HomeMy WebLinkAbout8 - Minnesota Communities Program
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 Proqram 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 quality
construction for first time homeowners in 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
ln the mortgage processin<1 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. S.E., Prior Lake. Minnesota 55372 / Ph. (612) 447-4230 / Fax (612) 447-4245
Citr'S role in actual promotion
min1mal. The City's role will
facilitator for the program in
See attached one sheet promotion
as provided by Reebie.
will be
be as a
Prior Lake.
description
Mr. Reebie has participated in similar
programs successfully selling homes in the
Sand Point neighborhood. (Previous programs
required HUD and MHFA approval only.) In 1989
Reebie received $1,000,000 worth of mortgage
financing at 8.5% interest resulting in 11
facilitated mortgages in this deve1o~ment.
See attached letter and property descrlption
sheet provided by Reebie. In the 1990 ~rogram
the maximum alloted reserve for any Clty is
$500,000 or approximately 6 mortgages.
The builder approved to construct the new
homes is John Mahoney. Mr. Mahoney does
considerable construction in Prior Lake and
has a reputation for building a quality home.
Mr. Reebie has provided several pictures of
the homes built through MHFA mortgage programs
in the past.
Mr. Mahoner does an average of 25 homes per
year in Prlor Lake, approximately 20% of the
building permits in 1989. Participating in
this program would assist several local
businessmen to capture $500,000 in financing
available for home construction.
Staff believes Mr. Reebie's proposal will
assist in developing a neighborhood consistent
with the City's Comprehensive Plan and
consistent with the other homes built by
Mahoney in this neighborhood.
The aPl?lication indicates that mortgage
process1ng will be done through Dan O'Keefe of
the Minnesota Guarantee Mortga<1e corporation.
Although Mr. O'Keefe is a res1dent of Prior
Lake, staff has encouraged Mr. Reebie to
consider using Marquette Bank who also
qualifies for processing these mortgages.
Staff has given the contract document to City
Attorney Glenn Kessel. The City is responsible
for providin<1 an MHFA Certificate (one page
form) to el1gible qualifiers. He concurs
that the contract requires that the City
merely provide a certificate to potential
mortgage qualifiers. The City is under no
financial obligation for
certificates. staff does
large commitment of time
certificates.
processing the
not anticipate a
processing the six
RECOMMENDATION:
staff recommends the Citr 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
mort<1ages 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. Acce~t Ski~ Reebie's request and
partlcipate 1n 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.
A MEMBER OF THE SEARS FINANCIAl. NETWORK
16677 DULUTH AVE SE
PRIOR LAKE, MN 55372
BUS (612) 447-8989
15T PRIOR
LAKE REALTY
February 9, 1990
Mr. Dave Unmacht
City Manager
City of Prior Lake
4629 Dakota Street S.E.
Prior Lake, Minnesota 55372
Dear Dave:
Please find attached a list of properties that have
been built and sold since January 1, 1989 in the
Sand Pointe Addition by John Mahoney Construction.
The bulk of these sales were made because of
special financing provided to the area by the
Affordable Housing Program. This program used
the same 1st time Buyer low interest money
being offered to us now under the Minnesota
Communities Program.
As our research shows there is a need to have
additional funds on hand in order to maintain
the activity level into 1990 that was enjoyed
during 1989. Prior to obtaining these funds
the level was dormant with the two original
Builders going out of business. These funds
are a must if the present acceptable level of
activity is to be continued since our figures
show that 85%+ of the Buyers in that area are
the First Time Buyer.
Dave, we strongly need the City to apply for
these funds immediately to insure a successful
and timely completion of this project.
cc: Kay Schmudlach
An Independently Owned and Operated Member of Coldwell Banker Residential Affiliates. Inc.
A MEMBER OF THE SEARS FINANCiAl NETWORK
15T PRIOR
LAKE REALTY
Welcome To:
SAND POI~7E BY THE LAKE
* New Homes $79,900 - $89,900
* HOW Warranty Included (Ten Years Of Protection)
* Special First Time Buyer Financing Available
* Lot Of Your Choice * Model Of Your Choice
* Included: Oak Trim
Custom Oak Cabinets
Carpeting
Blacktop Driveway
Final Grade
$475.00 Lighting Allowance
Hot Water Heater
Wash Basin - Lower Level
Double Attached Garage
* Options:
Walkout
Brick
Deck
Appliance Package
Sl,OOO
500
1,000
1,500
* WALKING DISTANCE TO PUBLIC BEACH AND PARK
* CLOSE TO PRIOR LAKE'S ~~W BOAT ACCESS
* Great Neighborhood For The Young Family!!!
