5.2. SR 03-05-2007
City of Elk River Item Number
REQUEST FOR COUNCIL ACTION 5.2.
Agenda Section Meeting Date Prepared by
Community Development March 5, 2007 Scott Clark, Community Development
Director
Item Description Reviewed by
Dominium Corporation Request for Housing Revenue Bond for ~
Birchwood Court Apartments - 227 School Street NW
Introduction
An Inducement Resolution was passed by the City Council on Februmy 5, 2007, which allowed
the process to begin for Elk River Leased Housing Associates II, ILP (Elk River Housing) to
secure a 30-year tax exempt housing revenue bond, in an amount up to $2.5 million dollars from
the City. These funds will be used as proceeds for the purchase of the 51-unit Birchwood Court
Apartments (formerly Park Point), located at the southwest comer of School Street and Proctor
Avenue. The City's issuance of these housing revenue bonds will also enable the new owner to
receive housing tax credits, which will be converted to project equity. As part of the statutory
requirements, the City needs to conduct a public hearing and to pass a resolution regarding the
same. Approval of this resolution will formally start the underwriting and issuance process of the
housing revenue note.
Discussion
No programmatic changes have occurred from the February 5, 2007 meeting and the amount of
rehabilitation, rent restrictions, etc. regarding this program are the same as shown on the attached
February 5, 2007 Council action.
Financial Impact
It is important to reemphasize that there will be no impact to the City, since this request is for a
revenue bond conduit fInancing, with the City not having to pledge any considerations for its debt
payment. In addition, Dominium has paid an initial $5,000 application fee. The City will also
require a one percent issuance fee and all out-of-pocket expenses for legal fees to underwrite the
bond will be paid by the applicant.
Attachments
· HousingDevelopmentBondResolution07-_<to be handed out Monday evening)
· Council Action Request Form - February 5, 2007
· Dominium letter dated January 16, 2007
· Inducement Resolution ofthe City of Elk River No. 07-13
· Elk River Conduit Bonding Application Approved Program for Financing a Multifamily
Housing Program
Action Requested
Staff recommends approval of the following:
Resolution No. 07-_ , A Resolution Approving a Housing Plan and Housing Program and
approving Authorizing Execution of Various Documents in Connection with the Issuance
of Multifamily Housing Revenue Bonds (Birchwood Court Apartments Project)
These recommendations are based on:
1. Issuance and other fees to be paid by the applicant
2. Up to $671,000 in rehabilitation fees plus contingencies be dedicated to the project
3. Any and all City of Elk River fire inspection deficiencies be corrected prior to closing or
as part of the rehabilitation program as improvements.
Council Action
Motion by_
Second by _
Vote
Follow Up
RESOLUTION 07- ~
A RESOLUTION OF THE CITY OF ELK RIVER
RECITING A PROPOSAL FOR A MULTIFAMILY HOUSING DEVELOPMENT
PROJECT, INDICATING PRELIMINARY INTENT, SUBJECT TO CERTAIN
CONDITIONS, TO ASSIST THE FINANCING OF THE PROJECT PURSUANT TO
MINNESOTA STATUTES, CHAPTER 462C
(BIRCHWOOD COURT APARTMENTS PROJECT)
WHEREAS,
(a) The City is authorized pursuant to Minnesota Statutes, Chapter 462C, as amended
(the "Act") to finance the making or purchasing of loans with respect to multifamily housing
developments within the boundaries of the City of Elk River (the "City") through the issuance of
revenue bonds;
(b) Pursuant to the Act, the full faith and credit of the City will not be pledged to the
payment of the principal of, premium, if any, and interest on the revenue bonds;
(c) The City has received a proposal from Elk River Leased Housing Associates II, LP, a
Minnesota limited partnership (the "Company"), that the City assist in financing a Project hereinafter
described, through the issuance of revenue bonds in the maximum aggregate principal amount of
approximately $2,500,000 (the "Revenue Bonds") pursuant to the Act and in accordance with a
housing finance program prepared with respect to the Project;
(d) The undertaking of the proposed Project and the issuance of the Revenue Bonds to
finance the cost thereof will further promote the public purposes and legislative objectives of the
Act by expanding and assisting the multifamily housing facilities available in the City;
(e) The Project to be financed by the Revenue Bonds is the acquisition and renovation
of an existing 51-unit multifamily rental housing facility at 1227 School Street NW in the City
currently known as Birchwood Courts Apartments (the "Project"). The Project will be owned and
operated by the Company;
(f) The City has been advised by representatives of the Company that conventional,
commercial financing to pay the capital cost of the Project is available only on a limited basis and at
such high costs of borrowing that the economic feasibility of operating the Project would be
s~ficantlyreduced,
(g) No public official of the City has either a direct or indirect financial interest in the
Project nor will any public official either directly or indirectly benefit financially from the Project.
nl-i~
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Elk River,
Minnesota, as follows:
I. The Council hereby indicates its preliminary intent to undertake the Project pursuant
to the Act and to issue the Revenue Bonds in the maximum aggregate principal amount of
$2,500,000 pursuant to the Act to finance the Project
2. On the basis of information available to the City it appears, and the City hereby
finds, that the Project constitutes a multifamily housing development within the meaning of Section
462C.05 of the Act; that the availability of financing under the Act and the willingness of the City to
furnish such financing will be a substantial inducement to the Company to undertake the Project,
and that the effect of the Project, if undertaken, will be to encourage the provision of multifamily
rental housing opportunities to residents of the City at a reasonable cost.
3. The City staff is authorized to publish notice of a public hearing with respect to the
Project and issuance of the Revenue Bonds on March 5, 2007.
4. The issuance of the Revenue Bonds by the City is subject to, among other things, (a)
holding a public hearing with and consideration of any public comments at such hearing, (b) receipt
of federal bond allocation for the Revenue Bonds and (c) final approval by this Council, the
Company and the purchaser of the Revenue Bonds as to the ultimate details of the financing of the
Project.
5. The Company has agreed and it is hereby determined that any and all costs incurred
by the City in connection with the financing of the Project whether or not the Project is carried to
completion and whether or not approved by the City will be paid by Company.
