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RES 10-36RESOLUTION NO. 10-36 RESOLUTION RELATING TO A MULTIFAMILY HOUSING DEVELOPMENT AND THE ISSUANCE OF REVENUE BONDS TO FINANCE THE COSTS THEREOF UNDER MINNESOTA STATUTES, CHAPTER 462C, AS AMENDED; GRANTING PRELIMINARY APPROVAL THERETO; AND TAHING CERTAIN OTHER ACTIONS WITH RESPECT THERETO BE IT RESOLVED by the City Council of the City of Elk River, Minnesota (the "City"), as follows: Section 1. Recitals. 1.01 The City is a municipal corporation duly organized and existing under the Constitution and laws of the State of Minnesota. 1.02. 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 to provide funds to finance or refinance multifamily housing developments located within the City. The Act imposes certain affordability standards on such multifamily housing developments. 1.03. As a condition to the issuance of revenue bonds pursuant to the Act, the City must adopt a housing program providing the information required by Section 46X.03, subdivision la, of the Act (the "Housing Program"). In addition, a public hearing must be held in accordance with the requirements of Section 147(f) of the Internal Revenue Code of 1986, as amended (the "Code"), and in accordance with the requirements of the Act. Under Section 146 of the Code, an allocation of private activity bonding authority must be received from the State of Minnesota. An application for such an allocation must be made pursuant to the requirements of Minnesota Statutes, Chapter 474A, as amended (the "Allocation Act"). 1.04. Elk River Leased Housing Associates III, Limited Partnership, a Minnesota limited partnership, or an affiliate thereof (the "Borrower"), has proposed that the City, pursuant to the Act, issue its revenue bonds in the approximate aggregate principal amount of $7,000,000, in one or more series at one time or from time to time (the "Bonds"), the proceeds of which will be loaned by the City to the Borrower to be applied by the Borrower to the acquisition and renovation of an existing 68-unit multifamily rental housing facility located at 1105 Lions Park Drive in the City (the "Project"). The Borrower will apply the proceeds of the loan to: (i) the acquisition and renovation of the Project; (ii) the funding of one or more reserve funds to secure the timely payment of the Bonds; (iii) the payment of certain interest on the Bonds during renovation of the Project; and (iv) the payment of certain costs of issuing the Bonds. Section 2. Preliminary Findings. Based on representations made by the Borrower to the City to date, the City Council of the City hereby makes the following preliminary findings, determinations, and declarations: (a) The Project consists of a multifamily housing development, and at least forty percent (40%) of the units in the Project will be set-aside for persons or families with sixty percent (60%) or less of median area income, adjusted for family size. (b) The proceeds of the Bonds will be loaned to the Borrower and the proceeds of the loan will be applied to: (i) the acquisition and renovation of the Project; (ii) the funding of one or more reserve funds to secure the timely payment of the Bonds; (iii) the payment of certain interest on the Bonds during the renovation of the Project; and (iv) the payment of certain costs of issuing the Bonds. The City will enter into a loan agreement (or other revenue agreement) with the Borrower requiring loan repayments from the Borrower in amounts sufficient to repay the loan when due and requiring the Borrower to pay all costs of maintaining and insuring the Project, including taxes thereon. (c) The Bonds will be limited obligations of the City payable solely from the revenues pledged to the payment thereof, and will not be a general or moral obligation of the City and will not be secured by or payable from revenues derived from any exercise of the taxing powers of the City. Section 3. Public Hearin. The City on the date hereof conducted a public hearing on the Housing Program, the Project, and the issuance of the Bonds by the City, notice of which hearing (the "Public Notice") was published in the City's official newspaper on June 12, 2010. The Public Notice provided a general, functional description of the Project, the expected maximum aggregate face amount of the Bonds, the identity of the Borrower, and the location of the Project. At the public hearing reasonable opportunity was provided for interested individuals to express their views on the Project and the proposed issuance of the Bonds. Section 4. Housing Program. Prior to the date hereof, Gray, Plant, Mooty, Mooty & Bennett, P.A., as Bond Counsel, prepared and submitted the Housing Program to City staff for review. The Housing Program is hereby approved and adopted. Section 5. Preliminary Approval. The City Council hereby provides preliminary approval to the issuance of the Bonds in the approximate aggregate principal amount of $7,000,000 to finance a portion of the costs of the Project pursuant to the Housing Program of the City, subject to: (i) a final approval following the preparation of applicable documents; and (ii) final determination by the City Council that the financing of the Project and the issuance of the Bonds are in the best interests of the City. Section 6. Submission of an A~?plication for an Allocation of Bonding Authority. The City Council hereby authorizes the submission of an application for allocation of bonding authority pursuant to Section 146 of the Code and the Allocation Act in accordance with the requirements of the Allocation Act. The Mayor, City Administrator, Finance Director and Director of Economic Development of the City, with the assistance of Bond Counsel, shall take all actions, in cooperation with the Borrower, as are necessary to submit an application for an allocation of bonding authority to the Minnesota Office of Management & Budget. Section 7. Reimbursement of Costs under the Code. The United States Department of the Treasury has promulgated regulations governing the use of the proceeds of tax-exempt obligations, all or a portion.of which are to be used to reimburse project expenditures paid prior to the date of issuance of such obligations: Those regulations (Treasury Regulations, Section 1.150-2) (the "Regulations") require that the City adopt a statement of official intent to reimburse an ongmal expenditure not later than sixty (60) 2 days after payment of the original expenditure. The Regulations also generally require that the obligations be issued and the reimbursement occur within eighteen (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 three (3) years after the date the expenditure is paid. The Regulations generally permit reimbursement of capital expenditures and costs of issuance. This Resolution shall act as a declaration of the City's interit to reimburse the Borrower for expenditures made for costs of the Project prior to the issuance of the Bonds, subject to the City Council's final approval of the issuance of the Bonds. Section 8. Costs. The Borrower will pay any administrative fees of the City and pay or 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. Section 9. Commihnent Conditional. The adoption of this Resolution does not constitute a guarantee or a firm commitment that the City will issue the Bonds as requested by the Borrower. If, as a result of information made available to or obtained by the City during its review of the Project, it appears that the Project or the issuance of Bonds to finance the costs thereof is not in the public interest or is inconsistent with the purposes of the Act, the City reserves the right to decline to give final approval to the issuance of the Bonds. The City also retains the right, in its sole discretion, to withdraw from participation and accordingly not issue the Bonds should the City Council, at any time prior to the issuance thereof, determine that it is in the best interests of the City not to issue the Bonds or should the parties to the transaction be unable to reach agreement as to the terms and conditions of any of the documents for the transaction. Section 10. Effective Date. This Resolution shall be in full force and effect from and after its passage. Adopted by the City Council of the City of Elk River, Minnesota, on June 28, 2010. CITY OF ELK RIVER, MINNESOTA 1 ~ ~ ~ Mayor ~~ Attest: ~.... ity Administrator