Thank you for visiting Sand Pointe By The Lake
Skip Reebie
447-8989
447-6070
An Independently Owned and Operated Member of Coldwell Banker Residential Affiliates, Inc.
16677 DULUTH AVE SE
PRIOR LAKE. MN 55372
BUS. (612) 447.8989
A MEMBER OF THE SEARS FINANCIAl NETWORK
1 ST PRIOR
LAKE REALTY
February 9, 1990
16677 DULUTH AVE SE
PRIOR LAKE. MN 55372
BUS (612) 447-8989
Sales in Sand Pointe Addition January 1, 1989 to
February 1, 1990
Address
5749 Cedarwood
5773 Cedarwood
5607 Cedarwood
14520 Shore Lane*
14549 Shore Lane*
5620 Cedarwood
5619 Cedarwood
14228 Shore Lane
14319 Shore Lane
14333 Shore Lane
5599 Cedarwood
5633 Cedarwood
5645 Cedarwood
5587 Cedarwood
5744 Cedarwood
5730 Cedarwood
5758 Cedarwood
1st Time Buyer
Yes
Yes
Yes
No-Moved From Sand Pointe
to larger home & lot
Yes
Yes
Yes
Yes
Yes
Yes
No
Yes
Yes
Yes
Yes
Yes
Yes
An Independently Owned and Operated Member of Coldwell Banker Residential Affiliates, Inc.
Affordable Housing
Financing
Yes
Yes
Yes
N/A
No-Used different
No 1st Time Money
- Buyer worKea
at a Bank
No - Cash
Yes
No - VA
Yes
No
Yes-Targeted Loan
Yes
Yes
Yes
Yes
Yes
REQUEST FOR PROFOSAl
under the
M~NNESOT A HOUSuNG FJNANCE AGENCY'S
MINNESOTA COMMUNITIES PROGRAM
Complete this Request for Proposal (RFP) in detail and deliver to the Minnesota
Housing Finance Agency (MHFA). Depending on current availability of funds within
the Minnesota Communities Program (MCP), MHFA will consider this request for either
immediate funding, or placement on a waiting list for access to future f!..!~d pOui:s. Refer
to the attached cover letter for program details.
h SUMMARY OF PROPOSAL
A. Community Requesting Funds:
City Of Prior Lake
(Community Name)
Kav Schmudlach. Assistant City Manacer/EDC
(Cont~ Person) (Title) (Telep,one Nurrber)
B.
Amount of Funds Requested: $
500,000
C. Anticipated Start Date: ASAP- Immediate
D. Narrative Description of Propos'ed Program including
financial capability to administer and deliver funds and
economic viability of the program (if an urgency exists,
include circumstances regarding such urgency);
Affordable Housing Program in existing subdivision
which was approved by HUD in 1989. $1,000,000
was used under the Affordable Housing Program
and additional funds are needed to complete
the pro ject.
MHFA Form MCP 89-1
Page 1
~ DETAILS OF PROPOSAL
A. Community Requesting Funds
City Of Prior Lake
(Community Name)
Administration
(Department)
4629 Dakota Street
(Street ~~~rslS ~gl~~t Office Box)
Minnesota
55372
(City)
(State)
(Zip)
Person authorized to execute contractual agreements with MHFA:
Kay Schmudnch
(Name)
Assistant City Manager
(Trtle)
(Telephone Number)
Person authorized to distribute Program Certificate regarding eligible
properties:
Kay Schm udlach
(Name)
(Title)
Assistant City Manager
(Telephone Number)
B. Brief description of community boundries (Attach map to
illustrate said boundries):
Sand Pointe Addition Excluding Blocks 7 & 8
in 4th addition
C. Originating Lender (Must be a lender currently participating in
MHFA's Minnesota Mortgage Program (MMP), see MHFA's
Lender list):
Minnesota Guaranty Mortgage Corporation
(Lender Name)
14300 Nicollet Ct. -Suite 208
(Street Address and Post Office Box)
Burnsville, Minnesota 55337
(City)
(State)
Vice President
(Zip)
Dan O'Keefe
(Contact Person)
435-6462
(Title)
(Telephone Number)
MHFA Form MCP 89-1
Page 2
D. Funds Requested
1. Level of Funding - To better serve communities in Minnesota,
please provide the anticipated program start date and funds
needed at that time. If your program calls for more than one
phase, indicate this by giving the start date, amount of funds
needed and approximate number of mortgage loans for each
phase:
Immediate
(Start Date)
$500,000
(Amount of Mortgage Funds Needed)
6
(Approx. # of Loans)
$500,000 6
(Approx. # of Loans)
90 Days from first start date
(Start Date) (Amount of Mortgage Funds Needed)
2. Does any portion of your community have unexpended Mortgage
Revenue Bonds (MRS) or Mortgage Credit Certificate (MCC)
resources?
