8.1. HRSR 01-03-2005ITEM ~ 8.1.
of
1111 ~/'~.
River
MEMORANDUM
TO: Housing and Redevelopment Authority ~j
FROM: Heidi Steinmetz, Assistant Director of Economic Development ~J
DATE: January 3, 2005
SUBJECT: Minnesota City Participation Program
Attachments
• MCPP Guidelines
• MCCP Program Enhancements
• 2004 MCPP Usage Report
Background
From 1991 to 1996, the Elk River HRA participated in the Minnesota Housing Finance
Agency's (MHFA) Minnesota City Participation Program (MCPP), which provides loan
dollars to qualified first time home buyers. Through the MCPP, MHFA sells mortgage
revenue bonds on behalf of communities to meet locally identified housing needs. The
proceeds are then used to provide below-market interest rate mortgages to first time
homebuyers with income limits outlined in the attached MCPP Guidelines. The loans are
originated and administered through local lenders approved by the MHFA.
To participate in the program, staff would need to complete the application and administer
any city added targeting or enhancements such as those listed in the attached MCPP
Program Enhancements list, and monitor fund usage. The HRA would need to pay a
processing fee of $20 for each $100,000 allotment provided and a 1% refundable deposit.
Issue
Staff recently received information regarding the 2005 MCPP. The HRA has not
participated in the program since 1996, however Sherburne County has applied and been
awarded an allocation for the last several years. The attached MCPP Usage Report indicates
that Sherburne County was allotted over one million dollars in 2004 and completed nine
loans.
Recommendation
The Sherburne County Administrator has indicated to staff that he will apply fora 2005
allocation therefore staff does not recommend a separate city application.
2004 MCPP Usage Report
11 /30/2004
Allocation Percentage of
Allocation Name Amount Committed Amount Funds Availabe # of Loans Usage
Albert Lea, City of $261,684.00 $446,975.00 -$185,291.00 7 170.81
Alexandria, City of $142,646.00 $451,325.00 -$308,679.00 4 316.40%
Anoka County $4,460,612.00 $4,252,885.00 $207,727.00 25 95.34%
Barnesville, City of $100,000.00 $135,400.00 -$35,400.00 1 135.40%
Barnum, City of $100,000.00 $0.00 $100,000.00 0 0.00%
Becker County $443,585.00 $1,198,022.00 -$754,437.00 12 270.08%
Beltrami County $592,860.00 $861,422.00 -$268,562.00 10 145.30%
Blue Earth County $825,812.00 $1,764,857.00 -$939,045.00 15 213.71%
Breckenridge, City of $100,000.00 $187,365.00 -$87,365.00 2 187.37%
Cass Lake, City or $100,000.00 $0.00 $100,000.00 0 0.00%
Chippewa County $188,081.00 $265,723.00 -$77,642.00 4 141.28%
Chisago County $648,167.00 $276,000.00 $372,167.00 5 42.58%
Clearwater County $100,000.00 $0.00 $100,000.00 0 0.00%
Crow Wing County $826,955.00 $1,999,609.00 -$1,172,654.00 20 241.80%
Dilworth, City of $100,000.00 $112,235.00 -$12,235.00 1 112.24%
Dodge County $268,863.00 $503,454.00 -$234,591.00 5 187.25%
Duluth, City of $1,245,441.00 $1,977,470.00 -$732,029.00 18 158.78%
Fillmore County $310,014.00 $323,645.00 -$13,631.00 3 104.40%
Fulda, City of $100,000.00 $206,111.00 -$106,111.00 3 206.11%
Glyndon, City of $100,000.00 $119,050.00 -$19,050.00 1 119.05%
Hennepin County (Suburban) $10,829,507.00 $2,724,904.00 $8,104,603.00 20 25.16%
Houston County $288,143.00 $905,900.00 -$617,757.00 8 314.39%
Hubbard County $267,488.00 $403,000.00 -$135,512.00 4 150.66%
