HomeMy WebLinkAboutResolution - 88-240 - Relating to Issuance of Revenue Bonds Per Chapter 462C Statutes for Multi-Family/Elderly Housing and Calling for Public Hearing - Elim Shores - After some discussion, Councilmember Pidcock
introduced the following resolution and moved its adoption:
RESOLUTION NO.
RESOLUTION RELATING TO THE ISSUANCE OF
REVENUE BONDS PURSUANT TO CHAPTER 462C,
MINNFSOTA STATUTES , FOR THE PURPOSE OF
FINANCING A MULTIFAMILY HOUSING DEVELOPMENT
FOR THE ELDERLY ; GIVING PRELIMINARY APPROVAL
TO THE DEVELOPMENT AND CALLING FOR A PUBLIC
HEARING ON A PROGRAM FOR THE ISSUANCE OF SUCH
REVENUE BONDS
BE IT RESOLVED by the City Council of the City of Eden
Prairie, Minnesota (the "City" ) as follows :
Section 1 . Recitals .
1 . 1 . By the provisions of Minnesota Statutes,
Chapter 462C, as amended (the "Act" ) , the City is authorized to
plan, administer and make or purchase loans to finance one or
more multifamily housing developments within its boundaries,
including a development consisting of a multifamily housing
development designed and intended to be used for rental occupancy
primarily by elderly persons.
1 . 2 . Elim Homes , Inc. , on its behalf and on behalf of
Elim Shores, Inc. , a Minnesota nonprofit corporation
(collectively, the "Company") , has indicated to the City its
desire to acquire, construct and equip on certain land located
adjacent to Lake Mitchell near the intersection of Highway 5 and
County Road 4 in the City of Eden Prairie a development
containing an approximate total of 64 apartment units for rental
primarily to the elderly together with common recreation and
support facilities (the "Project") . The Company estimates the
capital costs of the Project to be approximately $5 , 400, 000 . The
Company has proposed that the City issue its revenue bonds (the
"Bonds" ) pursuant to the authority of the Act , in such amount as
may be necessary to finance all or a portion of the costs of the
Project and make the proceeds of the Bonds available to the
Company for the acquisition, construction and equipping of the
Project, subject to an agreement by the Company to pay promptly
the principal of and interest on the Bonds.
1 . 3 . The City, on February 2 , 1982 , adopted Resolution
82-87 approving the "City Comprehensive Guide Plan Update dated
September, 1980" which includes within it the City ' s Housing
Assistance Plan pursuant to the Act (collectively, the "Housing
Plan") , which Housing Plan specifically evaluates the housing
problems, policies, programs and strategies of the City.
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1 . 4 . The Act provides that, prior to issuing revenue
bonds or obligations to finance a development consisting of a
multifamily housing development, the City' s Housing Plan must
describe the program for which the revenue bonds are proposed.
The Housing Plan provides , inter alia , that the City will attempt
to provide lower cost subsidized housing with a ratio of 60%
family and 40% elderly with continued cooperation between -the
public sector and private industry, including the formation and
use of the Housing and Rehabilitation Authority of the City of
Eden Prairie (the "HRA" ) .
1 . 5 . Section 462C.05 , Subd . 4 and. 2 authorizes the
City to construct housing for rental at market rates to elderly
or handicapped persons (Subd . 4 ) and for rental to low and
moderate income families who would otherwi:-e be unable to obtain
adequate housing at prices or rentals they could afford.
(Subd. 2) , to encourage such construction in the areas of need
and demand with a reasonable balance between non-metropolitan and
metropolitan areas of the state, and to assist in the elimination
of substandard housing conditions and to prevent the recurrence
of such conditions by housing persons of varied economic means
and a wide range of incomes in the same developments and
neighborhoods properly planned and related to public facilities
and sources of employment and services . The Act further provides
that the City may plan, administer and make or purchase a loan or
loans to finance one or more developments of the kind described
in Subd. 2 and 4 of Section 462C. 05 upon adoption of a "program"
setting forth the information required by Subd. 6 of
Section 462C. 05 and Subd. la of Section 462C. 03 of the Act.