f.J. No
DYes - If yes, explain:
E. Selection Criteria Identification
Answer the following questions by checking the appropriate box (attach
supporting documentation as applicable):
1. Does this proposal provide for the rehabilitation of existing
housing stock within the community?
)4 No
DYes - If yes, explain and include level of rehabilitation (e.g.,
extensive, minor, code compliance etc.)
MHFA Form MCP 89-1
Page 3
2. Does this proposal target sales of existing housing currently
owned and occupied by 1-2 residents, with one resident older
than 60 years of age?
)g No
DYes - If yes, provide an estimate of the number of eligible
homes, area(s) of the city where they are located, and the
source of your data
3. Does this proposal provide for new construction within the
community?
o No
:l(I Yes - If yes, complete the appropriate section below.
(a) The construction will take place with a subdivision or, if
scattered sites, involves more than 6 units. Briefly state the status
of your requested approval from the Department of Housing and
Urban Development (HUD) through the HUD Affordable Housing
Program (attach a location map):
Already approved for Affordable Housing
Program
MHFA Form MCP 89-1
Page 4
(b) The proposal involves six or fewer new construction homes on
scattered sites. Describe source and use of leveraged funds, in an
amount equal to or greater than 5% of the property sales price:
NA
4. Does this proposal address specific economic development needs
within you community?
~ No
DYes - If yes, describe (a) what business growth or economic
development has influenced your city to apply for MCP
funds, and (b) source and use of leveraged funds:
5. Does this proposal identify and address specific low income
housing needs within your community?
:iJ No
DYes - If yes, describe a) low income (including information
sources) and, b) source and use of leveraged funds:
MHFA Form MCP 89-1
Page 5
6. Are you in the process of changing ordinances, building codes or
zoning requirements?
~. No
DYes - If yes, provide specific information:
F. Additional Information
1. List all forms of direct or indirect subsidy to be provided by the
Community and other entities (nonprofit organizations, churches,
trade/business associations, developers, etc.) as a part of the
program (no abbreviations):
TYPE OF SUBSIDY:
SPONSOR:
None
2. Will the local Housing and Redevelopment Authority (HRA) be
involved in the Program?
~ No
DYes - If yes, explain HRA's role in the Program:
MHFA Form MCP 89-1
Page 6
3. If new construction is being considered, do you have subdivision
approval?
~
o
Not applicable
o
No
Yes - If yes, provide name of approving entity and attach a
copy of the approval:
Existing Subdivision
4. If new construction is planned for scattered sites, are the sites
currently improved, prepared and available for immediate
construction commencement?
~ Not applicable
o No
DYes
If no, explain:
5. Do you have a set-aside agreement with a
B ui Ide r/Develope r/Realto r?
Xl
MHFA Form MCP 89-1
o
No
If yes, explain arrangements and provide organization
name, contact person, and telephone number for each:
Builder - John Mahoney Construction, Inc.
447-3360
(Builder has purchased all lots in sub-division)
Realtor - Coldwell Banker - skip Reebie
447-8989
Page 7
6. If new construction is included in your proposal, have construction
financing arrangements been made?
~ No
DYes - Source:
If no, explain:
business in excess of 25 years.
Not Needed - Contractor has been in
7. Describe your marketing plan and include a marketing budget:
Coldwell Banker is handling marketing
and did provide plan for the Affordable
Housing Program. Same plan will be followed.
8. Do you have additional statement/documents to submit which are
!pportant to complete this proposal?
