CR 93-196 Application For MHFA Community
~t;' .'
. November 8, 1993 Council Rpt. .93 -196
APPLICATION FOR THE MHFA COMMUNITY REHABILITATION FUND
PROGRAM
ProDosed Action
Staff recommends approval of the following motion: Approve Resolution 93- 132 naming the
Westbrooke neighborhood as the designated area for the Community Rehabilitation Fund and
authorize staff to prepare and submit an application for the program.
With this motion1 the application will be prepared and submitted to MHF A for their consideration.
Overview
The Minnesota Housing Finance Agency (MHF A) recently announced the availability of funds for
the Community Rehabilitation Fund.program, The.program provides grant funds to be used in
. designated neighborhoods for a variety of activities including acquisition, rehabilitation, financing
and demolition.
Because one of the main goals of the City Council is to address the needs of the Westbrooke
neighborhood of Hopkins, staffis proposing to apply for the Community Rehabilitation Fund
program for this area. Although the specifics of the application have not been confirmed, the
funds would be designed to be used to meet one of the goals for the neighborhood.
Applications for the program are due by December 61 1993. A complete application will be
provided to the Council prior to it's submission.
Primary Issues to Consider
o What is the Community Rehabilitation Fund Program?
o What are the details of the proposed application?
SUDDorting Information
o Community Rehabilitation Fund Program Manual
,/
.
~,
...~ .-
. Comm.Rehab.Fund
Council Rpt. 93-196
Page 2
Analvsis of Issues
,
o What is the Community Rehabilitation Fund Program?
. The Community Rehabilitation Fund Program is a grant program administered by the Minnesota
Housing Finance Agency. The grant program provides funds for the following activities:
o acquisition
.0 rehabilitation
o demolition
o permanent financing
..0 gap financing
The fu~dsn:1ust be used for properties (both single family and multi-family) occupied by low to
.moderate income. individuals or families.
. o.What are the details of the proposed application?
Many of the details of the application have not been identified as staff has been unable to confer
with MHF A staff regarding the specific requirements of the funds. However, the application will
address one of more of the goals for the Westbrooke neighborhoods. The goals are as follows:
o Increase the owner-occupancy levels in both the condominiums and patio homes
o Provide funds for the rehabilitation of common areas
o Provide funds for the rehabilitation of the interior areas of the units
In addition to meeting with MHF A representatives, staff will be meeting with private lenders in
order to develop the .proposed program. Among the ideas staff is pursuing is an interest rate.
write-down program which would offer mortgages at approximately 5% for .owner-occupants.
However, MHFA has not confirmed ifthis would be an eligible activity.
'"
Alternatives
.
o.Authorize application as proposed.
o Direct staff to develop an application for another neighborhood in Hopkins.
o Elect not to submit an application for the Community Rehabilitation Fundat this time.
.
--
.,.:- ~
.
CITY OF. HOPKINS
HENNEPIN COUNTY, MINNESOTA
RESOLUTION NUMBER 93~ 132
AUTHORIZING AN APPLICATION FOR THE COMMUNITY REHABILITATION FUND
FOR THE WESTBROOKE NEIGHBORHOOD
WHEREAS, the Minnesota Housing Finance Agency (MHF A) has made available grant funds
through the Community Rehabilitation Fund Program to assist in the improvement and
preservation of housing in neighborhoods designated by the applying City, and
WHEREAS, . the Westbrooke neighborhood has been identified by the City Council as a priority.
neighborhood in need of assistance in order to preserve it's housing stock, and
WHEREAS, the purpose of the Community Rehabilitation Fund Program is consistent with the
needs of the neighborhood.
. NOW, THEREFORE, BE IT RESOLVED, by the City Council of the City of Hopkins,
Minnesota, that the Westbrooke neighborhood of Hopkins is named as the designated
neighborhood for the Minnesota Housing Finance Agency's Community Rehabilitation Fund
program.
By:
Charles D. Redepenning, Mayor
Attest:
James A. Genellie, City Clerk
.
