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HomeMy WebLinkAboutResolution - 2016-118 - Revenue Bonds for Prairie Meadows Housing Development - 11/15/2016 CITY OF EDEN PRAIRIE HENNEPIN COUNTY,MINNESOTA RESOLUTION NO.2016-118 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF EDEN PRAIRIE, MINNESOTA, RELATING TO A MULTIFAMILY HOUSING DEVELOPMENT AND THE ISSUANCE OF REVENUE BONDS TO FINANCE THE COSTS THEREOF UNDER MINNESOTA STATUTES, CHAPTER 462C,AS AMENDED; GRANTING PRELIMINARY APPROVAL THERETO, ESTABLISHING COMPLIANCE WITH CERTAIN REIMBURSEMENT REGULATIONS UNDER THE INTERNAL REVENUE CODE OF 1986, AS AMENDED, AND TAKING CERTAIN OTHER ACTIONS WITH RESPECT THERETO BE IT RESOLVED by the City Council of the City of Eden Prairie, Minnesota(the "Council")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 of multifamily rental housing developments within its boundaries by the issuance of revenue bonds. As a condition to the issuance of such revenue bonds, the Issuer must adopt a housing program providing the information required by Section 462C.03, subdivision la, of the Act. 1.3. A public hearing must be held in accordance with the requirements of Section 147(f) of the Internal Revenue Code of 1986, as amended (the "Code") and the requirements of Section 462C.04, subdivision 2 of the Act. Section 147(f) of the Code requires approval of the Council of the issuance of revenue bonds after a public hearing following "reasonable public notice," defined under Section 5f.103- 2(g)(3) of the Treasury Regulations to mean no fewer than fourteen (14) days before the hearing. Under Section 462C.04, subdivision 2, of the Act, a public hearing must be held on the housing program after one publication of notice in a newspaper circulating generally in the City, at least fifteen (15) days before the hearing, and on or before the day on which notice of the public hearing is published, the housing program must be submitted to the Metropolitan Council for its review and comment. 1.4. The Council must also grant preliminary approval to the issuance of revenue bonds to finance the multifamily housing development referred to in a housing program, and under Section 146 of the Code, such bonds must receive an allocation of the bonding authority of the State of Minnesota. Under Minnesota Statutes, Chapter 474A, as amended (the "Allocation Act"), an application for such an allocation of bonding authority must be submitted to and granted by the Minnesota Department of Management and Budget("MMB") in accordance with the terms and conditions of the Allocation Act. 1.5. Prairie Meadows Limited Partnership, a Minnesota limited partnership (the "Borrower"), has proposed that the Issuer adopt a program for a multifamily housing development (the "Housing Program")to provide for the issuance of its revenue bonds in accordance with the terms and conditions of the Act, in an aggregate principal amount not to exceed $18,000,000, in one or more series (the "Bonds"), I for the purpose of loaning the proceeds thereof to the Borrower to finance the acquisition, construction, and rehabilitation of a 168-unit multifamily rental housing development, comprised of twenty-eight (28) town home buildings located at 11345 Westwind Drive in the City (the "Project"). The Project is currently owned by the Borrower, the general partner of which is CHDC Prairie Meadows GP LLC, a Minnesota limited liability company. Section 2. Preliminary Findings. Based on representations made by the Borrower to the Issuer to date,the Council hereby makes the following preliminary findings, determinations, and declarations: a. The Project consists of a multifamily housing development designed and intended to be used for rental occupancy. b. The proceeds of the Bonds will be loaned to the Borrower and such proceeds will be applied by the Borrower to the payment of a portion of the costs of the acquisition, construction, and rehabilitation of the Project and related costs. The Issuer will enter into a loan agreement (or other revenue agreement) (the "Loan Agreement") with the Borrower requiring loan repayments from the Borrower in amounts sufficient to repay the loan when due and requiring the Borrower to pay all costs of maintaining and insuring the Project, including taxes thereon. C. In preliminarily authorizing the issuance of the Bonds and the financing of the acquisition, construction, and rehabilitation of the Project and related costs, the Issuer's purpose is, and the effect thereof will be, to promote the public welfare of the City and its residents by retaining and improving multifamily housing developments for low and moderate income residents of the City and otherwise furthering the purposes and policies of the Act. d. The issuance of the Bonds to finance all or a portion of the costs of the Project is in the public interest. e. The Bonds will be special, limited obligations of the Issuer payable solely from the revenues pledged to the payment thereof, and will not constitute or give rise to a general or moral obligation of the City or any pecuniary liability of the City or any charge upon its general credit or taxing powers. Section 3. Public Hearing. The Issuer will conduct a public hearing on the Housing Program,the Project, and the issuance of the Bonds, notice of which hearing(the "Public Notice"), will be published as required by Minnesota Statutes, Section 462C.04, subdivision 2, of the Act, and Section 147(f) of the Code. The City Manager of the Issuer is hereby authorized to establish a date for the public hearing and to publish the Public Notice in accordance with applicable law. The Public Notice will provide a general functional description of the Project, as well as the maximum aggregate face amount of the obligations to be issued for the purposes referenced above, the identity of the initial owner or principal user of the Project, and the location of the Project. The Public Notice is authorized to be published in a newspaper circulating generally in the City on a date at least fifteen (15) days before the meeting of the Council at which the public hearing will take place. At the public hearing, reasonable opportunity will be provided for interested individuals to express their views, both orally and in writing, on the Project and the proposed issuance of such revenue obligations. Section 4. Housing Program. Kennedy& Graven, Chartered, as bond counsel ("Bond Counsel"), with the assistance of City staff, shall prepare