CR 08-042 Multi family Housing Revenue Bonds _ Raspberry Ridge
CITY OF
~
April 10, 2008
HOPKINS
Council Report 2008-042
MULTIFAMILY HOUISING REVENUE BONDS - RASPBERRY RIDGE
Proposed Action
Staffrecommends adoption of the following motion: Following the public hearing, move
to approve Resolution 2008-028 authorizinq the issuance. sale and delivery of a
multifamilv housinq revenue note (Raspberry Ridqe Proiect), Series 2008. and
prescribing the form of and auth6rizinq the execution of related documents.
Ov rview
Raspberry Ridge is a multifamily housing development consisting of 65 apartments and
36 town home units. The units are occupied by low and moderate income individuals
and families. All 101 units receive project-based Section 8 assistance.
Community Housing Development Corporation, the owner of the project, has applied to
the City to issue a multifamily housing revenue note. The proceeds will be used to
refund prior bonds, finance approximately $886,000 in additional improvements and
fund a reserve.
Primary Issues to Consider
. What is the purpose of this financing?
. Does this project meet the requirements of the City policy regarding taxable/tax
exempt financing?
. What are the implications to the City related to this action?
. Has legal counsel reviewed this matter?
Supportina Information
. Resolution 2008-028
. Application for Private Activity Revenue Bond Financing - Community
Housing Development Corporation
· F' os cope ok
Finan iallmpact: $ 0 Budgeted: Y/N
Related Documents (CIP, ERP, etc.):
Notes:
Source:
Council Report 2008-042
Page 2
Analv i of th I ue
. What is the purpose of this financing?
Local units of government are authorized to issue tax exempt/taxable revenue bonds
to facilitate projects that are felt to be beneficial to the community. Securing financing
through such an issue usually provides for a lower interest rate than could be secured
through a private lending institution.
. Does this project meet the requirements of the City policy regarding
taxable/tax exempt financing?
The City of Hopkins has a revenue bond financing policy. The proposed project
adheres to the requirements of the policy by meeting the housing needs of the City
and preserving an affordable housing development.
. What are the implications to the City related to this action?
These bonds and all such revenue bonds are secured by a pledge of repayment
strictly from the revenue generated from the proposed project. The City is not liable to
make any payment should there be a default. The City is acting only as a facilitator in
this project.
The City has not been informed that the owner of the subject property is presently in
default on any bond payments to bond holders.
. Has legal counsel reviewed this matter?
Stefanie Galey, Faegre & Benson, represents the City as bond counsel on tax exempt
bond financing transactions and has reviewed all documents associated with this
project.
Alt rnatives
The City Council has the following alternatives regarding this matter:
1. Approve the action as recommended by staff.
2. Deny the approval for the sale of bonds. With this action, the applicant would
continue to make payments on the current bond debt and attempt to locate other
financing for the needed improvements.
3. Continue for additional information.
CITY OF HOPKINS, MINNESOTA
RESOLUTION NO. 2008-028
RESOLUTION AUTHORIZING THE ISSUANCE, SALE AND DELIVERY
OF A MUL TIF AMIL Y HOUSING REVENUE NOTE (RASPBERRY
RIDGE PROJECT), SERIES 2008; AND PRESCRIBING THE FORM OF
AND AUTHORIZING THE EXECUTION OF RELATED DOCUMENTS.