,(1 't--'
i - .
.
COMMUNITY REHABILITA TION
FUND PROGRAM
PROCEDURAL MANUAL
.
MINNESOTA HOUSING FINANCE AGENCY
HOME IMPROVEMENT DIVISION
September 1993
.
~ ' ,
.' ,
COMMUNITY REHABILITATION FUND PROGRAM
. PROCEDURAL MANUAL
SECTION'1 - DEFINITIONS
1.1 BLIGHTED RESIDENTIAL PROPERTY
, 'The term Blighted Residential Property shall have the meaning given it
by the Grantee in the Grant Application.
1.2 BUILDER
The term Builder shall mean a person or entity engaged in the business '
,of housing construction who (i) meets all licensing and other
requirements of applicable laws, ordinances, and regulations;' (ii)
possess experience and creditworthiness satisfactory to the Gr-antee;
and (iii) will enter into an agreement to sell or rent the residential housing'
which construction is assisted in whole or in part with the proceedsofa ,
State Grant to persons and families of Low and Moderate Income.
1.3 CITY
In accordance with Minn. Stat.~~ 426A.03 Subd. 21 and 462C.02 Subd.
. 6 (1992), the term City shall mean (i) a statutory city, (ii) any home rule
charter city, (iii) a county housing and, redevelopment authority created
by special law or authorized by its county to exercise its powers pursuant'
. to Minnesota ~ 469.004 (1992), or (iv) any public body which:
A. is the housing and redevelopment authority in and for a statutory or
home rule, charter city, the port authority of a statutory or home rule
charter city; or an economic development authority of a city
established under Minn. Stat. ~~ 469.090 to 469.108 (1992); and
B. is authQrized by ordinance to exercise, on behalf of a statutory or
home rule charter city, the powers to develop and implement certain
municipal housing programs (Minn. Stat. ~~ 462C.01 to 462C.10
(1992)).
1.4 CITY GRANT
The term City Grant means a grant from the Grantee to an Eligible
Mortgagor for eligible Program purposes.
1.5 COMMUNITY REHABILITATION FUND PROGRAM'
The term Community Rehabilitation Fund Program or Program means
~he P!ogram authorized by of Minn. Stat. ~ 462A.206 (1992) and
. descnbed in this MHFA Community Rehabilitation Fund Program'
Procedural Manual, and the applicable request for proposals, Grant
Comm Rehab Fund Manual 1 9/93
..,
'"
Application, and Grant Agreement, as these may be am~nded from time .
to time.
1.6 COOPERATIVE HOUSING CORPORATION
The term Cooperative Housing Corporation means those corporations
which qualify as cooperative housing corporations under section 216(b)
of the Internal Revenue Code of 1986, as amended.
1.7 DESIGNATED AREAS
The term Designated Areas means, for the purpose of focusing
resources, a city located in a metropolitan statistical area (MSA) must.
designate neighborhoods within which the grants or loans may be used,
and a city located outside of a MSA must designate a geographical area
within which the grants or loans may be used.
1.8 ELIGIBLE MORTGAGOR
The term Eligible Mortgagor means a recipient of a Loan or City Grant,
and includes a natural person of Low or Moderate Income, and the
following entities which sponsor or construct "residential housing", as
defined in Minn. Stat. ~ 462A.03, Subd. 7 (1992).:,
A. A Nonprofit or Cooperative Housing Corporation; .
B. A Limited Profit or Limited Dividend Entity;
C. A Builder.
1.9 ELIGIBLE PROPERTIES
The term Eligible Properties means single or multi-family dwelling units
which are owner occupied or used as rental units.
1.10 GAP FINANCING
The term Gap Financing means financing for the difference between the
cost of the improvement of a blighted property, including acquisition,
demolition, rehabilitation, and construction, and the market value of the
property upon sale.