1 . 6 . A program implementing the Housing Plan to
describe the Project has been prepared in accordance with the
provisions of Subd. la of Section 462C. 03 and Subd. 6 of
Section 462 . 05 (the "Program") . A draft copy of the Program has
been submitted to this Council. and is attached to this Resolution
as Exhibit A.
1 . 7 . Prior to the consideration by the City of the
Program; Subd. 2 of Section 462C. 04 of the Act requires the City
to hold a public hearing thereon following a notice published at
least fifteen days prior thereto. On or before the day of
publication of such notice of public hearing, the City is
required to submit the Program to the Metropolitan Council for
review and comment pursuant to Section 462C. 04 , Subd. 2, of the
Act. The City must also submit the Program to the Minnesota
Housing Finance Agency for review and for approval as provided in
an on the basis of the considerations stated in Section 462C. 04 ,
Subd . 2 , of the Act.
1. 8 . The Citv has been advised by representatives of
the Company that conventional commercial financing is available
to pay the capital costs of the Project only on a limited basis
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and at such high costs of borrowing that the scope of the
Project, the economic feasibility of operating the Project and
the costs to be borne by the residents thereof would be
significantly affected, but with the aid of municipal financing
the Project can be constructed as designed and its operation can
be made more economically feasible .
has been advised by representatives
of Dougherty, Dawkins, Strand & Yost Incorporated, of
Minneapolis , Minnesota (the Underwriter) , that on the basis of
information available from the Company and potential purchasers
of tax-exempt bonds, the Bonds could be sold at favorable rates
and terms to finance the Project .
1 . 10'. The full faith and credit of t e City will not
be pledged to or responsible for the payment of the principal of
and interest on the Bonds .
1 . 11. The applicant has agreed to pay directly or
through the City any and all costs incurred by the City in
connection with the project whether or not the project is
approved by the Metropolitan Council or the Minnesota Housing
Finance Agency; whether or not the project is carried to
completion ; and whether or not the Bonds or operative instruments
are executed .
Section 2 . Approvals ; Authorization and Hearjnn .
2 . 1 . A public hearing on the Program shall be held at
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U p .m. on NduP.vx-Lzy /5" , 1988 and the notice of public hearing
attached hereto as Exhibit B shall be published in a newspaper of
general circulation in the City at least 15 days prior to such
public hearing consistent with §462 . 04 . Subd. 2 . The Mayor, City
Clerk and City Attorney are authorized to submit the Program, if
adopted by this Council after the public hearing, to the
Minnesota Housing Finance Agency for review and approval in
accordance with Section 462C. O4 and Section 462C. O5 of the Act
and such officials are further authorized to prepare and execute
such further required certifications as may be necessary or
appropriate in connection therewith. The Program shall be
submitted to the Metropolitan Council on or before the day of
publication of the notice of public hearing.
2 . 2 . It is hereby found and determined that it would
be in the best interests of the City to issue the Bonds under the
provisions of the Act to finance the costs of the Project in an
amount currently estimated to be $4 , 400 , 000.
2 . 3 . The Project is hereby given preliminary approval
by the City and the issuance of the Bonds for such purpose
approved, subject to conditions on such approval as may be
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required as a result of the public hearing called pursuant 'to
Section 2 . 1 hereof, The Bonds shall not be issued until the
Program has been reviewed and approved as provided by the Act and
until the City, the Company and the Underwriter have agreed upon
the details of the Bonds and the provisions for their payment .
The principal of, premium, if any, and interest on the Bonds,
when, as and if issued shall be payable solely from the revenues
of the Project and/or the property pledged to the payment thereof
and shall not constitute a debt of the City . The City Attorney
and other officers of the City are authorized in cooperation with
Lindquist & Vennum, as bond counsel, to initiate preparation of
such documents as may be appropriate to the financing of the
Project setting forth the detailed terms of the Bonds , the
security therefor and provisions for payment of the principal ,
premium, if any, and interest thereon in co tplia:,ce with state
and federal statutes and regulations and the City' s Charter. In
particular, and without limitation , the City Manager and/or City
Clerk are authorized to execute on behalf of the City any and all
certificates necessary to submit the program to the Minnesota
Housing Finance Agency for approval .
