EDSR MEMORANDUM 03-08-1993 - Laserfiche WebLink

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EDA Agenda Memo Page 4 March 3, 1993 • On January 19, 1993, the EDA Finance Committee met to review and discuss changes to the existing loan policy guidelines. Upon their review, Committee members suggested minor changes to the policy which are reflected in a red-lined/black-lined draft that is enclosed in the agenda packet. Rather than suggesting broad changes to the policy, Committee members desired to retain the policy's flexibility. The revised language, however, attempts to ensure that conventional financing has been maximized and that the proposed project may not occur without a supplemental loan from the EDA. In addition, the financing of projects has been prioritized. That is, first priority is given to manufacturing or industrial loans and a lower priority is for retail, service, or other types of uses. Finance Committee members were mailed a copy of the proposed revisions. Follow-up calls were made and Committee members either concurred with the proposed changes or had no comments. Action Requested The EDA is asked to approve the revisions to the EDA Revolving Loan policy guidelines. • 10. MHFA HOME MORTGAGE PROGRAM Again this year, Minnesota cities or EDA's can reserve a block of MHFA funds for first time home buyers. In 1991, the EDA was awarded nearly $800,000 in mortgage funds. In 1992, the award was $1. 1 million. To review the program, MHFA typically sells $40 million to $45 million worth of revenue bonds annually and the proceeds of these bonds are used for first time home buyer mortgages . The program enables first time home buyers to obtain a 30-year mortgage that is below conventional rates . For example, MHFA recently reduced its interest rate on the balance of the 1992 mortgage funds to 6 .65% (APR 7 .592%) . Because this is a public purpose program, it is subject to a maximum qualifying income and a maximum purchase price. With Sherburne County's designation as part of the metro area, we believe the 1993 maximum qualifying income for this program will be $40,800 . It is not known, however, what the maximum purchase prices will be on both existing homes or newly-constructed homes. In 1992 program, "Metro" homes purchased under this program could not exceed $85,000 (existing homes) or $95,000 (new construction) . The EDA may wish to consider another • reservation for 1993 funds. This requires an application submitted to MHFA no later than April 15, 1993 . A deposit fee equal to 1% of the requested allocation must accompany the application. This deposit, however, is refunded upon