3.0. EDSR 05-25-1993 ELK RIVER ECONOMIC DEVELOPMENT AUTHORITY
TO: ECONOMIC DEVELOPMENT AUTHORITY
FROM: WILLIAM RUBIN, ED COORDINATO
DATE: MAY 19, 1993
SUBJECT: COMMITMENT AGREEMENT AND
ALLOTMENT AGREEMENT FOR FIRST TIME
HOMEBUYER PROGRAM
INTRODUCTION
At its April meeting, EDA Commissioners authorized an
application to the Minnesota Housing Finance Agency (MHFA) for
inclusion in a first time homebuyer program known as the
Minnesota City Participation Program. Following the bond
allocation meeting on May 12, the Elk River EDA is now in a
position to execute final documents with MHFA for participation
in this program.
BACKGROUND
The bond allocation meeting was necessitated because MHFA
0 received 60 requests in various amounts totaling $73 . 6
million. MHFA intends to only bond for $47 .5 million.
Therefore, the individual requests for mortgage funds were
reduced. The Elk River EDA' s request was reduced to $974,242 .
Cities, counties, and Economic Development Authorities that
choose to participate in this program are required to approve
two contracts known as the Allotment Agreement and the Program
Application-Commitment Agreement.. Both have been enclosed for
your review and comment and are similar in content to the
agreements authorized in previous years.
ACTION REQUESTED
The Elk River EDA is asked to approve the Allotment Agreement
and the Program Application-Commitment Agreement with the
Minnesota Housing Finance Agency. In a separate motion, the
EDA is asked to authorize a new one percent ( 1%) refundable
deposit fee in the amount of $9,742.42, and further, to
authorize a nonrefundable $200 processing fee.
Given the uncertainty of MHFA' s ability to issue revenue bonds
for home mortgage purposes, payment of the deposit fee and the
processing fee will not be made at this time.
•
P.O. Box 490 • 13065 Orono Parkway • Elk River, MN 55330-1743 • (612) 441-7420 • Fax: (612) 441-7425
Equal Opportunity Housing and Equal.Opportunity Employment
4111
MINNESOTA HOUSING FINANCE AGENCY
MINNESOTA CITIES PARTICIPATION PROGRAM
PROGRAM APPLICATION-COMMITMENT
AGREEMENT
THIS APPLICATION AND AGREEMENT is made and entered into by and between
the Elk River Economic Development Authority(hereinafter refereed to as the"City"),with its
office at,720 Dodge Avenue N.W., Elk River,Minnesota 55330,and the Minnesota Housing
Finance Agency(hereinafter referred to as the"MHFA"),with its office at 400 Sibley Street-Suite
300,St.Paul,Minnesota 55101-1998.
WITNESSETH:
WHEREAS,the MHFA,under the provisions of Minn.Stat. §474A.061 Subd.2a(1992),
is authorized to issue qualified mortgage bonds,as such term is used in the Internal Revenue Code
of 1986,as amended through the date of this agreement,on behalf of the City,and it has issued,or
will issue,such bonds on the behalf thereof;and
WHEREAS, the MHFA has implemented the Minnesota Housing Finance Agency
Minnesota Cities Participation Program(hereinafter referred to as the"Program"),and is using,or
will use,the proceeds from the issuance of such bonds to fund the Program;and
WHEREAS,the City has requested and received a set-aside of funds from the Program;
and
WHEREAS, the City wishes to obtain a commitment by MHFA to purchase mortgage
notes and mortgages(hereinafter referred to as"Mortgages")which will be originated by a lender,
or lenders,designated by the City(hereinafter cumulatively referred to as the"Lender");and
WHEREAS, Mortgages to be purchased by the MHFA pursuant to the commitment
requested by the City must only be for residences located within a geographic area to be established
and designated by the City;and
WHEREAS,the MHFA is willing to issue a commitment wherein it will agree to purchase
Mortgages which are(i)originated by the Lender,(ii)reviewed,when required by the MHFA,in
• its sole option and discretion,by an entity to be designated by the MHFA(hereinafter referred to as
the "Review Contractor"), and (iii) are in accordance with the terms and conditions of this
Agreement, the Program, and a procedural manual to be supplied by the MHFA (hereinafter
referred to as the "Procedural Manual"), the provisions of which are hereby incorporated by
reference into this Agreement as if set forth in full herein;and
WHEREAS,MHFA is willing to issue to the Lender a commitment under this Agreement,
after it has been fully executed by all of the parties hereto (the fully executed document is
hereinafter referred to as the "Program Commitment Agreement"), to purchase Mortgages
originated by the Lender in accordance with the terms set forth hereinbelow,the provisions of the
Program and Procedural Manual,and the terms of any other agreement entered into between the
MHFA and the Lender.