2 .4 . Pursuant to Subd . 1 of Section 462C. 07 of the
Act, in the making of the loan to finance acquisition,
construction and equipment of the Project and in the issuance of
the Bonds or other obligations of the City, the City may
exercise, within its corporate limits , any of the powers of the
Minnesota Housing Finance Agency may exercise under Chapter 462A,
Minnesota Statutes, without limitation under the provisions of
Chapter 475 , Minnesota Statutes.
2 .5 . All commitments of the City expressed herein are
subject to the condition that by December 31, 1989 the City and
the applicant shall have agreed to mutually acceptable terms and
conditions of the Revenue Agreement, the Bonds and of the other
instruments and proceedings relating to the Bonds and their
issuance and sale. If the events set forth herein do not take
place within the time set forth above, or any extension thereof,
and the Bonds are not sold within such time , this Resolution
shall expire and be of no further effect .
2 .6 . 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 Company. The City retains
the right in its sole discretion to withdraw from participation
and accordingly not to issue the Bonds , or issue the Bonds in an
amount less than the amount referred to in Section 1 . 02 hereof ,
should the City at any time prior to issuance thereof determine
that it is in the best interests of the City not to issue the
Bonds, or to issue the Bonds in an amount less than the amount
referred to in Section 1. 02 hereof, or should the parties to the
transaction be unable to reach agreement as to the terms and
conditions of any of the documents required for the transaction.
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Passed and adopted by the City Council of the City of
Eder. Prairie , Minnesota this day of ./,rt � 1988•
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The motion for the adoption of the foregoing
resolution was duly seconded by Councilmember Harris , and
upon vote being taken thereon, the following voted in favor
thereof:
and the following voted against the same:
whereupon the resolution was declared duly passed and adopted.
Mayor
ATTEST:
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City Cl 'k
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EXHIBIT A
TO
RESOLUTION RELATING TO THE ISSUANCE OF
REVENUE BONDS PURSUANT TO CHAPTER 462C,
MINNESOTA STATUTES, FOR THE PURPOSE OF
FINANCING A MULTIFAMILY HOUSING DEVELOPMENT
FOR THE ELDERLY ; GIVING PRELIMINARY APPROVAL
TO THE DEVELOPMENT AND CALLING FOR THE
ISSUANCE OF SUCH REVENUE BONDS
CITY OF EDEN PRAIRIE
PROGRAM FOR THE CONSTRUCTION OF A
MULTIFAMILY HOUSING DEVELOPMENT
(SLIM SHORES , INC . PROJECT)
Pursuant to Minnesota Statutes, Chapter 462C (the
"Act" ) , the City of Eden Prairie, Minnesota (the "City" ) has been
authorized to develop and administer programs of _multifamily
housing developments under the circumstances and within the
limitations set forth in the Act. Minnesota Statutes ,
Section 462C. 07 provides that such programs for multifamily
housing developments may be financed by revenue bonds issued by
the City.
The City has received a proposal from Elim Homes , Inc . ,
a Minnesota nonprofit corporation on behalf of itself and Elim
Shores , Inc . , a Minnesota nonprofit corporation (collectively,
the "Company") that, pursuant to the authority found in the Act,
the City approve a program (the "Program") for the financing of
the acquisition, construction and equipping by the Company of a
multifamily rental facility with an approximate total of 64 units
for rental primarily to elderly persons together with common
recreation and support facilities (the "Project" ) . The Project
will be located adjacent to Lake Mitchell near the intersection
i of Highway 5 and County Road 4 in the City of Eden Prairie . It
is estimated that rents for the Housing Units will be between
$575 and $1 , 250 per month. The apartments will be rented to
members of the general public, without regard to race , religion,
creed or national origin . The Company will not give preference
to any particular class or group of persons, other than elderly
and Lower Income Tenants (as hereinafter defined) . Accessibility
to the handicapped will be considered in the construction of the
Project. The construction of the Project is to be funded through
the issuance of one or more series of up to $4 , 400 , 000 in revenue
bonds issued by the City (the "Bonds") . It is proposed that the
Bonds be sold publicly through an underwriter. The Bonds will be
secured primarily by a revenue agreement with the Company .