6. Nothing in this resolution or in the documents prepared pursuant hereto shall
authorize the expenditure of any municipal funds on the Project other than the revenues derived
from the Project or otherwise granted to the City for this purpose. The Revenue Bonds shall not
constitute a charge, lien or encumbrance, legal or equitable, upon any property or funds of the City
except the revenue and proceeds pledged to the payment thereof, nor shall the City be subject to any
liability thereon. The holder of the Revenue Bonds shall never have the right to compel any exercise
of the taxing power of the City to pay the outstanding principal on the Revenue Bonds or the
interest thereon, or to enforce payment thereof against any property of the City. The Revenue
Bonds shall recite in substance that the Revenue Bonds, including interest thereon, is payable solely
from the revenue and proceeds pledged to the payment thereof. The Revenue Bonds shall not
constitute a debt of the City within the meaning of any constitutional or statutory limitation.
7. It is the purpose of this resolution to evidence the commitment of the parties and
their intentions with respect to the proposed Project in order that the Company may proceed
without delay with the commencement of the acquisition and renovation of the Project with the
assurance that there has been sufficient "official intent" within the meaning of Treasury Regulations
Section 1.150-2(d) to permit Project costs incurred within sixty (60) days prior to the date of
adoption of this Resolution to be financed by the issuance of multifamily revenue bonds to finance
the entire cost of the Project upon agreement being reached as to the ultimate details of the Project
and its financing.
S;\Community Development\Scott ClarklDominium Project\Resolution.doc
2
2007.
Adopted by the City Council of the City of Elk River, Minnesota, this 5th day of February,
Ary~
~.~
I~ (i/\/ "
Stephalbie Klinzing, Ma
Tina Allard, City Clerk
FILE COpy
City of Elk River
REQUEST FOR COUNCIL ACTION
Agenda Section Meeting Date
Community Development Februaty 5, 2007
Item Number
Item Description "
Dominium Corporation Request for Housing Revenue Bond for
Birchwood Court A artments 1227 School Street
Prepared by
Scott Clark, Community Development
Director
Reviewed by
Introduction
The Dominium Corporation,- under the ownership of Elk River Leased Housing Associates II, 12 (Elk
River Housing), is seeking authorization for t\:1e City of Elk River to issue a 30-year tax exempt housing
revenue bond in an amount up to $2.5 million. These funds will be used as proceeds for the purchase of
the 51-unit Birchwood Court Apartments (formerly Park Pointe) located at the southwest comer of
School Street and Proctor Avenue. The City's issuance of these housing revenue bond will also enable the
new owner to receive housing tax credits which will be converted to project equity. The bond and credits
place a cap on income and rent for the project which is illustrated on page 2 of the attached Dominium
letter dated Januaty 16, 2007. It should be noted that this apartment complex was originally financed with
tax credits, and as such, had similar limitations.
The applicant is requesting that the Council consider an inducement resolution which indicates a
preliminarjr intention to start the process (and allows the applicant to start the tax credit process). In
addition, the resolution establishes March 5, 2007 as the date for a statutorily required public hearing.
Also included for Council consideration is a "Program for Financing a Multifamily Rental Housing
Development", which essentially is a summary of how proceeds will be used, rent standards, and where
authorization of the bonds are derived from.
Discussion
Staff is recommending this issuance base on the following:
Elk River Housing will infuse a minimum of $671,000 into rehabilitation efforts including boilers, interior
and common area improvements. This is in addition to approximately $300,000 of recent improvements
for steel siding, roof and new decks. The combined total of $971,000 equates to almost $16,000 per unit
of rehabilitation, which is substantial for a complex of this age (built in approximately 1990).
Rent "restrictions" on this property is not a concern as the maximum allowable rent is substantially higher
than Elk River's normal rental market value. Page 2 of the previously cited letter illustrates that current
rents will be increased, depending on the type of unit, and more important to the point of rental rates,
proposed rents will be $250 to $300 under the maximum allowed by the restrictions placed on the
property because of the bond sale.
S:\Cornmunity Deve1opmem\Scon Clark\Dominium Projea\R.equest Council Action dominium.doc
.r. /"'> "~'._ , '"'. ".:: i .
The City's Fire Department, which conducts apa,! wiem; m;spec(ioils, has stated that the Dominium
Corporation, which owns the Dove Tree Apart:rftenism the City; has been excellent to work with from a
management viewpoint.
Financial Impact
There will be no impact to the City since this request is for a revenue bond (conduit financing) with the
City not having to pledge any considerations towards debt payment. In addition, Dominium has paid an
initial $5,000 application fee, the City will require a 1 % of issuance fee and all out of pocket expenses for
legal fees to underwrite the bond will be paid for W the applicant.
Attachments
· Dominium letter dated January 16, 2007
. Elk River Conduit Bonding Application
· Program for Financing a MultifamilyRental Housing Development
· Resolution No. 07-_,
Action Requested
Staff recommends approval of the following:
1. Resolution No. 07-_, A Resolution Reciting a Proposal for a Multifamily Housing
Development Project, Indicating Preliminaty Intent, Subject to Certain Conditions, to Assist
the Financing of the Project Pursuant to Minnesota Statutes, Chapter 462C (Birchwood
Court Apartments Project) in an amount up to $2.5 million; and
2. The Program for Financing a Multifamily Rental Housing Development
These recommendations are based on:
· Approximately $671,000 of rehabilitation funds be dedicated to the project
. Issuance and other fees to be paid for by the applicant
Council Action
Motion by _
Second by _
Vote
Follow Up
S;\Community Devdopment\Scott dark\Dominium Projecc\Request Council Action dominiwn.doc
RESOLUTION 07-
A RESOLUTION OF THE CITY OF ELK RIVER
RECITING A PROPOSAL FORA MULTIFAMILY HOUSING DEVELOPMENT
PROJECT, INDICATING PRELIMINARY INTENT, SUBJECT TO CERTAIN
CONDITIONS, TO ASSIST THE FINANCING OF THE PROJECT PURSUANT TO
MINNESOTA STATUTES, CHAPTER 462C
(BIRCHWOOD CO~T APARTMENTS PROJECT)
WHEREAS,
(a) The City is authorized pursuant to Minnesota Statutes, Chapter 462C, as amended
(the "Act") to finance the making or. purchasing of loans with respect to multifamily housing
developments within the boundaries of the City of Elk River (the "City") through the -issuance of
revenue bonds;
(b) Pursuant to the Act, the full faith and credit of the City will not be pledged to the
payment of the principal of, premium, if any, and interest on the revenue bonds;
(c) The City has received a proposal from Elk River Leased Housing Associates II, LP, a
Minnesota limited partnership (the "Company"), that the City assist in financing a Project hereinafter
described, through the issuance of revenue bonds in the maximum aggregate principal amount of
approximately $2,500,000 (the "Revenue Bonds") pursuant to the Act and in accordance with a
housing finance program prepared with respect to the Project;
(d) The undertaking of the proposed Project and the issuance of the Revenue Bonds to
finance the cost thereof will further promote the public purposes and legislative objectives of the
Act by expanding and assisting the multifamily housing facilities available in the City;
( e) The Project to be financed by the Revenue Bonds is the acquisition and renovation
of an existing 51-unit multifamily rental housing facility at 1227 School Street NW in the City
currently known as Birchwood COUrts Apartments (the "Project"). The Project will be owned and
operated by the Company;
(f) The City has been advised by representatives of the Company that conventional,
commercial financing to pay the capital cost of the Project is available only on a limited basis and at
such high costs of borrowing that the economic feasibility of operating the Project would be
significantly reduced;
(g) No public official of the City has either a direct or indirect financial interest in the
Project nor will any public official either directly or indirectly benefit financially from the Project.
NOW, lHEREFORE, BE IT RESOLVED by the City Council of the City of Elk River,
1v.!innesota, as follows:
1. The Council hereby indicates its preliminary intent to undertake the Project pursuant
to the Act and to issue the Revenue Bonds in the maximum aggregate principal amount of
$2,500,000 pursuant to the Act to finance the Project.
2. On the basis of information available to the City it appears, and the City hereby
finds, that the Project constitutes a multifamily housing development within the meaning of Section
462C.05 of the Act; that the availability of financing under the Act and the willingness of the City to
furnish such financing will be a substantial kducement to the Company to undertake the Project,
and that the effect of the Proj ect, if undertaken, will be to encourage the provision of multifamily
rental housing opportunities to residents of the City at a reasonable cost.
3. The City staff is authorized to publish notice of a public hearing with respect to the
Project and issuance of the Revenue Bonds on March 5, 2007.
4. The issuance of the Revenue Bonds by the City is subject to, among other things, (a)
holding a public hearing with and consideration of any public comments at such hearing, (b) receipt
of federal bond allocation for the Revenue Bonds and (c) final approval by this Council, the
Company and the purchaser of the Revenue Bonds as to the ultimate details of the financing of the
Project.
5. The Company has agreed and it is hereby determined that any and all costs incurred .
by the City in connection with the financing of the Project whether or not the Project is carried to
completion and whether or not approved by the Citywill be paid by Company.
6. Nothing in this resolution or in the documents prepared pursuant hereto shall
authorize the expenditure of any municipal funds on the Project other than the revenues derived
from the Project or otherwise granted to the City for this purpose. The Revenue Bonds shall not
constitute a charge, lien or encumbrance, legal or equitable, upon any property or funds of the City
except the revenue and proceeds pledged to the payment thereof, nor shall the City be subject to any
liability thereon. The holder of the Revenue Bonds shall never have the right to compel any exercise
of the taxing power of the City to pay the outstanding principal on the Revenue Bonds or the
interest thereon, or to enforce payment thereof against any property of the City. The Revenue
Bonds shall recite in substance that the Revenue Bonds, including interest thereon, is payable solely
from the revenue and proceeds pledged to the payment thereof. The Revenue Bonds shall not
constitute a debt of the City within the meaning of any constitutional or statutory limitation.
7. It is the purpose of this resolution to evidence the commitment of the parties and
their intentions with respect to the proposed Project in order that the Company may proceed
without delay with the commencement of the acquisition and renovation of the Project with the
assurance that there has been sufficient" official intent" within the meaning of Treasury Regulations
Section 1.1 50-2 (d) to permit Project costs incurred within sixty (60) days prior to the date of
adoption of this Resolution to be financed by the issuance of multifamily revenue bonds to finance
the entire cost of the Project upon agreement being reached as to the ultimate details of the Project
and its financing.
S :\Community Development-Scott Clark\Dorninium Project\Resolution.doc
2
Adopted by the City Council of the City of Elk River, Minnesota, this 5th day of February-,
2007.
Stephanie Klinzing, Mayor
ATIEST:
..
Tina Allard, City Oerk
STATE OF MINNESOTA
COUNTY OF SHERBURNE
CITY OF ELK RIVER
I, the undersigned, being the duly qualified and acting City Clerk of the City of
Elk River, Minnesota, DO HEREBY CERTIFY that I have compared the attached and
foregoing extract of minutes with the original thereof on file in my office, and that the
same is a full, true and complete transcript of the minutes of a meeting of the City
Council of said City duly called and held on the date therein indicated, insofar as such
minutes relate to giving preliminary approval on the City's Birchwood Court Apartments
Proj ect.
WITNESS my hand and the seal of said City this _ day of
,2007.
City Clerk
(SEAL)
NOW, lHEREFORE, BE IT RESOLVED [ Click here and type resolution ]
Passed and adopted this _ day of
2006.
Stephanie Klinzing, Mayor
ATTEST:
Joan Schmidt, City Clerk
PROGRAM FOR FINANCING
A MUL TIP AMIL Y RENTAL HOUSING DEVELOPMENT
Proposal Authoritv. Pursuant to lvfinnesota Statutes, Chapter 462C (the "Act") the City
of Elk River (the "City") is authorized to develop and administer programs of multifamily
housing developments under the circumstances and within the limitations set forth in the Act.
lvfinnesota Statutes, Section 462C.07 provides that such programs for lvfinnesotlt family housing
developments may be financed by revenUe bonds issued by the City. This housing finance
program (this "Program") is undertaken by the City to finaoce a Project (as hereafter described)
to be developed and owned by Elk River Leased Housing Associates II, LP, a Minnesota limited
partnership (the "Company"). The City expects to issue multifamily housing development
revenue bonds (the "Bonds") pursuaot to lvfinnesota Statutes, Chapter 462C, to assist in
financing the Project.