WHEREAS, the City of Hopkins (the "City") is a municipal corporation and political
subdivision duly organized and existing under the Constitution and laws of the State of
Minnesota; and
WHEREAS, 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 housing within its jurisdiction, by issuing revenue notes and bonds to defray, in
whole or in part, the development costs of a low and moderate income rental housing
development, 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 notes and bonds; and
WHEREAS, the City has previously issued its Multifamily Housing Revenue Bonds
(Hopkins Renaissance Project), Series 1996 (the "Prior Bonds") to finance the acquisition
and improvement of a lOl-unit multifamily residential rental housing development currently
known as Raspberry Ridge, located at 27 - 14th Avenue North in the City of Hopkins (the
"Project"), for occupancy by persons and families of low and moderate income; and
WHEREAS, Community Housing Development Corporation, a Minnesota nonprofit
corporation (the "Borrower"), the owner of the Project, has requested the City to issue its
Multifamily Housing Revenue Note (Raspberry Ridge Project), Series 2008 (the "Note") for the
purpose of refunding the Prior Bonds and financing additional improvements to the Project and
related costs; and
WHEREAS, the City has on this date conducted a public hearing on a program for the
issuance of revenue obligations for such purpose (the "Program"), after due publication of
notice thereof in a newspaper of general circulation in the City; and
WHEREAS, the Note will be issued under this Resolution (the "Resolution"), and the
proceeds of the Note will be loaned to the Borrower pursuant to a Loan Agreement (the
"Loan Agreement"), and the Note will be secured by a pledge of all rights and revenues
derived by the City fromthe Loan Agreement (except certain retained rights of the City), and
said Note and the interest on said Note shall be payable solely from the revenues pledged
therefor and the Note shall not constitute a debt of the City within the meaning of any
constitutional or statutory limitation nor give rise to a pecuniary liability of the City or a
charge against its general credit or assets and shall not constitute a charge, lien, or
AUTHORIZING RESOLUTION
encumbrance, legal or equitable, upon any property of the City other than the City's interest
in the Project, and the revenues from the Project shall be pledged for the security and
payment of the Note (except as may otherwise be set forth in the Pledge Agreement
hereinafter referred to); and
WHEREAS, forms of the following documents (including the exhibits referred to
therein) have been submitted to the City:
a. The Loan Agreement to be made and entered into between the City and
the Borrower providing for the loan of the proceeds of the Note to the Borrower, and
for the repayment of such loan;
b. The Pledge Agreement to be made and entered into between the City
and U.S. Bank National Association (the "Lender"), pledging the City's right, title
and interest in the Loan Agreement as the security of the Note, and setting forth
proposed covenants and agreements with respect thereto;
c. The Amended and Restated Regulatory Agreement between the City,
the Lender and the Borrower (the "Regulatory Agreement");
d. The form of Note from the City to the Lender; and
e. The Combination Mortgage, Security Agreement, Assignment of Rents
and Leases and Fixture Financing Statement from the Borrower to the City (the
"Mortgage"), and the Assignment of Mortgage from the City to the Lender (the
"Assignment").
The agreements described and referred to in paragraphs a through e above shall
hereinafter sometimes be referred to collectively as the "Agreements";
NOW, THEREFORE, BE IT RESOLVED BY THE CITY OF HOPKINS THAT:
Section 1. 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.
Section 2. The City hereby approves the Program. For the purpose of refunding the
Prior Bonds and financing the costs of rehabilitation of the Project, and related costs and
reserves, there is hereby authorized the issuance of the Note, in an aggregate principal
amount not to exceed $4,635,000. The Note shall bear interest at such rate not to exceed 6%
per annum (which may be the actual rate of the Note, or the rate which is the effective rate
after entering into an interest rate swap), shall be in such denomination, 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 form of the
Note and the Loan Agreement described herein. The final principal amount and interest rate
AUTHORIZING RESOLUTION
2
shall be determined by the City Manager, in his discretion; provided that the execution
thereof by the City Manager shall be conclusive evidence of such determination.
Section 3. The Note shall be a special obligation of the City payable solely from the
revenues of the Project. The Note does not constitute an indebtedness, liability, general or
moral obligation or a pledge of the faith and credit or any taxing power of the City, the State
of Minnesota, or any political subdivision thereof.
Section 4. The Mayor of the City (the "Mayor") and the City Manager of the City
(the "City Manager") are hereby designated as the representatives of the City with respect to
the issuance of the Note and the transactions related thereto.
Section 5. The Note and Agreements in substantially the forms submitted to the City
at this meeting are hereby approved. Such of the documents as require the execution of the
City are hereby authorized and directed to be executed or accepted, as the case may be, and
delivered in the name and on behalf of the City by its Mayor and City Manager upon
execution thereof by the parties thereto as appropriate. The Note and the Agreements shall
be executed and delivered as provided therein. Copies of all the documents necessary for the
consummation of the transactions described herein and in the Agreements shall be delivered,
filed and recorded as provided herein and in the Agreements.