1.11 GRANT AGREEMENT
The term Grant Agreements means the Community Rehabilitation Fund
Program Grant Agreement as it may be amended by exhibits and letters
of acceptance, constituting a contractual agreement between MHFA and
the Grantee setting forth the terms and conditions for the proper
administration of the Program. .
Comm Rehab Fund Manual 2 9/93
~
-~
<- ~ >(
." ;:
. 1.12 GRANT APPLICA TION
The term Grant Applications means an application for a State Grant
prepared in the format required by MHFA.
1.13 GRANTEE
The term Grantee means:
A. a City which receives a grant under the Community Rehabilitation.
Fund Program; or
B. a nonprofit organization which applies for and receives a grant
under the Community Rehabilitation Fund Program on behalf of a
City within which the nonprofit is located and which has enacted a
resolution authorizing such an application. .
1.14 '-/M/TED PROFIT OR '-IMITED DIVIDEND ENTITY
The term Limited Profit or Limited Dividend Entity means those
individuals, partnerships, joint ventures, and corporations which, by their
organizational documents or by agreement or otherwise, limit their rate of
return to ten. percent, or such lesser amount as the City may require, of
.the capital contribution of the investors in the residential housing to be
. assisted, in whole or in part, with the proceeds of a State Grant
1.15 LOAN
The terms Loans means an advance of State Grant Funds, or funds from
the Revolving Loan Fund, for eligible Program purposes by a Grantee to
an Eligible Mortgagor with a requirement. for repayment.
1.16 LOW OR MODERATE INCOME
"
The term Low or Moderate Income means households with an income
not exceeding 115% of the greater of county or area median income as
. determined by the. United States Department of Housing and Urban
Development.
1.17 MHFA
The term MHFA means the Minnesota Housing Finance Agency.
1.18 NONPROFIT OR NONPROFIT ENTITY
The term Nonprofit or Nonprofit Entity means housing and
redevelopment authorities established under. and, pursuant to the
. provisions of Minn. Stat. ~~ 462.411 to 462.711 (1992); and 'those
partnerships, joint ventures, corporations, and associations which are
established for a purpose not involving pecuniary gain to the members,
partners, or shareholders thereof, pay no dividends or other pecuniary
re,rrluneration, directly or indirectly, to the members, partn~rs, or
. Comm Rehab Fund Manual 3 9/93
~
shareholders thereof, and in the case of private, nonprofit corporations, .
are established under and pursuant to Chapter 317 of the Minn. Stat.
. and are in compliance with all the provisions thereof; provided, however,
that in no event shall a Limited Dividend Entity be deemed a Nonprofit
~ ntity ~
1.19 PARTICIPATION TERM
The term Participation Term means the period of time during which the
Grantee first expends all funds received from tHe State Grant, but not to
extend beyond June 30, 1995.
1.20 PROCEDURAL MANUAL
The term Procedural Manual means this Community Rehabilitation Fund
Program Procedural Manual.
1.21 PROGRAM ADMINISTRATOR
The term Program Administrator means an entity with which a City may
select to subcontract administration of the Program on the City's behalf.
Such entities may include housing and redevelopment authorities,
economic development authorities, nonprofit organizations or other
entities, as approved by the City, possessing adequate capital and .
personnel for effective delivery of the Program.
1.22 REVOLVING LOAN FUND
The term Revolving Loan Fund means the fund from which a Grantee
makes Loans to Eligible Mortgagors and into which loan payments are
deposited for the purpose of making additional Loans or City Grants
under the Community Rehabilitation Fund Program.
1.23 STATE GRANT
The term State Grant'means an award of funds to a Grantee for eligible
purposes under the Community Rehabilitation Fund Program.
.
Comm Rehab Fund Manual 4 9/93
="~
.;- .
~' -;
COMMUNITY REHABiliTATION FUND PROGRAM
. PROCEDURAL MANUAL
SECTION 2 - POLICY
2.1 AMENDMENTS DIRECTIVES
The provisions of this Procedural Manual may be clarified or
supplemented from time to time by MHFA by issuance of revised pages
to be effective as of the date of issue, or such later time as determined by
MHFA; provided that such amendments shall not retroactively impair the
obligations of MHFA under its agreements with the Grantee, nor shall the
provisions of this Section 2.1 be construed as constituting consent of the
Grantee to any future amendments or administrative actions which so.
impair such contracts or.agreements with MHFA.
