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HomeMy WebLinkAboutResolution - 2016-113 - Bonds for Eden Glen Apartment Project - 11/01/2016 CITY OF EDEN PRAIRIE HENNEPIN COUNTY,MINNESOTA RESOLUTION NO.2016-113 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF EDEN PRAIRIE, MINNESOTA, AUTHORIZING THE ISSUANCE, SALE, AND DELIVERY OF ITS REVENUE BONDS; AUTHORIZING THE LOAN OF THE PROCEEDS OF THE REVENUE BONDS TO EDEN INVESTMENTS, LLP TO FINANCE AND REFINANCE A MULTIFAMILY HOUSING DEVELOPMENT; ADOPTING A HOUSING PROGRAM; AND APPROVING THE FORMS OF AND AUTHORIZING THE EXECUTION AND DELIVERY OF THE REVENUE BONDS AND RELATED DOCUMENTS BE IT RESOLVED by the City Council of the City of Eden Prairie, Minnesota (the "City" or "Issuer")as follows: Section 1. Recitals. 1.1. The City of Eden Prairie, Minnesota (the "City" or"Issuer") is a statutory city organized and existing under the Constitution and laws of the State of Minnesota. 1.2. Pursuant to the Constitution and laws of the State of Minnesota, particularly Minnesota Statutes, Chapter 462C, as amended (the "Act"), the City is authorized to carry out the public purposes described therein and contemplated thereby in the financing and refinancing of multifamily rental housing developments within its boundaries by issuing revenue bonds to defray, in whole or in part, the development costs of a rental housing development and for the purpose of refunding any outstanding bonds issued by the City pursuant to the Act, and by entering into any agreements made in connection therewith and by pledging any such agreements as security for the payment of the principal of and interest on any such revenue bonds. 1.3. In order to further the purposes of the Act and to provide financing for costs of the acquisition and construction of a seventy-unit rental housing development located at 13670 Valley View Road in the City known as Eden Glen Apartments (the "Project"), the Issuer previously issued its Housing Development Revenue Note (Eden Investments Partnership Project), Series 1984 (the "Series 1984 Note"), in the original aggregate principal amount of $2,750,000. The Series 1984 Note was redeemed and prepaid with the proceeds of the Issuer's Multifamily Housing Revenue Refunding Bonds (Eden Investments Partnership Project-FHA Insured Mortgage Loan), Series 1990 (the "Series 1990 Bonds"), in the original aggregate principal amount of $2,715,000. The Series 1990 Bonds were redeemed and prepaid with the proceeds of the Issuer's Multifamily Housing Revenue Refunding Bonds (Eden Glen Apartments Project), Series 2001, issued in the original aggregate principal amount of $2,490,000(the"Prior Bonds"). 1.4. Eden Investments, LLP, a Minnesota limited liability partnership (the "Borrower"), has requested that the Issuer issue its: (i) Variable Rate Demand Multifamily Housing Revenue Refunding Bonds (Eden Glen Apartments Project), Series 2016A (the "Series 2016A Bonds"), in the approximate aggregate principal amount of $2,390,000, and apply the proceeds thereof to the redemption and prepayment the Prior Bonds, thereby refinancing the Project; and (ii) Taxable Variable Rate Demand Multifamily Housing Revenue Bonds (Eden Glen Apartments Project), Series 2016B (the "Series 2016B Bonds," and collectively with the Series 2016A Bonds, the "Bonds"), in the aggregate principal amount not to exceed $3,000,000, and apply the proceeds thereof to the construction of general improvements to and the renovation of the Project and the payment of the costs of issuance with respect to the Series 2016B Bonds. The Bonds are proposed to be sold publicly and underwritten by Dougherty & Company LLC, a Delaware limited liability company(the "Underwriter"). 1.5. The proceeds derived from the sale of the Bonds will be applied to fund a loan to the Borrower pursuant to the terms of a Loan Agreement, dated as of November 1, 2016 (the "Loan Agreement"), between the City and the Borrower, and the proceeds of such loan will be applied to the purposes stated herein. 1.6. The Bonds will be issued pursuant to this resolution, the Act, and an Indenture of Trust, dated as of November 1, 2016 (the "Indenture"), between the City and U.S. Bank National Association, a national banking association, as trustee (the "Trustee"), and the Bonds and the interest on the Bonds (i) shall be payable solely from the revenues pledged therefor under the Loan Agreement and additional sources of revenue provided by or on behalf of the Borrower; (ii)shall not constitute a debt of the City within the meaning of any constitutional or statutory limitation; (iii) shall not constitute nor give rise to a pecuniary liability of the City or a charge against its general credit or taxing powers; (iv) shall not constitute a charge, lien, or encumbrance, legal or equitable, upon any property of the City other than the City's interest in the Loan Agreement; and (v)shall not constitute a general or moral obligation of the City. 1.7. The loan repayments to be made by the Borrower under the Loan Agreement will be fixed so as to produce revenue sufficient to pay the principal of, premium, if any, and interest on the Bonds when due. The City will assign its rights to the basic payments and certain other rights under the Loan Agreement to the Trustee pursuant to the terms of the Indenture. The Borrower will secure its obligations by executing and delivering to the City a Combination Mortgage, Security Agreement, Fixture Filing and Assignment of Leases and Rents, to be dated on or about November 14, 2015, or another document with an alternate title (the "Mortgage"), which will be assigned by the City to Bridgewater Bank, a Minnesota banking corporation (the "Bank"), pursuant to an Assignment of Combination Mortgage, Security Agreement, Fixture Filing and Assignment of Leases and Rents, to be dated on or about November 14, 2016, or another document with an alternate title (the "Assignment"). The proceeds of the Bonds will be disbursed pursuant to the Loan Agreement and a Disbursing Agreement, to be dated on or about November 14, 2016, between the Borrower, the Bank, the Trustee, and a disbursing agent named therein 1.8. In accordance with the Act, the City has prepared a housing program (the "Housing Program")to authorize the issuance by the City of the Series 2016B Bonds to finance the construction of general improvements to and the renovation of the Project by the Borrower. The Housing Program was prepared and submitted to the Metropolitan Council for its review and comment. 1.9. On October 13, 2016, a notice of public hearing (the "Public Notice") was published in the Eden Prairie News, the official newspaper and a newspaper of general circulation in the City, with respect to the required public hearing under Section 147(f) of the Internal Revenue Code of 1986, as amended (the"Code"), and Section 462C.04, subdivision 2 of the Act. 1.10. The Public Notice was published at least fifteen (15) days before the regularly scheduled meeting of the City Council, and on the date hereof,the City Council conducted a public hearing at which a reasonable opportunity was provided for interested individuals to express their views, both orally and in writing. 1.11. The City Council of the City held a public hearing on the date hereof (November 1, 2016) with respect to the Housing Program and the proposed issuance of revenue obligations to finance 2 the Project. Section 2. Findings as to Public Purpose and Affordabili ; Occupancy and Income Limitations. The City acknowledges, finds, determines, and declares that the preservation of the quality of life in the City is dependent upon the maintenance, provision, and preservation of an adequate housing stock which is affordable to persons and families of low or moderate income and that accomplishing this is a public purpose. Based upon representations by the Borrower, the City also hereby finds, determines, and declares that the Project has been designed to be affordable by persons and families of low and moderate incomes. The City further finds that the Borrower has agreed to meet the occupancy limitations and adjusted gross income limitations set forth in Section 103(b)(4)(A) of the Internal Revenue Code of 1954, as amended, and applicable Treasury Regulations (collectively,the"1954 Code"). Section 3. Housing Program. The Housing Program, in the form substantially on file with the City, is hereby approved. Section 4. Authorization of the Issuance, Sale, and Delivery of the Bonds; Security Therefor; and Approving the Forms of and Authorizing the Execution and Delivery of the Bonds and Related Documents. 4.1. For the purpose of financing and refinancing the Project there is hereby authorized the issuance, sale, and delivery of the Bonds. The Bonds shall bear interest at such rates, shall be in such denominations, shall be numbered, shall be dated, shall mature, shall be subject to redemption prior to maturity, shall be in such form, and shall have such other details and provisions as are prescribed by the Indenture, in the form now on file with the City, with the amendments referenced herein. The City hereby authorizes the Series 2016A Bonds to be issued as "tax-exempt bonds"the interest on which is not includable in gross income for federal and State of Minnesota income tax purposes. All of the provisions of the Bonds, when executed as authorized herein, shall be deemed to be a part of this resolution as fully and to the same extent as if incorporated verbatim herein and shall be in full force and effect from the date of execution and delivery thereof. The Bonds shall be substantially in the forms set forth in the Indenture on file with the City, which forms are hereby approved, with such necessary and appropriate variations, omissions, and insertions (including changes to the aggregate principal amount of the Bonds, the stated maturities of the Bonds, the interest rates on the Bonds and the terms of redemption of the Bonds) as the Mayor and the City Manager, in their discretion, shall determine. The execution of the Bonds with the manual or facsimile signatures of the Mayor and the City Manager and the delivery of the Bonds by the City shall be conclusive evidence of such determination. 4.2. The Bonds shall be special, limited obligations of the City payable solely from the revenues provided by the Borrower pursuant to the Loan Agreement, including revenues of the Project, and other funds pledged pursuant to the Indenture and from payments made pursuant to an irrevocable letter of credit, to be dated on or about November 14, 2016 (the "Letter of Credit"), issued by the Bank pursuant to the terms of a Reimbursement Agreement, to be dated on or about November 14, 2016, between the Borrower and the Bank. A confirming irrevocable letter of credit, to be dated on or about November 14, 2016 (the "Confirming Letter of Credit"), will be issued by Federal Home Loan Bank of Des Moines to secure payments on the Letter of Credit. All of the provisions of the Indenture, when executed as authorized herein, shall be deemed to be a part of this resolution as fully and to the same extent as if incorporated verbatim herein and shall be in full force and effect from the date of execution and delivery thereof. The Indenture shall be substantially in the form on file with the City, which is hereby approved, with such necessary and appropriate variations, omissions and insertions as do not materially change the substance thereof, and as the Mayor 3 and the City Manager, in their discretion, shall determine, and the execution thereof by the Mayor and the City Manager shall be conclusive evidence of such determination. The Mayor and the City Manager are hereby authorized and directed the to execute the Indenture, and to deliver the Indenture to the Trustee, and hereby authorizes and directs the execution of the Bonds in accordance with the terms of the Indenture, and hereby provides that the Indenture shall provide the terms and conditions, covenants, rights, obligations, duties, and agreements of the owners of the Bonds, the City and the Trustee as set forth therein. 4.3. The Mayor and the City Manager are hereby authorized and directed to execute and deliver the Loan Agreement and a Bond Purchase Agreement, to be dated after the date hereof (the "Bond Purchase Agreement"), between the City, the Borrower, and the Underwriter. All of the provisions of the Loan Agreement and Bond Purchase Agreement, when executed and delivered as authorized herein, shall be deemed to be a part of this resolution as fully and to the same extent as if incorporated verbatim herein and shall be in full force and effect from the date of execution and delivery thereof. The Loan Agreement shall be substantially in the form on file with the City which is hereby approved, with such omissions and insertions as do not materially change the substance thereof, and as the Mayor and the City Manager, in their discretion, shall determine, and the execution thereof by the Mayor and the City Manager shall be conclusive evidence of such determinations. 4.4. The Mayor and the City Manager are hereby authorized to execute and deliver, on behalf of the City, such other documents and certificates as are necessary or appropriate in connection with the issuance, sale, and delivery of the Bonds, including the Assignment, various certificates of the City, an Information Return for Tax-Exempt Private Activity Bond Issues, Form 8038 (Rev. April 2011), with respect to the Series 2016A Bonds, an endorsement of the City to the tax certificate of the Borrower with respect to the Series 2016A Bonds, and similar documents, and all other documents and certificates as shall be necessary and appropriate in connection with the issuance, sale, and delivery of the Bonds. The City hereby approves the execution and delivery by the Trustee of the Indenture and all other instruments, certificates, and documents prepared in conjunction with the issuance of the Bonds that require execution by the Trustee. The City hereby authorizes Bond Counsel to prepare, execute, and deliver its approving legal opinions with respect to the Bonds. 4.5. The City will not participate in the preparation of the Official Statement relating to the offer and sale of the Bonds (the "Official Statement"), and will make no independent investigation with respect to the information contained therein, including the appendices thereto, and the City assumes no responsibility for the sufficiency, accuracy, or completeness of such information. Subject to the foregoing, the City hereby consents to the distribution and the use by the Underwriter of the Official Statement in connection with the offer and sale of the Bonds. The Official Statement is the sole material consented to by the City for use in connection with the offer and sale of the Bonds. 4.6. The Borrower has represented to the City that the Borrower will provide certain security for payment of its obligations under the Loan Agreement and for payment of the Bonds, including the Letter of Credit, the Confirming Letter of Credit, the Mortgage, one or more guaranties, or any other security agreed upon by the Borrower and the Bank, and the City hereby approves the execution and delivery of such security. Section 5. Additional Findings and Certifications. 5.1. The Bonds are authorized to be issued in an amount not to exceed $5,390,000. On the date hereof the Series 2016A Bonds are expected to be issued in the approximate aggregate principal amount of $2,390,000, and the Series 2016B Bonds are expected to be issued in the approximate aggregate principal amount of$2,820,000. However,the final principal amount of both the Series 2016A 4 Bonds and the Series 2016B Bonds may change so long as the aggregate principal amount of the Series 2016A Bonds and the Series 2016B Bonds combined does not exceed $5,390,000. 5.2. To ensure continued compliance by the Borrower and the Project with the limitations imposed by the Act and Section 103(b)(4)(A) of the 1954 Code, as amended through December 31, 1985, read as if it included certain provisions of the Internal Revenue Code of 1986, as amended, as required by Section 1313(a) of the Tax Reform Act of 1986, and the regulations promulgated thereunder, and to ensure compliance with certain restrictions imposed by the City, the Mayor and City Manager are also hereby authorized and directed to execute and deliver a Regulatory Agreement, to be dated on or around November 14, 2016 (the "Regulatory Agreement"), between the City, the Borrower, Steven Scott Management, Inc., as manager, and the Trustee. All of the provisions of the Regulatory Agreement, when executed and delivered as authorized herein, shall be deemed to be a part of this resolution as fully and to the same extent as if incorporated verbatim herein and shall be in full force and effect from the date of execution and delivery thereof. The Regulatory Agreement shall be substantially in the form on file with the City which is hereby approved, with such omissions and insertions as do not materially change the substance thereof, or as the Mayor and the City Manager, in their discretion, shall determine, and the execution thereof by the Mayor and the City Manager shall be conclusive evidence of such determination. 