AJ No
DYes - If yes, list attached documentation and purpose of
same:
MHFA Form MCP 89-1
Page 8
... .,-. .,....,.1 .I
111 MORTGAGE MARKET (include historical housing data):
A. Economy and Demands
D
~
Population within community:
q.. 'f Zk
Provide percent of population for each of the following ranges:
(or use your own breakdown which correlates with your data)
4.
Population within targeted area:
Median Household Income $
5)
l.<o 70-,
)
l (/?,o ~_::.~~)
.6', Provide percent of households with incomes in the following range
(or use your own breakdown which correlates with your data):
MHFA Form MCP 89-1
Page 9
7. Who are the major employers in your community?
EMPLOYER
TYPE OF BUSINESS
NUMBER OF
EMPLOYEES
J:.N4. S "'\-.<>c\ U,,,,\;r.....1'- , j q - E ~ ",-, ~ \-: c.....)
2(;. ~
L. t H <. ~:,,~. :,~C Y,-l.-.'-'t.
~NTc.r~&., "....-..... ~
"2 s.- c>
H.........~.~ ~A"r--" v.1\-.I...JL .- <O;-c~-Y'
l..\\
'?,.v I....~~ 5t<...k. ~.........t.
B",,, ~;-'b
'3,S-
Comments:
-I.--.)~,_"",-~:~_ obt-......._~A
0'- ,. ..u
.........- ~
'\l (' .c.... L """ t..t..
c:...:. - --- v- ~ .+ "=' \l.-.::.~ : \..t..
8. Unemployment (Include present unemployment, anticipated
changes and trends as a percent of the communities population):
r:':' '
'9. \ New Construction Suilding permits (within community):
All dwelling units
(all dwelling units
within targeted area)
Number/Percent of:
1 988-89
1-4\.;.
~
\~
Single Family
Multi-family (including
condominiums)
1.Lil /~%
ISO / qb %
~ /
%
~ / 3 %
o / 0 %
() / 0 %
Mobile Homes
MHFA Form MCP 89-1
10
., .. ._.....,..,.,,')..............-4........... ..........,.,.,......t~.... _,~olw/ltlJ~~
MHFA Form MCP 89-1
11
!Y.t PROPOSED CERTIFICATION
The information herein is true and correct based on normal and prudent bUSiness
inquiry.
Ka Schmudlach
(Name of Person who prepared this proposal)
(Authorized Signatory)
Ka Schmudlach
(Printed or Typewritten Name of Authorized Signatory)
Its: Ass i stant C it
Trtle
Development Committee
(612) 447-4230
Telephone Number
Forward completed Submission Package to:
Minnesota Housing Finance Agency
400 Sibley Street - Suite 300
St. Paul, MN 55101
Attn: Fran Gustafson
MHFA Form MCP 89-1
12
MINNESOTA
HOUSING
FINANCE
AGENCY
January 24, 1990
Mr. Skip Reebie
Coldwell Banker
16677 Duluth Ave. S.E.
Prior Lake, MN 55372
RE: Minnesota Communities Program
Dear Mr. Reebie:
Per your request, I have enclosed copies of the introductory cover letter and the
Request for Proposal for the Minnesota Communities Program. The selection
criteria as defined in these materials has been recently revised from our MCP
offering in 1989. Some additional, minor changes may be made to the
language of the selection criteria, but the information you have is essentially
correct.
Please review the materials, and discuss with your local city officials if you wish
to pursue a set-aside of funds under the program. Application for funds can
only be made by a local governmental entity, such as a city, HRA, county, etc.
If you have any questions regarding the MCP, feel free to contact me at 297-
3129.
Sincerely,
c,~ R. ahr-
Gene R. Aho
Housing Development Officer
GRAlfg
enc.
400 Sibley Street, Suite 300. St. '.ull Mlnnesot. 11101 (812) 218-7808 Telecopler (&12) 218-8131
Equ.1 Opportunity Housing .nd Equ.1 Opportunity Employment
I' .
MEMO TO:
FROM:
Minnesota City Officials
Michael Haley
Director of Home Mortgage Programs
DATE:
RE: Announcement and Requests For Proposals, The
Minnesota Communities Program
The Minnesota Housing Finance Agency (MHFA) is pleased to both announce and
request proposals for The Minnesota Communities Program (MCP). Through the
MCP, MHFA is offering access to $7 million in below market interest rate mortgage
financing to assist communities throughout the state in meeting local housing
objectives that are consistent with certain statewide housing goals. The MCP has
been designed to' enable communities through the state to use MHFA resources in a
cooperative effort to address both local and statewide housing concerns. .