Following construction of the Project, the Company will own and
operate the Project as a multifamily residential rental project
primarily for the elderly. At least twenty percent ( 200) of the
units will be specifically reserved for tenants whose incomes are
not greater than eighty percent ( 800) of the area median income
pursuant to Minnesota Statutes 462C. 05 , Subd. 2 .
The use of tax-exempt bonds for the Project will allow
approximately 64 more affordable rental units for use by the
elderly and/or low and moderate income families and individuals
as required by law. The Project will also increase the variety
of housing types and costs in the City. The Project, by
( providing alternative housing in which the elderly and/or low and
moderate income families and individuals are housed in the same
development as others of varied economic means will meet the
needs and objectives of the City and the public at the least
expense possible .
The City, in establishing this Program, has considered
the information contained in the Housing Plan, including
particularly ( i) the availability and affordability of private
market financing for the construction of multifamily housing
units ; ( ii) the availability and affordability of other
government housing programs; ( iii) an analysis of population and
employment trends and projections of future employment needs;
( iv) the recent housing trends and future housing needs of the
City ; and (v) an analysis of how the Program will meet the needs
of persons and families residing and expected to reside in the
City .
The City, in adopting the Program, has further
considered (i ) the amount, timing and sale of Bonds to finance
the construction of the Housing Units, to fund the appropriate
reserves and to pay the cost of issuance; ( ii) the method of
monitoring and implementation of the Program to ensure
compliance with the City' s Housing Plan and its objectives ;
( iii) the method of administering, servicing and supervising the
Program; ( iv) the cost to the City, including future
administrative expenses ; (v) the restrictions on the multifamily
development to be .financed under the Program; and (vi) other
matters deemed relevant .
The City, in adopting the Program, considered the
potential financial impact of a bond issuance on affected public
agencies . In addition, the City reviewed the method of marketing
the Program. Such review included the examination of the equal
opportunity for participation by : ( i) minorities ; ( ii) house—
holds with incomes at the lower end of the range that can be
served by the Program; (iii) households displaced by public or
private action ; ( iv) families with children; and (v) access-
ibility to the handicapped.
The Project will be constructed and financed pursuant
to Subd. 1 through 4 of Section 462C. 05 of the Act (particularly
Subd . 2 thereof) and Section 469 . 175 , Subd. 4 .
Subsection A. Definitions
The following terms used in this Program shall have the
following meanings, respectively:
(1) "Act" shall mean Minnesota Statutes, Section
4 62C. 01, et sue. , as currently in effect and as the same may from
t1me to time be amended.
(2.) "Adjusted Gross Income" shall mean gross family
income. less $750 for each adult (maximum of two) and less $500
for each other dependent in the family as provided by and
consistent with Section 462C. O2, Subd. 7 .
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( 3 ) "Bonds" shall mean the revenue bonds to be issued
by the City to finance the Program.
(4 ) "City" shall mean the City of Eden Prairie ,
County of Hennepin, State of Minnesota .
( 5) "Company" shall mean Elin Homes, Inc. , a Minnesota
nonprofit corporation, and/or Elim Shores , Inc. , a Minnesota
nonprofit corporation.
( ti) "Housing Plan" shall mean the City of Eden Prairie
462C Housing Plan, adopted on February 2 , 1982 , as amended,
setting forth certain information required by the Act .
(7) "Housing Unit" shall mean any one of the apartment
units located in the Project, occupied by one person or family,
and containing complete living facilities .
(8) "Land" shall mean the real property upon which the
Project will be situated.
(9 ) "Lower-Income Tenants" shall mean individuals who
on the date of their initial occupancy of dwelling units in the
Projects are individuals of low or moderate income within the
5 meaning of Section 142 (d) of -the Internal Revenue Code of 1986 ,
as amended (the "Code") ; without limiting the foregoing, the
occupants of a unit shall not be considered to be of low or
moderate income if all the occupants are students (as defined in
Section 151 (e) (4 ) of the Code) , no one of whom is entitled to
file a joint return under Section 6013 of the Code .
( 10) "Program" shall mean the program for the financing
of the Project pursuant to the Act.
( 11) "Project" shall mean the multifamily housing
development consisting of approximately 64 Housing Units to be
constructed by the Company on the Land .
( 12 ) "Qualified Project Period" for the set aside of
20% of the Housing Units shall mean a period beginning on the
later of the first day on which at least 10 percent of the units
in the Projects are first occupied or the date of issue of the
Bonds for the Project and ending on the date which is 10 years
after the date on which at least 50 percent of the units in the
Project are first occupied.
Subsection B. Program for Financing the Project
It is proposed that the City establish this Project to
( construct 64 Housing Units to be owned by the Company, at the
price and upon such other terms and conditions as may be agreed
upon in writing between the City and the Company . To do this,
the City expects to issue one or more series of Bonds , the
proceeds of which will be loaned to the Company for construction
and initial financing of the Project. It is expected that a
Trustee will be appointed by the City to monitor the construction
of the Project and any payments of principal and interest on the
Bonds .
It is contemplated that the Bonds shall contain a
maturity of not more than thirty (30) years and will be priced to
the market at the time of issuance. It is anticipated that the
Bonds will. be issued on or about December 1 , 1988 .
The City will hire no additional staff for the
administration of the Program. ' The City intends to select and
contract with a trustee experienced in trust matters to
administrate the Bonds.
Insofar as the City will be contracting with under-
writers , the trustee, and others, all of whom will be reimbursed
from bond proceeds and revenues generated by the Program, little
or no administrative costs will be paid from the City' s budget
with respect to this Program . The City will charge an
administrative fee of 1/8 of one percent of the outstanding
principal amount of bonds annually for administrative costs . The
Bonds will not be general obligation bonds of the City, but are
expected to be paid from properties pledged to the payment
thereof , and out of net revenues of the Project or otherwise by
E1im Homes, Inc.
Subsection C. Local Contributions to the Program
It is not contemplated that any additional financing or
contributions will be needed for the completion of the Project,
or for the operation of the Program.
Subsection D. Standards and Requirements Relatinq to
the Financing of the Project Pursuant to the Program
The following standards and requirements shall apply
with respect to the operation of the Project by the Company
pursuant to this Program:
(1) Substantially all of the proceeds of the sale of
the Bonds will be used to provide funds for the construction of
the Project, which will provide approximately 64 residential
units . The funds will be made available to the Company pursuant
to the terms of the Bond offering , which may include certain
covenants to be entered into between the City and the Company.
(2) The Company will not arbitrarily reject an
application from a proposed tenant because of race, color, creed,
religion , national origin, sex, marital status or status with
regard to public assistance or disability. The Housing Units are
intended to be rented primarily to elderly persons .
( 3 ) No Housing Unit may be in violation of applicable
zoning ordinances or other applicable land use regulations,
including any urban renewal plan or development district plan,
and including the state building code as set forth under
Minnesota Statutes, Section 16 . 83 , et se .
(4 ) At all times during the Qualified Project Period
the Company will allocate (without designation) at least twenty
percent ( 20%) of the dwelling units in the Project for occupancy
by Lower-Income Tenants .
(5) The Company has proposed a plan by which it will
use its best efforts to see that approximately 70 percent of the
Housing Units will be made available to individuals or families
whose anticipated annual income is not more than 80 percent of
the median income (adjusted for family size) of the metropolitan
area (approximately $24 , 400) , and 20 percent of the Housing Units
(13 units) are targeted to be set aside for individuals with
50 percent or less of the area median income (adjusted for family
size of 1 and 2 ) with the proposed limitation that no more than
40 percent of the latter group's income would be spent on rents .
To the extent the foregoing describes a program to assist tenants
of low to median income above and beyond the requirements of the
J Act , the Company has stated a good faith intention to implement
such a program subject to the condition that the Company has the
overriding concern and intention to operate the Project so that
the Bonds are payable solely out of net revenues (i . e. , the
Project is expected to be and remain economically viable and
self-supporting) subject only to ( i) certain subsidies
contemplated by a tax increment interest reduction program being
considered by the City of Eden Prairie and (ii ) the proposal that
Elim Foundation use its best efforts to subsidize rents in the
approximate amount of $50 , 000 per year for certain tenants .