The form and terms of the Note and Agreements may be varied prior to execution and
delivery by the parties thereto, provided that any such variance shall not be, in the opinion of
the City's legal counsel and the City Manager, materially adverse to the interests of the City.
The execution and delivery of the Note and Agreements as provided above shall be
conclusive evidence of the determination that any such variance was not materially adverse
to the interests ofthe City.
Section 6. The sale of the Note to the Lender is hereby approved and the Note is
hereby directed to be sold to the Lender, upon the terms and conditions set forth in the
Agreements and the Note. The Mayor and City Manager of the City are hereby authorized
and directed to prepare and execute by manual or facsimile signature the Note as described in
the Agreements and to deliver it to the Lender together with a certified copy of this
Resolution, and the other documents required by the Agreements.
Section 7. Except as otherwise provided in this resolution, all rights, powers, and
privileges conferred, and duties and liabilities imposed, upon the City by the provisions of
this Resolution or other documents authorized hereby shall be exercised or performed by the
City, or by such officers, board, body, or agency as may be required or authorized by law to
exercise such powers and to perform such duties. No covenant, stipulation, obligation,
representation, or agreement herein contained or contained in the other documents authorized
hereby shall be deemed to be a covenant, stipulation, obligation, representation, or agreement
of any officer, agent, or employee of the City in that person's individual capacity, and neither
the members of this City Council nor any officer or employee executing the Note shall be
liable personally on the Note or be subject to any personal liability or accountability by
reason of the issuance thereof.
AUTHORIZING RESOLUTION
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Section 8. Except as herein otherwise expressly provided, nothing in this Resolution,
expressed or implied, is intended or shall be construed to confer upon any person, firm, or
corporation other than the City, and the owners of the Note, any right, remedy, or claim,
legal or equitable, under and by reason of this Resolution or any provision hereof; this
Resolution and all of its provisions being intended to be and being for the sole and exclusive
benefit of the City and the owners of the Note issued under the provisions of this Resolution.
Section 9. In case anyone or more of the provisions of this Resolution or of the Note
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 Note, but this
Resolution and the Note shall be construed as if such illegal or invalid provision had not been
contained therein.
Section 10. The Mayor and City Manager of the City, officers of the City, and
attorneys and other agents or employees of the City are hereby authorized to do all acts and
things required by them by or in connection with this Resolution and the other documents
referred to above for the full, punctual, and complete performance of all the terms,
covenants, and agreements contained in the Note and the other documents referred to above,
and this resolution.
Section 11. The Mayor and the City Manager are hereby designated and authorized
to take such administrative action as is permitted or required in connection with the issuance
of the Note by the terms of the Loan Agreement, the Regulatory Agreement and the Pledge
Agreement.
Section 13. The Mayor and the City Manager of the City are authorized and directed
to execute and deliver any and all certificates, agreements or other documents which are
required by the Loan Agreement, the Pledge Agreement, the Regulatory Agreement, the
Assignment or any other agreements, certificates or documents which are deemed necessary
or appropriate by bond counsel to evidence the validity or enforceability of the Note or the
other documents referred to in this Resolution, or the security therefore, or to evidence
compliance with Section 145, 148 or Section 142(d) of the Internal Revenue Code of 1986,
as amended (the "Code"); and all such agreements or representations when made shall be
deemed to be agreements or representations, as the case may be, of the City.
Section 14. If for any reason the Mayor or City Manager of the City is unable to
execute and deliver those documents referred to in this Resolution, any member of the City
Council of the City may execute and deliver such documents with the same force and effect
as if such documents were executed by the Mayor or the City Manager.
Section 15. The City hereby designates the Note as a "qualified tax-exempt obligation"
for purpose of Section 265(b) of the Code relating to the disallowance of interest expenses for
financial institutions. The City represents that in calendar year 2008 it (together with its
subordinate entities) does not reasonably expect to issue tax-exempt obligations which are not
private activity bonds (not treating qualified 50 1 (c)(3) bonds under Section 145 of the Code as
AUTHORIZING RESOLUTION
4
private activity bonds for purposes of this representation) in an aggregate amount in excess of
$10,000,000.
Section 16. This resolution shall be in full force and effect from and after its passage.
