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HomeMy WebLinkAboutResolution No. 253-24 - Resolution - Preliminary Approval for Conduit Revenue Bonds Onward Civic Center Drive Phase II Project RESOLUTION Adopting a Resolution Granting Preliminary Approval for Conduit Revenue Bonds for the Onward Civic Center Drive Phase II Project. WHEREAS, the City of Rochester, Minnesota (the “City”) is a home rule charter city and political subdivision duly organized and existing under its Charter and the Constitution and laws of the State of Minnesota. WHEREAS, pursuant to Minnesota Statutes, Chapter 462C, as amended (the “Act”), the City is authorized to carry out the public purposes described in the Act by providing for the issuance of revenue bonds to finance multifamily rental housing developments located within the City. WHEREAS, OI Rochester LIHTC II, LLC, a Minnesota limited liability company (or another entity to be formed by or affiliated with Onward Investors, the “Borrower”), has proposed that the City issue its revenue bonds, pursuant to the Act, in an aggregate principal amount not to exceed $27,371,000, in one or more series, at one time or from time to time (the “Bonds”). WHEREAS, the proceeds of the Bonds are proposed to be loaned by the City to the Borrower to be applied by the Borrower to (i) finance the acquisition, construction and equipping of an approximately 142-unit multifamily rental housing development and functionally related facilities, to be located at approximately 403 5th Avenue NW, in the City (the “Project”); (ii) fund one or more reserve funds to secure the timely payment of the Bonds, if necessary; (iii) pay interest on the Bonds during the construction of the Project, if necessary; and (iv) pay certain costs of issuing the Bonds. WHEREAS, the City may the issue the Bonds only after adopting a housing program providing the information required by Section 462C.03, subdivision 1a of the Act (the “Housing Program”). WHEREAS, prior to the issuance of the Bonds, a public hearing will be held and notice of the public hearing will be published in accordance with the requirements of Section 147(f) of the Internal Revenue Code of 1986, as amended (the “Code”) and Section 462C.04, subdivision 2 of the Act. WHEREAS, under Section 146 of the Code, the Bonds must receive an allocation of the bonding authority of the State of Minnesota. An application for such an allocation must be made pursuant to the requirements of Minnesota Statutes, Chapter 474A, as amended (the “Allocation Act”) and preliminary approval of the issuance of the Bonds by the Council is sufficient to authorize the submission of an application to the State of Minnesota Management and Budget for an allocation of bonding authority with respect to the Bonds to finance the Project. 1 RC110-178-991458.v2 NOW, THEREFOR, BE IT RESOLVED by the Common Council (the “Council”) of the City of Rochester, Minnesota (the “City”), as follows: Section 1. Preliminary Findings. Based on representations made by the Borrower to the City to date, the Council hereby makes the following preliminary findings, determinations, and declarations: (a) The Project consists of the acquisition, construction, and equipping of a multifamily rental housing development designed and intended to be used for rental occupancy. (b) The proceeds of the Bonds will be loaned to the Borrower and the proceeds of the loan will be applied to: (i) the acquisition, construction, and equipping of the Project; (ii) the funding of one or more reserve funds to secure the timely payment of the Bonds, if necessary; (iii) the payment of interest on the Bonds during the construction of the Project, if necessary; and (iv) the payment of the costs of issuing the Bonds. The City will enter into one or more loan agreements (or other revenue agreement) with the Borrower requiring loan repayments from the Borrower in amounts sufficient to repay the loan when due and requiring the Borrower to pay all costs of maintaining and insuring the Project, including taxes thereon. (c) In preliminarily authorizing the issuance of the Bonds and the financing of the acquisition, construction, and equipping of the Project and related costs, the City’s purpose is to further the policies of the Act. (d) The Bonds will be special, limited obligations of the City payable solely from the revenues pledged to the payment thereof under the loan agreement (or other revenue agreement) referred to above, and will not be a general or moral obligation of the City, and will not be secured by or payable from revenues derived from any exercise of the taxing powers of the City. Section 2. Public Hearing. The Council will conduct a public hearing on the Housing Program, the Project, and the issuance of the Bonds by the City at a regular or special meeting on a date to be determined by City staff for which proper notice may be given as provided below. Notice of such hearing (the “Public Notice”) will be published as required by Section 462C.04, subdivision 2 of the Act and Section 147(f) of the Code. City staff is hereby authorized to publish the Public Notice, in substantially the form attached hereto as EXHIBIT A, in the Post Bulletin, a newspaper of general circulation in the City, as required by Section 462C.04 of the Act. At the public hearing reasonable opportunity will be provided for interested