NOW, THEREFORE, in consideration of the covenants hereinafter contained and the
mutual benefits to be derived therefrom,the parties hereto do hereby agree as follows:
1. City Requirements. All Mortgages submitted to the MHFA for purchase under the
Program must comply with all of the requirements of the Program,and all of the requirements and
provisions contained in the Procedural Manual and the Program Commitment Agreement.
2. Commitment and Commitment Amount. The City hereby applies for a
commitment by MHFA to purchase Mortgages which(i)have been originated by the Lender,(ii)
have been reviewed and approved,where applicable,by the Review Contractor,and(iii)meet the
requirements of and are made in accordance with the provisions of the Program Commitment
Agreement,the Program,and the Procedural Manual;and the MHFA,by accepting this Program
Application-Commitment Agreement,commits to the purchase of such Mortgages in the aggregate
principal amount(hereinafter referred to as the"Commitment Amount")set forth hereinbelow.
All Mortgages to be purchased by the MHFA pursuant to the Program Commitment
Agreement shall be only for property which,and borrowers who,satisfy the requirements and
provisions of the Program Commitment Agreement,the Program,and the Procedural Manual. the
City acknowledges that the commitment herein applied for shall be effective only upon the approval
thereof by MHFA at the place provided for herembelow,and the delivery of a copy of the same by
MHFA to the City, which approved application shall constitute the Program Commitment
Agreement
•
City Participation Program Form 93-1 1 (Ver.5/11/93)
11110
3. Variance in Commitment Amount. A variance of Fifteen Thousand and No/100
Dollars($15,000.00)in the total principal amount of Mortgages purchased under the Program
Commitment Agreement,above or below the Commitment Amount,shall be deemed by the MHFA
to constitute compliance with the Program Commitment Agreement.
4. Commencement of Activity. Upon the acceptance,execution, and delivery of the
Program Commitment Agreement by MHFA to the City,the City shall select and designate Lender,
and shall have Lender enter into and execute a Lender Application-Commitment Agreement in a
form to be supplied by the MHFA.
5. Commitment Term. The term of the Program Commitment Agreement and the
City's participation in the Program (hereinafter referred to as the "Commitment Term")shall
commence on a date to be selected and specified by the MHFA,and shall continue for a period of
time to be established by the MHFA,in its sole option and discretion,provided,however,such
time period shall not be less than Six(6)months. The MHFA shall transmit a written notification
to the City of the date on which the Commitment Term shall commence. The Program
Commitment Agreement,and the City's participation in the Program,shall automatically terminate,
without the need for any action by either party hereto,at the end of the Commitment Term.
6. Set-Aside Term. The Commitment Amount shall be set-aside and held by the
MHFA for the sole use by the City for a period of time to be established by the MHFA,in its sole
option and discretion,provided,however,such time period shall not be less than Four(4)months
(hereinafter referred to as the"Set-Aside Term")commencing on a date to be selected and specified
by the MHFA. The MHFA shall transmit a written notification to the City of the date on which the
Set-Aside Term shall commence.
Any portion of the Commitment Amount not reserved for the purchase of qualifying
Mortgages as of the end of the Set-Aside Term shall be cancelled and returned to the MHFA for
redistribution under the Program in accordance with the provisions contained in the Procedural
Manual. In addition,any portion of the Commitment Amount reserved for Mortgages which are
not delivered to the MHFA for purchase within the time period delineated in the Procedural Manual
for such purchase, shall be cancelled and returned to the MHFA for redistribution under the
Program, and any funds contained in the Program at the end of the Commitment Term shall
become funds of the MHFA,and transferred to whatever program the MHFA,in its sole option
and discretion,may designate.
7. Commitment Fees. No commitment fee shall be payable by the City for the
commitment by the MHFA to purchase qualifying Mortgages.
8. Purchase Price. The purchase price of each Mortgage to be purchased by MHFA
hereunder shall be as set forth in the Procedural Manual.
9. Mortgage Terms. The interest rate for all Mortgages shall be set from time to time
by the MHFA,at its dole option and discretion,by way of a written statement to the City and the
Lender;provided,however,any change in interest rate shall only apply to Mortgages for which an
individual commitment is issued after the City and the Lender have received such notification of
interest rate change. Mortgages shall meet all requirements of the Program,and those set forth in
the Program Commitment Agreement,the Procedural Manual,and either the Originating Lender
Application-Commitment Agreement or the Direct Seller Application-Commitment Agreement,
whichever is applicable.
10. Area Limitation. The City hereby specifically agrees that the MHFA shall,pursuant
to the Program Commitment Agreement,be required to purchase only those Mortgages which are
for residences located within a geographic area to be established and designated by the City.
11. Warranties. The City hereby warrants to MHFA that,upon approval and delivery of
the Program Commitment Agreement by MHFA and the subsequent purchase by and delivery of
Mortgages to MHFA pursuant thereto, all such Mortgages will have been made in compliance
with, and will be in full compliance with, the terms and conditions contained in the Program
Commitment Agreement,the Program,and the Procedural Manual,and all warranties set forth in
the Procedural Manual are adopted and made by the City,and shall be applicable to each such
Mortgage.
12. Servicing. The servicing of Mortgages shall be the sole responsibility of MHFA,or
of those servicing institutions which MHFA may designate in its sole option and discretion.
13. Remedies. Time is of the essence hereof. In the event that the City defaults in the
observance or performance of any covenant or condition in the Program Commitment Agreement
or Procedural Manual, or in the event that any warranty made by the City with respect to any
Mortgage is found to be untrue,then the MHFA shall be entitled to all remedies at law or in equity
including, but not limited to; (i) the right to rescind acceptance of the Program Commitment
• Agreement,(ii)the right to seek equitable relief by way of injunction(mandatory or prohibitory)to
City Participation Program Form 93-1 2 (Ver-5/11/93)
prevent the breach or threatened breach of any of the provisions of the Program Commitment
Agreement, or to enforce the performance thereof, (iii)the right to seek damages, including
411).
. consequential damages,arising by virtue of the MHFA's sale of its debt securities in reliance on
the City's observance and performance of the provisions of the Program Commitment Agreement,
and(iv)the right to terminate the Program Commitment Agreement,and upon such termination the
City shall have no further rights pursuant hereto,provided,however,that such termination shall
not diminish MHFA's rights specified in the Program Commitment Agreement and in the
Procedural Manual. All such remedies shall be cumulative,and the exercise by the MHFA of any
one or more of them shall not in anyway alter or diminish the MHFA's right to any other remedy
provided herein or by law.
14. Contract Documents. All Mortgage transactions between the City and the MHFA
pursuant to the Program Commitment Agreement are on a contractual basis. The contract in each
instance consisting of the Program Commitment Agreement and the provisions and requirements
contained in the Procedural Manual,with all amendments and supplements thereto in any form in
effect as of the date of the MHFA's acceptance of the Program Commitment Agreement.
15. Assignment. Neither this Program Application-Commitment Agreement, the
Program Commitment Agreement,nor any interest therein is assignable or transferable by the City,
or by operation of law,without the prior written consent of the MHFA.
16. Paragraph Captions and Program Headings. The captions and headings of the
paragraphs of this Agreement are for convenience only,and shall not be used to interpret or define
the provisions thereof.
17. Applicable Law. The Program Commitment Agreement is made and entered into in
the State of Minnesota,and all questions relating to the validity,construction,performance and
enforcement hereof shall be governed by the laws of the State of Minnesota.
