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HomeMy WebLinkAbout7 - Minnesota Communities Program AGENDA NUMBER: PREPARED BY: SUBJECT: DATE: INTRODUCTION: BACKGROUND: DISCUSSION: HERITAGE 1891 \ 1J.:TJ$fi ./ COMMUNITY 1991 .20J' 7 KAY SCHMUDLACH, ASSISTANT CITY MANAGER CONSIDER APPROVAL OF PARTICIPATION IN THE MINNESOTA COMMUNITIES PROGRAM UNRESTRICTED POOL SEPTEMBER 4, 1990 On February 20, 1990 the City Council approved a re9Uest by Coldwell Banker Realtor Skip Reebl.e to participate in the Minnesota Communities Program. The program provides $500,000 in financing for home construction. The Cit~'s role was to facilitate the loans by certifYl.ng the applicants as eligible. This item has been placed on the agenda at the request of Skip Reebie to continue participation in the Minnesota Communities Program through the second phase, that which accesses an unrestricted pool. On August 14, 1990 the City received a letter from John Silvis the Production Supervisor for the MHFA Home Mortgage Loan Program. Mr. Silvis, responding to a request from Mr. Reebie, provided background information on the unrestricted pool (See the attached letter). In essence the pool provides a continuation of the loan program previously adopted. The previous loan program provides $500,000 in loans. The unrestricted pool will provide up to $500,000 in additional home financing to be used by December 12, 1990. Mr. Reebie and Mr. Mahoney, the realtor and builder respectively, have requested City Council authorization to enter into a contract to participate in the unrestricted pool. The gentlemen will be at the September 4, 1990 City Council meeting to present an overview of the first phase of the program and answer questions regarding the second phase. Reebie has been asked to bring a map showing available lot locations for the second phase. Staff has reviewed the contract and feel it will have a minimal impact on staff time. 4629 Dakota 51. 5.E., Prior Lake, Minnesota 55372 / Ph. (612) 447-4230 / Fax (612) 447-4245 staff has attached a copy of the February 1990 agenda write up on this item and a of the February 20 City Council minutes background information. 20, copy for RECOMMENDATION: The Council should address questions to Mahoney and Reebie on the type of homes to be constructed with these funds prior to acting on their request. staff recommends the Council be satisfied as to the plans of the applicant before making a decision to participate in the Unrestricted Pool Program. ALTERNATIVES: The Council alternatives are as follows: 1. Acce~t Mr. Reebie's request to partl.cipate in the Minnesota Communities Program by approving the contract for the unrestricted pool. Deny the request to participate Minnesota Communities Unrestricted Pool. 3. Table this matter for a stated reason. in the Program 2 . ACTION NECESSARY: The Council action will vary based on the discussion. MINNESOTA HOUSING FINANCE AGENCY Od~ Lg~ MINNlSO(^ 1990 August 10, 1990 .-9c$'c -4/./8 ~/V.s I ~ () ,o~C/)o... '9" '1oi{ OJ:' . i{} ~-t~ Mr. David J. Unmacht City of Prior Lake 4629 Dakota Street Prior Lake, MN 55372 Dear Mr. Unmacht: (Thank you for your request)to continue participating in the Minnesota Communities \ Program (MCP) under the Unrestricted Pool Phase. The Minnesota Housing Finance Agency looks forward to continue supporting your efforts to meet your community's housing needs. Virtually all of the guidelines which were in effect under the set-aside phase of the program will continue under the unrestricted pool phase. The sole exception will be the way in which funds are allocated to the participating communities. Under this new phase you will be able to reserve individual loan transactions, but only if funds remain available at the time you request them. To receive an update on unrestricted funds remaining at any given time, please contact Alesia Smith at 1-800-652-9747 and ask for extension 6-8259 if calling from Greater Minnesota or dial 296-8259 if calling from the Twin Cities Metropolitan area. The maximum funds that you can receive under this phase will be the difference between $1 million and the total funds which you have reserved previously under your restricted pool set aside. As an example, suppose a city has used $250,000 in commitments under the set aside agreement. Under this new phase, that city would subtract $250,000 from the $1 million MCP program maximum and find they are eligible for $750,000 under the unrestricted pool contact. The Agency will send a monthly report showing the loans reserved to date beginning next month. There is a new issue which we need to bring to the attention of participating communities and lenders. The funding for MCP is regulated by federal law. Congress has imposed an additional restriction on borrowers that is to be effective for all mortgage loans purchased by MHFA or other bond issues after December 31, 1989. Basically this restriction provides for the recapture of a portion of interest rate subsidy that borrowers enjoy on their mortgage upon sale of their home. This recapture is only to occur in areas in which borrower's income have grown significantly from the time the mortgage was issued to the time of home sale, and only for that portion of appreciation realized upon sale of any. However, details of this system