individuals to express their views, both orally and in writing, on the Project, the Housing Program, and the proposed issuance of the Bonds. Section 3. Housing Program. Kennedy & Graven, Chartered, acting as bond counsel with respect to the Project and the Bonds (“Bond Counsel”) shall prepare and 2 RC110-178-991458.v2 submit to the City a draft Housing Program to authorize the issuance by the City of up to approximately $27,371,000 in revenue bonds in one or more series, at one time or from time to time, to finance the acquisition, construction, and equipping of the Project by the Borrower. Section 4. Submission of an Application for an Allocation of Bonding Authority. Under Section 146 of the Code, the Bonds must receive an allocation of the bonding authority of the State of Minnesota. The Council hereby authorizes the submission of an application for allocation of bonding authority pursuant to Section 146 of the Code and the Allocation Act in accordance with the requirements of the Allocation Act. The Mayor of the City, the City Administrator, the Finance Director of the City, and Kennedy & Graven, Chartered, acting as bond counsel with respect to the Project and the Bonds (“Bond Counsel”), are hereby authorized to take all actions, in cooperation with the Borrower, as are necessary to submit an application for an allocation of bonding authority to the office of Minnesota Management & Budget. Section 5. Preliminary Approval. The Council hereby provides preliminary approval to the issuance of the Bonds in the approximate aggregate principal amount of up to $27,371,000 to finance all or a portion of the costs of the Project pursuant to the Housing Program of the City, subject to: (i) a public hearing as required by the Act and Section 147(f) of the Code; (ii) receipt of an allocation of bonding authority from the office of Minnesota Management & Budget; (iii) final approval by the Council following the preparation of bond documents; and (iv) final determination by the Council that the financing of the Project and the issuance of the Bonds are in the best interests of the City. Section 6. Reimbursement of Costs under the Code. 6.01. The United States Department of the Treasury has promulgated regulations governing the use of the proceeds of tax-exempt bonds, all or a portion of which are to be used to reimburse the City or the Borrower for project expenditures paid prior to the date of issuance of such bonds. Those regulations (Treasury Regulations, Section 1.150- 2) (the “Regulations”) require that the City adopt a statement of official intent to reimburse an original expenditure not later than 60 days after payment of the original expenditure. The Regulations also generally require that the bonds be issued and the reimbursement allocation made from the proceeds of the bonds occur within 18 months after the later of: (i) the date the expenditure is paid; or (ii) the date the project is placed in service or abandoned, but in no event more than 3 years after the date the expenditure is paid. The Regulations generally permit reimbursement of capital expenditures and costs of issuance of the Bonds. 6.02. To the extent any portion of the proceeds of the Bonds will be applied to expenditures with respect to the Project, the City reasonably expects to reimburse the Borrower for the expenditures made for costs of the Project from the proceeds of the Bonds after the date of payment of all or a portion of such expenditures. All reimbursed expenditures shall be capital expenditures, costs of issuance of the Bonds, or other 3 RC110-178-991458.v2 expenditures eligible for reimbursement under Section 1.150-2(d)(3) of the Regulations and also qualifying expenditures under the Act. Based on representations by the Borrower, other than (i) expenditures to be paid or reimbursed from sources other than the Bonds, (ii) expenditures permitted to be reimbursed under prior regulations pursuant to the transitional provision contained in Section 1.150-2(j)(2)(i)(B) of the Regulations, (iii) expenditures constituting preliminary expenditures within the meaning of Section 1.150-2(f)(2) of the Regulations, or (iv) expenditures in a “de minimis” amount (as defined in Section 1.150-2(f)(1) of the Regulations), no expenditures with respect to the Project to be reimbursed with the proceeds of the Bonds have been made by the Borrower more than 60 days before the date of adoption of this resolution of the City. 6.03. Based on representations by the Borrower, as of the date hereof, there are no funds of the Borrower reserved, allocated on a long term-basis, or otherwise set aside (or reasonably expected to be reserved, allocated on a long-term basis, or otherwise set aside) to provide permanent financing for the expenditures related to the Project to be financed from proceeds of the Bonds, other than pursuant to the issuance of the Bonds. This resolution, therefore, is determined to be consistent with the budgetary and financial circumstances of the Borrower as they exist or are reasonably foreseeable on the date hereof. Section 7. Costs. The Borrower will pay the administrative fees of the City and pay, or, upon demand, reimburse the City for payment of, any and all costs incurred by the City in connection with the Project and the issuance of the Bonds, whether or not the Bonds are issued. Section 8. Commitment Conditional. The