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HRA RES 1996-08 - 00001075HRA RESOLUTION N0. 8- 1996 A RESOLUTION ESTABLISHING A COMPREHENSIVE HOUSING REHABILITATION PROGRAM FOR THE CITY OF FRIDLEY; ESTABLISHING THE AREA OF OPERATION; PROVIDING FOR THE DELEGATION OF CERTAIN POWERS AND DUTIES; AUTHORIZING THE EXECUTION OF A CONSULTING AGREEMENT BY AND BETWEEN THE HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF FRIDLEY AND THE CENTER FOR ENERGY AND ENVIRONMENT BE IT RESOLVED by the Board of Commissioners (the "Commissioners") of the Housing and Redevelopment Authority in and for the City of Fridley, Minnesota (the "Authority"), as follows: Section l. RPritals. 1.01. The Authority has previously established a Comprehensive Housing Rehabilitation Program for the City of Fridley's Hyde Park Neighborhood (the "Hyde Park Program") for the residents of the City of Fridley's Hyde Park neighborhood. 1.02. It has been proposed that the Authority now establish a Comprehensive Housing Rehabilitation Program for the entire City of Fridley (the "Program") for the residents of all of the City of Fridley's neighborhoods. 1.03. The Authority has entered into the necessary agreements to implement the Hyde Park Program by executing a consulting agreement with the Center for Energy and Environment (the "CEE"). 1.04. It has been proposed that the Authority now enter into the necessary agreements to implement the City wide Program by executing the City wide consulting agreement with CEE (the "Agreement"). Section 2. Findinas. 2.01. The Authority hereby finds that its area of operation in which to implement the Program is the area within the territorial boundaries of the City as provided for in MinnP�ota StatutP�, Section 469.002, Subd. 8 and that the Program will be available to the residents of all of the City's neighborhoods. 2.02. The Authority hereby finds that the adoption of the Program promotes the purposes of the Authority as those purposes are defined in MinnPSOta StatutP�, Section 469.001, �t_s_eC�. (the "Act"). 2.03. The Authority hereby finds that the Program will assist in the alleviation of shortages of decent, safe and sanitary residential housing available within the City at prices affordable to persons and families of low or moderate income as described therein. 2.04. The Authority hereby finds that preservation of the quality of life in the City is dependent upon the maintenance, provision, and preservation of an adequate housing stock; that accomplishing this is a public purpose in that there are many residences in the City which require rehabilitation; that a need exists to provide in a timely fashion Page 2-- HRA Resolution No. 8- 1996 affordable housing to persons of low and moderate income as described in the Act and herein residing and expected to reside in the City; that many owners, would-be purchasers or providers of residences are unable to obtain mortgage credit for rehabilitation of residences under current market conditions; and that in establishing its Program the Authority is acting in all respects to benefit the citizens of the City and to serve a public purpose in improving and otherwise promoting their health, welfare and prosperity. Section 3. Authori�ation of Program. 3.01. The Authority hereby approves and adopts the Program as described in the Description and Guidelines on Schedule A attached to this Resolution. Section 4. �PlPgation of PowPr and �utiPS. 4.01. In accordance with the Act, specifically MinnP�ota StatutP�, Section 429.012, Subd. 1(3), and in accordance with the Description and Guidelines, the officers, agents and employees of the Authority are hereby authorized to take such actions as may be necessary to implement the Agreement and operate the Program. 4.02. The Executive Director or Housing Coordinator are hereby authorized to execute all documents relating to the approval and closing of any loans provided for in the Program. 4.03. The Executive Director or the Chairman are hereby authorized to approve payments for Program loans and any costs or fees incurred as a result of implementing the Agreement. Section 5. Authori�ation for FxPrution of thP AgrPPmPnt. 5.01. The Authority hereby approves the Agreement substantially in the form presented to the Authority and authorizes its Chairman and Executive Director to execute the Agreement on behalf of the Authority with such additions and modifications as those officers may deem desirable or necessary as evidenced by the execution thereof. PASSED AND ADOPTED BY THE FRIDLEY HOUSING AND REDEVELOPMENT AUTHORITY OF THE CITY OF FRIDLEY THIS 11TH DAY OF APRIL, 1996. LAWRENCE R. COMMERS - CHAIRPERSON ATTEST: WILLIAM W. BURNS - EXECUTIVE DIRECTOR Page 3-- HRA Resolution No. 8- 1996 SCHEDULE A � �► _►� � ► lu' . ► .1 ► ._: 1► :1 _u IC . 1 1 I. SINGLE FAMILY LOAN PROGRAMS A. INTEREST RATE WRITE DOWN PROGRAM I •.