Except as provided herein below, all communities throughout the state are eligible to r ~J
submit proposals under this program. . fltowever. aU selected.,communitias, are I~'
expected to be active administrators and stewards in the program, and must be able to
demonstrate capacity to do so. Communities that either operate or have access to
active mortgage revenue bond or mortgage credit certificate programs are ineligible to
participate in the MCP, as one of the primary objectives of this program is to provide for
a broader distribution of such resources through the state. Specifically, the cities of
Minneapolis, St. Paul, East Grand Forks, and all communities in Washington and
Dakota counties, are ineligible to participate at this time.
,
~~.F:1P~
Uo:,yotfwish to develop and submit a proposal, you may do so at .any time ~as the (',
progr~m is developed. as long as the Mep remains in operation. MHFA will accept
and process proposals on a "pipeline" basis and provide funding for approved
proposals as such resources are made available.
The Minnesota Communities PrOQram: One of the primary objectives of MHFA is to
provide affordable mortgage financing for low and moderate income first time
homebuyers through The Minnesota Mortgage Program. The funds under The
Minnesota Mortgage Program are raised through the sale of tax exempt mortgage
revenue bonds. A "pocket guide" describing the requirements of The Minnesota
Mortgage Program including borrower and property requirements, a description of the
mortgage investments etc, is enclosed herein.
The MCP provides selected communities with access to funds raised under The
Minnesota Mortgage Program. Besides first mortgage loans originated under The
Minnesota Mortgage Program, all selected communities also have access to the
MHFA Homeownership Assistance Fund (HAF), which provides modest income
2
borrowers with monthly payment assistance and/or downpayment assistance through
an interest free, graduated payment second mortgage loan. HAF is funded through
appropriations from the State Legislature. Thus, most of the requirements and benefits
of The Minnesota Mortgage Program Procedural Manual apply.
Notwithstanding the above, MHFA will be happy to work with communities pertaining
to contracts under The Minnesota Mortgage Program to accommodate individual MCP
components or concepts. In particular, MHFA will attempt to assist communities that
wish to employ borrower and/or mortgage subsidy mechanisms other than HAF.
.under the MCP, communities are required to work with a mortgage lender that
currently participates in The Minnesota Mortgage Program to originate mortgage
loans. Local lenders may not participate in the MCP only. If a community wishes to
submit a proposal under the MCP, but there is no local lender participating in The
Minnesota Mortgage Program, MHFA will be happy to work with the community
towards recruiting a mortgage lender that does participate in The Minnesota Mortgage
Program.
,..ither ~mmunities nor oarticipatinQ lenders are required to pay fees to oarticipate iO
the MCP.
Selection Criteria: To be eligible for selection under the McP, .projects must meet the
following criteria:
1. The community must demonstrate that its proposed project or program is
economically viable in that it is likely that the funds requested may be employed
to achieve the purposes of the proposal within the term specified in the contract
between the community and MHFA.
2. The community must provide adequate documentation that its proposed project,
or program 'WMHIone Qtroor~t()f th,(j following:
~ \ -'"\ a.
'-..J ..J
~ '<:b.
The project or program may provide for rehabilitation of existing housing
stock within the community. In each case the rehabilitation of the
property must be completed prior to the closing of the MHFA mortgage
loan.
The proposal may specifically target existing properties currently owned
by senior households of 1-2 people (1 person must be over 60 years of
age), to encourage the sale of the properties to first-time homebuyers.
Proposals under this criteria must provide information on the
approximate number and percentage of the community's housing stock
which falls into this category, its location, and the proximity of existing
support facilities for families (e.g.: schools, parks, playgrounds). The
objective of this program component is to bring younger buyers and
families back into established neighborhoods. and therefore result in
more efficient usage of existing facilities by the people who need them.
-0
~ c.
~<)d.
ve.
.~\W
3
The project or program may address specific economic development
needs within the community. Such projects must demonstrate a need for
mortgage funds due to bonafide immediate housing needs brought about
by current economic development (e.g. a housing shortage due to
current business expansion as opposed to a desire for housing to attract
new business). In such proposals, leverage funds in an aggregate
amount of 5% of the property sales prices are required from outside
sources. Recapture/repayment of this 5% subsidy is allowable under this
selection criteria.
