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HomeMy WebLinkAboutResolution - 2019-43 - Edendale Residence Project Bonding - 03/19/2019 CITY OF EDEN PRAIRIE HENNEPIN COUNTY, MINNESOTA RESOLUTION NO. 2019-43 RELATING TO A MULTIFAMILY RENTAL HOUSING FACILITY AND THE ISSUANCE OF CONDUIT HOUSING REVENUE BONDS UNDER MINNESOTA STATUTES, CHAPTER 462C, AS AMENDED; GRANTING PRELIMINARY APPROVAL THERETO; CALLING FOR A PUBLIC HEARING; ESTABLISHING COMPLIANCE WITH CERTAIN REIMBURSEMENT REGULATIONS UNDER THE INTERNAL REVENUE CODE OF 1986, AS AMENDED; AND TAKING CERTAIN OTHER ACTIONS WITH RESPECT THERETO (EDENDALE RESIDENCE PROJECT) BE IT RESOLVED by the City Council (the “Council”) of the City of Eden Prairie, Minnesota (the “City”), as follows: Section 1. Recitals. 1.1. The City is a municipal corporation and political subdivision duly organized and existing under the Constitution and laws of the State of Minnesota. 1.2. Pursuant to Minnesota Statutes, Chapter 462C, as amended (the “Act”), the City is authorized to carry out the public purposes described in the Act by providing for the issuance of revenue bonds to provide funds to finance or refinance multifamily rental housing developments located within the City. 1.3. Aeon Edendale GP LLC, a Minnesota limited liability company, intends to form Aeon Edendale Limited Partnership, a Minnesota limited partnership (or an entity affiliated with or created by Aeon, the “Borrower”), which proposes that the City issue its revenue bonds, pursuant to the Act, in an aggregate principal amount not to exceed $10,000,000, in one or more series at one time or from time to time (the “Bonds”). 1.4. The proceeds of the Bonds are proposed to be loaned by the City to the Borrower to be applied by the Borrower to (i) finance the acquisition, rehabilitation, and equipping of an approximately 61 unit rental housing facility and related amenities located at 16700 Main Street in the City known as the Edendale Residence (the “Project”); (ii) fund one or more reserve funds to secure the timely payment of the Bonds, if necessary; (iii) pay interest on the Bonds during the construction of the Project, if necessary; and (iv) pay the costs of issuing the Bonds. 1.5. As a condition to the issuance of the Bonds, the City must adopt a housing program providing the information required by Section 462C.03, subdivision 1a of the Act (the “Housing Program”). 1.6. Prior to the issuance of the Bonds, a public hearing will be held and notice of the public hearing will be published in accordance with the requirements of Section 147(f) of the Internal Revenue Code of 1986, as amended (the “Code”) and Section 462C.04, subdivision 2 of the Act. 1.7. Under Section 146 of the Code, the Bonds must receive an allocation of the bonding authority of the State of Minnesota. An application for such an allocation must be made pursuant to the requirements of Minnesota Statutes, Chapter 474A, as amended (the “Allocation Act”) and preliminary approval of the issuance of the Bonds by the Council is sufficient to authorize the submission of an application to the State of Minnesota for an allocation of bonding authority with respect to the Bonds to finance the Project. Section 2. Preliminary Findings. Based on representations made by the Borrower to the City to date, the Council hereby makes the following preliminary findings, determinations, and declarations: 2.1 The Project consists of the acquisition, rehabilitation, and equipping of an existing a multifamily rental housing development designed and intended to be used for rental occupancy. 2.2 The proceeds of the Bonds will be loaned to the Borrower and the proceeds of the loan will be applied to: (i) the acquisition, rehabilitation, and equipping of the Project; (ii) the funding of one or more reserve funds to secure the timely payment of the Bonds, if necessary; (iii) the payment of interest on the Bonds during the rehabilitation of the Project, if necessary; and (iv) the payment of the costs of issuing the Bonds. The City and the Borrower will enter into a loan agreement (or other revenue agreement) (the “Loan Agreement”) 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. 2.3 In preliminarily authorizing the issuance of the Bonds and the financing of the acquisition, rehabilitation, and equipping of the Project and related costs, the City’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 the policies of the Act. 2.4 The Bonds will be special, limited obligations of the City payable solely from the revenues pledged to the payment thereof under the loan agreement (or other revenue agreement) referred to above, and will not be a general or moral obligation of the City and will not be secured by or payable from revenues derived from any exercise of the taxing powers of the City. Section 3. Public Hearing. The City Council will conduct a public hearing on the Housing Program, the Project, and the issuance of the Bonds by the City at a regular or special meeting on a date as shall be determined by the City staff for which proper notice may be given as provided below. Notice of such hearing (the “Public Notice”) will be published as required by Section 462C.04, subdivision 2 and Section 147(f) of the Code. The City Clerk of the City is hereby authorized and directed to publish the Public Notice, in substantially the form attached hereto as EXHIBIT A, as required by Section 462C.04.. At the public hearing, reasonable opportunity will be provided for interested individuals to express their views, both orally and in writing, on the Project, the Housing Program, and the proposed issuance of the Bonds. Section 4. Housing Program. Kennedy & Graven, Chartered, acting as bond counsel with respect to the Project and the Bonds (“Bond Counsel”) shall prepare and submit to the Metropolitan Council for its review a draft Housing Program to authorize the issuance by the City of up to approximately $10,000,000 in revenue bonds in one or more series to finance the acquisition, construction, and equipping of the Project by the Borrower. Section 5. Submission of an Application for an Allocation of Bonding Authority. The City Council hereby authorizes the submission of an application for allocation of bonding authority pursuant to 2 Section 146 of the Code and the Allocation Act in accordance with the requirements of the Allocation Act. The Mayor of the City or 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 Minnesota Management & Budget. Section 6. Preliminary Approval. The City Council hereby grants preliminary approval to the issuance of the Bonds in the approximate maximum aggregate principal amount of $10,000,000 to finance all or a portion of the costs of the Project pursuant to the Housing Program of the City, subject to: (i) review of the Housing Program by the Metropolitan Council; (ii) a public hearing as required by the Act and Section 147(f) of the Code; (iii) receipt of an allocation of the bonding authority from the State of Minnesota; (iv) final approval following the preparation of bond documents; and (v) final determination by the City Council that the financing of the Project and the issuance of the Bonds are in the best interests of the City. Section 7. Reimbursement of Costs under the Code. 7.1. The United States Department of the Treasury has promulgated regulations governing the use of the proceeds of tax-exempt bonds, all or a portion of which are to be used to reimburse the City or the Borrower for project expenditures paid prior to the date of issuance of such bonds. Those regulations (Treasury Regulations, Section 1.150-2) (the “Regulations”) require that the City adopt a statement of official intent to reimburse an original expenditure not later than 60 days after payment of the original expenditure. The Regulations also generally require that the bonds be issued and the reimbursement allocation made from the proceeds of the bonds occur within 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 3 years after the date the expenditure is paid. The Regulations generally permit reimbursement of capital expenditures and costs of issuance of the 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 City 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, costs 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. 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 1.150-2(j)(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 minimis” 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 60 days before the date of adoption of this resolution of the City. 7.03. 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 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. 3 Section 8. Costs. The Borrower will pay the administrative fee of the City and 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 City will issue the Bonds as requested by the Borrower. If, as a result of information made available to or obtained by the City 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 City reserves the right to decline to give final approval to the issuance of the Bonds. The City also retains the right, in its sole discretion, to withdraw from participation and accordingly not issue the Bonds, or issue the Bonds in an amount less than the amount referred to herein, should the City Council, at any time prior to the 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 herein, 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, 2019. 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. th ADOPTED by the Eden Prairie City Council on this 19 day of March, 2019. ___________________________ Ronald A. Case, Mayor ATTEST: ___________________________ Kathleen Porta, City Clerk 4 EXHIBIT A NOTICE OF PUBLIC HEARING ON A HOUSING PROGRAM AND THE ISSUANCE OF CONDUIT REVENUE BONDS FOR A MULTIFAMILY HOUSING PROJECT NOTICE IS HEREBY GIVEN that the City Council of the City of Eden Prairie, Minnesota (the “Council”) will meet on _______, 2019 at 7:00 p.m., or as soon thereafter as the matter may be heard, at the City Hall at 8080 Mitchell Road in the City for the purpose of conducting a public hearing on a proposal Aeon Edendale Limited Partnership, a Minnesota limited partnership (or an entity affiliated with or created by Aeon, the “Borrower”) that the City of Eden Prairie, Minnesota (the “City”) finance the acquisition, rehabilitation and equipping of a rental housing development, hereinafter described, by the issuance of conduit revenue bonds or other obligations (the “Bonds”) pursuant to Minnesota Statutes, Chapter 462C, as amended, and that the City adopt a housing program for such bonds. The proceeds of the Bonds are proposed to be loaned by the City to the Borrower to be applied by the Borrower to (i) finance the acquisition, rehabilitation and equipping of an approximately 61 unit rental housing facility and related amenities located at 16700 Main Street in the City; (ii) fund a debt service reserve fund, if necessary; (iii) pay interest on the Bonds during the construction of the Project, if necessary; and (iv) pay a portion of the costs of issuing the Bonds. The Project will be owned and operated by the Borrower. The estimated maximum aggregate principal amount of bonds or other obligations to be issued to finance the Project is $10,000,000. The Bonds if and when issued will be special, limited obligations of the City, and the Bonds and interest thereon will be payable solely from the revenues and assets pledged to the payment thereof. No holder of any Bond will have the right to compel any exercise of the taxing power of the City to pay the Bonds or the interest thereon, nor to enforce payment against any property of the City except money payable by the Borrower to the City and pledged to the payment of the Bonds. Before issuing the Bonds, the City will enter into an agreement with the Borrower, whereby the Borrower will be obligated to make payments at least sufficient at all times to pay the principal of and interest on the Bonds when due. Following the public hearing the Council will consider a resolution approving a housing program prepared in accordance with the requirements of the Act and granting approval to the issuance of the Bonds. A copy of the housing program will be on file at City Hall, 8080 Mitchell Road, Eden Prairie, Minnesota 55344, Monday through Friday during the City’s normal business hours until the date of the Public Hearing. At the time and place fixed for the Public Hearing, the City Council will give all persons who appear or submit comments in writing to the City Council prior to the hearing, an opportunity to express their views with respect to the proposal. In addition, interested persons may file written comments respecting the proposal with the City Clerk at or prior to said public hearing. Publish ________, 2019. A-1