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HomeMy WebLinkAboutResolution No. 257-16 - Northgate Plaza.BondFinancingCITY OF ROCHESTER COUNTY OF OLMSTED STATE OF MINNESOTA RESOLUTION NO. AUTHORIZING THE ISSUANCE, SALE, AND DELIVERY OF ITS MULTIFAMILY HOUSING REVENUE NOTE RELATING TO THE NORTHGATE APARTMENTS PROJECT; ADOPTING 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 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 la, of the Act; and WHEREAS, in the issuance of the City's revenue note 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, New Northgate Plaza Limited Partnership, a Minnesota limited partnership (the `Borrower"), has requested that the City issue its revenue note, in one or more series, under the Act and lend the proceeds thereof to the Borrower to finance the following: (i) the acquisition, rehabilitation and equipping of an approximately 151-unit multifamily rental housing development and functionally related facilities located at 902 11' Avenue NW in the City (the "Project"); (11) certain costs of issuance and other costs related to the issuance of the Note; and (iii) capitalized interest and certain reserves; and WHEREAS, the City has prepared a housing program (the "Housing Program" or "Program") to authorize the issuance by the City of one or more revenue notes in the maximum principal amount of $14,500,000 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"); (11) 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 Note, as hereinafter defined; 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 May 16, 2016, the 480134v1 JSB RC110-68 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, on April 18, 2016, the Common Council adopted Resolution No 143-16 (the "Preliminary Resolution") under the terms of which the City: (1) 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 $14,500,000; 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 Multifamily Mortgage Revenue Note (Northgate Apartments Project), Series 2016, in an original aggregate principal amount not to exceed 514,500,000; and WHEREAS, the proceeds derived from the sale of the Note will be loaned by the City to the Borrower pursuant to the terms of a Project Loan Agreement, dated on or after June 1, 2016 by and among the Borrower, the City and U.S. Bank National Association (the "Fiscal Agent"), whereby the City will apply the proceeds derived from the sale of the Note to fund a loan to the Borrower (the "Project Loan Agreement"); and WHEREAS, as further security for the repayment of principal and interest on the Note, the Borrower will execute a Multifamily Mortgage, Assignment of Rents, Security Agreement, and Fixture Financing Statement, dated on or after June 1, 2016 (the "Mortgage") for the benefit of the City, which will be assigned by the City to the Fiscal Agent pursuant to an Assignment of Security Instrument, dated on or after June 1, 2016 (the "Assignment of Security Instrument"); and WHEREAS, the Note will be issued to and purchased by JLL Capital Markets (the "Funding Lender") and the City will assign its interest in the Project Loan Agreement to the Funding Lender pursuant to a Funding Loan Agreement, dated on or after June 1, 2016, by and among the City, the Fiscal Agent and the Funding Lender (the "Funding Loan Agreement"); and WHEREAS, the Note will be issued pursuant to this resolution and the Note and the interest on the Note: (i) shall be payable solely from the revenues pledged therefor under the Project Loan Agreement, the Funding Loan Agreement and the Mortgage; (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 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 OF THE CITY OF ROCHESTER, MINNESOTA, AS FOLLOWS: 1. The City acknowledges, finds, determines, and declares that the issuance of the Note is authorized by the Act and is consistent with the purposes of the Act and that the issuance of the Note, and the other actions of the City under the Funding Loan Agreement, the Project Loan Agreement, and this 2 480134v1 JSB RC110-68 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 Note 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. The Housing Program is hereby adopted, ratified, and approved in all respects without amendment. The preparation of the Housing Program is hereby ratified, confirmed, and 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. 3. For the purposes set forth above, there is hereby authorized the issuance, sale, and delivery of the Note in one or more series in the maximum aggregate principal amount not to exceed $14,500,000. The 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 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 Note, the stated maturity of the Note, the interest rates on the Note and the terms of redemption of the Note) as are approved as evidence by the execution thereof as provided in Section 9. The City hereby authorizes the Note 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 taxable bonds. The Note shall be a special, limited obligation 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 Note. All of the provisions of the Note, 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. 4. The Note 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 Note shall be loaned to the Borrower in accordance with the 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 Note when due. 5. 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 Note 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. 3 480134v1 JSB RC110-68 6. 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. 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 Mayor and City Clerk are also hereby authorized and directed to execute and deliver a Regulatory Agreement, dated on or after June 1, 2016 (the "Regulatory Agreement"), among the City, the Borrower, and the Fiscal Agent. 8. The Note shall not constitute general or moral obligations of the City but shall be a special, limited revenue obligation of the City payable solely from the revenues provided by the Borrower under the terms of the Funding Loan Agreement and the Project Loan Agreement and from the revenues and security pledged, assigned, and granted under the terms of this resolution, the Note, the Funding Loan Agreement and the Project Loan Agreement, and any other security documents provided by the Borrower or any other party to secure the timely payment of the principal of, premium, if any, and interest on the Note. As provided in the Funding Loan Agreement and the Project Loan Agreement, the Note shall not be payable from nor charged upon any funds other than the revenues pledged to their payment, nor shall the City be subject to any liability thereon, except as otherwise provided in this paragraph. No holder of the Note shall ever have the right to compel any exercise by the City of any taxing powers of the City to pay the Note or the interest or premium thereon, or to enforce payment thereof against any property of the City except the interests of the City in the Project Loan Agreement and the revenues and assets thereunder, which will be assigned to the Fiscal Agent under the terms the Funding Loan Agreement. The proceeds of the Note shall be disbursed pursuant to the terms of the Funding Loan Agreement and the Project Loan Agreement. 