5.3. Except as otherwise provided in this resolution, all rights, powers, and privileges conferred and duties and liabilities imposed upon the City or the City Council by the provisions of this resolution or of the aforementioned documents shall be exercised or performed by the City or by such members of the City Council, or such officers, board, body or agency thereof as may be required or authorized by law to exercise such powers and to perform such duties. No covenant, stipulation, obligation or agreement herein contained or contained in the aforementioned documents shall be deemed to be a covenant, stipulation, obligation or agreement of any member of the City Council of the City, or any officer, agent or employee of the City in that person's individual capacity, and neither the City Council of the City nor any officer or employee executing the Bonds shall be personally liable on the Bonds or be subject to any personal liability or accountability by reason of the issuance thereof. No provision, covenant or agreement contained in the aforementioned documents, the Bonds, or in any other document relating to the Bonds, and no obligation therein or herein imposed upon the City or the breach thereof, shall constitute or give rise to a general, legal or moral obligation of the City or any pecuniary liability of the City or any charge upon its general credit or taxing powers. In making the agreements, provisions, covenants, and representations set forth in such documents, the City has not obligated itself to pay or remit any funds or revenues, other than funds and revenues derived from the Loan Agreement which are to be applied to the payment of the Bonds, as provided therein. 5.4. Except as herein otherwise expressly provided, nothing in this resolution or in the aforementioned documents expressed or implied is intended or shall be construed to confer upon any person or firm or corporation, other than the City, any holder of the Bonds issued under the provisions of this resolution, any right, remedy or claim, legal or equitable, under and by reason of this resolution or any provisions hereof, this resolution, the aforementioned documents, and all of their provisions being intended to be and being for the sole and exclusive benefit of the City, and any holder from time to time of the Bonds issued under the provisions of this resolution. 5.5. In case any one or more of the provisions of this resolution, other than the provisions contained in the first sentence of Section 4.2 hereof, or of the aforementioned documents, or of the Bonds issued hereunder shall for any reason be held to be illegal or invalid, such illegality or invalidity shall not affect any other provision of this resolution, or of the aforementioned documents,or of the Bonds, but this 5 resolution, the aforementioned documents, and the Bonds shall be construed and endorsed as if such illegal or invalid provisions had not been contained therein. 5.06. The Bonds, when executed and delivered, shall contain a recital that they are issued pursuant to the Act, and such recital shall be conclusive evidence of the validity of the Bonds and the regularity of the issuance thereof, and that all acts, conditions, and things required by the laws of the State of Minnesota relating to the adoption of this resolution, to the issuance of the Bonds, and to the execution of the aforementioned documents to happen, exist, and be performed precedent to the execution of the aforementioned documents have happened, exist,and have been performed as so required by law. 5.07. The officers of the City, Bond Counsel, other attorneys, engineers, and other agents or employees of the City are hereby authorized to do all acts and things required of them by or in connection with this resolution, the aforementioned documents, and the Bonds, for the full, punctual, and complete performance of all the terms, covenants, and agreements contained in the Bonds, the aforementioned documents, and this resolution. If for any reason the Mayor or the City Manager is unable to execute and deliver the documents referred to in this resolution, such documents may be executed by any member of the City Council or any officer of the City delegated the duties of the Mayor or the City Manager with the same force and effect as if such documents were executed and delivered by the Mayor or the City Manager. 5.08. The Borrower shall pay the administrative fee of the City for the issuance of conduit debt. The Borrower will also pay, or, upon demand, reimburse the City for payment of, any and all costs incurred by the City in connection with the Project and the issuance of the Bonds, whether or not the Bonds are issued, including any costs for attorneys' fees. 5.09. This resolution shall be in full force and effect from and after its approval. (The remainder of this page is intentionally left blank.) 6 ADOPTED by the City Council of the City of Eden Prairie this 1"day of November, 2016. ?�anr-pyra,- u yor ATTEST: 11(d,&9 p6h—' Kat leen Porta, City Clerk ED185-002(SEL) 488352v.2 7