General Description of the Program and Location. The City anticipates loaning the
proceeds of the Bonds to the Company to finance the acquisition and renovation of an
approximately 51 unit multifamily rental housing facility located in the City at 1227 School
Street NW (the "Project"). When the renovation is completed there will be the following units at
the following estimated rents: 12 three-bedroom, 1,066 square foot units ($850); 36 two-
bedroom, 871-1,113 square foot units ($715-750); and 3 one-bedroom, 683 square foot units
($625).
Operation of Project. The Project will be operated in accordance with applicable
development restrictions, and all rehabilitation will be subject to applicable state and local
building codes. The affordability standards and set-aside requirements of Section 462C.05,
Subdivision 2 of the Act, and the requirements of lvfinnesota Statutes 474A and Section 142(d)
of the Internal Revenue Code of 1986, as amended (the "Code"), will be met. The Company will
be required to operate the Project in accordance with state and local anti-discrimination laws and
ordinances.
Revenue Bonds. The Company has indicated that the amount of Bonds required to
finance the Project is approximately $2,500,000 which will mature in approximately 35 years.
The proceeds will fmance the acquisition and renovation of the Project and pay certain costs of
issuing the Bonds, and may be used to establish a reserve. Tax credit equity is also expected to
provide financing for the Project.
1990325v 1
Issuance Authority. The Bonds will be issued pursuant to Section 462C.07 Subdivision 1
of the Act and shall be payable primarily from revenues of the Program. Issuance of the Bonds
is anticipated to be in early 2007. Up to $2,500,000 of the state volume cap for private activity
bonds, pursuant to Section 146 of the Code and Chapter 474A of Minnesota Statutes, will be
allocated to the Bonds.
Monitoring. The Company expects to enter into suitable agreements with necessary
parties to ensure consistent compliance with the objectives of this Program, as well as with the
requirements of applicable law.
Use of Bond Proceeds. The proceeds of the Bonds will be loaned to the Company
pursuant to a revenue agreement (the "Loan Agreement") by and between the City and the
Company. The Company will be required, pursuant to the Loan Agreement, to make payments
sufficient to pay when due the principal of, premium, if any, and interest on the Bonds.
1990325v 1
2
CITY OF ELK RIVER
[:(())fPt
Conduit Bonding Application
I. CONTACT INFORMATION.
Company:
Elk River Leased Housing Associates II, LP
2355 Polaris lane North, Ste. 100
Address:
City / State / Zip
Plymouth, MN 55447
Contact Person(s)
DavidDve
Business Phone
763/354-5609
Fax 763/354-5626
Email
ddve@daminiuminc.com
Federal ill #
State ill #
Proposed Bond Council
Proposed Underwriters Council
II. PROJECT INFORMATION
What type of project is proposed?
x
Industrial Development/Expansion
Medical Facility
Multi-Family Residential Housing
M:ixed Use Redevelopment
Other
What will funds be used for?
x
X
Land Acquisition
Construction/Renovation
Capital Equipment
Other
Bond Amount Requested.: $ not to exceed $2,300,000
Total Project Cost: $4,253,783
Please provide a summaty of the proposed project:
Please see attached letter requesting l:cnd resolution
~
Has the appli=t ever defaulted on a bond or mortgage commitment or ever declared
bankruptcy? If so, please explain.
No
Please list the communities where the applicant has applied for conduit bonding within the past
five years.
City of Minneapolis
St. Paul
Champlin
Eden Prairie
New Brighton
2
August 2001
III. FINANCING
Sources of Funds
SOURCE
Bank Loan
Bank Loan
NAME ..
Other Private Funds Charj.erMac
Other Private Funds
Applicant Contribution
Fed Grant/Loan HeME
StaIe Grant/Loan
City Financing
Conduit Bonding
Total Financing
Uses of Funds
Land
Construction/Renovation (attach plans & costs)
Capital Equipment
Other Professional Services
Legal
Financing Costs
Total Costs
Comments:
3
TERMS AMOUNT
$
$
Equity $ 1,025,512
$
$ 195,272
0%; 30 yrs $ 764,000
$
$
$ 2,269.000
$ 4,253,783
$ 2,346,000
$
673,200 (plans not available)
$
$ 1,234,583
$ 4,253,783
August 2001
rv. PROJECT GOALS
Directions
. IndustriaI/Medical Facilities Applicants to complete Section 1 only.
. Housing applicants to complete Section 2 only.
Mixed use applicant to complete both Sections 1 & 2
..
SECTION I: Industrial/Medical Facilities
Present # of Employees
Total Payroll
Job Creation
Average Are the Jobs Expected
Number Hourly Annu:lI Permanent or Hiring
Tob Tide ofTobs Wa"e SalarY Temoorarv? Date
-
Current Market Value of Property $
Estimated Market Value upon Completion $
SECTION 2: Housing Developments
Housing Unit Data
Type of Unit
.....l.- 1 bedroom
2 bedroom
..J2 3 bedroom
1 bedroom
2 bedroom
3 bedroom
1 bedroom
2 bedroom
3 bedroom
,-
$625-
$715 - $750
$850
Percent Available to
LMI
100% @ 60%
100%@ 60% AMI
100%@ 60% AMI
100%
Number of Units
Rent Range
4
August 2001
IV. PROJECT CONTACTS
Attorney
Name Erin Jones / Winthrop & Weinstine
Address 225 South Sixth Street, Ste. 3500, Minneapolis MN 55402
Phone 612 / 604 6730
Ernail eJones@winthrop.can
I>
Accountant
Name Alex Hunt / Besley Hunt & Associates, Ltd..