2.2 FEDERAL AND STATE REGULATIONS
Nothing in this Procedural Manual shall be construed in such a manner
as to conflict with, alter. or amend any federal or state regulations
applicable to the conduct of the Grantee's business. ..
2~3 RELIANCE ON GRANTEE WARRANTIES
~
. Grantee should carefully note the warranties required of it set forth in
Section 3~3 of this Procedural Manual. MHFA expressly relies on each
Grantee satisfying fully each of these warranty requirements at all times
as they pertain to the Grantee's or its Program Administrator's
administration of .the Program.
2.4 FAIR HOUSING/EQUAL OPPORTUNITY..
NONDISCRIMINA TION
It is the policy of MHFA that MHFA and Cities work affirmatively to ensure
that all persons, regardless or race, color, creed, national origin, sex, .
religion, marital status, age, handicapped status or reliance on public
assistance, will be treated fairly and equally for purposes of competitive
participation in the Program. :
2.5 OTHER SOURCES OF FUNDS
At the time a Loan orCity Grant is made, conventional financing for the
proposed activities must not otherwise be available from private lenders
upon equivalent terms and conditions. . : .
2.6 . SIZE OF GRANTS
. The minimum State Grant is $30,000. The maximum State. Grant is
$350,000.
Comm Rehab Fund Manual 5 9/93
-
.' ~ :;:..""
..
One third (1/3) of program funds will be allocated for making State Grants .
in amounts from $30.000 to $100.000 (small grant pool). Two-thirds (2/3)
of program funds will be allocated for making State Grants in amounts
greater than $100,000. but no greaterthan $350.000 (large grant pool).
In the event .Grant Applications received and selected for funding by
MHFA are inadequate to exhaust the funds allocated for either small or
large grant pools. the unused portion will be reallocated to the other
pool.
2.7 GRANTEE RESPONSIBILITY
Grantees are responsible for the administration of the Program and
compliance with the warranties contained in Section 3.3 of this
Procedural Manual, even when the Grantee is a City which subcontracts
with a Program Administrator for program administration.
2.8 REVOLVING LOAN FUND
Payments of Loans to the Revolving Loan Fund may be used for eligible
Program purposes within the Designated Area. Payments may be used
for eligible Program purposes outside the Designated Area upon
approval of the City.
2.9 TERMINATION OF DESIGNATED AREA .
If a City desires to use unexpended State Grant funds for eligible
Program purposes in an area other than the Designated Area, then the
City must adopt a resolution terminating the designation of the
Designated Area and designating a new: Designated Area.
MHFA's approval of such a termination of a Designated Area is required.
2.10 REPORTS
Grantees :shall provide semi-annual reports during the Participation Term
to MHFA on forms provided by MHFA detailing:
A. Activities funded with the State Grant. and Loan repayments;
B. The amount and type of financing provided;
C. Demographic and other information about Eligible Mortgagors.
purchasers and tenants of properties receiving assistance under the
program;
D. Revolving loan payments of principal and interest, and City Grant
funds that may be returned to the Grantee;
E. Interest received on State Grant funds and their use;
F. Other information that may be deemed appropriate by MHFA.:
Grantees shall report annually to MHFA after the Participation .
Term.
Comm Rehab Fund Manual 6 9/93
. ' ......;'~
>, . ..