PASSED AND APPROVED this
day of April, 2008.
Eugene J. Maxwell, Mayor
ATTEST:
Terry Obermaier, City Clerk
AUTHORIZING RESOLUTION
5
CITY OF HOPKINS
APPLICATION FOR PRIVATE ACTIVITY REVENUE BOND FINANCING
CITY OF HOPKINS
1010 FIRST STREET SOUTH
HOPKINS, MN 55343
OFFICE USE ONLY:
Date Received:
Received by:
Type of Request: (check one)
Taxable Bond Issue
XX Tax-Exempt Bond Issue
Refunding of Previous Bond Issue
GENERAL APPLICANT INFORMATION
1. Applicantlbusiness name: Community Housing Development Corporation (CHDC)
Contact person (inc!. telephone number): Danielle Salus and Barb Broen (consultant to CHDC)
Address: 614 N. 1 st Street, Suite 100
City: Minneapolis State: MN ZIP: 55401
Telephone: (work) _612-332-6264 x 11 (Danielle) 651-645-8474 (Barb)
E-mail: dschdc@comcast.net
FAX: 612-332-2627
2. Applicant's legal counsel: Faegre and Benson
Contact person (inc!. telephone number): Stephanie Galey (Bond Counsel) I Angela Christy
(Borrower's real estate counsel)
Address: 2200 Wells Fargo Center, 90 South 7th Street
City: Minneapolis_ State: MN_ ZIP: 55402
Telephone: (S. Galey) 612-766-7661 (A. Christy) 612-766-6833
FAX: 612-766-1600 E-mail:
3. Property owner(s) of record: Community Housing Development Corporation (CHDC)
1
Address: 614 N. 1st Street, Suite 100
City: Minneapolis State: MN ZIP: 55401
Telephone: (work) 612-332-6264 x 11
E-mail: dschdc@comcast.net
FAJ<: 612-332-2627
4. Applicant's business form (corporation, partnership, sole proprietor-ship, etc.) and state of
corporation or organization:
Applicant is a nonprofit organization, formed in 1991. The mission of CHDC is to own and
operate affordable housing. Please see attached handout for more information about
CHDC.
5. If the applicant is a corporation, list the officers, directors and stockholders holding more than 5%
of the stock of the corporation. State their name, address, telephone number and relationship to
the applicant.(If a corporation is not formed, list the potential officers, directors and stockholders):
CHDC is a nonprofit organization and has a board of directors. Please see the attached CHDC
Board of Director list.
6. If the applicant is a partnership, list the general partners and any limited partners with more than
5% interest. (If the partnership is not formed, give as much data as possible concerning the
potential partners):
N/A
7. List any cities to which the applicant has applied for taxable/tax exempt bond financing within the
last five years:-
In the last five years, CHDC has applied for tax exempt bond financing from: Eden Prairie,
Brooklyn Center, and the City of Minneapolis.
2
8. Has the applicant ever been in bankruptcy? If yes, please explain:
No.
9. Has the applicant ever defaulted on any bond or mortgage commitment? If yes, please explain:
No.
PROJECT INFORMA nON
1. Project name: Raspberry Ridge
2. Project address: _27 14th Ave. North, Hopkins, MN 55343
3. Applicant's interest in property if not owner: Applicant is owner. However, in 1996 CHDC and
the tenants of the project formed a leasehold cooperative, and CHDC leases the project to the
Cooperative. The term of the lease is 20 years.
4. Brief description of the nature of the business, such as principal services or products, etc.:
Raspberry Ridge is a multifamily housing project consisting of a 65 unit apartment building and
36 townhome units. These units are occupied by low to moderate income individuals and
families. All 101 units are project based Section 8 units.
5. Amount of bond issue requested: $_4,635,000
6. Total project cost: $ 5,181,350
7. Expected term: 25 years
8.
Estimated date of construction: June 2008
Completion: December 2008
3
9a. Project architect: _N/A
Address:
b. General contractor: _Flannery Construction
Address: _Saint Paul, MN
BUSINESS INFORMATION
1. Number of employees in Hopkins?
Full Time
Part Time
A.
B.
Before this project:
After this project:
3
3
o
o
2. