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HomeMy WebLinkAboutResolution No. 049-20 - Resolution Approving Conduit Financing and Housing Program for the Eastridge Estates Project RESOLUTION Authorizing the issuance, sale, and delivery of its conduit multi-family housing revenue note (Eastridge Estates Project) series 2020 and approving a housing program pursuant to Minnesota Statutes, Chapter 462C; approving the form of and authorizing the execution and delivery of the note and related documents; providing for the security, rights, and remedies with respect to the note; 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 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 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 by any provisions of Minnesota Statutes, Chapter 475, as amended; and WHEREAS, Eastridge Housing Partners, LP, a limited partnership (the “Borrower”), has requested that the City issue its revenue bonds, notes or other obligations, in one or more series, at one time or from time to time pursuant to the Act, in an aggregate amount not to exceed $15,000,000 (collectively, the “Obligations”) and lend the proceeds thereof to the Borrower to (i) finance the acquisition, rehabilitation, and equipping of an approximately 126-unit multifamily rental housing development, consisting of six 3-story buildings and functionally related facilities, with its office located at 2009 17th Street SE in the City, including funding capitalized interest and certain reserves and paying certain costs of issuance of the Obligations (the “Project”) (ii) fund one or more reserve funds to secure the timely payment of the Obligations, if necessary; (iii) pay interest on the Obligations during the rehabilitation of the Project, if necessary; and (iv) pay the costs of issuing the Obligations, if necessary; and WHEREAS, Minnesota Statutes, Section 471.656, as amended, authorizes a municipality to issue obligations to finance the acquisition or improvement of property located outside of the corporate boundaries of such municipality if the obligations are issued under a joint powers agreement between the municipality issuing the obligations and the municipality in which the property to be acquired or improved is located. Pursuant to Minnesota Statutes, Section 471.59, as amended, by the terms of a joint powers agreement entered into through action of their governing bodies, two municipalities may jointly or 634347v3RC110-113 cooperatively exercise any power common to the contracting parties or any similar powers, including those which are the same except for the territorial limits within which they may be exercised and the joint powers agreement may provide for the exercise of such powers by one or more of the participating governmental units on behalf of the other participating units; and WHEREAS, Section 146(i)(6) of the Internal Revenue Code of 1986, as amended (the “Code”) permits the reuse of bonding authority for affordable housing projects and treats the reuse as a refunding for tax purposes if: (i) the “refunding” occurs within 4 years after the original bonds were issued, (ii) the “refunding” bonds are issued within 6 months after the principal payment of the original bonds, and (iii) the “refunding” bonds mature within 34 years of the original issue date; and WHEREAS, the Borrower has represented to the City that the Obligations will meet the requirements of Section 146(i)(6) of the Code with respect to the reuse of a portion of the bonding authority from the Housing and Redevelopment Authority of the City of Saint Paul, Minnesota (the “Saint Paul HRA”) Multifamily Housing Revenue Bonds (Pioneer Press Apartments Project), Series 2017B and Multifamily Housing Revenue Bonds (Pioneer Press Apartments Project), Series 2017C (collectively, the “Saint Paul HRA Bonds”); and WHEREAS, in order to better leverage public funding by recycling bonding authority as permitted by Section 146(i)(6) of the Code, the Borrower, the City and the Saint Paul HRA propose to enter into a Joint Powers Agreement whereby the parties will agree that the City is authorized to use recycled bonding authority from the Saint Paul HRA Bonds to finance the Project in accordance with Section 146(i)(6) of the Code (the “Joint Powers Agreement”). The City will use up to approximately $5,000,000 of recycled bonding authority from the Saint Paul HRA Bonds, pursuant to the Joint Powers Agreement, in order to finance a portion of the Project; and WHEREAS, in addition, the Issuer received an allocation of bonding authority from Minnesota Department of Management and Budget (“MMB”) under Minnesota Statutes, Chapter 474A, as amended (the “Allocation Act”), in the aggregate principal amount of $10,393,031.55; and WHEREAS, on August 19, 2019, the Common Council adopted a preliminary resolution (the “Preliminary Resolution”) which 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 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 Obligations in an aggregate principal amount of up to $15,000,000, to finance the Project; and 634347v3RC110-113 2 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 required public hearing under the Code; (ii) the required public hearing under Section 462C.04, subdivision 2, of the Act; (iii) the Housing Program; and (iv) approval of the issuance of the Obligations 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 Public Notice was published at least 15 days before the regularly scheduled meeting of the Common Council of the City (the “Common Council”), and on this same date, the Common 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, the Obligations will be purchased by Jones Lang LaSalle Multifamily, LLC, or another financial institution selected by the Borrower (the “Funding Lender”) and the Obligations will be issued pursuant to a Funding Loan Agreement, dated on or after March 1, 2020, (the “Funding Loan Agreement”), by and between the City, U.S. Bank National Association, a national banking association, in its capacity as fiscal agent (the “Fiscal Agent”), and the Funding Lender; and WHEREAS, the proceeds derived from the sale of the Obligations (the “Funding Loan”) will be loaned by the City to the Borrower pursuant to the terms of a Project Loan Agreement, dated on or after March 1, 2020 (the “Project Loan Agreement”), by and between the Borrower, the Fiscal Agent, and the City, whereby the City will apply the proceeds derived from the sale of the Obligations to fund a loan to the Borrower to finance the Project (the “Project Loan”). Additionally, the Borrower will issue a project note (the “Project Note”) to the City to be endorsed by the City to the Fiscal Agent as security for the Funding Loan; and WHEREAS, as further security for the repayment of principal and interest on the Obligations, the Borrower will execute a Multifamily Mortgage, Assignment of Rents, Security Agreement and Fixture Filing (Minnesota), dated on or after March 1, 2020 (the “Mortgage”), for the benefit of the City, which will be assigned by the City to the Fiscal Agent; and WHEREAS, the Obligations will be issued pursuant to this resolution and the Obligations and the interest thereon: (i) shall be payable solely from the revenues pledged therefor under the Project Loan Agreement, the Funding Loan Agreement, the Mortgage, and additional sources of revenues 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 Project 634347v3RC110-113 3 Loan Agreement and the Funding Loan Agreement; and (v) shall not constitute a general or moral obligation of the City. NOW, THEREFORE, BE IT RESOLVED by the Common Council of the City of Rochester, Minnesota, as follows: 1. Findings. The City acknowledges, finds, determines, and declares that the issuance of the Obligations is authorized by the Act and is consistent with the purposes of the Act and that the issuance of the Obligations, and the other actions of the City under the Funding Loan Agreement, the Project 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 Obligations 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 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. Authorization of Obligations. For the purposes set forth above, there is hereby authorized the issuance, sale, and delivery of the Obligations in one or more series in the maximum aggregate principal amount not to exceed $15,000,000. The Obligations 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 Loan Agreement, 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 Obligations, the stated maturity of the Obligations, the interest rates on the Obligations and the terms of redemption of the Obligations) as are approved as evidenced by the execution thereof as provided in Section 8 hereof. The City hereby authorizes the Obligations 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 or as a taxable bond. The Obligations shall be special, limited obligations of the City payable solely from the revenues provided by the Borrower pursuant to the Project Loan Agreement and other funds pledged pursuant to the Mortgage and the Funding Loan Agreement; the City does not pledge its general credit or taxing powers or any funds of the City to the payment of the Obligations. All of the provisions of the Obligations, 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. 3. Financing Structure. The Obligations shall be sold to the Funding Lender under the terms and conditions of the Funding Loan Agreement and the proceeds derived from the sale of the Obligations shall be loaned to the Borrower in accordance with the 634347v3RC110-113 4 terms and conditions of the Project Loan Agreement. The Borrower shall apply the proceeds of the Loan made pursuant to the terms and conditions of the Project 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 Project Loan Agreement are to be fixed so as to produce revenues sufficient to pay the principal of, premium, if any, and interest on the Obligations when due. 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, the Mortgage, and certain moneys and securities held by the Fiscal Agent in the funds and accounts established under the Funding Loan Agreement to the Fiscal Agent. The Common Council hereby provides that the Funding Loan Agreement shall provide the terms and conditions, covenants, rights, obligations, duties, and agreements of the owners of the Obligations and the City as set forth therein. All of the provisions of the Funding Loan Agreement, 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. All of the provisions of the Project Loan Agreement, 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. 4. Compliance with Certain Rental and Occupancy Restrictions as to the Project. 