� 1- • •� The purpose of this program is to reduce the cost of borrowing money to improve owner-occupied, residential homes. This program will only be used in conjunction with the following Minnesota Housing Finance Agency (the "MHFA") loan programs: � The Great Minnesota Fix-Up Fund � The Community Fix-Up Fund � The Home Energy Loan Fund A summary of these MHFA programs is provided below. Depending on the borrower's financial status the Authority will write-down the interest rate to five (5) percent. Some MHFA loans will be originated at less than five (5) percent, in which case the Authority will not provide any interest subsidy. MHFA Program Summary a. The Great Minnesota Fix-Up Fund Provides fixed-rate, home improvement loans up to $15,000 at interest rates from two (2) percent to eight (8) percent, depending on the borrower's income. Maximum term is 15 years. The borrower must meet the following guidelines: � Household income less than $41,000. ��Have good credit and the ability to meet normal lender underwriting standards for credit history, debt-to-income ratio, equity in home, etc. ��Own and occupy the property to be improved; property cannot have more than 4 units. ��Meet other criteria as required by the MHFA. The MHFA has established an interest rate schedule for borrowers which is described on the next page. Page 4-- HRA Resolution No. 8- 1996 a. The Great Minnesota Fix-Up Fund (cont.) Adjusted Gross Interest Income Rate $0-$10,000 2% $10,001-$15,000 4% $15,001-$21,000 6% $21,001-$41,000 8% Only Great Minnesota Fix-Up Fund loans originated at the six (6) and eight (8) percent levels will be subsidized (i.e. written down to five (5) percent) by the Authority. b. The Community Fix-Up Fund Provides fixed-rate, home improvement loans up to $25,000 at an interest rate of eight (8) percent. Maximum term is 20 years. The borrower must meet the following guidelines: � Household income less than $58,650. � Have good credit and the ability to meet normal lender underwriting standards for credit history, debt-to- income ratio, equity in home, etc. � Own and occupy the property to be improved; property cannot have more than 4 units. � Meet other criteria as required by the MHFA. All Community Fix-Up Fund loans will be subsidized (i.e. written down to five (5) percent by the Authority. c. The Home Energy Loan Fund Provides fixed-rate, home energy loans up to $5,000 at an interest rate of eight (8) percent. Maximum term is 5 years. The borrower must meet the following guidelines: � No income limit, however must have sufficient income to repay loan. � Have good credit and the ability to meet normal lender underwriting standards for credit history, debt-to- income ratio, equity in home, etc. ��Own and occupy the property to be improved; property cannot have more than 2 units. � Meet other criteria as required by the MHFA. All Home Energy Fund loans will be subsidized (i.e. written down to five (5) percent) by the Authority. Page 5-- HRA Resolution No. 8- 1996 �. �. . The Interest Rate Write Down Program will be funded by the Authority. The MHFA loans described in Section I(A)(1)(a-c) will be originated by the Center for Energy and Environment (the "CEE") and sold to the MHFA. C ' .. .0 �.0 � . The Center for Energy and Environment will market, administer and close all loans under this program. 4. nualifications Income Limits: $58,650. This means projected annual household income as defined by the MHFA Home Improvement Loan Program Procedural Guide. Underwriting: Borrowers must meet MHFA underwriting guidelines for the programs described in Section I(A)(1)(a- c) . Equity: Same as above. Property Type: Owner-occupied, 1 to 4 unit residential properties located in Fridley. 5. Program SpPrifics Borrowers may not receive more than $6,000 in Interest Rate Write Down Program funds per property improved. Any Interest Rate Write Down greater than $1,500 requires a post-installation inspection to verify that improvements have been made. . -�- :-. -��-� This program is available to any homeowner in the City of Fridley which meets the guidelines of the programs described in Section I (A) (1) (a-c) . 7, TmprovPmPnts Borrowers shall use funds under this program to make permanent repairs and improvements to their properties. Improvements shall be limited to those defined in the most current version of the MHFA Home Improvement Loan Program Procedural Guide. Page 6-- HRA Resolution No. 8- 1996 B. REVOLVING LOAN PROGRAM I •.� 1- • •� This program is intended to address the home improvement financing needs of borrowers who cannot qualify for an MHFA loan as described in Section I(A)(1)(a-c), but who can afford to make a monthly payment. This program fills a programming gap not addressed by other Authority, public or private institutions. �. �. . The Revolving Loan Program will be funded solely by the Authority. C ' .. .0 �.0 � . The Center for Energy and Environment will market, administer and close all loans under this program. 4. nualifications Income Limits: $58,650. This means projected annual household income as defined by the MHFA Home Improvement Loan Program Procedural Guide. Underwriting: Borrowers who don't meet normal lender underwriting criteria and fall into the following categories: a. Debt-to-Income Ratios not to exceed 50%. b. Loan-to-Value Ratios not to exceed 115%. c. May have marginal credit, but have the ability to make a monthly payment. Property Type: Owner-occupied, 1 to 4 unit residential properties located in Fridley. 5. Program SpPrifics The Revolving Loan will carry an annual interest rate of five (5) percent and must be repaid in monthly installments. The maximum Revolving Loan shall not exceed $25,000. The maximum term shall not exceed 20 years. All Revolving Loans will be secured with a separate mortgage. . -�- :-. -��-� This program is available to any homeowner in the City of Fridley who meets the income, credit, and other program requirements in Section I(B)(1-7) or as otherwise approved by the Authority. Page 7-- HRA Resolution No. 8- 1996 7, TmprovPmPnts Borrowers shall use funds under this program to make permanent repairs and improvements to their properties. Improvements shall be limited to those defined in the most current version of the MHFA Home Improvement Loan Program Procedural Guide. C. LAST RESORT LOAN PROGRAM l. Inan �PSCri tn ion This program is designed for those homeowners who cannot qualify for any other Authority loan or grant programs. Funding will be provided in the form of a deferred payment loan up to $10,000. Interest on a Last Resort Loan will be calculated as follows: ��For the first ten years, 2% (simple interest) charged on the principal balance. ��After ten years, no interest shall be charged. The Last Resort Loan is due and payable when the home is sold or after twenty (20) years from the date of the loan note, whichever comes first. The Last Resort Loan may be prepaid at any time. The Authority, may at its discretion, extend the maturity date of a Last Resort Loan. �. �. . The Last Resort Loan Program will be funded solely by the Authority. C ' .. .0 �.0 � . The Center for Energy and Environment will market, administer and close all loans under this program. � �. .� Income Limits: $58,650 Underwriting: This is a last resort program and as such applicants shall be selected for this program only if they are unable to qualify for financing through other Authority programs. The Authority and the Program Administrator shall work in cooperation to identify all possible resources before an applicant can be considered for this program. Equity: The Last Resort Loan shall be secured with a separate mortgage. Page 8- HRA Resolution No. 8- 1996 Property Type: Owner-occupied, 1 to 4 unit residential properties located in the City of Fridley. 5. Program SpPrifics The Last Resort Loan is designed specifically for homeowners in the City of Fridley who can't qualify for a loan or a grant. Acceptable criteria include, but are not limited to: a.Borrowers who have existing financial obligations and/or insufficient income to qualify for a loan. b.Debt-to-income ratios in excess of 50%. c.Loan-to-value ratios in excess of 115%, but not greater than 125%. d.Borrowers who have had credit problems, such as slow payment. e.Borrowers who can't qualify for any CDBG or HOME program funding because their incomes exceed the program guidelines. This program is not available to borrowers with nPn� bankruptcies or foreclosures, unpaid judgements or liens, or non-payment of real estate taxes/assessments. 6. General ReauirPmPnts This program is available to any homeowner in the City of Fridley with incomes up to $58,650 per year who meet the criteria in Section I(C)(1-7). 7, TmprovPmPnts Borrowers shall use funds under this program to make permanent repairs and improvements to their properties. Improvements shall be limited to those defined in the most current version of the MHFA Home Improvement Loan Program Procedural Guide. All properties shall be inspected prior to the approval of any financing. The Authority will only disburse funds to the contractor/s directly after an inspection has been conducted and the homeowner signs a completion certificate. II. MULTIPLE FAMILY LOAN PROGRAMS A. RENTAL REHABILITATION LOAN PROGRAM l. Inan �PSCri tn ion Page 9-- HRA Resolution No. 8- 1996 The Rental Rehabilitation Loan Program is funded by the Minnesota Housing Finance Agency and is intended to help rental property owners complete improvements which increase the livability and energy efficiency of their properties. The program provides loans at 6% simple interest with repayment terms up to 15 years. The maximum amount that can be borrowed is based on the number of units in the property. 1 and 2 Unit Buildings Minimum: $ 1,000 Maximum: $25,000 3 or More Units Minimum: $1,000 Maximum: Lesser of $10,000 per unit, not to exceed $100,000 per structure. All loans over $5,000 must be secured with a separate mortgage against the property to be improved. �. �. . The Rental Rehabilitation Loan Program will be solely funded by the MHFA. CEE will originate and sell loans directly to MHFA. The Authority will not provide any funding under this program. C ' .. .0 �.0 � . The Center for Energy and Environment will market, administer and close all loans under this program. � �. .� Income Limits: None Underwriting: The property generally must show positive cash flow after the rehabilitation work is complete. For loans which are unsecured, the borrower must have the ability to repay the loan based on their own personal finances. For loans which are secured, the property must show positive cash flow after the rehab is completed. Page 10 -- HRA Resolution No. 8- 1996 Equity: The borrower must have sufficient equity in the property, if the loan exceeds $5,000. Property Type: Non-owner-occupied, residential rental properties located in the City of Fridley. � .. . �� . - After the improvements are completed a certain portion of the units must be occupied by households with incomes less than 80% of the state median income. . -�- :-. -��-� This program is available to any rental property owner in the City of Fridley who meets the guidelines of the programs as described in Section II(A)(1-7). 