Address 2607 White Bear Avenue, Maplewood MN 55109
Phone 6511110-8505
Email ahunt@heslevhunt.can
Developer/Builder
Name Elk River Leased HOllS; n9" Associates II. T;P
Address 2355 Polaris Lane North, Ste. 100 Plymouth, MN 55447
Phone 763 / 354 5609
Email ddye@dominiummc.com
Financing Sources (lenders. partners. etc... )
Name rnngn,cr+y 1: f""nrnp:::my / n.=I"i:r; n ..lnr;::jn
Address '10 Sont"}, St"rf'f't". St.., 4400 Mlnne"P'"'l; '" MN ~';4n?
Phone 612 / 376-4075
Name
Address
Phone
Deanna Hernrnesch /Central Minnesota Housing Partnership
Rl ow..",t" St" r-.pTmi'l;n St"rF'Pt". St"p, in, !'it". ('In,,," MN ~h<n1
320 / 259-0393
Name
Address
Phone
Eric Trucksess / CharterMac Capital
fi;;>~ Mad; ",on Av..n"p. NF'W York NY 1 On;;>?
212 / 521-6392
Name
Address
Phone
Parent Company
Name Dominium .Developnent & Acquisition, LIe
Address ;;>,s~ Pol"rjs Lane North. St"..e. 100 Pl~Jt"h. MN ~';447
5 Aug= 2001
V. ATTACHMENTS CHECK LIST
Please attach the following:
X A) Non-Refundable Deposit of $5,000
The City is to be reimbursed and held harmless for any out-of-pocket
expenses related to the conduit bonding including, but not limited to the
City's issuer counsel and other legal fees, financial analyst: fees, bond counsel
fees, and the City's a&ninistrative expenses in connection with the
application. The applicant must execute a letter to the City undertaking to
pay all such expenses even if they exceed the $5,000 deposit.
B) Administrative Fee of one percent (1 %) of the bond request. (fo be paid at
time of bond closing)
VI. AGREEMENT
I I We certify that all information provided in this application is true and correct to the best of
my I our knowledge. I I We authorize the City of Elk River to check credit references and verify
financial and other information. I I We agree to provide any additional information as may be
requested by the City.
NA11E 'Rlk Ri.vprT AA~~r1 "Rnn.::; ng nc::c:nl'"""; rirpc::: TT. T .P
DATE 1 / 22 / 07
6
August 2001
.~~
..
DOMINIUM
Development & Acquisition, LLC
January 16, 2007
.
Mr. Scott M. Clark
Community Development Director
City of Elk River
13065 Orono Parkway
Elk River, MN 55330
Minneapolis, MN 55402-4115
Re: Birchwood Court Apartments
1227 School Street
Elk River, MN
Dear Mr. Clark:
By this letter, Elk River Leased Housing Associates n, LP is formally requesting that the
City of Elk River City Council pass a resolution authorizing issuance oftax-exempt
bonds in an amount not to exceed $2,350,000 to aid funding the acquisition/rehabilitation
of the Birchwood Court apartments located at 1227 School Street NW in Elk River. We
are requesting a 30-year bond term.
The Buyer is proposing to: 1) preserve the existing affordable housing by executing a 30-
year affordable housing deed restriction; 2) substantially rehabilitate the property; and 3)
provide a high-quality, crime-free environment for our residents.
The general partner is comprised of four members who are the four principals of
Dominium Development & Acquisition, LLC based in Plymouth, MN. The four
members of the general partner own another apartment project in Elk River, i.e. Dove
Tree Apartments located at 1105 Lions Park Drive. We strongly support the Elk River
Coalition for Crime-Free and Drug-Free Housing as demonstrated by our involvement
with this program at Dove Tree Apartments. It is our intention to strongly enforce the
same tenant selection criteria at Birchwood Court Apartments that we have successfully
implemented at Dove Tree Apartments. As Minnesota's largest privately-held owner of
apartments, we have consistently found that providing safe, crime-free housing units to
good tenants is a win-win scenario for the owners, our tenants and the City.
2355 Polaris Lane North Suite lOO MinneapoliS, MN 55447 Phone 763/354-5500 Fax 763/354-5650
A~mli_~ifin7J.. T>Pw>JnnmPrlt. r,,"..'h-w"frn.. . M"..".,............,
.. . , ... .~. .-" -~- ,.
. ".-"
Mr. Clark
January 16, 2007
Page ii
The current owner recently replaced the siding and roofing shingles. The Buyer's scope
of rehabilitation includes:
1) converting one unit into a leasing office / clubroom resulting in 51 rental units;
2) new kitchen cabinets and countettops;
3) new bathroom vanities and cultured marble vanity tops;
4) replacing the boilers;
5) replacing appliances over 7 years old; and
6) updating the common areas with new carpet, paint and light fixtures.
We anticipate that the rehabilitation budget will be between $10,000 and $12,000 per unit
plus a 10% contingency. In addition to tax-exempt bonds, the Buyer is applying for
$900,000 in HOME funds from Central Minnesota Housing Partnership. Also, the Buyer
expects to raise $1,025,000 in tax credit equity.
The property is currently encumbered by a Land Use RestrictiveAgreement (LURA) that
was executed December 24, 1990. The LURA specifies 100% of the units are rent and
income restricted at or below 60% of Area Median Income (AMI). The Buyer is
proposing to preserve 100% of this affordable housing under the same rent and income
restrictions, i.e. at or below 60% AMI.
The 60% AMI income restrictions are as follows:
2006 LllITC INCOME LIMITS (60% of AREA MEDIAN INCOME)
1 Person 2 Persons 3 Persons 4 Persons 5 Persons 6 Persons
$33,000 $37,680 $42,420 $47,100 $50,880 $54,660
The following table outlines current rents, proposed rents after rehabilitation and
maximum allowable rents per the Section 42 guidelines for the metro area:
2006 URTC RENT LIMITS (60% of AREA MEDIAN INCOME)
Unit Type #of Size Current Rent Proposed Max. LlHTC
Units (SF) Rent Rent
One Bedroom 3 683 $555 $625 $883
Two Bedroom 22 871 $665 $715 $1,060
2 BR / Two Bath 2 1,113 $675 $750 $1,060
3 BR / One Bath* 12 995 $725 $735 $1,060
3 BR / Two Bath 12 1,066 $775 $850 $1,224
* We are considering converting the twelve three bedroom / one bath units into two
bedroom / one bath units.