Janesville, City of $100,000.00 $121,500.00 -$21,500.00 1 121.50%
Kandiyohi County $597,897.00 $1,676,193.00 -$1,078,296.00 18 280.35%
Lake of the Woods County $100,000.00 $0.00 $100,000.00 0 0.00%
Mahnomen County $100,000.00 $196,100.00 -$96,100.00 4 196.10%
McLeod County $513,844.00 $668,882.00 -$155,038.00 6 130.17%
Moorhead, City of $471,462.00 $740,147.00 -$268,685.00 7 156.99%
Morrison County $468,336.00 $643,102.00 -$174,766.00 6 137.32%
Mower County $563,636.00 $1,233,468.00 -$669,832.00 18 218.84%
NW MN Mulit-County HRA $1,269,643.00 $1,398,555.00 -$128,912.00 24 110.15%
North Mankato, City of $176,704.00 $143,763.00 $32,941.00 1 81.36%
Olmsted County $1,878,844.00 $3,433,423.00 -$1,554,579.00 29 182.74%
Otter Tail County $839,403.00 $1,649,045.00 -$809,642.00 21 196.45%
Owatonna, City of $334,100.00 $323,887.00 $10,213.00 3 96.94%
Ramsey County (Suburban) $3,282,057.00 $3,536,912.00 -$254,855.00 22 107.77%
Rice County $848,609.00 $687,700.00 $160,909.00 5 81.04%
SE MN Multi-County HRA $1,297,984.00 $1,297,582.00 $402.00 12 99.97%
Sauk Centre, City of $100,000.00 $192,920.00 -$92,920.00 2 192.92%
Sherburne County $1,035,460.00 $1,235,657.00 -$200,197.00 9 119.33%
St. James, City of $100,000.00 $138,000.00 -$38,000.00 3 138.00%
St. Peter, City of $144,441.00 $521,899.00 -$377,458.00 4 361.32%
Stevens County $144,904.00 $337,200.00 -$192,296.00 4 232.71%
Swift County $167,267.00 $274,200.00 -$106,933.00 4 163.93%
Washington County $3,050,118.00 $2,411,571.00 $638,547.00 14 79.06%
Winona, City of $100,000.00 $0.00 $100,000.00 0 0.00%
Wright County $1,424,433.00 $2,390,802.00 -$966,369.00 16 167.84%
Total $46,509,000.00 $44,367,860.00 $2,141,140.00 401 95.40%
The Minnesota City Participation Program (MCPP)
PROGRAM GUIDELINES
Through the MCPP, MHFA sells mortgage revenue bonds on behalf of cities to meet locally identified
housing needs. The proceeds of these bonds provide below-market interest rate home mortgage loans
for low- and moderate-income first-time homebuyers. The MCPP provides cities throughout the state
with a unique opportunity to easily access housing resources to meet the needs of their citizens. (Note:
City means any statutory or home rule charter city, county housing and redevelopment authority, or any
public body which: a) is the housing and redevelopment authority, port authority, or an economic
development authority of a city; and b) is authorized by a statutory or home rule charter city.)
• Statute limits the single-family portion of the housing pool to an initial 31
• Per statute, MHFA uses apopulation-based formula to determine each city's maximum allocation.
The maximum allocation a city receives is determined by its population compared to the total
population of all applicants.
• Cities apply for a specific dollar amount (minimum of $100,000) or request the "maximum
allowable" under the population formula. If the individual allocation as determined by the per capita
formula falls below a level that the city cites as "minimum," MHFA contacts the city to verify
whether the city would like to cancel its application.
• If funds remain in the housing pool on July 15`h, MHFA may request those funds on behalf of cities
that received an initial allocation in the 2005 program year. Statute directs MHFA to provide those
funds to cities in a pool on a first come, first served basis.