18. Agreement Conditional Upon MHFA Approval. The Program Commitment
Agreement shall be a binding obligation of the MHFA upon its execution by the MHFA and
delivery of a copy of the same to the City. In the event that this Program Application-Commitment
Agreement is not,for any reason,so executed and delivered by the MHFA on or before the 15th
day of June,1993,it shall be null and void and of no force or effect.
19. Issuance of Bonds. The City does hereby authorize the MHFA to issue,on behalf
of the City,qualified mortgage bonds,as such term is used in the Internal Revenue Code of 1986,
in an amount equal to the Commitment Amount,and the MHFA agrees to so issue such bonds if
and when federal law authorizes and the MHFA deems it is economically feasible to do so.
(THE REMAINING PORTION OF THIS PAGE IS INTENTIONALLY LEFT BLANK)
City Participation Program Form 93-1 3 (Ver-5/11/93)
IN WITNESS WHEREOF,the City has set its hand this_day of
19
•
CITY:
ELK RIVER ECONOMIC DEVELOPMENT
AUTHORITY
By:
(Signature of Authorized Officer)
(Printed or Typewritten Name of
Authorized Officer)
REQUESTED COMMITMENT AMOUNT $1.500.000
MHFA APPROVAL
MHFA hereby accepts the above Program Application-Commitment Agreement and approves
and grants the following:
APPROVED COMMITMENT AMOUNT $974.242
MINNESOTA HOUSING FINANCE AGENCY
By:
Its:
Signed this day of ,19 .
SUMMARY
(To be completed by MHFA)
City's requested commitment amount $1.500.000
Commitment Amount granted by MHFA $974.242
•
City Participation Program Form 93-1 4 (Ver-5/11/93)
MORTGAGE REVENUE BOND
ALLOTMENT AGREEMENT
for 1993
THIS AGREEMENT shall have an effective date of the 12th day of May, 1993,and is
made and entered into by and between the Minnesota Housing Finance Agency,a public body
corporate and politic of the State of Minnesota(hereinafter referred to as the"MHFA"),and the
entities(hereinafter individually referred to as a"Recipient",and collectively referred to as the
"Recipients") identified in Exhibit A which is attached hereto and incorporated herein by
reference.
WITNESSETH:
WHEREAS,Section 146 of the Internal Revenue Code of 1986,as amended,(hereinafter
referred to as the "IRC") establishes an annual volume cap for the issuance of private activity
bonds;and
WHEREAS, IRC §146(e) allows States to enact legislation to allot that State's annual
volume cap for private activity bonds amongst different entities located within that State;and
WHEREAS, the allocation of annual volume cap for private activity bonds amongst
different entities located within the State of Minnesota is vested in the Commissioner of Finance for
the State of Minnesota(hereinafter referred to as the"Commissioner of Finance");and
WHEREAS,the State of Minnesota,pursuant to the authority granted under IRC§146(e),
enacted Minn.Stat.§474A.061 Subd.2a(1992),which such statute,along with any amendments
thereto which have been or will be made by the 1993 Minnesota State Legislature,establishes a
procedure for the allotment of qualified mortgage bonds (hereinafter referred to as "Qualified
Mortgage Bonds"),as such term is used in IRC§143(a);and
WHEREAS, each Recipient has, pursuant to the requirements contained in Minn. Stat.
§474A.061 Subd.2a(a)(1992),along with any amendments thereto which have been or will be
made by the 1993 Minnesota State Legislature, submitted an application to the MHFA for an
allotment of Qualified Mortgage Bonds;and
WHEREAS, Minn. Stat. §474A.061 Subd. 2a (b) (1992), along with any amendments
thereto which have been or will be made by the 1993 Minnesota State Legislature,requires that the
MHFA and the Recipients must,before the MHFA can forward an allotment of Qualified Mortgage
Bonds to the Commissioner of Finance, negotiate the terms of and enter into an agreement
regarding the allotment of Qualified Mortgage Bonds amongst the Recipients;and
WHEREAS, the provisions contained in IRC §143(a)(1)(B) preclude the issuance of
Qualified Mortgage Bonds after the 30th day of June,1992;and
WHEREAS, the Federal Congress is considering amending IRC§143(a)(1)(B) to allow
for the issuance of Qualified Mortgage Bonds after the 30th day of June,1992;and
WHEREAS,the MHFA and the Recipients believe that the Federal Congress will amend
IRC§143(a)(1)(B)to authorize and-allow for the issuance of Qualified Mortgage Bonds after the
30th day of June, 1992,and wish to enter into an agreement regarding the allotment of Qualified
Mortgage Bonds so that such bonds can be issued as soon as IRC §143(a)(1)(B)is so amended;
and
WHEREAS,the MHFA and the Recipients have negotiated and agreed to the terms which
are to be included in such agreement regarding the allotment of Qualified Mortgage Bonds amongst
the Recipients.
