07-01-80 agendaCITY OF RICHFIELD, MINNESOTA
Office of City Manager
Council Letter No. 233
Agenda July 1, 1980
The Honorable Mayor
and
Members of the City Council
City of Richfield
Council Members:
Subject: Housing Mortgage Revenue Bonds
Knutson Project
As we transmitted to you last Friday, via telephone, there
is at least a possibility that the House and Senate of the U.S.
Congress will be taking action in the very near future concern-
ing amendments to the housing mortgage revenue bond financing
law. The particular law has been under review for the past year
and three months by both the House and the Senate. Up until
April 25, 1979, many communities were making use of the housing
mortgage revenue bonds funds as a vehicle for providing low in-
terest loans to its citizens both in single and multiple family
dwelling units. The financial mechanism was essentially frozen
subsequent to April 25, 1979 as a result of introduction of leg-
islation by Representative Ullman of the House Ways and Means
Committee.
Sl.ibsequently, the House Ways and Means Committee and the full
house reported out a bill which would severely restrict the use
of housing revenue bonds in cities like Richfield.
Senator Ullman's bill would allow the housing mortgage revenue
bond financing vehicle to be utilized for the project we have
discussed informally to relocate south of 66th Street between
Lake Shore Drive and Graham Avenue. This is the project which is
currently being put together by the Knutson Company. The Senate
has not yet made determination as to what they feel should be put
into legislation governing the housing revenue mortgage bonds.
However, on Friday afternoon, the city attorney's office monitored
the telex system which put forth the following information:
"Congressional sources said senate finance committee Chairman
Russell Long D-LA., has been discussing changes in the transition
rules for mortgage revenue bonds with House Ways and Means Conun-
ittee Chairman Al Ullman D-Ore., indicating some movement on ttie
stalled issue. There was no indication of any talk of permanent
rules for issuing mortgage bonds, the sources said. Long is
drafting a transition rule to allow mortgage bonds on which official
action was taken before July 2 to be issued not later than November
1, 1980, the sources said."
r ~ Council Letter No. 233 -2- July 1, 1980
Since we have no knowledge of what types of interim regula-
tions Senator Long is proposing, it seems that it behooves us to
take official action protecting our ability to issue housing
mortgage revenue bonds before duly.:?. Passing.a resolution indica-
ting our desire to utilize the financing vehicle in no way commits
the council to approving the project. In addition, it does not
commit the HRA to approval of the project.
It is my hope that Knutson Company will be in a position by
July 21 to unveil their project to the HRA, city council, and
other members of the public. It was our intent to request the
HRA to allow Knutson Company to do a market analysis to determine
the specific needs for such a project in Richfield. At the same
time we were going to request that the city council make prelimin-
ary commitments to authorizing financing under housing financing
mortgage revenue bonds. Both actions would be preliminary and
allow for public input over the next few months until such time
as adequate response is received to allow the HRA and city council
to make a final decision.
However, due to the uncertainty of Senator Long's proposals,
I would like to request that the city council meet on July 1
at 5:30 p.m. to take action on this matter. The resolution that
we would suggest for council action is enclosed with this letter.
The city attorney's office will be represented at the meeting in
order to provide any additional data which the city council may
require.
Respectfully submitted,
i
Karl Nollenberger
City Manager
CC: City Attorney
Director Community Development
HRA Specialist
Director Administrative Services
HRA Members
RESOLUTION N0.
RESOLUTION GIVING PRELIr1INARY
APPROVAL TO TIDE PROPOSED MULTI-FAr1ILY
HOUSING DEVELOPMENT MORTGAGE FINANCE PROGRAM
BE IT RESOLVED, by the City Council of the City of Richfield,
Minnesota:
1. Findings
1.1 Minnesota Statutes, Section 462C.O1 to 46X .08 (1979
Supp.) (the "Act"), authorizes cities to issue revenue bonds
or other obligations to plan and administer programs of
making or purchasing mortgage loans to finance the construc-
tion and acqusition of multi-family housing developments (as
defined in the Act), including construction financing and
the financing of the acquisition of dwelling units and
interests in common facilities by persons to whom such units
and facilities may be sold as contemplated in Minnesota
Statutes, Chapter 515.
1.2 Prior to issuing its bonds or other obliations for the
Program the City is required by the Act to prepare and adopt
a housing plan (the "Plan"), and the City staff has begun
work on the preparation of the Plan in anticipation of the
issuance of such bonds or obligations by the City.
1.3 The City Council finds that it is necessary and desir-
able for the sound management of the City and the achieve-
ment of its housing and redevelopment goals to utilize the
authority granted by the Act and to provide for the issuance
and sale of bonds or other obligations (the "Bonds") to
finance a program as further described below.
_ _1.4 The City staff has held preliminary discussions with
Knutson Company involving a proposal for the construction of
a multi-family housing development for persons 62 years of
age and over, to be owned and operated by a cooperative and
to be located at approximately 66tH street and Graham Avenue
in the Lyndale-ltub-Nicollet Redevelopment area (LHN) (the
"Program") at a cost of approximately $10,000,000.
1.5 The City Council finds that it is desirable to retain
the firm of Evenson-Dodge, Inc. of Minneapolis, Minnesota,
financial consultants, to assist the City in the development
of the Plan and Program and the marketing of the Bonds in
accordance with the Act, and to retain the law firm of
LeI'evere, Lefler, Pearson, O'Brien & Drawz as Bond Counsel
in connection with the issuance and legal approval of the
Borrds .
,,. .
2. Directions: Authorizations
2.1 The City Manager is authorized and directed to develop
and submit the Plan to the City Council for its review and
approval. The Plan shall include and identify the Program
and make such recommendation as are necessary in order to
permit the issuance of the Bonds by the City.
2.2 Evenson-Dodge, lnc., and LeFevere, Lefler, Pearson,
O'Brien & Drawz are authorized and directed to assist the
City Staff in preparing the Plan and to work with Knutson
Company in the further deliveration of the Program to con-
form with the Act and LHN goals.
2.3 The City Council intends to issue the Bonds in an
aggregate principal amount of approximately $10,000,000 to
finance the Program, provided that that amount may be
increased by any amount by which construction and permanent
notes and bonds may be outstanding at the time of issuance
of the Bonds"."
2.4 The issuance of the Bonds pursuant to the Plan"and
Program is subject in all respects to the ultimate approval
of the City of all agreements and other documents reasonably
necessary to complete such issuance.
2.5 This Resolution is effective immediately. ':
Mayor
ATTEST:
City Clerk
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