Minnesota Housing Finance Agency v. Hatfield

210 N.W.2d 298, 297 Minn. 155, 1973 Minn. LEXIS 1073
CourtSupreme Court of Minnesota
DecidedAugust 17, 1973
Docket44111
StatusPublished
Cited by23 cases

This text of 210 N.W.2d 298 (Minnesota Housing Finance Agency v. Hatfield) is published on Counsel Stack Legal Research, covering Supreme Court of Minnesota primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Minnesota Housing Finance Agency v. Hatfield, 210 N.W.2d 298, 297 Minn. 155, 1973 Minn. LEXIS 1073 (Mich. 1973).

Opinion

Knutson, Chief Justice.

This is an appeal from a summary declaratory judgment involving the constitutionality of L. 1971, c. 702 (Minn. St. c. 462A). The act involves a comprehensive plan “to facilitate the construction and rehabilitation of housing projects for families of low and moderate income by providing for mortgage loans, development loans, and technical assistance to qualified housing sponsors to be used for construction and rehabilitation.” The act creates the Minnesota Housing Finance Agency, hereinafter MHFA, to administer the act and prescribes the powers and duties of such agency. It authorizes the agency to issue bonds and other obligations, provides for the terms and security thereof and the means to pay such bonds and other obligations and interest thereon, and authorizes the agency to grant “seed money” or temporary loans to “nonprofit” sponsors for the planning and commencement of the housing projects contemplated by the act.

The rationale for the statute is stated in Minn. St. 462A.02, subd. 1, as follows:

“It is hereby found and declared that as a result of public actions involving highways, public facilities and urban renewal activities, and as a result of the spread of deteriorated housing and blight to formerly sound urban and rural neighborhoods, and as a result of the inability of private enterprise and investment to produce without public assistance a sufficient supply of decent, safe and sanitary residential dwellings at prices and rentals which persons and families of low and moderate income can afford, there exists within the state of Minnesota a serious *158 shortage of decent, safe and sanitary housing at prices or rentals within the means of persons and families of low and moderate income.”

The act is lengthy, and a summary of its provisions should suffice for the purpose of this decision. Subd. 2 of § 462A.02 declares that this housing shortage “is inimical to the safety, health, morals and welfare of the residents of the state and to the sound growth and development of its communities.” An adequate supply of a variety of housing serving people of all income levels is declared to be essential to.the growth and prosperity of the state. Subds. 3 and 4 state that the present patterns of housing in the state limit the ability of private industry to provide sufficient financing for low and moderate income housing and that Federal housing assistance programs are insufficient to meet the housing needs of low- and moderate-income families. 1 The legislature further finds that sufficient housing financing *159 will not exist without state action to increase the available private and Federal funds.

Subd. 5 declares that the MHFA created by the act will serve a public purpose by promoting the health, welfare, and prosperity of the people. Subd. 6 declares that it is also a valid public purpose to—

“* * * construct housing for low and moderate income families who would otherwise be unable to obtain adequate housing at prices or rentals they could afford and to assist in the elimination of substandard housing conditions and to prevent the recurrence of such conditions by housing persons of varied economic means and a wide range of incomes in the same developments and neighborhoods properly planned and related to public facilities and sources of employment and services to provide the necessary powers to accomplish these public purposes.”

MHFA, the agency created to fulfill these purposes, consists of the state planning director, the state auditor, and three public members appointed by the governor. MHFA is specifically empowered to make, or participate in making, Federally insured construction loans and mortgage loans to sponsors of housing for low- and moderate-income persons and families, but only if it has determined that loans “are not otherwise available, wholly or in part, from private lenders upon equivalent terms and conditions.” Minn. St. 462A.05, subds. 2 and 3. MHFA may also make temporary loans, with or without interest, to nonprofit sponsors of such housing to defray development costs. Minn. St. 462A.05, subd. 5. Finally, the agency may purchase Federally insured securities if the proceeds of the securities will be used for housing for families and persons of low and moderate income. Minn. St. 462A.05, subd. 4.

The agency is empowered to finance its activities by issuing negotiable bonds and notes, the bonds to mature no later than 50 years from date of issue. Minn. St. 462A.06, subd. 12, and 462A. 08. The statute specifically states that these notes, and bonds shall not be a debt on the state and that the face of the *160 bonds shall contain a statement to that effect. Minn. St. 462A.14. These bonds, as well as the property and income of the agency, are exempt from all taxation by the state or any of its subdivisions. Minn. St. 462A.19.

The sum of $250,000 was appropriated to the agency “for the purpose of this act.” L. 1971, c. 702, § 25.

On February 17, 1972, MHFA adopted Resolution 72-4, agreeing to participate in the financing of a housing project under which South High Non-Profit Housing Corporation, hereinafter South High, would construct housing for families and persons of low and moderate income. The financing plan was that Shelter Mortgage Corporation (Shelter) would lend $616,100.90 to South High as a construction loan. Shelter would then sell 90 percent of the loan, and of all additional construction loans, to MHFA. To finance this purchase from Shelter, MHFA was to sell tax-exempt Housing Development Notes. The first $500,000 of these notes were to be sold to the First National Bank of Minneapolis and the remainder were to be sold after advertising for bids. These notes are salable at an interest rate less than the rate for equivalent taxable notes, and Shelter has agreed to pass this saving on to South High so that South High will receive a construction loan on terms otherwise unavailable from private lenders. Under similar provisions, MHFA further agreed to make a long-term Federally insured mortgage loan to South High for up to $4,500,000 under § 236 of the National Housing Act.

In connection with this transaction, defendant, as secretary of the agency, was directed to execute the participation agreement with Shelter; print, execute, and deliver the first $500,000 of Housing Development Notes to the First National Bank of Minneapolis; and advertise for bids on the remainder of the notes. Because of doubts as to the constitutionality of Minn. St. c. 462A, defendant, Rolland F. Hatfield, MHFA’s secretary, refused to take these actions.

The second transaction directly involved in this action was an agreement with Greater Minneapolis Metropolitan Housing Cor *161 poration (Metro), a nonprofit corporation, to participate in “seed money” loans to cover the development costs of sponsors of housing construction for families and persons of low and moderate income. MHFA agreed to purchase from Metro up to 20 percent of the amount loaned to each sponsor, subject to the limits of $4,000 per sponsor and a total participation of $20,000 outstanding at any one time. These loans were to be made only to nonprofit sponsors eligible for Federally insured construction and mortgage loans.

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Bluebook (online)
210 N.W.2d 298, 297 Minn. 155, 1973 Minn. LEXIS 1073, Counsel Stack Legal Research, https://law.counselstack.com/opinion/minnesota-housing-finance-agency-v-hatfield-minn-1973.