If the project under this criteria involves a new construction subdivision.
or more than six units on scattered sites. HUD's approval under the
Affordable Housing Program is also required (see #e-(1). below).
The project or program identifies and addresses specific low income
housing needs within the community. Under such projects or programs,
borrower incomes may not exceed the adjusted income limits under HAF
. for the area of the state in which the community is located (see the
enclosed "pocket guide"). In such proposals, leverage funds in an
aggregate amount of 5% of the property sales prices are required from
outside sources. Recapture/repayment of this 5%subsidy is allowable
under this selection criteria.
.......-
If the project under this criteria involves a new construction subdivision,
or more than six units on scattered sites, HUD's approval under the
Affordable Housing Program is also required (see #e-(1), below).
The project may address the production of affordable new construction
housing stock, without targeting economic development needs (criteria c,
above) or low income homebuyers (criteria d, above); simply by meeting
one of the two categories noted below:
~ ~(1)
-"';lA8W ~nstruct!o" .project is located in. a sUbdivisiqn, or if it
involves funding more than 6 units under this proposal, priQr.
approval through the Department of Housing and Urban
Development's (HUD) Affordable Housing Program (AHP) is a
requirement. .t,the Affordable Housing Program. HUO works
cooperatively with communities and builders/developers to plan
innovative new construction which results in direct cost saVings to
the homebuyer. Inclusion under the Affordable Housing Program
assures that both the builder/developer and the community have
taken specific cost reduction steps in the development and building
process. "':~bt~,spec~!urQS!!l~ .i:~for~ation. c.ontact .Ms.
F'W)C!~ 9'Nell at.HUD's MIMeapOfis fie.l<foffice al(612) 370;.3053.
~.. '..
Given the processing time for an Affordable Housing Program
project, a proposal under the Mep may be submitted and processed
:Jj
,A.fp
4
,(J
\J
subject to acceptance under the Affordable Housing Program. A
contract for the MCP may be executed upon preliminary indication
from the Minneapolis HUD office that the project qualifies under the
Affordable Housing Program, and the MCP contract would be
conditioned upon said final approval. No mortgage loans for newly
constructed homes may be processed under the MCP until such
acceptance is received from HUD.
V"{ln the past, MHFA has provided mortgage financing for current
Affordable Housing Program projects. If a project that has
previously received financing under the Affordable Housing
Program is to be submitted under the MCP, the community that
wishes to submit the proposal should contact MHFA for further
instructions. )
(2) If the new construction project involves six or fewer scattered sites,
the commu,nity has the option of participating in the HUD Affordable
Housing Program or of providing leverage funds equal to 5% of the
sales price. These leverage funds must result in a direct reduction
to the final sales price and cannot involve any recaoture or future
repayment by the buyer.
As noted above, the community must identify a lender that is currently
participating in The Minnesota Mortgage Program to originate mortgage loans
under the MCP. The lender must be both capable of making and willing to
make FHA, VA, insured and uninsured conventional, and HAF loans under the
MCP.
i~ 3.
Ordinances and/or local building codes must be in place prior to the origination of
mortgages under the MCP unless changes are necessary to obtain Affordable
Housing Program status.
MHFA acknowledges that the selection criteria for the program are vigorous.
However, given the limited financial resources that MHFA may currently dedicate to
the MCP, the program was designed to assist communities that are meeting a specific
set of public policy goals pertaining to affordable housing.
Selection Process: Upon receipt of a proposal under the MCP, MHFA will process the
proposal to verify compliance with the selection criteria above. Determination of
whether a specific proposal complies with the selection criteria shall be at the sole
discretion of MHFA.
Communities may develop and submit a proposal under the MCP at any time.
MHFA shall endeavor to immediately fund all acceptable proposals. However, should
MHFA receive requests for funds exceeding the resources currently available for the
5
MCP, MHFA will provide for selection of proposals through a lottery process.
Acceptable proposals not selected through the lottery will be placed in priority position
for funding as funds are made available for the program.
MCP Funds Access: MHFA is currently making $7 million available under MCP. The
inwajjnterest rat8'for funds offered under the MCP shall be 7.95%. per annum.
