HomeMy WebLinkAboutResolution No. 085-26 - Resolution - The Commons at Bear Creek
RESOLUTION
Adopting a Housing Program Pursuant to Minnesota Statutes, Chapter 462C;
Authorizing the Issuance, Sale, and Delivery of its Conduit Multifamily Housing
Revenue Bonds and Related Documents Relating to the Commons at Bear Creek;
and Granting Approval for Certain Other Actions with Respect Thereto
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; and
WHEREAS, pursuant to Minnesota Statutes, Chapter 462C and 474A, as amended
(collectively, the “Act”), the City is authorized to carry out the public purposes described
in the Act by issuing revenue bonds and notes or other obligations to finance or refinance
multifamily housing developments located within the City, and as a condition to the
issuance of such revenue obligations, adopt a housing program providing the information
required by Section 462C.03, subdivision 1a, of the Act; and
WHEREAS, in the issuance of the City’s revenue obligations and in the making of a loan
to finance or refinance a multifamily housing development, the City may exercise, within
its corporate limits, any of the powers that the Minnesota Housing Finance Agency may
exercise under Minnesota Statutes, Chapter 462A, as amended, including without
limitation under the provisions of Minnesota Statutes, Chapter 475, as amended; and
WHEREAS, Rochester I Limited Partnership, a Minnesota limited partnership
(“Borrower”), has requested that the City issue conduit multifamily housing revenue
bonds, pursuant to the Act, in an aggregate principal amount not to exceed $27,155,000,
in one or more series, at one time or from time to time (the “Bonds”) and lend the proceeds
thereof to the Borrower to (i) finance the acquisition, construction and equipping of an
approximately 149-unit multifamily rental housing development and functionally related
facilities, including approximately 149 garage parking stalls, a fitness center, and a club
room, to be located at approximately 602 4th Street SE, 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
the costs of issuing the Bonds; and
WHEREAS, on December 9, 2024, the City Council adopted resolution 254-24 (the
“Preliminary Resolution”) under the terms of which the City (i) granted preliminary
approval to the issuance of one or more series of multifamily housing revenue bonds or
other obligations (the “Obligations”) in an aggregate principal amount not to exceed
$27,400,000, pursuant to the Housing Act to finance the Project; (ii) authorized the
submission of an application to the Minnesota Department of Management and Budget
(“MMB”) for an allocation of bonding authority under Minnesota Statutes, Chapter 474A,
as amended (the “Allocation Act”); (iii) authorized the preparation of a housing program
with respect to the Project in accordance with the requirements of the Act and submission
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of the housing program to the Metropolitan Council for its review and comment; and (iv)
authorized a public hearing to be conducted by the City Council on the Project; and
WHEREAS, the Preliminary Resolution constitutes a reimbursement resolution and an
official intent of the City to reimburse expenditures with respect to the Project from the
proceeds of tax-exempt revenue obligations in accordance with the provisions of Treasury
Regulations, Section 1.150-2; and
WHEREAS, the City received Certificate of Allocation No. 528, dated January 12, 2026,
from Minnesota Management and Budget allocating volume cap bonding authority to the
City in the amount of $27,155,000 for the Project; and
WHEREAS, the City has prepared a housing program providing the information required
by Section 462C.03, subdivision 1a of the Act (the “Housing Program”) regarding the
issuance by the City of the Bonds in the maximum principal amount of $27,155,000 and
the loan of the proceeds thereof to the Borrower to finance the acquisition, construction
and equipping of the Project; and
WHEREAS, a notice of public hearing (the “Public Notice”) was published in accordance
with the Act and Section 147(f) of the Internal Revenue Code of 1986, as amended (the
“Code”), with respect to: (i) the public hearing required under the Code; (ii) the public
hearing required under Section 462C.04, subdivision 2, of the Act; (iii) the Housing
Program; and (iv) approval of the issuance of the Bonds and on this same date, the
Common Council conducted a public hearing on the date hereof at which a reasonable
opportunity was provided for interested individuals to express their views, both orally and
in writing; and
WHEREAS, the Bonds will be issued pursuant to this Resolution and the Bonds and the
interest on the Bonds: (i) shall be payable solely from the revenues pledged therefor
under the Loan Agreement, the Indenture, the Funding Loan Agreement and the Project
Loan Agreement (all as hereinafter defined) and additional sources of revenue provided
by or on behalf of the Borrower; (ii) shall not constitute a debt of the City within the
meaning of any constitutional or statutory limitation; (iii) shall not constitute nor give rise
to a pecuniary liability of the City or a charge against its general credit or taxing powers;
(iv) shall not constitute a charge, lien, or encumbrance, legal or equitable, upon any
property of the City other than the City’s interest in the Loan Agreement and the Project
Loan Agreement; and (v) shall not constitute a general or moral obligation of the City; and
NOW, THEREFORE, BE IT RESOLVED by the Common Council (the “Council”) of the
City of Rochester, Minnesota (the “City”), as follows:
1. Findings. The City acknowledges, finds, determines, and declares that the
issuance of the Bonds is authorized by the Act and is consistent with the purposes of the
Act and that the issuance of the Bonds, and the other actions of the City under the
Indenture, the Loan Agreement, the Project Loan Agreement, the Funding Loan
Agreement, and this resolution constitute a public purpose and are in the interests of the
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City. The Project constitutes a “qualified residential rental project” within the meaning of
Section 142(d) of the Code, and a “multifamily housing development” authorized by the
Act, and furthers the purposes of the Act. In authorizing the issuance of the Bonds for
the financing and refinancing of the Project and the related costs, the City’s purpose is
and the effect thereof will be to promote the public welfare of the City and its residents by
providing or preserving affordable multifamily housing developments for low or moderate
income residents of the City and otherwise furthering the purposes and policies of the
Act.