Subsection E. Evidence of Compliance
The City may require from the Company or such other
persons deemed necessary, at or before the issuance of the Bonds,
evidence satisfactory to the City of the ability and intention of
the Company to complete the Project , and evidence satisfactory to
the City of compliance with the standards and requirements for
the making of the financing established by the City, as set forth
herein ; and in connection therewith, the City or its
representatives may inspect the relevant books and records of the
Company in order to confirm such ability, intention and
compliance . In addition, the City may periodically require
certification from either the Company or such other persons
deemed necessary, concerning compliance with various aspects of
this Program.
Subsection F. Issuance of Bonds
To finance the Program authorized by this Section, the
City may by resolution authorize. , issue and sell one or more
series of its Revenue Bonds in an aggregate principal amount
estimated to be up to $4 , 400, 000 . The Bonds shall be issued
pursuant to Section 462C. O7, Subd. 1 of the Act, and shall be
payable primarily from the revenues of the Program authorized by
this Section.
Subsection G. SeverabilitV
The provisions of this Program are severable and if any
of its provisions , sentences, clauses or paragraphs shall be held
unconstitutional , contrary to statute, exceeding the authority of
the City or otherwise illegal or inoperative by any court of
competent jurisdiction, the decision of such court shall not
affect or impair any of the remaining provisions .
Subsection H. Amendment
The City shall not amend this Program while Bonds
authorized hereby are outstanding to the detriment of the holders
of such Bonds .
EXHIBIT B
NOTICE OF PUBIjIC HEARING
$4 , 400, 000
CITY OF EDEN PRAIRIE , MINNESOTA
HOUSING REVENUE BONDS
(ELIM SHORES , INC . PROJECT)
NOTICE IS HEREBY GIVEN that the City Council of the
City of Eden Prairie will meet at City Hall , 7600 Executive
Drive, Eden Prairie, Minnesota on -,+ , the day of
(V 4- r_ .-,o zrr , 1988 , at � fo o' clock p.m. , to conduct a public
hearing on a proposed program for the acquisition and
construction of a Multifamily Housing Development for the Elderly
(the Program) to be financed by the issuance of revenue bonds or
notes of the City pursuant to Minnesota Statutes Chapter 462C
(the Minnesota Municipal Housing Programs Act) in an aggregate
principal amount not to exceed $4 ,400 , 000 .
The Program describes a development, to be owned by
El im Homes , Inc . and/or El im Shores , Inc. , both of which are
Minnesota nonprofit corporations (the "Company") , which will
consist generally of approximately 64 apartment units together
with common recreational and support facilities to be constructed
at a site adjacent to Lake Mitchell , near the intersection of
a Highway 5 and County Road 4 in the City . (The street addresses
of such building has not been established. ) The Bonds or other
obligations issued to finance the development will be payable
solely from the revenues pledged to the payment thereof or other
security or collateral furnished by or through the Company and in
no event shall the bonds constitute a debt of the City . The
Program describes the need for the development and the method of
financing proposed and states that the development is to be
constructed pursuant to Section 462C. 05 , Subd. 4, of the
Minnesota Municipal Housing Programs Act.
Copies of the City 's Housing Plan and the Program are
on file and available for inspection in the office of the Finance
Director at City Hall , 7600 Executive Drive , Eden Prairie,
Minnesota, 553 44 , during regular business hours ( 8 : 00 a .m. to
4 : 30 p. m. ) .
All persons desiring to appear at the public hearing
will be afforded an opportunity to express their views with
respect to the proposal to undertake and finance the Program. At
such public hearing, or at any adjournment or continuance
thereof , the City Council will consider and , if appropriate, will
adopt a resolution determining to proceed with the proposal to
undertake the Program. All persons interested may file written
comments with the City Clerk prior to the date of the hearing
set forth above.
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Dated at Eden Prairie , Minnesota , this day of
1988 .
BY ORDER OF THE CITY COUNCIL
By
Carl Jul City, Manager