B. Grantee, and its Program administrator, if applicable, will work .
affirmatively to ensure that all persons, regardless or race, color,
ere ed, national origin, sex, religion, marital status, age,
handicapped status or reliance on-public assistance, will be treated
fairly and equally for purposes of competitive participation in the
Program;
c. Grantee, and its Program administrator, if applicable, will maintain
records sufficient in detail to report the uses of the State Grant and
repayments thereon, and the amount and uses of earnings on
investments of the State Grant;
D., Grantee will provide required reports on a timely basis; and
E. Grantee will comply with all of the requirements of the Program.
3.4 PENAL TIES
If any of the warranties in Section 3.3 of this Procedural Manual are
untrue in any respect, then MHFA may, at its sole option and discretion,
- suspend or cancel the Grant Agreement.
In the event of a cancellation of the Grant Agreement, MHF A may, at its
sole option and discretion, require repayment to MHFA of unspent State
Grant dollars and/or funds in the Revolving Loan Fund, and/or .
assignment to MHFA of Loans made under the Program.
In the event the State Grant is not fully expended within the Participation
Term, MHFA may, at its sole option and discretion, either extend the
Participation Term or require return of all unexpended State Grant
dollars, and unspent earnings thereon.
.
Comm Rehab Fund Manual 8 9/93
, ~~"''''
-- .. ' ,
..
....' .i
COMMUNITY REHABiliTATION FUND PROGRAM
- PROCEDURAL MANUAL
-- SECTION 4 - ELIGIBILITY REQUIREMENTS
4.1 ELIGIBLE FORMS OF FINANCING
Grantees may use State Grants to make City Grants or Loans
4.2 ELIGIBLE PURPOSES
City Grants' or Loans may be used only for the purposes of construction,
acquisition, rehabilitation, demolition, permanent financing, refinancing,
or gap financing of single or multi.family housing and related costs to the
Eligible Mortgagor necessary for their achievement.
If a City Grantor Loan is used for demolition, the cleared land must be
used for:
A. The construction of housing to be rented to.or owned by Low or
Moderate Income households; or
B. For other housing related purposes primarily for the benefit of
persons residing in the adjacent housing.
. Architectural and survey expenses and fees for title . searches, title
opinions and,title.insurance qualify as related costs. Related costs do not
include origination fees charged by the Grantee or . Program
Administrator for a Loan or City Grant.
4.3 INELIGIBLE USES OF STATE GRANT
State Grant and interest earned on State Grant dollars, whether invested
in Loans or other investments, and repayments of Loan principal, may
not be' used to defray the Grantee's or Program Administrator's costs of
administration of the Program.
4.4 OCCUPANCY REQUIREMENTS
A. Owner-Occupied SinQle-Family Properties
Properties which are rehabilitated or constructed with the
assistance of Loans or City Grants and are intended to be owner-
occupied shall be sold to persons or families of Low or Moderate
Income. Eligible Mortgagors shall be required by the Grantee to
ensure that the property is sold to a person or, family of Low or
Moderate Income, and to report to the Grantee the demographic
information about the purchaser and his or her. household that will
t enable the Grantee to fulfill its reporting requirements.
Comm Rehab Fund Manual 9 9/93
- --
".""' ':. roo
--- .~"
B. Rental Properties
Owners of properties containing one or more rental units which are .
rehabilitated or constructed with the assistance of Loans or City
Grants shall enter into an agreement with the Grantee ensuring that:
1. Upon completion of .rehabilitation or construction, rental units
will be rented to persons and families of Low or Moderate
Income in the following ratios: one unit in the case of a one-unit
property, at least one of the units in the case of a two-unit
property, two of the units in a three-unit property, three of the
units in the case of a four-unit property, and four of the units in
a five or six-unit property, and at least 75% Of the units in cases
where the property contains more than six units.
2. The agreement shall remain in effect until the property is fully
rented, or such later time as the Grantee may .deem
appropriate.
3. That for the term of the agreement, the owner will report to the
Grantee the demographic information about the tenants'
households that will enable the Grantee to fulfill its reporting
requirements.
The agreement shall contain a clause permitting the Grantee to .
accelerate payment of the Loan and/or recapture of the City Grant if
the property owner does not rent the appropriate number of units to
Low or Moderate Income person or families for the required period.
t
Comm Rehab Fund Manual 10 9/93
K~