2. Financing Structure. The Borrower has requested that the City issue, sell,
and deliver the Bonds pursuant to a Trust Indenture, dated on or after June 1, 2026 (the
“Indenture”), between the Issuer and U.S. Bank Trust Company, National Association, a
national banking association (the “Trustee”), as the Multifamily Housing Revenue Bonds
(The Commons at Bear Creek), Series 2026 to be purchased by Colliers Securities LLC
(the “Underwriter”) pursuant to the Bond Purchase Agreement, dated on or after the date
this Resolution is approved (the “Purchase Contract”), among the Underwriter, the City,
and the Borrower and the proceeds derived from the sale of the Bonds will be loaned by
the City to the Borrower to finance a portion of the cost of the Project pursuant to the
terms of a Loan Agreement, dated on or after June 1, 2026, by and between the Borrower
and the City (the “Loan Agreement”). Pursuant to the Loan Agreement the City will loan
the proceeds of the Bonds to the Borrower.
The payments to be made by the Borrower under the Loan Agreement are fixed
so as to produce revenue sufficient to pay the principal of, premium, if any, and interest
on the Bonds when due. When executed, the right, title and interest of the City in, to and
under, among other things, the Loan Agreement (except as therein provided) will be
assigned to the Trustee pursuant to the Indenture. The Borrower’s repayment obligations
under the Loan Agreement will be evidenced by a Promissory Note delivered by the
Borrower to the Issuer (the “Promissory Note”), which will be endorsed by the Issuer to
the Trustee. The Trustee is hereby appointed as the Paying Agent and the Bond Registrar
for the Bonds.
3. Conversion. Upon the satisfaction of certain conditions set forth in the
Indenture and a Forward Commitment Agreement, dated on or after June 1, 2026 (the
“Forward Commitment Agreement”), to be entered into between the City, the Borrower,
and Citibank N.A., a national banking association (the “Mortgage Lender”), as the
construction-to-permanent mortgage lender, (i) the Bonds shall be subject to mandatory
tender, (ii) the purchase price of the Bonds shall be paid with amounts on deposit in an
account with the Trustee on behalf of the Mortgage Lender, and (iii) the Bonds shall be
converted (the “Conversion”) to a Multifamily Housing Revenue Note (The Commons at
Bear Creek), Series 2026 (the “Governmental Note”) to be purchased by the Mortgage
Lender. In connection with Conversion, the Funding Loan Agreement (the “Funding Loan
Agreement”), by and between the City and the Mortgage Lender will be executed and will
replace and supersede the Indenture and the Project Loan Agreement (the “Project Loan
Agreement”) by and between the City and the Borrower will be executed and will replace
and supersede the Loan Agreement. Additionally, at Conversion, the Borrower will issue
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an Amended and Restated Multifamily Note (Tax Exempt) (the “Project Note”) to the City
to replace the Promissory Note and secure its obligations under the Project Loan
Agreement, to be endorsed by the City to the Mortgage Lender.