a draft housing program to authorize the issuance by the Issuer of Bonds to finance the acquisition, construction, and rehabilitation by the Borrower of the Project. The City Manager is hereby authorized to review, approve and submit the Housing Program to the 2 Metropolitan Council for its review on or before the date of publication of the public notice in accordance with the requirements of Section 462C.04, subdivision 2 of the Act. Section 5. Preliminary Approval. This Council hereby grants preliminary approval to the issuance of the Bonds, in an aggregate principal amount not to exceed $18,000,000 to finance all or a portion of the costs of the Project pursuant to the Housing Program, subject to: (i)review of the Housing Program by the Metropolitan Council; (ii)the public hearing as required by Section 462C.04, subdivision 2 of the Act and Section 147(f) of the Code; (iii) final approval following the preparation of bond documents; and (iv)final determination by this Council that the financing of the Project and the issuance of the Bonds are in the best interests of the City. Section 6. Submission of an Application for an Allocation of Bonding Authority. The Council hereby authorizes the submission of an application for allocation of bonding authority pursuant to Section 146 of the Code and in accordance with the requirements of the Allocation Act. The Mayor and the City Manager and Bond Counsel are hereby authorized and directed to take all actions, in cooperation with the Borrower, as are necessary to submit an application for an allocation of bonding authority to MMB. Section 7. Reimbursement of Costs under the Code. 7.1. The United States Department of the Treasury promulgated Section 1.150-2 of the Regulations, which governs the use of the proceeds of tax-exempt bonds, all or a portion of which are to be used to reimburse the Issuer or the Borrower for project expenditures paid prior to the date of issuance of such bonds. Section 1.150-2 of the Regulations requires that the Issuer adopt a statement of official intent to reimburse an original expenditure not later than sixty(60) days after payment of the original expenditure. Section 1.150-2 of the Regulations also generally requires that the bonds be issued and the reimbursement allocation made from the proceeds of the bonds occur within eighteen(18) months after the later of: (i) the date the expenditure is paid; or (ii) the date the project is placed in service or abandoned, but in no event more than three (3) years after the date the expenditure is paid. The Regulations generally permit reimbursement of capital expenditures and costs of issuance of bonds. 7.2. To the extent any portion of the proceeds of the Bonds will be applied to expenditures with respect to the Project, the Issuer reasonably expects to reimburse the Borrower for the expenditures made for costs of the Project from the proceeds of the Bonds after the date of payment of all or a portion of such expenditures. All reimbursed expenditures shall be capital expenditures, a cost of issuance of the Bonds, or other expenditures eligible for reimbursement under Section 1.150-2(d)(3) of the Regulations and also qualifying expenditures under the Act. 7.3. Based on representations by the Borrower, other than (i) expenditures to be paid or reimbursed from sources other than the Bonds, (ii) expenditures permitted to be reimbursed under prior regulations pursuant to the transitional provision contained in Section 1.150-20)(2)(i)(B) of the Regulations, (iii)expenditures constituting preliminary expenditures within the meaning of Section 1.150- 2(f)(2) of the Regulations, or (iv) expenditures in a "de minimus" amount (as defined in Section 1.150- 2(f)(1)of the Regulations), no expenditures with respect to the Project to be reimbursed with the proceeds of the Bonds have been made by the Borrower more than sixty (60) days before the date of adoption of this resolution of the Issuer. 7.3. Based on representations by the Borrower, as of the date hereof, there are no funds of the Borrower reserved, allocated on a long term-basis or otherwise set aside (or reasonably expected to be reserved, allocated on a long-term basis or otherwise set aside) to provide permanent financing for the expenditures related to the Project to be financed from proceeds of the Bonds, other than pursuant to the 3 issuance of the Bonds. This resolution, therefore, is determined to be consistent with the budgetary and financial circumstances of the Borrower as they exist or are reasonably foreseeable on the date hereof. Section 8. Costs. 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. Section 9. Commitment Conditional; Expiration of Commitment. The adoption of this resolution does not constitute a guarantee or a firm commitment that the Issuer will issue the Bonds as requested by the Borrower. If, as a result of information made available to or obtained by the Issuer during its review of the Project, it appears that the Project or the issuance of Bonds to finance or refinance the costs thereof is not in the public interest or is inconsistent with the purposes of the Act, the Issuer reserves the right to decline to give final approval to the issuance of the Bonds. The Issuer also 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 herein, should the Issuer, at any time prior to the issuance thereof determine that it is in the best interests of the Issuer not to issue the Bonds, or to issue the Bonds in an amount less than the amount referred to in this resolution, or should the parties to the transaction be unable to reach agreement as to the terms and conditions of any of the documents for this financing transaction. All commitments of the Issuer expressed herein are subject to the condition that the Issuer and the Borrower shall have agreed to mutually acceptable terms and conditions of the Loan Agreement, the Bonds, and of the other instruments and proceedings relating to the Bonds and that the closing of the issuance and sale of the Bonds shall have occurred by no later than December 31, 2017. 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. Section 10. Effective Date. This resolution shall be in full force and effect from and after its adoption. [The remainder of this page is intentionally left blank.] 4 ADOPTED by the City Council of the City of Eden Prairie this 15th day of November,2016. an r ens, Mayor ATTEST: P4-& Kath en Porta, City Clerk ED185-003(SEL) 489199v.3 5