However, a specific interest rate is not guaranteed for the duration of the MCP. MHFA
may, at its option, replace the funds currently available under the MCP with funds at a
different interest rate which may be lower or higher than the previous interest rate.
However, all mortgage loans in process at mortgage lenders at that time are
guaranteed the interest rate offered at the time of application. The maximum term for
each mortgage offered under the MCP is currently 30 years.
All funds under the MCP are placed into two "commitment pools" for the program - - the
Restricted MCP Commitment Pool and the Unrestricted MCP Commitment Pool. Upon
selection into the MCP, a community may receive up to $500,000 in Restricted MCP
Commitment Pool funds exclusively for its use for a 90 day period. No other
community may lise these funds for this period. At the end of the 90 day period,
uncommitted funds are placed in the Unrestricted MCP Commitment Pool. They
remain available to the community for which they were initially set aside, but not
exclusive~y.
As is implied above, the Unrestricted Commitment Pool is comprised of funds that
either have been specified by MHFA for this pool, have not been committed to
communities under the Restricted MCP Commitment Pool, or were previously set
aside for communities under The Restricted MCP Commitment Pool but the '90 day
time periOd has elapsed. If more than $500,000 is needed for a particular project or
program, a community may reserve additional loans from the Unrestricted MCP
Commitment Pool up to a maximum of $1 million. Of course, during the period that a
community has a set aside under the Restricted MCP Commitment Pool, it may not
reserve funds from the Unrestricted Commitment Pool until the Restricted Commitment
Pool set aside has been used.
Of the $7 million in funds initially available under the MCP, $6 million is eligible to be
set aside in the Restricted MCP Commitment Pool, and $1 million will be held back for
use in the Unrestricted MCP Commitment Pool. Each proposal under the MCP must
include a request for not less than $200,000 in mortgage loan funds.
t'!~~~~~~~~ljr~ti~::~~I!~~P~fn,J!lJx~~lt~Qa~~:"=i:: ~~!;ga:;
development and marketing period. If the scope of the proposal requires a longer time
frame, the Agency will consider an extended contract term if adequately supported by
the project description and documentation in the RFP. The community may cause
mortgage loans to be reserved under the MCP for the entire term of the contract,
pending funds availability.
6
Procedures are to be established by which communities may refer borrowers to
participating mortgage lenders under the MCP. Lenders will be required to reserve
each loan at MHFA by telephone upon borrower application. After the telephone
reservation, a specified term will be established during which each mortgage loan
must be processed and delivered to MHFA for purchase.
MarketinQ/Publicity: Upon acceptance into the MCP, MHFA will provide marketing
assistance and support to the community to enhance the probability of program
success.
Proposal Submission: To be accepted under the MCP, communities must submit the
following in prescribed form:
The Minnesota Communities Program Request for Proposal, MHFA Form I
MCP 89-1 (enclosed), and related supporting documentation; and ~i'
A letter from a mortgage lender currently participating in The MinnesotaJt1~
Mortgage Program affirming that it will originate loans under the MCP
and that it has the willingness and capacity to originate all types of
mortgage loans under the MCP.
Technical Assistance: As the MCP is a new program, communities will have many
questions about the Mep and developing proposals. MHFA staff is happy to assist in
any way we can. For questions, concerns and additional information, please call
MHFA Housing Development officer Gene Aho at (612) 297-3129 or May Hutchinson
at (612) 296-8840.
1.
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2. City develops marketing plan. Scope 01 plan is determined by considerations 01
program size. iI new construction or existing. expected demand (market
analysis) I and budget.
~ .AP!llication process is developed. This should be a cooperative ellort among
the city, lender and builder (iI new construction) as all parties have a key role ~'n
the process. .An application date must be established. and a public IL...e..........
announcement made belore any applications may be taken. ~.
4. Application process/requirements are posted al city offices. lender. and builder
(if applicable).
5. Program is announced and marketing begins.
6, On or alter the program starting date. prospective buyers are selected through a
f-.anc1 impartial process developed by the city.
7. -Buyer and seller execute a formal purchase agreement.
8. City issues an onginal. signed Property Eligibility Certificate to selected buYers
alter buyers come to purchase terms with seller. City refers buyer to lender.
9. Buyer places formal application with lender.
10. Lender prequalifies buyer and reserves funds at MHFA.
1 ,. Lender processes. underwntes. and grants lormalloan approval to buYer.