4. Authorization of Bonds. For the purposes set forth herein, there is hereby
authorized the issuance, sale, and delivery of the Bonds in one or more series in a
principal amount not to exceed $27,155,000. The Bonds shall bear interest at the rates,
shall be designated, shall be numbered, shall be dated, shall mature, shall be in the
aggregate principal amount, shall be subject to redemption prior to maturity, shall be in
such form, and shall have such other terms, details, and provisions as are prescribed in
the Indenture, in substantially the form now on file with the City, with any necessary and
appropriate variations, omissions, and insertions (including changes to the aggregate
principal amount of the Bonds, the stated maturity of the Bonds, the interest rate or rates
on the Bonds and the terms of redemption of the Bonds) as are approved as evidenced
by the execution thereof as provided in Sections 7 and 15. The City hereby authorizes
the Bonds to be issued, in whole or in part, as “tax-exempt bonds,” the interest on which
is excludable from gross income for federal and State of Minnesota income tax purposes;
provided that, if necessary, certain Bonds may be issued as taxable obligations.
The Council hereby authorizes and directs the execution of the Bonds in
accordance with the terms of the Indenture, and hereby provides that the Indenture shall
provide the terms and conditions, covenants, rights, obligations, duties, and agreements
of the owners of the Bonds, the City, and the Trustee as set forth therein. The Trustee is
hereby appointed as the Paying Agent and the Bond Registrar for the Bonds.
All of the provisions of the Bonds, when executed as authorized herein, shall be
deemed to be a part of this Resolution as fully and to the same extent as if incorporated
verbatim herein and shall be in full force and effect from the date of execution and delivery
thereof. The Bonds shall be substantially in the form in the Indenture on file with the City,
which form is hereby approved, with such necessary and appropriate variations,
omissions, and insertions (including but not limited to changes to the aggregate principal
amount of the Bonds, the stated maturities of the Bonds, the interest rates on the Bonds
and the terms of redemption of the Bonds) as the Mayor and the City Clerk (the “City
Officials”), in their discretion, shall determine. The execution of the Bonds with the manual
or facsimile signatures of the City Officials and the delivery of the Bonds by the City shall
be conclusive evidence of such determination.
The Council further hereby authorizes and directs the Conversion of the Bonds to
the Governmental Note in accordance with the terms of the Funding Loan Agreement,
and hereby provides that the Funding Loan Agreement shall provide the terms and
conditions, covenants, rights, obligations, duties, and agreements of the owner(s) of the
Governmental Note, the City, and the Mortgage Lender as set forth therein.
Upon Conversion, the Governmental Note shall bear interest at the rates, shall be
designated, shall be numbered, shall be dated, shall mature, shall be in the aggregate
principal amount, shall be subject to redemption prior to maturity, shall be in such form,
and shall have such other terms, details, and provisions as are prescribed in the Funding
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Loan Agreement, in substantially the form now on file with the City, with necessary and
appropriate variations, omissions, and insertions (including but not limited to changes to
the aggregate principal amount of the Governmental Note, the stated maturity of the
Governmental Note, the interest rates on the Governmental Note and the terms of
redemption of the Governmental Note) as are approved as evidenced by the execution
thereof as provided in Section 7. Pursuant to the Funding Loan Agreement, the City will
assign its rights to the basic payments and certain other rights and interests under the
Project Loan Agreement, the Project Loan, the Project Note, and certain moneys and
securities held by the Mortgage Lender in the funds and accounts established under the
Funding Loan Agreement to the Mortgage Lender.
5. Limitation of Liability. The Bonds and the Governmental Note shall be
special, limited revenue obligations of the City payable solely from the revenues provided
by the Borrower pursuant to the Loan Agreement, the Project Loan Agreement, and other
funds pledged pursuant to the applicable Financing Documents; the City does not pledge
its general credit or taxing powers or any funds of the City to the payment of the Bonds
or the Governmental Note.
No provision, covenant or agreement contained in the aforementioned documents,
the Bonds, the Governmental Note or in any other document relating to the Bonds or the
Governmental Note, and no obligation therein or herein imposed upon the City or the
breach thereof, shall constitute or give rise to a general or moral obligation of the City or
any pecuniary liability of the City or any charge upon its general credit or taxing powers.
In making the agreements, provisions, covenants, and representations set forth in such
documents, the City has not obligated itself to pay or remit any funds or revenues, other
than funds and revenues derived from the Loan Agreement and the Project Loan
Agreement which are to be applied to the payment of the Bonds and the Governmental
Note, as provided therein and as assigned to the Trustee or the Mortgage Lender, under
the Indenture or the Funding Loan Agreement, respectively.
