12-13-1978 Council Agenda - Laserfiche WebLink

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REVENUE BONDS FOR HOUSING Today, in Minnesota, only five cities have special legislation which will allow the issuance of Housing Revenue Bonds designed to provide home mortgage money at reduced cost to borrowers. All five are either providing this service to their community now, or developing programs to go into operation in the near future. There are literally dozens of reasons why this program is beneficial to the cities, the home buyers and the lenders who serve the community. A basic problem has been that the program has up to now been restricted to five cities. Recently, however, a plan has emerged where with the right circumstances, communities such as your own that are growing and need the assurance that mortgage money will continue to be made available to finance buyers of new homes, may enact a resolution authorizing the issuance of Municipal Revenue Bonds which will be secured by a pool of first mortgages on new homes in the sponsoring builder's development. Juran F Moody, Inc., has been instrumental in developing this plan and has had its plan adopted by several Minnesota communities recently. A key element of the program is that a capable developer, working with the community, be able and willing to produce a relatively large scale housing sub- division in the city. The project would specifically include owner occupied single - family homes and may include two- through four - family owner occupied living units such as doubles or quads. EVERYONE BENEFITS The City benefits from the addition of new housing and the resulting increases in tax and revenue base the project brings with it. The additional real estate tax revenue can be used to help defray some of the large general obligation debt of the city incurred in financing city improvements. The real estate mortgage credit crunch we are living through today may cause new development to be post- poned indefinately until the supply of mortgage loan money becomes more plentiful and interest rates become more reasonable. This could be a serious financial problem to your community if you have relied at all on continual growth to finance improvements. The home buyer certainly benefits from the program because: 1. A new source of low cost mortgage money is made available. 2. The interest rate he pays will be up to 2% less than he will pay in the conventional mortgage loan market. 3. The monthly payments will be lower and will allow a buyer to purchase more home for his money than he could otherwise. 4. For lower income people, it may provide the only way for them to afford 0075