7, TmprovPmPnts Borrowers shall use funds under this program to make permanent repairs and improvements to their properties. Improvements shall be limited to those defined in the most current version of the MHFA Rental Rehabilitation Loan Program Procedural Guide. B. RENTAL ENERGY LOAN PROGRAM I •.� 1- • •� The Rental Energy Loan Program is funded by the Minnesota Department of Public Service and uses Exxon Oil Overcharge funds. The program provides loans at 4% simple interest with repayment terms up to 5 years. The minimum and maximum loan amounts are as follows: Minimum: $500 Maximum: $10,000 All loans over $3,500 must be secured with a separate mortgage against the property to be improved. �. �. . The Rental Energy Loan Program will be solely funded by the Minnesota Department of Public Service. CEE will originate and sell loans directly to MnDPS. The Authority will not provide any funding under this program. Page 11 -- HRA Resolution No. 8- 1996 C ' .. .0 �.0 � . The Center for Energy and Environment will market, administer and close all loans under this program. 4. nualifications Income Limits: None Underwriting: The property generally must show positive cash flow after the rehabilitation work is complete. For loans which are unsecured, the borrower must have the ability to repay the loan based on their own personal finances. For loans which are secured, the property must show positive cash flow after the rehab is completed. Equity: The borrower must have sufficient equity in the property, if the loan exceeds $5,000. Property Type: Non owner-occupied, residential rental properties located in the City of Fridley. � .. . �� . - None. . -�- :-. -��-� This program is available to any rental property owner in the City of Fridley who meets the guidelines of the programs described in Section II(B)(1-7). 7, TmprovPmPnts Borrowers shall use funds under this program to make permanent repairs and improvements to their properties. Improvements shall be limited to those defined in the most current version of the Minnesota Department of Public Service Rental Energy Loan Fund Procedural Guide. C. LAST RESORT RENTAL LOAN PROGRAM I •.� 1- • •� This program is designed for those rental property owners who cannot qualify for any other Authority loan or grant programs. Funding will be provided in the form of a deferred payment loan up to $10,000 per unit, not to exceed $50,000 per structure. Page 12 -- HRA Resolution No. 8- 1996 � For the first ten years, 2% (simple interest) charged on the principal balance. � After ten years, no interest shall be charged. The Last Resort Loan is due and payable when the home is sold or after twenty (20) years from the date of the loan note, whichever comes first. The Last Resort Loan may be prepaid at any time. The Authority, may at its discretion, extend the maturity date of a Last Resort Loan. �. �. . The Last Resort Rental Loan Program will be funded solely by the Authority. C ' .. .0 �.0 � . The Center for Energy and Environment will market, administer and close all Last Resort Rental Loan Program Loans. 4. nualifications Income Limits: No income limit. Underwriting: This is a last resort program and as such applicants shall be selected for this program only if they are unable to qualify for financing through other Authority programs. The Authority and the Program Administrator shall work in cooperation to identify all possible resources before an applicant can be considered for this program. Equity: The Last Resort Loan shall be secured with a separate mortgage. Property Type: Non-owner-occupied, residential rental properties located in the City of Fridley. 5. Program SpPrifics The Last Resort Rental Loan Program is designed specifically for rental property owners who can't qualify for a loan or a grant. Because there are numerous variables which are used when underwriting a multiple family rental loan, it is difficult to list all of the scenarios which would qualify an applicant for the Last Resort Rental Loan Program. In general, the following criteria will be used as primary factors: Page 13 -- HRA Resolution No. 8- 1996 a.Borrowers who have a negative cash flow on their property. b. Borrowers who have no equity in their property and the Loan- to-Value Ratio (with the new debt) which exceeds 100%, but is not greater than 125%. c. Borrowers who have had credit problems, such as slow payment. This program is not available to borrowers with nPn� bankruptcies or foreclosures, unpaid judgements or liens, or non-payment of real estate taxes/assessments. . -�- :-. -��-� This program is available to rental property owners on a case-by-case basis. The Authority Board of Commissioners sha11 specifically approve a11 Last Resort Rental Loans in excess of $10,000. 7, TmprovPmPnts Borrowers shall use funds under this program to make permanent repairs and improvements to their properties. Improvements shall be limited to those defined in the most current version of the MHFA Rental Rehabilitation Loan Program Procedural Guide.