Loading...
HomeMy WebLinkAboutResolution No. 066-19 - Approval of Conduit Bonds to Finance Bella Grove Project RESOLUTION NO. ___________ CITY OF ROCHESTER COUNTY OF OLMSTED STATE OF MINNESOTA AUTHORIZING THE ISSUANCE, SALE, AND DELIVERY OF ITS VARIABLE RATE DEMAND MULTIFAMILY HOUSING REVENUE BONDS RELATING TO THE BELLA GROVE APARTMENTS PROJECT; ADOPTING A HOUSING PROGRAM PURSUANT TO MINNESOTA STATUTES, CHAPTER 462C; APPROVING THE FORM OF AND AUTHORIZING THE EXECUTION AND DELIVERY OF THE BONDS AND RELATED DOCUMENTS; PROVIDING FOR THE SECURITY, RIGHTS, AND REMEDIES WITH RESPECT TO THE BONDS; AND GRANTING APPROVAL FOR CERTAIN OTHER ACTIONS WITH RESPECT THERETO WHEREAS, the City of Rochester, Minnesota (the “City”), is a home rule charter city 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, as amended (the “Act”), the City is authorized to carry out the public purposes described in the Act by issuing revenue bonds or other obligations to finance or refinance multifamily housing developments located within the City, and as a condition to the issuance of such revenue bonds, 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 bonds and in the making of a loan to finance 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, without limitation under the provisions of Minnesota Statutes, Chapter 475, as amended; and WHEREAS, Village Capital Corporation, an Indiana corporation, or an affiliate thereof (the “Borrower”), has requested that the City issue its revenue bonds, in one or more series, under the Act and lend the proceeds thereof to the Borrower to assist in financing the acquisition, construction, and equipping of an approximately 128-unit multifamily rental housing development consisting of approximately 8 two-story garden style buildings with a clubhouse, fitness room, community room, and playground, to be located on an approximately 12.56 acre parcel of land located south of Alpha Parkway between 46th Avenue Northwest and Superior Drive Northwest in the City of Rochester, Minnesota (the “Project”) including, if necessary, funding capitalized interest and certain reserves and paying certain costs of issuance and other costs related to the issuance of the bonds; and WHEREAS, the City has prepared a housing program (the “Housing Program”) to authorize the issuance by the City of one or more revenue bonds in the maximum principal amount of $24,000,000 to finance the acquisition, construction, and equipping of the Project; and WHEREAS, a notice of public hearing (the “Public Notice”) was published in the Rochester Post-Bulletin, the official newspaper and a newspaper of general circulation in the City, with respect to: (i) the required public hearing under Section 147(f) of the Internal Revenue Code of 1986, as amended (the “Code”); (ii) the required public hearing under Section 462C.04, 562198v1 JSB RC110-106 subdivision 2, of the Act; (iii) the Housing Program; and (iv) approval of the issuance of the bonds, as hereinafter defined; and WHEREAS, the Public Notice was published at least 15 days before the date hereof and, on this date, the Common Council of the City (the “Council”) conducted a public hearing at which a reasonable opportunity was provided for interested individuals to express their views, both orally and in writing; and WHEREAS, on December 17, 2018, the Council adopted Resolution No 398-18 (the “Preliminary Resolution”) under the terms of which the City: (i) granted preliminary approval to the issuance of multifamily housing revenue obligations under the terms of the 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”), in a principal amount not to exceed $24,000,000; and (iii) acknowledged the preparation of the Housing Program in accordance with the requirements of the Act; 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 bonds in accordance with the provisions of Treasury Regulations, Section 1.150-2; and WHEREAS, the Borrower has requested that the City issue, sell, and deliver its (a) Variable Rate Demand Multifamily Housing Revenue Bonds (Bella Grove Apartments Project), Series 2019A (the “Series 2019A Bonds); (b) Variable Rate Demand Multifamily Housing Revenue Bonds (Bella Grove Apartments Project), Series 2019B (the “Series 2019B Bonds”); and (c) Variable Rate Demand Multifamily Housing Revenue Bonds (Bella Grove Apartments Project), Series 2019C (the “Series 2019C Bonds” and, together with the Series 2019A Bonds and the Series 2019B Bonds, the “Bonds”), in an original aggregate principal amount not to exceed $24,000,000; and WHEREAS, the proceeds derived from the sale of the Bonds will be loaned by the City to the Borrower pursuant to the terms of a Loan Agreement, dated on or after May 1, 2019 by and among the Borrower and the City, whereby the City will apply the proceeds derived from the sale of the Bonds to fund a loan to the Borrower (the “Loan Agreement”); and WHEREAS, the City will assign its interest in the Loan Agreement to BOKF, NA, a national banking association, or another trustee selected by the Borrower (the “Trustee”) pursuant to an Indenture of Trust, dated on or after May 1, 2019, by and among the City and the Trustee (the “Indenture”); 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 or other security documents described therein; (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 2 562198v1 JSB RC110-106 NOW, THEREFORE, BE IT RESOLVED BY THE COMMON COUNCIL OF THE CITY OF ROCHESTER, MINNESOTA, AS FOLLOWS: 1. 