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 Mayor and City Clerk are also hereby authorized and directed to execute and deliver a Regulatory Agreement, dated on or after March 1, 2020 (the “Regulatory Agreement”), among the City, the Borrower, and the Fiscal Agent. 5. Approval of Housing Program. The Housing Program, in substantially the form on file with the City, is hereby approved. 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. 6. Approval of Forms; Execution. The Mayor and the City Clerk (the “City Officials”) are hereby authorized and directed to execute and deliver the Funding Loan Agreement, the Joint Powers Agreement, the Project Loan Agreement, the Obligations, the Regulatory Agreement, an Assignment of the Multifamily Mortgage, Assignment of Rents, Security Agreement and Fixture Filing (the “Assignment of Mortgage”), from the City to the Fiscal Agent, any consents or such other documents as are necessary or appropriate in connection with the issuance, sale, and delivery of the Obligations, including without limitation various certificates of the City, the Information Return for Tax- Exempt Private Activity Bond Issues, Form 8038, an endorsement to the tax certificate of 634347v3RC110-113 5 the Borrower, 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 in substantially the forms on file with the City which are hereby approved, with such necessary and appropriate variations, omissions, and insertions as are approved by bond counsel to the City and do not materially adversely change the substance thereof with respect to the City, and as the City Officials, in their discretion, shall determine, and the execution thereof by the City Officials shall be conclusive evidence of such determinations. 7. Security for Obligations. The City hereby authorizes the Borrower to provide such security for payment of its obligations under the Funding Loan Agreement and the Project Loan Agreement and for payment of the Obligations, including the Mortgage, one or more guaranties, or any other security agreed upon by the Borrower, Fiscal Agent, and the Funding Lender, and the City hereby approves the execution and delivery of such security. 8. Bond Opinion. The City hereby authorizes Kennedy & Graven, Chartered, as bond counsel, to prepare, execute, and deliver its approving legal opinions with respect to the Obligations. 9. Council Authority; Limitation of 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 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 Obligations shall be personally liable on the Obligations or be subject to any personal liability or accountability by reason of the issuance thereof. No provision, covenant or agreement contained in the aforementioned documents, the Obligations, or in any other document relating to the Obligations, 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 Funding Loan Agreement and the Project Loan Agreement which are to be applied to the payment of the Obligations, as provided therein. 634347v3RC110-113 6 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, any holder of the Obligations 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 Obligations 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 in the last sentence of Section 2, Sections 9 and 13 and any other provisions limiting the liability of the City, the City Officials, or any officer, employee, or agent of the City contained herein) or of the aforementioned documents, or of the Obligations 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 Obligations, but this resolution, the aforementioned documents, and the Obligations shall be construed and endorsed as if such illegal or invalid provisions had not been contained therein. 11. Validity. The Obligations, when executed and delivered, shall contain a recital that it is 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. 12. Authorization; Direction. The officers of the City, bond counsel, other attorneys, 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 the Mayor or the City Clerk 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 the Mayor or the City Clerk with the same force and effect as if such documents were executed and delivered by the Mayor or the City Clerk. 13. City Costs. The Borrower shall pay the administrative fee of the City as provided in the Funding 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 Obligations, whether or not the Obligations 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 Obligations, as further provided in the Project Loan Agreement. 634347v3RC110-113 7 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 Obligations 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 Obligations or such consent has been obtained; (b) such amendments or consents do 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 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 Obligations of an issue that finances the program in an amount related to the amount of the purpose investment acquired from that obligor; and 634347v3RC110-113 8 (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 _______________, 2020. ___________________________________ PRESIDENT OF SAID COMMON COUNCIL ATTEST: __________________________ CITY CLERK APPROVED THIS _____ DAY OF ______________________, 2020. ___________________________________ MAYOR OF SAID CITY (Seal of the City of Rochester, Minnesota) 634347v3RC110-113 9