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HomeMy WebLinkAboutResolution - 96-181 - Fountain Place I - Reissuance of Multifamily Housing Revenue Bonds - 10/15/1996 RESOLUTION NO. 96- 81 RESOLUTION AUTHORIZING AND APPROVING THE EXECUTION AND FILING WITH THE INTERNAL REVENUE SERVICE OF A FORM 8038, INFORMATION RETURN FOR TAX-EXEMPT PRIVATE ACTIVITY BOND ISSUES, WITH RESPECT TO THE $20,900,000 MULTIFAMILY HOUSING REVENUE BOND (FOUNTAIN PLACE APARTMENTS PROJECT -- PHASE I) SERIES 1987 (THE 'BOND"); APPROVING THE WAIVER AND CANCELLATION OF UNPAID BASE INTEREST ON THE BOND; AMENDING THE INTEREST RATE PROVISIONS SO AS TO PROVIDE FOR A FLOATING RATE OF INTEREST ON THE BOND AND THE PAYMENT OF INTEREST ON THE FIRST DAY OF EACH MONTH; ELIMINATING ALL REMARKETING PROVISIONS AND EXTENDING THE SCHEDULED MATURITY DATE OF THE BOND; ADDING ACCRUED CONSTRUCTION PERIOD DEFERRED INTEREST TO THE PRINCIPAL AMOUNT OF THE BOND; ADDING CERTAIN PROVISIONS WITH RESPECT TO THE EXERCISE OF REMEDIAL RIGHTS; AND AUTHORIZING THE EXECUTION AND DELIVERY OF DOCUMENTS AND INSTRUMENTS RELATING THERETO WHEREAS, the City of Eden Prairie, Minnesota (the "Issuer") has previously issued its "$20,900,000 Multifamily Housing Revenue Bond (Fountain Place Apartments Project -- Phase I), Series 1987" (the "Bond"), pursuant to and in accordance with a Lender Loan Agreement between the Issuer and Capital Realty Investors Tax Exempt Fund Limited Partnership (the "Bondholder") dated as of December 1, 1987; and WHEREAS, the Issuer used the proceeds of the Bond to make a loan (the "Loan!') to Fountain Place Apartments Limited Partnership, a Minnesota limited partnership (the "Original Developer"), to provide financing for a multifamily rental residential development (the "Project"); and WHEREAS, the Project was conveyed by the Original Developer to CRICO of Fountain Place Limited Partnership (the "Owner") by Quitclaim Deed on January 2, 1991, with the Owner assuming the existing indebtedness on the Project; and WHEREAS, the Bondholder is willing to forgive and forever discharge all Bond interest which was not paid when scheduled to be due and has been deferred, and desires that the Issuer forgive and forever discharge all corresponding unpaid interest accrued on the Loan; and WHEREAS,the Bondholder desires to delete all provisions pertaining to the payment of Contingent Interest from the Bond,the Lender Loan Agreement and the Loan Agreement, to amend the interest rate on the Bond to a rate which floats with the PSA Index, and to provide for the payment of interest on the first day of each month; and WHEREAS, the Bondholder desires to eliminate all provisions for remarketing from the Bond and to extend the maturity date of the Bond to a date not later than December 1, 2018; and WHEREAS, the Bondholder desires to add to the principal amount of the Bond and the Loan all unpaid Construction Period Deferred Interest accrued as of the date it acquires the Bond; and WHEREAS,immediately following its acquisition of the Bond,the Bondholder intends to convey the Bond to United States Trust Company of New York, as Trustee(the'"Trustee") and, in connection with its acquisition of the Bond, the Trustee intends to credit enhance the Bond, in a secondary market transaction, with a letter of credit; and WHEREAS, in connection with the credit enhancement of the Bond it will be necessary for the Issuer and the provider of such credit enhancement to agree to certain intercreditor arrangements affecting the exercise of remedial rights under the Bond and related documents and with respect to the Project; and WHEREAS, Capital Apartment Properties, Inc., a Maryland corporation ("CAPREIT"),which will be an affiliate of the Bondholder,has agreed to pay any counsel fees incurred by the Issuer in connection with such transactions, regardless of whether the Bondholder actually acquires the Bond; and WHEREAS, the credit enhancement of the Bond and the requested amendments to the Bond will cause a reissuance of the Bond for federal income tax purposes; and WHEREAS, a reissuance of the Bond will necessitate the filing by the Issuer with the Internal Revenue Service of Internal Revenue Service Form 8038, Information Return for Tax-Exempt Private Activity Bond Issues, in order to maintain the excludability from the income of the holders thereof of interest on the Bond; and WHEREAS, the Issuer is willing to execute and file a Form 8038 in connection with and as a result of the addition of credit enhancement for the Bond, the elimination of all accrued interest on the Bond and the Loan which was not paid when scheduled to be due and has been deferred, the amendment of the interest rate provisions on the Bond and provision for payment of interest on the first day of each month, the elimination of remarketing provisions and extension of the Bond's maturity to a date not later than December 1, 2018, the provision of intercreditor arrangements with respect to remedial actions under the Bond and related documents and the addition of accrued Construction Period Deferred Interest to the principal amount of the Bond and the Loan, all as described above; and WHEREAS, there has been submitted to the City Council of the Issuer(the"Council") the proposed Form 8038, which is attached to and comprises a part of this Resolution; and 2 WHEREAS, there has been submitted to the Council the proposed form of Amendment to Lender Loan Agreement and Amendment to Loan Agreement, copies of which are attached to and comprise a part of this Resolution. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF EDEN PRAIRIE, MINNESOTA- 1. That the filing of an Internal Revenue Service Form 8038 in connection with the addition of credit enhancement for the Bond and the execution and delivery of an Amendment to Lender Loan Agreement and an Amendment to Loan Agreement, in form and content substantially as attached hereto, is hereby authorized and that (subject to paragraph 3 below) upon execution of said Form 8039 by the Mayor or the City Manager,such form shall be mailed to the Internal Revenue Service Center, Philadelphia, Pennsylvania 19255. 2. That the execution and delivery of an Amendment to Lender Loan Agreement and an Amendment to Loan Agreement, substantially in the form and substance of those attached hereto, and the taking of such other actions as have been taken or as may be necessary or convenient in connection therewith is hereby authorized and that upon execution and delivery of such documents by the Mayor and the City Manager such documents shall be binding upon the Issuer. 3. That the acts authorized in numbered paragraphs 1 and 2 immediately above are to be effected only in the event of the acquisition of the Bond by the Bondholder or by an affiliate of; or by a party acting on behalf of an affiliate of; CAPREIT. PASSED AND APPROVED this 15th day of October, 1996. CITY O DEN PRAIRIE, 11dINNESOTA By: Mayor tt st: Clerk 3