6. Approval of Housing Program; Compliance with Certain Rental and
Occupancy Restrictions as to the Project. The Housing Program is hereby adopted,
ratified, and approved in all respects. The City Clerk is hereby authorized to do all other
things and take all other actions as may be necessary or appropriate to carry out the
Housing Program in accordance with the Act and any other applicable laws and
regulations. To ensure compliance with certain rental and occupancy restrictions imposed
by the Act and Section 142(d) of the Code and to ensure compliance with certain
restrictions imposed by the City, the Project will be subject to a Regulatory Agreement,
dated as of or after June 1, 2026 (the “Regulatory Agreement”), among the City, the
Borrower, and the Trustee.
7. Approval of Financing Documents; Execution. The City Officials are hereby
authorized and directed to execute and deliver the Indenture, the Loan Agreement, the
Bonds, the Purchase Contract, the Regulatory Agreement, the Project Loan Agreement,
the Funding Loan Agreement, the Governmental Note, and any consents or such other
documents and certificates as are necessary or appropriate in connection with the
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issuance, sale, and delivery of the Bonds, including without limitation various certificates
of the City, the Information Return for Tax-Exempt Private Activity Bond Issues, Form
8038, a letter prepared in accordance with Section 42(m)(2)(D) of the Code evidencing
the determination of the City, as the issuer of the Bonds, based on conclusions of a third
party analyst, that the amount of tax credits to be allocated to the Project will not exceed
the amount necessary for the financial feasibility of the Project and its viability as a
qualified low-income housing project, a certificate as to arbitrage and rebate and similar
documents (collectively, the “Financing Documents”).
All of the provisions of the Financing Documents, when executed and delivered as
authorized herein, shall be deemed to be a part of this resolution as fully and to the same
extent as if incorporated verbatim herein and shall be in full force and effect from the date
of execution and delivery thereof. The Financing Documents shall be substantially in the
forms currently on file with the City, which are hereby approved, with such necessary and
appropriate variations, omissions and insertions as do not materially change the
substance thereof, and as the City Officials, in their discretion, shall determine, and the
execution thereof by the City Officials shall be conclusive evidence of such determination.
The City Officials are authorized and directed to execute any additional documents
deemed necessary to carry out the intentions of this resolution and to complete the
financing described herein, so long as City staff and legal counsel approve such
documents.
8. Bond Opinion. The City hereby authorizes Kutak Rock LLP, as bond
counsel, to prepare, execute, and deliver its approving legal opinions with respect to the
Bonds.
9. Official Statement. The City has not participated in the preparation of the
Official Statement relating to the offer and sale of the Bonds (the “Official Statement”),
and has made no independent investigation with respect to the information contained
therein, including the appendices thereto, and the City assumes no responsibility for the
sufficiency, accuracy, or completeness of such information, except for the information
under the captions “THE ISSUER” and “ABSENCE OF LITIGATION—The Issuer.”
Subject to the foregoing, the City hereby consents to the distribution and the use by the
Underwriter of the Official Statement in connection with the offer and sale of the Bonds.
The Official Statement is the sole material consented to by the City for use in connection
with the offer and sale of the Bonds.
10. Council Authority; No Personal Liability. Except as otherwise provided in
this resolution, all rights, powers, and privileges conferred and duties and liabilities
imposed upon the City or the Common Council by the provisions of this resolution or of
the aforementioned documents shall be exercised or performed by the City or by such
members of the Common Council, or such officers, board, body or agency thereof as may
be required or authorized by law to exercise such powers and to perform such duties.
No covenant, stipulation, obligation or agreement herein contained or contained in
the aforementioned documents shall be deemed to be a covenant, stipulation, obligation
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or agreement of any member of the Common Council, or any officer, agent or employee
of the City in that person’s individual capacity, and neither the Common Council nor any
officer or employee executing the Bonds or the Governmental Note shall be personally
liable on the Bonds or the Governmental Note or be subject to any personal liability or
accountability by reason of the issuance thereof.
Except as otherwise expressly provided herein, nothing in this resolution or in the
aforementioned documents expressed or implied, is intended or shall be construed to
confer upon any person or firm or corporation, other than the City, or any holder of the
Bonds or the Governmental Note issued under the provisions of this resolution, any right,
remedy or claim, legal or equitable, under and by reason of this resolution or any
provisions hereof, this resolution, the aforementioned documents, and all of their
provisions being intended to be and being for the sole and exclusive benefit of the City,
and any holder from time to time of the Bonds or the Governmental Note issued under
the provisions of this resolution.
11. Severability. In case any one or more of the provisions of this Resolution,
other than the provisions contained Section 5 and 10, or of the aforementioned
documents, or of the Bonds or the Governmental Note issued hereunder shall for any
reason be held to be illegal or invalid, such illegality or invalidity shall not affect any other
provision of this resolution, or of the aforementioned documents, or of the Bonds or the
Governmental Note, but this Resolution, the aforementioned documents, and the Bonds
or the Governmental Note shall be construed and endorsed as if such illegal or invalid
provisions had not been contained therein.