•
MHFA Qualified Mortgage Bonds 1 (Ver-5/11/93)
Allotment Agreement
•
NOW,THEREFORE,the parties hereto,based upon the mutual covenants and warranties
contained herein,do hereby agree as follows:
1. Amount of Qualified Mortgage Bonds to be Allotted. The total amount of
authority for the issuance of Qualified Mortgage Bonds (hereinafter referred to as the "QMB
Authority") available to be allotted, and to actually be allotted, pursuant to this Allotment
Agreement is Forty-Seven Million Five Hundred Fifty-Six Thousand and No/100 Dollars
($47,556,000.00).
2. Applications. Each Recipient has submitted (i) an application to the MHFA for an
allotment of Qualified Mortgage Bonds which meets the requirements specified in Minn. Stat.
§474A.061 subd.2a(1992),along with any amendments thereto which have been,or the parties
hereto believe may be,made by the 1993 Minnesota State Legislature.
3. Allotment. The QMB Authority is allotted to the Recipients in the amounts specified
and delineated in Exhibit B attached hereto and incorporated herein by reference, and such
amount is allocated in accordance with the provisions contained in Minn. Stat.§474A.061 subd.
2a(1992),along with any amendments thereto which have been,or the parties hereto believe may
be,made by the 1993 Minnesota State Legislature.
4. Application Deposit and Application Fee. Upon Federal Congress amending
IRC §143(a)(1)(B) to authorize and allow for the issuance of Qualified Mortgage Bonds, the
MI3FA shall transmit to each individual Recipient written notice of the amount of application
deposit and application fee which state law requires such Recipient submit to the MHFA,and each
such Recipient shall submit such application deposit and application fee in accordance with the
instructions contained in such written notice.
5. Forward to Commissioner. The MHFA shall, in accordance with the provisions
contained in Minn.Stat.§474.061 Subd.2a(b)(1992),along with any amendments thereto which
have been,or the parties hereto believe may be,made by the 1993 Minnesota State Legislature,
forward this Agreement to the Commissioner of Finance, and upon receipt of the applicable
application deposit shall also forward such deposit to the Commissioner of Finance.
(THE REMAINING PORTION OF THIS PAGE IS INTENTIONALLY LEFT BLANK)
MHFA Qualified Mortgage Bonds 2 (Ver-5/11/93)
Allotment Agreement
THIS ALLOTMENT AGREEMENT was executed by the Elk River Economic
Development Authority on the day of , 1993.
411)
1111.
