Loading...
HomeMy WebLinkAboutResolution No. 117-26 - Resolution - DevCo Rochester Apartment Project 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 DevCo Rochester Apartments Project; 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, Chapters 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, DRG Rochester Apartments, LLC, a Washington limited liability company (“Borrower”), has requested that the City issue conduit multifamily housing revenue bonds, pursuant to the Act, in an aggregate principal amount not to exceed $70,000,000, in one or more series of tax-exempt and/or taxable obligations, 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 252-unit multifamily rental housing development consisting of an approximately 4-story apartment building and functionally related facilities to be located at 4395 23rd Ave 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 the costs of issuing the Bonds; and WHEREAS, on December 9, 2024, the Common Council adopted resolution 251-24 (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 $40,500,000, 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 (iv) authorized a public hearing to be conducted by the Common Council on the Project; and 4901-6219-3827.1 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. 526, dated January 12, 2026, from MMB allocating volume cap bonding authority to the City in the amount of $40,500,000 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 $70,000,000, up to $40,500,000 of which may be issued as tax-exempt bonds, 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 and the Indenture (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 (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, and this resolution constitute a public purpose and are in the interests of the 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 4901-6219-3827.1 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 July 1, 2026 (the “Indenture”), between the City and U.S. Bank Trust Company, National Association, a national banking association (the “Trustee”), as the Multifamily Housing Revenue Bonds (DevCo Rochester Apartments Project), 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 July 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 Trustee is hereby appointed as the Paying Agent and the Bond Registrar for the Bonds. The Borrower’s repayment obligations under the Loan Agreement will be secured by a mortgage granting a mortgage lien on the Project or a portion thereof (the “Mortgage”) to be delivered by the Borrower to the City and assigned to the Trustee, pursuant to an assignment of mortgage (the “Assignment of Mortgage”) 3. 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 $70,000,000, up to $40,500,000 of which may be issued as tax-exempt bonds. 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 6 and 14. 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 4901-6219-3827.1 Council hereby authorizes Kutak Rock LLP, as bond counsel, to prepare, execute, and deliver its approving legal opinion with respect to the Bonds. 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. 4. Limitation of Liability. The Bonds shall be special, limited revenue obligations of the City payable solely from the revenues provided by the Borrower pursuant to the Loan Agreement, and other funds pledged pursuant to the Indenture; the City does not pledge its general credit or taxing powers or any funds of the City to the payment of the Bonds. No covenant, stipulation, obligation or agreement herein contained or contained in the aforementioned documents shall be deemed to be a covenant, stipulation, obligation or agreement of any member of the Council, or any officer, agent or employee of the City in that person’s individual capacity, and neither the Council nor any officer or employee executing the Bonds shall be personally liable on the Bonds or be subject to any personal liability or accountability by reason of the issuance thereof. 5. 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 July 1, 2026 (the “Regulatory Agreement”), among the City, the Borrower, and the Trustee. 4901-6219-3827.1 6. 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, and any consents or such other documents and certificates as are necessary or appropriate in connection with the 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 are approved by Bond Counsel and do not materially adversely 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. 7. 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. 8. 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. 9. 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 Council by the provisions of this resolution or of the aforementioned documents shall be exercised or performed by the City or by such 4901-6219-3827.1 members of the 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 or agreement of any member of the Council, or any officer, agent or employee of the City in that person’s individual capacity, and neither the Council nor any officer or employee executing the Bonds shall be personally liable on the Bonds 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 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 issued under the provisions of this resolution. 10. Severability. In case any one or more of the provisions of this Resolution, other than the provisions contained Section 4 and 9, or of the aforementioned documents, or of the Bonds 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 , but this Resolution, the aforementioned documents, and the Bonds shall be construed and endorsed as if such illegal or invalid provisions had not been contained therein. 11. Validity. The Bonds 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 Bonds 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 Bonds, 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. 12. 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 Bonds, for the full, punctual, and complete performance of all the terms, covenants, and agreements contained in the Bonds, 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 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. 4901-6219-3827.1 13. 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. 14. Future Amendments and Consents. 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, and any consents required under the Financing Documents, 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. 15. 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 4901-6219-3827.1 to redeem and retire governmental obligations at the next earliest possible date of redemption; (d) the program documents prohibit any obligor on a purpose investment 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 purpose investment acquired from that obligor; and (e) the City shall not waive the right to treat the investment as a program investment. 16. Effective Date. This Resolution shall be in full force and effect from and after its approval. PASSED AND ADOPTED BY THE COMMON COUNCIL OF THE CITY OF ROCHESTER, MINNESOTA, THIS _________ DAY OF _____________, 2026. ___________________________________ PRESIDENT OF SAID COMMON COUNCIL ATTEST: __________________________ CITY CLERK APPROVED THIS ___________ DAY OF ______________, 2026. ___________________________________ MAYOR OF SAID CITY (Seal of the City of Rochester, Minnesota) 4901-6219-3827.1