• A city must use at least 50% of its 2005 allocation by the program expiration date. If the city uses
less than 50%, its program year 2006 allocation is limited to the amount successfully used in 2005.
However, cities receiving the minimum allocation of $100,000 must use 50% of their initial 2005
allocation to participate in 2006. If a city receiving the minimum allocation fails to use 50% of their
initial 2005 allocation and does not participate in 2006, the city may receive a 2007 allocation
based on the population formula.
• The usage test also applies to self-issuers. Submission of this application requires these cities to
submit loan origination data to MHFA to confirm compliance with this statutory requirement.
• The 2005 MCPP program term will run for eight months. Cities retain the exclusive use of their
individual allotments for asix-month period. Following the expiration of the six- month period,
MHFA collapses all remaining individual allotments into a single, statewide pool available to all
participating cities for the remaining program term.
11 /04
MCPP mortgages must meet the requirements of standard mortgage insuring and guaranteeing
entities, mortgage industry accepted underwriting standards, and state and federal law governing
mortgages provided through the issuance of mortgage revenue bonds.
Borrower household income limits may not exceed 80% of area median income tiered by
household size. Currently, these household (HH) limits are as follows (Note: HUD typically revises
these limits between January and April):
11-County Twin Cities Metropolitan Area
(Anoka, Carver, Chisago, Dakota, Hennepin, Isanti,
Ramsey, Scott, Sherburne, Washington and Wright)
$275,625
$275,625
Dodge County $214,312 $214,312
Goodhue County $202,388 $202,388
Olmsted County $214,312 i $214,312
Wabasha County $214,312 $214,312
Balance of State $189,682 $189,682
• MCPP funds may only be used to finance properties located within the jurisdictional limits of the
participating city or county.
• MHFA offers participating MCPP cities access to MHFA's Homeownership Assistance Fund (HAF),
an interest-free, deferred payment second mortgage loan. HAF provides targeted first-time
homebuyers with downpayment/closing cost assistance of up to $3,000 and monthly payment
assistance of up to $60 (cumulative amount $1,440).
• Participating lenders originate home mortgage loans, which MHFA buys in accordance with the
MHFA Mortgage Program Procedural Manual.
• If a city commits additional resources or subsidies in conjunction with MCPP, a layer of
guidelines may be added as required by the source of the subsidy. INDIVIDUAL CITIES ARE
RESPONSIBLE FOR THE DEFINITION AND ENFORCEMENT OF THESE ADDED GUIDELINES.
• The Minnesota Department of Finance charges a processing fee of $20 for each $100,000 allotment
provided and a 1 % refundable deposit. For cities participating in MCPP, this is due with the
executed MCPP contract returned by each city before the bonds are sold. DO NOT SEND A
11 /04
• The current statutory house price limits are:
CHECK BACK WITH YOUR COMPLETED RFP; WE WILL NOTIFY YOU WHEN TO FORWARD
YOUR FEE.
• MHFA provides marketing support in the form of brochures, press releases and a shared marketing
cost program.
1. Following the application deadline, MHFA reviews all submitted applications.
2. MHFA applies the per capita allocation formula, as specified in statute, to determine the
allocation plan.
3. MHFA completes a mailing notifying cities of allotment amounts, and provides a formal
request for fees. (DO NOT SEND A CHECK BACK WITH YOUR COMPLETED RFP). For
those cities participating in MCPP, the mailing also includes two (2) contracts, which must
be signed and returned.
4. Cities participating in MCPP must execute and return the contract along with the
processing fee (see Part VI. Program Administration) and a 1% application deposit. MHFA
fully refunds the 1% application deposit approximately one month after the closing of the
bond sale.
5. Please note that upon notification of allotment, self-issuing cities must send all fees
directly to the Department of Finance at the following address:
Peter Sausen
Minnesota Department of Finance
Cash and Debt Management Division
400 Centennial Building
658 Cedar Street
St. Paul, MN 55155
11 /04
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