2355 Polaris Lane North Suite 100 Minneapolis, MN 55447 Phone 763/354-5500 Fax 763/354-5650
- ..
Mr. Clark
January 16, 2007
Page iii
Please call with any more questions or comments. My direct phone number is 763/354-
5609.
I>
DOMINIUM DEVELOPMENT & ACQUISITION, LLC
~
Paul Sween
2355 Polaris Lane North Suite] 00 Minneapolis, MN 55447 Phone 763/354-5500 Fax 763/354-5650
~____,_,.,__ _ n._,_I,,~_,._;. ,....~_~.~........:...... . A,("'''''''''''_D",t
Extract of Minutes of a Meeting of the
City Council of the
City of Elk River, Minnesota
Pursuant to due call and notice thereof, a regular meeting of the City Council of
the City of Elk River, Minnesota was duIy held at the City Hall in said City on Monday, the 5th
day of March, 2007, at P.M.
The following members were present:
and the following were absent:
Member
introduced the following resolution and moved its
adoption:
RESOLUTION 07"_
RESOLUTION APPROVING A HOUSING PROGRAM
AND AUTHORIZING EXECUTION
OF VARIOUS DOCUMENTS IN CONNECTION WITH THE
ISSUANCE OF MULTIFAMILY HOUSING REVENUE BONDS
(BIRCHWOOD COURT APARTMENTS PROJECT)
WHEREAS, the City of Elk River (the "City") has received a proposal from Elk River
Leased Housing Associates II, LP, a Minnesota limited partnership (the "Company"), that the
City issue its revenue bonds in the aggregate principal amount of up to $2,500,000 to finance the
acquisition and renovation of a low and moderate income multifamily housing development
located at 1227 School Street NW in the City (the "Project"); and
WHEREAS, pursuant to Minnesota Statutes, Section 462C.OI and 462C.03, the City has
prepared a housing program (the "Housing Program") in connection with the Project; and
. WHEREAS, in accordance with Minnesota Statutes, Sections 462C.OI(2) and 462C.04,
subd. 2, the City has held a public hearing on the Housing Program and the issuance of revenue
bonds of the City to finance the Project.
NOW THEREFORE, BE IT RESOLVED by the City Council of the City of Elk
River, Minnesota, as follows:
I
l.
the City.
The Housing Program is hereby approved in substantially the forms on file with
2. The Company has proposed that the City issue its Multifamily Housing Revenue
Bonds (Birchwood Court Apartments Project), Series 2007 in the maximum principal amount of
$2,500,000 (the "Bonds") to finance the costs of the acquisition and renovation of the Project in
accordance with a Bond Purchase Agreement (the "Bond Purchase Agreement") among the City,
Elk River Leased Housing Associates II, LP, a Minnesota limited partnership (the "Company")
and Dougherty & Company LLC (the "Purchaser").
3. The Bonds will be issued by the City pursuant to an Indenture of Trust dated as of
April I, 2007 (the "Indenture"), executed by the City and U.S. Bank National Association,
St. Paul, Minnesota (the "Trustee"). The Bonds will be secured by a Combination Mortgage,
Security Agreement and Fixture Financing Statement dated as of April I, 2007 executed by the
Company in favor of the Issuer and assigned by the Issuer to the Trustee pursuant to an
Assignment of Mortgage dated as of April I, 2007 (the "Assignment of Mortgage").
4. Pursuant to the terms of a proposed Loan Agreement dated as of April I, 2007
between the City and the Company (the "Loan Agreement"), the City will loan the proceeds of
the Bonds to the Company to finance the Project. The Company has agreed, pursuant to a
Regulatory Agreement dated as of April I, 2007, by and among the City, the Company and the
Trustee (the "Regulatory Agreement") to operate the Project as a "residential rental project"
under Section 142(d) of the Internal Revenue Code of 1986, as amended. The Bonds will be
offered for resale by the Purchaser pursuant to an Official Statement (the "Official Statement").
5. Forms of the following documents have been submitted to the City Council:
(a) The Loan Agreement;
(b) The Indenture;
(c) The Regulatory Agreement;
(d) The Bond Purchase Agreement; and
(e) The Assignment of Mortgage.
The foregoing documents are hereafter referred to as the "Bond Documents."
6. It is hereby found, determined and declared that:
(a) the issuance and sale of the Bonds, the execution and delivery by the City of the
Bond Documents and the performance of all covenants and agreements of the City contained in
the Bond Documents and of all other acts and things required under the constitution and laws of
the State of Minnesota to make the Bond Documents and the Bonds valid and binding
obligations of the City in accordance with their terms, are authorized by the Act;
2
(b)
Indenture;
it is desirable that the Bonds be issued by the City upon the terms set forth in the
(c) the basic payments under the Loan Agreement are fixed to produce revenue
sufficient to proyide for the prompt payment of principal of, premium, if any, and interest on the
Bonds issued under the Indenture when due, and the Loan Agreement, Mortgage and Indenture
also provide that the Company is required to pay all expenses of the operation and maintenance
of the Project, including, but without limitation, adequate insurance thereon and insurance
against all liability for injury to persons or property arising from the operation thereof, and all
taxes and special assessments levied upon or with respect to the Project premises and payable
during the term of the Loan Agreement and Indenture;
(d) under the provisions of Minnesota Statutes, Chapter 462C and as provided in the
Loan Agreement and Indenture, the Bonds are not to be payable from or charged upon any funds
other than the revenue pledged to the payment thereof; the City is not subject to any liability
thereon; no holder of any 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 premiums thereon, or to enforce
payment thereof against any property of the City except the interests of the City in the Loan
Agreement which have been assigned to the Trustee under the Indenture; 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 which have been assigned to the Trustee under
the Indenture; the Bonds shall recite that the Bonds are issued without moral obligation on the
part of the state or its political subdivisions, and that the Bonds, including interest thereon, are
payable solely from the revenues pledged to the payment thereof; and, the Bonds shall not
constitute a debt of the City within the meaning of any constitutional or statutory limitation.
