Public Hearing August 31, 1982 page 4 OWHEREAS, the Metropolitan Council favorably reviewed the Plan; and WHEREAS, the City has determined that many would-be purchasers of single family houses are unable to either afford mortgage credit at the market rate of interest or obtain mortgage credit because the mortgage market is severely restricted; and WHEREAS, The City has considered (i) the availability and affordability of government housing programs; (2) the availability and affordability of private market financing for the acquisition of existing and newly constructed housing units; (3) an analysis of pop- ulation trends; and (4) the recent housing trends of the City and future housing needs in the City; and WHEREAS, the City Council has further considered (1) the amount, timing and sale of bonds to finance the estimated amounts of mortgage loans to be made under the Program, to fund the appropriate reserved and to pay the costs of issuance; (2) the number and qualifications of lenders eligible to participate in the Program; (3) the method of monitoring the im- plementation by participants to insure that the Program is consistent with the Plan of the City and its objectives; (4) the method of administering, servacing and supervising the Program; (5) the cost to the City, including future administrative expenses; (6) the re- strictions on the purchase prices of housing units to be financed under the Program and the limit on mortgage loan amounts to be provided thereunder; (7) the maximum permitted income of persons or families receiving financing under the Program; and (8) certain other limitations; and WHEREAS, the City will require letters of intent from local lenders to originate loans under the Program and to deposit an origination fee with the City in an amount equal to at least of the amount of loans to be made. NOW THEREFORE BE IT RESOLVED BY THE CITY OF COLUMBIA HEIGHTS: 1. That the 1982 Single Family Housing Bond Program as is on file with the City Clerk is approved; and 2. That the CiLy Manager is authorized and directed to submit the 1982 Single Family Housing Bond Program to the Minnesota Housing Finance Agency for review and app- roval; and 3. That the City will require all lenders who participate in the Program to deposit with the Program an origination fee of three percent (3%) of the dollar amount of the loans to be originated to the lenders; and 4. That the City will require each developer who participated in the Program to cont- ribute an amount at least equal to three percent (3%) of the amount of loans allocated to the developer's project (which contribution may, at the discretion of the City, be applied towards the lenders origination fee; and 5. That the City will require all sellars of housing units under the Program (other than developers who have paid a developer's commitment fee) to contribute to the program an amount equal to one percent (1%) of the loan for the housing unit; and 6. The total non-bond proceeds contributed to the program will not be less than 3% of the principal amount of the bond. Passed this 31st day of August- 1982. Offered by: Petkoff Seconded by Hovland Roll call P.~]~off, s, ,g~ --nay m~qlce G. NE~rocki , Mayor Jo-Anne Student, Council Secretary Motion by Petkoff, second by Hovland to adjourn the mee'tingjat~ 9:50 pm. R?ll call: All ayes Roger Jensen, Sec. Pro-Tem