12. Validity. The Bonds, and subsequently the Governmental Note (with the
Bonds, the “Obligations”), when executed and delivered, shall contain a recital that they
are issued pursuant to the Act, and such recital shall be conclusive evidence of the validity
of the Obligations and the regularity of the issuance thereof, and that all acts, conditions,
and things required by the laws of the State of Minnesota relating to the adoption of this
resolution, to the issuance of the Obligations, and to the execution of the aforementioned
documents to happen, exist, and be performed precedent to the execution of the
aforementioned documents have happened, exist, and have been performed as so
required by law.
13. Authorization; Direction. The officers of the City, bond counsel, other
attorneys, engineers, and other agents or employees of the City are hereby authorized to
do all acts and things required of them by or in connection with this resolution, the
aforementioned documents, and the Obligations, for the full, punctual, and complete
performance of all the terms, covenants, and agreements contained in the Obligations,
the aforementioned documents, and this resolution. If for any reason either of the City
Officials is unable to execute and deliver the documents referred to in this Resolution,
such documents may be executed by any member of the Common Council or any officer
of the City delegated the duties of such City Officials with the same force and effect as if
such documents were executed and delivered by such City Officials.
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14. City Costs. The Borrower shall pay the City’s administrative fee in
connection with the issuance of the Bonds, as provided in the Loan Agreement, 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, including any costs for attorneys’ fees. The Borrower shall indemnify
the City against all liabilities, losses, damages, costs and expenses (including attorney’s
fees and expenses incurred by the City) arising with respect to the Project or the Bonds,
as provided for and agreed to by the Borrower in the Loan Agreement.
15. Future Amendments. The authority to approve, execute and deliver future
amendments to the Financing Documents herein authorized entered into by the City in
connection with the issuance of the Bonds, any consents required under the Financing
Documents, and any documents necessary for the Conversion of the Bonds, is hereby
delegated to the City Officials upon consultation with the City’s Bond Counsel, subject to
the following conditions: (a) such amendments or consents do not require the consent of
the holder of the Bonds or such consent has been obtained; (b) such amendments or
consents to not materially adversely affect the interests of the City; (c) such amendments
or consents do not contravene or violate any policy of the City; and (d) such amendments
or consents are acceptable in form and substance to the City’s Bond Counsel. The
authorization hereby given shall be further construed as authorization for the execution
and delivery of such certificates and related items as may be required to demonstrate
compliance with the agreements being amended and the terms of this Resolution. The
execution of any instrument by the City Officials shall be conclusive evidence of the
approval of such instruments in accordance with the terms hereof. In the absence of
either of the City Officials, any instrument authorized by this paragraph to be executed
and delivered may be executed by the officer of the City or the City authorized to act in
his/her place and stead.
16. Governmental Program. The City has established a governmental program
of acquiring purpose investments for qualified residential rental projects. The
governmental program is one in which the following requirements of §1.148-1(b) of the
federal regulations relating to tax-exempt obligations shall be met:
(a) the program involves the origination or acquisition of purpose
investments;
(b) at least 95% of the cost of the purpose investments acquired under
the program represents one or more loans to a substantial number of persons
representing the general public, states or political subdivisions, 501(c)(3)
organizations, persons who provide housing and related facilities, or any
combination of the foregoing;
(c) at least 95% of the receipts from the purpose investments are used
to pay principal, interest, or redemption prices on issues that financed the program,
to pay or reimburse administrative costs of those issues or of the program, to pay
or reimburse anticipated future losses directly related to the program, to finance
additional purpose investments for the same general purposes of the program, or
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PASSED AND ADOPTED BY THE COMMON COUNCIL OF THE CITY OF
ROCHESTER, MINNESOTA, THIS __________ DAY OF _______________, 2026.
to redeem and retire governmental obligations at the next earliest possible date of
PRESIDENT OF SAID COMMON COUNCIL
redemption;
ATTEST:
(d) the program documents prohibit any obligor on a purpose investment
CITY CLERK
financed by the program or any related party to that obligor from purchasing Bonds
of an issue that finances the program in an amount related to the amount of the
APPROVED THIS _____ DAY OF ________, 2026.
purpose investment acquired from that obligor; and
(e) the City shall not waive the right to treat the investment as a program
investment.
MAYOR OF SAID CITY
17. Effective Date. This Resolution shall be in full force and effect from and after
(Seal of the City of
its approval.
Rochester, Minnesota)
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