7. The forms of the Bond Documents and exhibits thereto are approved substantially
in the form submitted. The Bond Documents, in substantially the forms submitted, are directed
to be executed in the name on behalf of the City by the Mayor and the City Administrator. Any
other documents and certificates necessary to the transaction described above shall be executed
by the appropriate City officers. Copies of all of the documents necessary to the transaction
herein described shall be delivered, fIled and recorded as provided herein and in Bond
Documents.
8. The City shall proceed forthwith to issue the Bonds, in Jhe form and upon the
terms set forth in the Indenture and at an interest rate not to exceed 7.00% per annum. The
Bonds will be purchased on substantially the terms set forth in the Bond Purchase Agreement
and the Indenture which have been submitted to the City in connection with this Resolution. The
Mayor and City Administrator are authorized and directed to prepare and execute the Bonds as
prescribed in the Indenture and to deliver them to the Trustee for authentication and delivery to
the original purchasers.
9. The Mayor and City Administrator and other officers of the City are authorized
and directed to prepare and furnish to the Purchaser certified copies of all proceedings and
records of the City relating to the Bonds, and such other affidavits and certificates as may be
required to show the facts relating to the legality of the bonds as such facts appear from the
books and records in the officers' custody and control or as otherwise kilown to them; and all
3
such certified copies, certificates and affidavits, including any heretofore furnished, shall
constitute representations of the City as to the truth of all statements contained herein.
10. The City hereby ratifies, confirms and consents to the use of the Official
Statement in connection with the sale of the Bonds. The City has not prepared nor made any
independent investigation of the information contained in the Official Statement other than the
section therein captioned "The Issuer," and the City takes no responsibility for such information.
11. The approval hereby given to the various documents referred to above includes
approval of such additional details therein as may be necessary and appropriate and such
modifications thereof, deletions therefrom and additions thereto as may be necessary and
appropriate and approved by the City Attorney and the City officials authorized herein to execute
said documents prior to their execution; and said City officials are hereby authorized to approve
said changes on behalf of the City. The execution of any instrument by the appropriate official
or officials herein authorized shall be conclusive evidence of the approval of such documents in
accordance with the terms hereof.
12. The approval hereby given to the Bond Documents and the various other
documents referred to in paragraph 6 above includes approval of (a) such additional details
therein as may be necessary and appropriate and such modifications thereof, deletions therefrom
and additions thereto as may be necessary and appropriate and approved by Bond Counsel, the
City Attorney and the City officials authorized herein to execute said documents prior to their
execution and (b) such additional documents, agreements or certificates as may be necessary and
appropriate in connection with the Bond Documents and with the issuance and sale of the Bonds
and approved by Bond Counsel, the City Attorney and City officials authorized herein to execute
said documents prior to their execution; and said City Attorney and City officials are hereby
authorized to approve said changes or additional documents, agreements or certificates on behalf
of the City. The execution of any instrument by the appropriate officer or officers of the City
herein authorized shall be conclusive evidence of the approval of such documents in accordance
with the terms thereof and hereof. In the absence (or inability) of the Mayor or City
Administrator, any of the documents authorized by this resolution to be executed by them may
be executed by the Acting Mayor or the Acting City Administrator, respectively.
Passed: March 5, 2007.
Stephanie Klinzing, Mayor
ATTEST
Tina Allard, City Clerk
4
Extract of Minutes of a Meeting of the
City Council of the
City of Elk River, Minnesota
c c \t,),v'n-+
-r-+e h--- 5. ~ .
3h-f 01
\.
>
Pursuant to due call and notice thereof, a regular meeting of the City Council of
the City of Elk River, Minnesota was duly held at the City Hall in said City on Monday, the 5th
day of March, 2007, at _ P.M.
The following members were present:
and the following were absent:
Member
introduced the following resolution and moved its
adoption:
RESOLUTION 07"_
RESOLUTION APPROVING A HOUSING PROGRAM
AND AUTHORIZING EXECUTION
OF VARIOUS DOCUMENTS IN CONNECTION WITH THE
ISSUANCE OF MULTIFAMILY HOUSING REVENUE BONDS
(BIRCHWOOD COURT APARTMENTS PROJECT)
WHEREAS, the City of Elk River (the "City") has received a proposal from Elk River
Leased Housing Associates II, LP, a Minnesota limited partnership (the "Company"), that the
City issue its revenue bonds in the aggregate principal amount of up to $2,500,000 to fmance the
acquisition and renovation of a low and moderate income multifamily housing development
located at 1227 School Street NW in the City (the "Project"); and
WHEREAS, pursuant to Minnesota Statutes, Section 462C.01 and 462C.03, the City has
prepared a housing program (the "Housing Program") in connection with the Project; and
WHEREAS, in accordance with Minnesota Statutes, Sections 462C.01(2) and 462C.04,
subd. 2, the City has held a public hearing on the Housing Program and the issuance of revenue
bonds of the City to finance the Project.
NOW THEREFORE, BE IT RESOL YED by the City Council of the City of Elk
River, Minnesota, as follows:
1
.
1.
the City.
The Housing Program is hereby approved in substantially the forms on file with
2. The Company has proposed that the City issue its Multifamily Housing Revenue
Bonds (Birchwood Court Apartments Project), Series 2007 in the maximum principal amount of
$2,500,000 (the "Bonds") to fmance the costs of the acquisition and renovation of the Project in
accordance with a Bond Purchase Agreement (the "Bond Purchase Agreement") among the City,
Elk River Leased Housing Associates II, LP, a Minnesota limited partnership (the "Company")
and Dougherty & Company LLC (the "Purchaser").
3. The Bonds will be issued by the City pursuant to an Indenture of Trust dated as of
April I, 2007 (the "Indenture"), executed by the City and U.S. Bank National Association,
St. Paul, Minnesota (the "Trustee"). The Bonds will be secured by a Combination Mortgage,
Security Agreement and Fixture Financing Statement dated as of April I, 2007 executed by the
Company in favor of the Issuer and assigned by the Issuer to the Trustee pursuant to an
Assignment of Mortgage dated as of April I, 2007 (the "Assignment of Mortgage").
