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HomeMy WebLinkAboutResolution No. 537-17 - ApproveModification.MultifamilyHousingRevenueBonds.BuckeyeProject CITY OF ROCHESTER COUNTY OF OLMSTED STATE OF MINNESOTA RESOLUTION NO. RESOLUTION APPROVING AMENDMENTS TO THE MULTIFAMILY HOUSING REVENUE BONDS (THE BUCKEYE PROJECT), SERIES 2016, AND AUTHORIZING THE EXECUTION AND DELIVERY OF DOCUMENTS RELATED THERETO Section 1. Recitals. 1.1. The City of Rochester, Minnesota (the “City”) is a home rule city duly organized and existing under its Charter and the Constitution and laws of the State of Minnesota. 1.2. On April 15, 2016, the City issued its Multifamily Housing Revenue Bonds (The Buckeye Project), Series 2016 (the “Bonds”), in the original aggregate principal amount of $13,440,000, pursuant to Minnesota Statutes, Chapter 462C, as amended, and a resolution adopted by the Common Council of the City on February 17, 2016 (the “Bond Resolution”). The City loaned the proceeds of the Bonds to The Buckeye LLC, a Minnesota limited liability company (the “Borrower”), pursuant to the terms of a Loan Agreement, dated as of April 1, 2016 (the “Loan Agreement”), between the City and the Borrower. The City assigned its rights to the basic payments and certain other rights under the Loan Agreement to U.S. Bank National Association, a national banking association (the “Lender”), pursuant to an Assignment of Loan Agreement, dated as of April 1, 2016 (the “Assignment of Loan Agreement”), between the City and the Lender. The Borrower secured its obligations to the Lender pursuant to a Combination Mortgage, Security Agreement and Fixture Financing Statement, dated as of April 1, 2016, from the Borrower to the City and assigned to the Lender; an Assignment of Leases and Rents, dated as of April 1, 2016, from the Borrower to the City and assigned to the Lender; and a Continuing Covenant Agreement, dated as of April 1, 2016 (the “Continuing Covenant Agreement”), between the Borrower and the Lender. The Borrower also caused to be delivered to the Lender separate Guaranties, each dated as of April 1, 2016 (the “Guaranties”), from the owners of the Borrower. 1.3. The proceeds of the Bonds were used to (i) finance the acquisition, construction, and equipping of an approximately 92-unit multifamily rental housing development and functionally related facilities with underground parking to be located at the southeast corner of the intersection of Third Avenue SE and Fourth Street SE in the City (the “Project”); (ii) pay interest on the Bonds during the construction of the Project; and (iii) pay the costs of issuing the Bonds. The Borrower owns the Project. 1.4. Pursuant to the current terms of the Bonds, amortization of the Bonds shall commence upon the occurrence of the earlier of (i) the tenth day of the month following Stabilization (as defined in the Continuing Covenant Agreement) or (ii) June 10, 2018. The Borrower has requested, and the Lender has agreed to, the extension of the amortization commencement date (the “Amendments”) and to amend certain provisions of the Continuing Covenant Agreement. In addition, one Guaranty (from Sean Kaufhold) will be released. 1.5. The City has been advised by Kennedy & Graven, Chartered, acting as bond counsel (“Bond Counsel”), that the proposed Amendments constitute significant modifications of the Bonds and will cause a “reissuance” of the Bonds for tax purposes pursuant to Section 1.1001-3 of the Treasury 474482v1 JAE RC110-60 Regulations promulgated under the Internal Revenue Code of 1986, as amended (the “Code”). For tax purposes, the Bonds would be treated as if they were refunded on the effective date of the Amendments. 1.6. On the date hereof, the City Council held a public hearing regarding the approval of the Amendments, where all persons interested were given the opportunity to be heard. Section 2. Findings; Authorizations and Approvals. 2.1. The City Council hereby consents to and approves and authorizes and directs the execution by the Mayor and the City Clerk of the Amendments to the Bonds, substantially in the form on file with the City on the date hereof, which is hereby approved, with such changes as shall be approved by the Mayor and the City Clerk; provided that the execution thereof by the Mayor and the City Clerk shall be conclusive evidence of such approval. 2.2. The Mayor and the City Clerk are hereby designated as the representatives of the City with respect to the Amendments to the Bonds. The Mayor, the City Clerk, and other officers of the City are authorized and directed to execute and deliver any and all certificates, agreements, or other documents which are required by the Loan Agreement, or any other agreements, certificates, or documents which are deemed necessary by Bond Counsel to documents as are necessary, customary, or appropriate in connection with the reissuance of the Bonds, or are required by Bond Counsel to complete the Amendments to the Bonds and establish the validity or enforceability of the Bonds or the exclusion from gross income of interest on the Bonds for purposes of federal income taxation and State of Minnesota taxation (including but not limited to the execution of an Information Return for Tax-Exempt Private Activity Bond Issues, Form 8038 (Rev. April 2011)). 2.3. As provided in the Loan Agreement and the Bond Resolution, the Bonds 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 Bonds shall ever have the right to compel any exercise by the City of its taxing powers to pay any of the Bonds 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 Loan Agreement and the revenues and assets thereunder, which have been be assigned to the Lender under the Assignment of Loan Agreement. The Bonds shall not constitute a charge, lien, or encumbrance, legal or equitable, upon any property of the City, except the interests of the City in the Loan Agreement, and the revenues and assets thereunder, which have been assigned to the Lender under the Assignment of Loan Agreement. Section 3. Effective Date. This resolution shall be in full force and effect from and after its passage. 474482v1 JAE RC110-60 2 PASSED AND ADOPTED BY THE COMMON COUNCIL OF THE CITY OF ROCHESTER, MINNESOTA, THIS ______ DAY OF _____________, 2017. PRESIDENT OF SAID COMMON COUNCIL ATTEST: CITY CLERK Approved this ______day of ___________, 2017. (Seal of the City of Rochester, Minnesota) MAYOR OF SAID CITY 474482v1 JAE RC110-60 3 C E R T I F I C A T I O N 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 approving amendments to the City’s Multifamily Housing Revenue Bonds (The Buckeye Project), Series 2016, and authorizing the execution and delivery of documents relate thereto, and 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 ____________ 2017. City Clerk City of Rochester, Minnesota 474482v1 JAE RC110-60