adoption of this resolution does not constitute a guarantee or a firm commitment that the City will issue the Bonds as requested by the Borrower. If, as a result of information made available to or obtained by the City during its review of the Project, it appears that the Project or the issuance of Bonds to finance the costs thereof is not in the public interest or is inconsistent with the purposes of the Act, the City reserves the right to decline to give final approval to the issuance of the Bonds. The City also retains the right, in its sole discretion, to withdraw from participation and accordingly not issue the Bonds should the Council, at any time prior to the issuance thereof, determine that it is in the best interests of the City not to issue the Bonds or should the parties to the transaction be unable to reach agreement as to the terms and conditions of any of the documents for the transaction. Section 9. Effective Date. This resolution shall be in full force and effect from and after its passage. 4 RC110-178-991458.v2 PASSED AND ADOPTED BY THE COMMON COUNCIL OF THE CITY OF ROCHESTER, MINNESOTA, THIS __________ DAY OF _______________, 2024. ___________________________________ PRESIDENT OF SAID COMMON COUNCIL ATTEST: __________________________ CITY CLERK APPROVED THIS _____ DAY OF ______________________, 2024. ___________________________________ MAYOR OF SAID CITY (Seal of the City of Rochester, Minnesota) 5 RC110-178-991458.v2 EXHIBIT A CITY OF ROCHESTER NOTICE OF PUBLIC HEARING TO CONSIDER A HOUSING PROGRAM FOR THE ISSUANCE OF COUDUIT REVENUE BONDS TO FINANCE THE ACQUISITION, CONSTRUCTION, AND EQUIPPING OF A MULTIFAMILY RENTAL HOUSING DEVELOPMENT IN THE CITY (ONWARD CIVIC CENTER DRIVE PHASE II PROJECT) NOTICE IS HEREBY GIVEN that the Common Council (the “Council”) of the City of Rochester, Minnesota (the “City”) will hold a public hearing on Monday, ________, 2025, at or after 6:00 p.m. in the Council Chambers in the City Hall at 201 Fourth Street SE Street in the City, to consider a proposal by OI Rochester LIHTC II, LLC, a Minnesota limited liability company (or another entity to be formed by or affiliated with Onward Investors, the “Borrower”) that the City approve a housing program and authorize the issuance of its conduit revenue bonds or other obligations in one or more series, at one time or from time to time (the “Bonds”) pursuant to Minnesota Statutes, Chapter 462C, as amended (the “Act”), for the purposes of (i) financing the acquisition, construction and equipping of an approximately 142-unit multifamily rental housing development and functionally related facilities, to be located at approximately 403 5th Avenue NW, in the City (the “Project”); (ii) funding one or more reserve funds to secure the timely payment of the Bonds, if necessary; (iii) paying interest on the Bonds during the construction of the Project, if necessary; and (iv) paying the costs of issuing the Bonds. The Borrower will own and operate the Project. The aggregate principal amount of the proposed Bonds is estimated not to exceed $27,371,000. Following the public hearing, the Council will consider a resolution approving a housing program prepared in accordance with the requirements of the Act and granting approval to the issuance of the Bonds. A copy of the housing program will be on file at City Hall, Monday through Friday during the City’s normal business hours until the date of the public hearing. The Bonds if and when issued will be special, limited obligations of the City, and the Bonds and interest thereon will be payable solely from the revenues and assets pledged to the payment thereof. No holder of any Bond will have the right to compel any exercise of the taxing power of the City to pay the Bonds or the interest thereon, nor to enforce payment against any property of the City except revenues and assets payable by the Borrower to the City and pledged to the payment of the Bonds. Before issuing the Bonds, the City will enter into an agreement with the Borrower, whereby the Borrower will be obligated to make payments at least sufficient at all times to pay the principal of and interest on the Bonds when due. At the time and place fixed for the public hearing, the Council will give all persons A-1 RC110-178-991458.v2 who appear at the hearing or submit comments in writing prior to the hearing, an opportunity to express their views with respect to the proposal. Interested persons may file written comments respecting the proposal with the City Clerk (507-328-2900) at or prior to said public hearing. Interested persons may view and participate in the meeting both in-person and virtually. ATTENDING AND VIEWING THE MEETING: Cable Television. View the meeting on cable TV on Channels 180 or 188 (Spectrum). Livestream. Livestream the meeting by visiting www.rochestermn.gov/agendas and clicking the "video/audio" link on the right side of the screen. The video/audio link will not appear until the meeting has started. Watch and Listen via Zoom. https://bit.ly/2OGnZYB Telephone in and Listen via Zoom. 1-312-626-6799. The Webinar ID is 912 4541 8192 Passcode: 162027 In-Person. Council/Board Chambers at Government Center, 151 4th Street SE, in the City. BY ORDER OF THE COMMON COUNCIL OF THE CITY OF ROCHESTER, MINNESOTA /s/ Kelly Geistler City Clerk City of Rochester, Minnesota A-2 RC110-178-991458.v2