4. Pursuant to the terms of a proposed Loan Agreement dated as of April I, 2007
between the City and the Company (the "Loan Agreement"), the City will loan the proceeds of
the Bonds to the Company to finance the Project. The Company has agreed, pursuant to a
Regulatory Agreement dated as of April I, 2007, by and among the City, the Company and the
Trustee (the "Regulatory Agreement") to operate the Project as a "residential rental project"
under Section 142( d) of the Internal Revenue Code of 1986, as amended. The Bonds will be
offered for resale by the Purchaser pursuant to an Official Statement (the "Official Statement").
5. Forms of the following documents have been submitted to the City Council:
(a) The Loan Agreement;
(b) TheIndenture;
(c) The Regulatory Agreement;
(d) The Bond Purchase Agreement; and
(e) The Assignment of Mortgage.
The foregoing documents are hereafter referred to as the "Bond Documents."
6. It is hereby found, determined and declared that:
(a) the issuance and sale of the Bonds, the execution and delivery by the City of the
Bond Documents and the performance of all covenants and agreements of the City contained in
the Bond Documents and of all other acts and things required under the constitution and laws of
the State of Minnesota to make the Bond Documents and the Bonds valid and binding
obligations of the City in accordance with their terms, are authorized by the Act;
2
(b)
Indenture;
it is desirable that the Bonds be issued by the City upon the terms set forth in the
(c) the basic payments under the Loan Agreement are fixed to produce revenue
sufficient to provide for the prompt payment of principal of, premium, if any, and interest on the
Bonds issued under the Indenture when due, and the Loan Agreement, Mortgage and Indenture
also provide that the Company is required to pay all expenses of the operation and maintenance
of the Project, including, but without limitation, adequate insurance thereon and insurance
against all liability for injury to persons or property arising from the operation thereof, and all
taxes and special assessments levied upon or with respect to the Project premises and payable
during the term of the Loan Agreement and Indenture;
(d) under the provisions of Minnesota Statutes, Chapter 462C and as provided in the
Loan Agreement and Indenture, the Bonds are not to be payable from or charged upon any funds
other than the revenue pledged to the payment thereof; the City is not subject to any liability
thereon; no holder of any 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 premiums thereon, or to enforce
payment thereof against any property of the City except the interests of the City in the Loan
Agreement which have been assigned to the Trustee under the Indenture; 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 which have been assigned to the Trustee under
the Indenture; the Bonds shall recite that the Bonds are issued without moral obligation on the
part of the state or its political subdivisions, and that the Bonds, including interest thereon, are
payable solely from the revenues pledged to the payment thereof; and, the Bonds shall not
constitute a debt of the City within the meaning of any constitutional or statutory limitation.
7. The forms of the Bond Documents and exhibits thereto are approved substantially
in the form submitted. The Bond Documents, in substantially the forms submitted, are directed
to be executed in the name on behalf of the City by the Mayor and the City Administrator. Any
other documents and certificates necessary to the transaction described above shall be executed
by the appropriate City officers. Copies of all of the documents necessary to the transaction
herein described shall be delivered, filed and recorded as provided herein and in Bond
Documents.
8. The City. shall proceed forthwith to issue the Bonds, in the form and upon the
terms set forth in the Indenture and at an interest rate not to exceed 7.00% per annum. The
Bonds will be purchased on substantially the terms set forth in the Bond Purchase Agreement
and the Indenture which have been submitted to the City in connection with this Resolution. The
Mayor and City Administrator are authorized and directed to prepare and execute the Bongs as
prescribed in the Indenture and to deliver them to the Trustee for authentication and delivery to
the original purchasers.
9. The Mayor and City Administrator and other officers of the City are authorized
and directed to prepare and furnish to the Purchaser certified copies of all proceedings and
records of the City relating to the Bonds, and such other affidavits and certificates as may be
required to show the facts relating to the legality of the bonds as such facts appear from the
books and records in the officers' custody and control or as otherwise known to them; and all
3
.
such certified copies, certificates and affidavits, including any heretofore furnished, shall
constitute representations of the City as to the truth of all statements contained herein.
10. The City hereby ratifies, confirms and consents to the use of the Official
Statement in connection with the sale of the Bonds. The City has not prepared nor made any
independent investigation of the information contained in the Official Statement other than the
section therein captioned "The Issuer," and the City takes no responsibility for such information.
11. The approval hereby given to the various documents referred to above includes
approval of such additional details therein as may be necessary and appropriate and such
modifications thereof, deletions therefrom and additions thereto as may be necessary and
appropriate and approved by the City Attorney and the City officials authorized herein to execute
said documents prior to their execution; and said City officials are hereby authorized to approve
said changes on behalf of the City. The execution of any instrument by the appropriate official
or officials herein authorized shall be conclusive evidence of the approval of such documents in
accordance with the terms hereof.
12. The approval hereby given to the Bond Documents and the various other
documents referred to in paragraph 6 above includes approval of (a) such additional details
therein as may be necessary and appropriate and such modifications thereof, deletions therefrom
and additions thereto as may be necessary and appropriate and approved by Bond Counsel, the
City Attorney and the City officials authorized herein to execute said documents prior to their
execution and (b) such additional documents, agreements or certificates as may be necessary and
appropriate in connection with the Bond Documents and with the issuance and sale of the Bonds
and approved by Bond Counsel, the City Attorney and City officials authorized herein to execute
said documents prior to their execution; and said City Attorney and City officials are hereby
authorized to approve said changes or additional documents, agreements or certificates on behalf
of the City. The execution of any instrument by the appropriate officer or officers of the City
herein authorized shall be conclusive evidence of the approval of such documents in accordance
with the terms thereof and hereof. In the absence (or inability) of the Mayor or City
Administrator, any of the documents authorized by this resolution to be executed by them may
be executed by the Acting Mayor or the Acting City Administrator, respectively.
Passed: March 5, 2007.
Stephanie Klinzing, Mayor
ATTEST
Tina Allard, City Clerk
4