12. II new construction. builder begins construction. II existing rehab. repair work
begins.
13. Construction or repair items are completed and final inspectiOn is mad" ·
appraiser.
14. MHF A loan closes. buyers OCCUPY property.
15. Lender packaQ8! ., documentation and forwards t'
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16. MHFA pu~ 108n trom lender
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JOR" R, C._ItOLL
JAN.' D. OL~O"
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I.r.OlfAaO K. AOOI"OTOIf
1I''''.1tT n. DART"
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AU3.N D. ""R"AltO
IhcIIAJltJ ^. I'r.TE""O"
HO"P:RT J. en .'!'lTlAJtSO". JR.
f'ltt.l"ll ,J. WALZ
TIIOMA' D. C"RI_~O"
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MA"l"U" W. Vt.l" PITTTP.N. JR.
Jo"" ^. BURTON. ,'R.
,IAMr." r. lllftACI.E"
RonEIIT I~ H RLLftlt. JIt.
SCOTT n. EU.Il11
CRAltl.lt!' C. DRltQUI!'lT
UP-OROI! O. l.uocRE
E. JOlllEPH LAFAvll III
Oltl!ooa,. D. SOULll
CATHY E. GoRUJI
PAT.lea B. n r.JlNP.!ll!JT
T'MOTRY A. SUI.I.lv.uc
TAMMY L. Pll!'!T
BillA" F. RJCll
TftACT .J. VAN STEP.JlBtrROR
DAVID J. ZUBIlE
BEST & FLANAOAN
^TTORNY.Y~ AT l..Aw
onoo IDS CENTF.n
MINNE.APOUS, MINN~~OTA 1515402'2113
TELr.rIlONr. 10121 nlln. 7121
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WAND n. LEwl!'
February 14, 1990
RIlTIIIP.D
LEONARD W. SIMONET
,'AMI~!O I. Br."T
1Q()t.!-IPlI"e
1I0nl':IIT J. f'1....NAOAN
IRAn IQ'.
r, P.ORO P. ~tA U)N r: T
1000 lunG
Mr. David Unmacht
City Manager
City of Prior Lake
4629 Southeast Dakota street
Prior Lake, MN 55372
Dear Mr. unmacht:
Our law firm represent~ the owners of the shopping center
located in Prior Lake where the Super Valu grocery store is \\
presently located. It has very recently come to our clients'
attention that a proposal is before the City Council to provide
Tax Increment Financing for a new grocery store site to be
located in the City. It is the intention of the developer to
sign a lease with Super Valu for this site, and this developer
expects Super Va1u to either find a replacement tenant to
sublease the site owned by our clients or to otherwise -buy-
their way out of the existing lease. This is to formally
request that we be provided an opportunity to present our
position on the record at the hearing scheduled for TueSday,
February 20, 1990.
Our clients have no intention of accepting such a subtenant nor
any proposal by Super Valu to -buyout- its obligation under the
balance of its lease term. We have been in contact with
officials at Super Va1u, and are in the process of negotiating a
new lease whereby additional parking a~d store area would be
made available on the existing si"t~., '
, :, I" .'. I
.;.\. ',; : ,
Our clients believe that it is inappropriate for the City to
provide a public subsidy to a developer merely to enable an
existing business to relocate within the city limits, hopping
from one publicly financed project to another. This is
particularly true in light of the economic damages that would
BEST & FLANAOAN
Mr. David Unmacht
February 14, 1990
PAge 2
result to the remaining tenants in our shopping center should
Super Valu depart. Moreover, it is our understanding that the
new project does not make any provision for additional retail
development, and so does not appear to provide the same
employment and small business opportunities that presently exist
in our shopping center.
Further, it is our position that the City, by providing
inducements and subsidies to Super Valu to break its existing
lease, will be liable to our clients for the tortious
interference with our contractual relation with Super Value
This exposure is particularly significant since there are more
than eight years left on our twenty year lease and the departure
of Super Valu would adversely effect other tenants and the value
of the shopping center. I advise you to consult your attorney
on this issue.
Accordingly, we respectfully request the City Council to defer
any furt~er consideration of tax increment financing for the
proposed project, at least until we have been able to conclude II
our attempts to reach an agreement with Super Valu for their
expansion at the present site.
Very truly yours,
G~::t7s~-:~
GDS:mmf
cc: Ronn Hechter
5701W