9. The Mayor and the City Clerk (the "City Officials") are hereby authorized and directed to execute and deliver the Funding Loan Agreement, the Project Loan Agreement, the Note, the Regulatory Agreement, the Assignment of Security Instrument, any consents or such other documents as are necessary or appropriate in connection with the issuance, sale, and delivery of the Note, including 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 Notes, 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 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, as 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. 10. The City hereby authorizes Kennedy & Graven, Chartered, as bond counsel, to prepare, execute, and deliver its approving legal opinions with respect to the Note. 11. The United States Department of the Treasury has promulgated regulations governing the use of the proceeds of tax-exempt bonds, all or a portion of which are to be used to reimburse the City or 4 480134v1 JSB RC110-68 the Borrower for project expenditures paid prior to the date of issuance of such bonds. Those regulations (Treasury Regulations, Section 1.150-2) (the "Regulations") require that the City adopt a statement of official intent to reimburse an original expenditure not later than 60 days after payment of the original expenditure. The Regulations also generally require that the bonds be issued and the reimbursement allocation made from the proceeds of the bonds occur within 18 months after the later of. (i) the date the expenditure is paid; or (ii) the date the project is placed in service or abandoned, but in no event more than 3 years after the date the expenditure is paid. The Regulations generally permit reimbursement of capital expenditures and costs of issuance of the bonds. To the extent any portion of the proceeds of the Note will be applied to expenditures with respect to the Project, the City reasonably expects to reimburse the Borrower for the expenditures made for costs of the Project from the proceeds of the Note after the date of payment of all or a portion of such expenditures. All reimbursed expenditures shall be capital expenditures, a cost of issuance of the Note, or other expenditures eligible for reimbursement under Section 1.150-2(d)(3) of the Regulations and also qualifying expenditures under the Act. Based on representations by the Borrower, other than (i) expenditures to be paid or reimbursed from sources other than the Note, (ii) expenditures permitted to be reimbursed under prior regulations pursuant to the transitional provision contained in Section 1.150-20)(2)(i)(B) of the Regulations, (iii) expenditures constituting preliminary expenditures within the meaning of Section 1.150-2(f)(2) of the Regulations, or (iv) expenditures in a "de minimus" amount (as defined in Section 1.150-2(f)(1) of the Regulations), no expenditures with respect to the Project to be reimbursed with the proceeds of the Note have been made by the Borrower more than 60 days before the date of adoption of this resolution of the City. Based on representations by the Borrower, as of the date hereof, there are no funds of the Borrower reserved, allocated on a long term -basis or otherwise set aside (or reasonably expected to be reserved, allocated on a long-term basis or otherwise set aside) to provide permanent financing for the expenditures related to the Project to be financed from proceeds of the Note, other than pursuant to the issuance of the Note. This resolution, therefore, is determined to be consistent with the budgetary and financial circumstances of the Borrower as they exist or are reasonably foreseeable on the date hereof. 12. 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 Note shall be personally liable on the Note 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 Note, or in any other document relating to the 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 480134v1 JSB RC110-68 pay or remit any funds or revenues, other than funds and revenues derived from the Project Loan Agreement which are to be applied to the payment of the Note, as provided therein. 13. Except as herein otherwise expressly provided, 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 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 Note issued under the provisions of this resolution. 14. In case any one or more of the provisions of this resolution, other than the provisions contained in the first sentence of Section 4, or of the aforementioned documents, or of the 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 Note, but this resolution, the aforementioned documents, and the Note shall be construed and endorsed as if such illegal or invalid provisions had not been contained therein. 15. The Note, 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 Note 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 Note, 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. 16. 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 Note, for the full, punctual, and complete performance of all the terms, covenants, and agreements contained in the Note, 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. 17. The Borrower shall pay the administrative fee of the City on the date of issuance of the Note. 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 Note, whether or not the Note is issued, including any costs for attorneys' fees. 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 20TH DAY OF JUNE, 2016. PRESIDENT OF SAID COMMON COUNCIL ATTEST: 6 480134v1 JSB RC110-68 CITY CLERK Approved this day of June, 2016. (Seal of the City of Rochester, Minnesota) MAYOR OF SAID CITY 480134v1JSB RC110-68 CERTIFICATION I, the undersigned City Clerk of the City of Rochester, Minnesota, do hereby certify the following: The foregoing is true and correct and a copy of the Resolution is on file and of record in the offices of the City, which Resolution relates to an issuance of a multifamily housing revenue note. Said Resolution was duly adopted by the Rochester Common Council at a regular or special meeting of the Council held on the date therein indicated. Said meeting was duly called and regularly held and was open to the public and was held at the place at which meetings of the Council are regularly held, a quorum of the Council being present and acting throughout. Councilmember moved the adoption of the Resolution, which motion was seconded by Councilmember . A vote being taken on the motion, the following members of the Council voted in favor of the Resolution: and the following voted against the same: Whereupon said Resolution was declared duly passed and adopted. The Resolution is in full force and effect and no action has been taken by the Council which would in any way alter or amend the Resolution. WITNESS MY HAND officially as the City Clerk of the City of Rochester, Minnesota, this day of , 2016. City Clerk City of Rochester, Minnesota 480134v1 JSB RC110-68