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HomeMy WebLinkAboutResolution - 96-182 - Fountain Place II-Reissuance of Multifamily Housing Revenue Bonds - 10/15/1996 RESOLUTION NO. 96- 82 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 $12,600,000 MULTIFAMILY HOUSING REVENUE REFUNDING BONDS (FOUNTAIN PLACE APARTMENTS PROJECT -- PHASE II) SERIES 1989A AND SERIES 1989B(THE"BONDS");APPROVING THE WAIVER AND CANCELLATION OF ACCRUED UNPAID INTEREST ON THE SERIES 1989B BONDS;AMENDING THE INTEREST RATE PROVISIONS SO AS TO PROVIDE FOR A FLOATING RATE OF INTEREST ON THE BONDS AND THE PAYMENT OF INTEREST ON THE FIRST DAY OF EACH MONTH, 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 112,600,000 Multifamily Housing Revenue Refunding Bonds (Fountain Place Apartments Project -- Phase II), Series 1989A and Series 1989B" (the 'Bonds"), pursuant to and in accordance with a Trust Indenture between the Issuer and First Trust National Association, as Trustee, dated as of July 1, 1989; and WHEREAS, the Issuer used the proceeds of the Bonds to make a loan (the "Loan') to Fountain Place Apartments II 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 FPA II Limited Partnership (the"Owner")by Warranty Deed on March 1, 1996,with the Owner assuming the existing indebtedness on the Project; and WHEREAS, the Bonds were acquired by CAPREIT FPII Financial Limited Partnership (the "Current Bondholder") on March 1, 1996, and WHEREAS,Capital Realty Investors Tax Exempt Fund Limited Partnership(the"New Bondholder") intends to acquire the Bonds from the Current Bondholder; and WHEREAS,the New Bondholder, at the time of its acquisition of the Bonds,is willing to forgive and forever discharge all accrued unpaid interest on the Series 1989B Bonds, and desires that the Issuer forgive and forever discharge all corresponding unpaid interest accrued on the Refunding Note; and WHEREAS, the New Bondholder desires to amend the interest rate on the Bonds 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, immediately following its acquisition of the Bonds, the New Bondholder intends to convey the Bonds to United States Trust Company of New York, as Trustee (the "Trustee") and, in connection with its acquisition of the Bonds, the Trustee intends to credit enhance the Bonds, in a secondary market transaction, with a letter of credit; and WHEREAS, in connection with the credit enhancement of the Bonds 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 Bonds and related documents and with respect to the Project; and WHEREAS, Capital Apartment Properties, Inc., a Maryland corporation ("CAPREI "), which will be an affiliate of the New Bondholder, has agreed to pay any counsel fees incurred by the Issuer in connection with such transactions,regardless of whether the New Bondholder actually acquires the Bonds; and WHEREAS, the credit enhancement of the Bonds and the requested amendments to the Bonds will cause a reissuance of the Bonds for federal income tax purposes; and WHEREAS, a reissuance of the Bonds 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 Bonds; 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 Bonds, the elimination of all accrued unpaid interest on the Series 1989B Bonds and the Refunding Note, the amendment of the interest rate provisions on the Bonds and provision for payment of interest on the first day of each month, and the provision of intercreditor arrangements with respect to remedial actions under the Bonds and related documents, 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 WHEREAS, there has been submitted to the Council the proposed form of First Supplemental Trust Indenture and Amendment to Loan Agreement, copies of which are attached to and comprise a part of this Resolution. 2 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 Bonds and the execution and delivery of a First Supplemental Trust Indenture 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 8038 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 a First Supplemental Trust Indenture 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 Bonds by the New 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 OF EDEN PRAIRIE, MINNESOTA By: Jayor Attest: a,'Cj0PUJ'- Clerk 3