CITY:
ELK RIVER ECONOMIC DEVELOPMENT
AUTHORITY
(Ver-5/11/93)
By:
Its:
AIIIFA Qualified Mortgage Bonds 4
Allotment Agreement
Exhibit A
List of Recipients
Anoka Housing&Redevelopment Authority
Beltrami County
• Bemidji Economic Development Authority
Brainerd Housing&Redevelopment Authority
Brooklyn Center Economic Development Authority
Buffalo Housing&Redevelopment Authority
City of Ashby
City of Audubon
City of Barnesville
City of Brooklyn Park HRA
City of Browns Valley
City of Detroit Lakes
City of Dilworth
City of Duluth
City of Eden Prairie
City of Fergus Falls
City of Glencoe
City of Glyndon
City of Hopkins
City of Jackson
City of Maple Grove
City of Maple Lake
City of Marshall
City of Minnetonka
City of Moorhead
City of New York Mills
City of Otsego Economic Development
City of Owatonna
City of Perham
City of St.James
• City of Villard
City of Wheaton
City of White Bear Lake
City of Winsted
City of Zimmerman •
County of Hubbard
County of Mahnomen
County of Wright
Crystal Economic Development Authority
Douglas County Housing&Redevelopment Authority
Elk River Economic Development Authority
Fridley Housing&Redevelopment Authority
Glenwood Development Corporation
Golden Valley Housing&Redevelopment Authority
Grant County Housing&Redevelopment Authority
Housing&Redevelopment Authority City of Dodge Center
Housing&Redevelopment Authority in and for the City of Richfield
Housing&Redevelopment Authority of Austin
Housing&Redevelopment Authority of Becker County
Housing&Redevelopment Authority of Columbia Heights
Housing&Redevelopment Authority of Todd County
Hutchinson Housing&Redevelopment Authority
Lake of the Woods County
Little Falls Housing&Redevelopment Authority
Morrison County Housing&Redevelopment Authority
Rice County Housing&Redevelopment Authority
Robbinsdale Economic Development Authority
Rochester Housing&Redevelopment Authority
Stevens County
• Swift County Housing&Redevelopment Authority
MHFA Qualified Mortgage Bonds 1 (Ver-5/11/93)
Exhibit A to Allotment Agreement
Exhibit B
Allotment
Name of Recipient Allotment
Anoka Housing&Redevelopment Authority $849,495
410
Beltrami County $540,000
Bemidji Economic Development Authority $849,495
Brainerd Housing&Redevelopment Authority $750,000
Brooklyn Center Economic Development Authority $1,473,232
Buffalo Housing&Redevelopment Authority $1,098,990
City of Ashby $250,000
City of Audubon $250,000
City of Barnesville $500,000
City of Brooklyn Park HRA $1,597,980
City of Browns Valley $250,000
City of Detroit Lakes $974,242
City of Dilworth $700,000
City of Duluth $1,098,990
City of Eden Prairie $1,098,990
City of Fergus Falls $974,242
City of Glencoe $818,308
City of Glyndon $700,000
City of Hopkins $999,192
City of Jackson $250,000
City of Maple Grove $750,000
City of Maple Lake $700,000
City of Marshall $800,000
City of Minnetonka $1,223,737
City of Moorhead $1,098,990
City of New York Mills $250,000
City of Otsego Economic Development $974,242
City of Owatonna $899,394
City of Perham $420,000
City of St.James $594,000
• City of Villard $250,000
City of Wheaton $500,000
City of White Bear Lake $1,130,177
City of Winsted $762,000$762,000
City of Zimmerman $974,242
County of Hubbard $450,000
County of Mahnomen $250,000
County of Wright $1,223,737
Crystal Economic Development Authority $1,024,141
Douglas County Housing&Redevelopment Authority $974,242
Elk River Economic Development Authority $974,242
Fridley Housing&Redevelopment Authority $1,161,363
Glenwood Development Corporation $500,000
Golden Valley Housing&Redevelopment Authority $899,394
Grant County Housing&1 edevelopment Authority $500,000
Housing&Redevelopment Authority City of Dodge Center $670,000
Housing&Redevelopment Authority in and for the City of Richfield $1,348,485
Housing&Redevelopment Authority of Austin $1,024,141
Housing&Redevelopment Authority of Becker County $500,000
Housing&Redevelopment Authority of Columbia Heights $911,868
Housing&Redevelopment Authority of Todd County $300,000
Hutchinson Housing&Redevelopment Authority $849,495
Lake of the Woods County $300,000
$750,000
$300,000
$1,098,990
$1,597,980
$1,597,980
$750,000
Little Falls Housing&Redevelopment Authority
Morrison County Housing&Redevelopment Authority
Rice County Housing&Redevelopment Authority
Robbinsdale Economic Development Authority
Rochester Housing&Redevelopment Authority
Stevens County
• Swift County Housing&Redevelopment Authority $250,000
MHFA Qualified Mortgage Bonds 1 Amount of
Exhibit B to Allotment Agreement (Ver-5/11193)