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 the issuance of the Bonds for the financing 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 affordable multifamily housing developments for low or moderate income residents of the City and otherwise furthering the purposes and policies of the Act. 2. The Housing Program is hereby adopted, ratified, and approved in all respects without amendment. 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. 3. For the purposes set forth above, there is hereby authorized the issuance, sale, and delivery of the Bonds in one or more series in the maximum aggregate principal amount not to exceed $24,000,000. 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 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 Section 8. 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 City 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 each 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 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. 3 562198v1 JSB RC110-106 4. 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 provision, covenant or agreement contained in the aforementioned documents, the Bonds, or in any other document relating to the Bonds, 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 which are to be applied to the payment of the Bonds, as provided therein and as assigned to the Trustee under the Indenture. 5. The obligations of the Borrower under the Loan Agreement and payment of amounts due under the Bonds will be payable from revenues of the Project and other funds pledged pursuant to the Indenture and from payments made pursuant to one or more irrevocable letters of credit, to be dated on or after May 1, 2019 (the “Letters of Credit”), issued by United Fidelity Bank, FSB, a federal savings bank (the “Bank”), securing each series of Bonds pursuant to the terms of one or more Reimbursement Agreements, to be dated on or after May 1, 2019 (the “Reimbursement Agreements”), between the Borrower and the Bank. One or more confirming irrevocable letters of credit, to be dated on or after May 1, 2019 (the “Confirming Letters of Credit”), will be issued by Federal Home Loan Bank of Indianapolis for each series of Bonds. The Loan Agreement and the Reimbursement Agreements will be secured, among other things, by (i) a Mortgage, Security Agreement, Fixture Filing and Assignment of Leases and Rents (the “Mortgage”) to be executed by the Borrower in favor of the City, and assigned to the Bank pursuant to an Assignment of Mortgage to be executed by the City (the “Mortgage Assignment”); and (ii) a Subordinate Combination Mortgage, Security Agreement, Assignment of Leases and Rents and Fixture Financing Statement (the “Subordinate Mortgage”) to be executed by the Borrower in favor of the City, and assigned to the Bank pursuant to an Assignment of Mortgage to be executed by the City (the “Subordinate Mortgage Assignment”). The Bonds will be purchased pursuant to the Bond Purchase Agreement, dated on or after the date this resolution is approved (the “Bond Purchase Agreement”), among Citigroup Global Markets Inc. (the “Underwriter”), the City, and the Borrower. 6. The Borrower shall apply the proceeds of the Loan made pursuant to the terms and conditions of the Loan Agreement to the payment of a portion of the capital costs of the Project and related costs. The Loan repayments to be made by the Borrower under the Loan Agreement are to be fixed so as to produce revenues sufficient to pay the principal of, premium, if any, and interest on the Bonds when due. 7. 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 May 1, 2019 (the “Regulatory Agreement”), among the City, the Borrower, and the Trustee. 8. The City Officials are hereby authorized and directed to execute and deliver the Indenture, the Loan Agreement, the Bonds, the Bond Purchase Agreement, the Regulatory Agreement, the Mortgage Assignment, the Subordinate Mortgage Assignment 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 4 562198v1 JSB RC110-106 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. 9. The City hereby authorizes Kennedy & Graven, Chartered, as bond counsel, to prepare, execute, and deliver its approving legal opinions with respect to the Bonds. 10. 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. 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. 11. 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 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. 5 562198v1 JSB RC110-106 12. In case any one or more of the provisions of this Resolution, other than the provisions contained Sections 4 or 11 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. 13. 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. 14. 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. 15. The Borrower shall pay the administrative fee of the City as provided in the Loan Agreement. The Borrower will also 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 is 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. 16. The authority to approve, execute and deliver future amendments to the Financing Documents herein authorized and 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. 6 562198v1 JSB RC110-106 17. 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 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. 18. 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 _______________, 2019. ___________________________________ PRESIDENT OF SAID COMMON COUNCIL ATTEST: __________________________ CITY CLERK APPROVED THIS _____ DAY OF ______________________, 2019. ___________________________________ MAYOR OF SAID CITY (Seal of the City of Rochester, Minnesota) 7 562198v1 JSB RC110-106