have not been determined to date. 400 Sibley Street, Suite 300, St. Paul, Mlnn.sota 65101 (612) 296-7608 Telecopler (612) 296-8139 Equal Opportunity Housing and Equal Opportunity Employment Mr. David J. Unmacht Page 2 August 10, 1990 In light of the above, it is in the interest of the borrowers, lenders, participating communities and the Agency to purchase these mortgage loans prior to the effective date of subsidy recapture. Therefore, the Agency is requiring that all loans under the 1989 Minnesota Communities Program be delivered to the Agency in purchasable form no later than December 12, 1990. No extensions of this date will be granted. Two original MCP Unrestricted Pool Contracts are provided for your execution. The third copy is provided for reference. There is no fee required to participate under the unrestricted pool agreement. After execution of the program contracts please submit two originals to the Housing Finance Agency at the following address: Minnesota Housing Finance Agency Homeownership Opportunity Division 400 Sibley Street, Suite 300 St. Paul, MN 55101-1998 Please note that the contract term is for five months and the city's participation will cease at the end of that time period or sooner if they have used their maximum allocation under the Program or if no further funds are available in the unrestricted pool. MHFA cannot accept further loan reservations until all parties have executed these agreements. The attached Request for Proposal and the information contained in that Procedural Manual is considered part and parcel of this agreement. Additional copies of the 1989 Minnesota Mortgage Program Procedural Manual are available at your request. Please note that when filling out this form there are attachments shown as Exhibit A, B and C. It is not required that the City fill in any portion of these exhibits which are attached for reference purposes only. Upon Agency execution a copy of the fully executed contract will be returned to you for your records. If you have questions regarding the completion of this Unrestricted Pool Contract or concerns about the MCP procedure please feel free to call Karen Meier. She can be reached by dialing 1-800-652-9747 and ask for extension 7-3623 if calling from Greater Minnesota or by dialing 297-3623 if calling from the Twin Cities Metropolitan area. Yours truly, JJ~ JL.~ John Silvis Production Supervisor Home Mortgage Loan Programs ~ ~ . Q..v .;~yo .~~ 0,,.1 f~ v 1f~ JS:fg AGENDA NUMBER: PREPARED BY: SUBJECT: DATE: INTRODUCTION: DISCUSSION: CENSUS '90 . 8 KAY SCHMUDLACH, ASSISTANT CITY MANAGER CONSIDER APPROVAL OF PARTICIPATION IN THE MINNESOTA COMMUNITIES PROGRAM FEBRUARY 20, 1990 The City of Prior Lake has been asked to participate in a program entitled Minnesota Communities Program by Coldwell Banker Realtor Skip Reebie. The Minnesota Communities Program is designed to enable communities access to 7 million dollars in below market interest rate mortgage financing. In Prior Lake the program will be used for the production of affordable new guality construction for first time homeowners l.n the Sand Point Beach neighborhood. In this neighborhood, the requirements for eligibility of new construction have all been met through the HUD affordable housing program. Sand Point is the only neighborhood in Prior Lake that qualifies in the HUD requirements. The Minnesota Communities Program is structured differently then other housing ~rograms in that it requires City involvement 1n the mortgage processin~ stages. In order to be eligible for the M1nnesota Communities Program, the City must enter into a contract with the Minnesota Housing Finance Agency. Staff needs City Council approval in order to proceed with processing the contract and participating in this program. The Minnesota Communities Program, unique in its application with municipalities, offers cities the opportunity to participate in the promotion of new construction housing financing. Promotion of this program can be done by the City or the interested parties. Reebie has indicated that he will undertake the promotion aspect of this program and the 4629 Dakota St. SE., Prior Lake. Minnesota 55372 I Ph. (612) 4474230 I Fax (612) 4474245 financial obligation for processing the certificates. staff does not anticipate a large commitment of time processing the six certificates. RECOMMENDATION: staff recommends the Cit~ enter into the contract to participate ln the Minnesota Communities Program. On the surface this program seems "too easy", this is because most of the work has been and will be done by Skip Reebie. The fact is that based on the application and criteria on page 4, number 3, the Sand Point neighborhood can qualify for this financing. Staff further believes that with Construction building the homes, and mort9ages available, this program utillzed very quickly. city Attorney Kessel will comment on the contract and present it at the meeting. Mahoney only 6 will be ALTERNATIVES: The Council alternatives are as follows: 1. Accel?t Ski~ Reebie's request and partl.cipate l.n the Minnesota Communities Program by approving the contract. 2. Deny the request to participate in the Minnesota Communities Program. 3. Table this matter for a reason stated. ACTION NECESSARY: will vary based on City Council discussion.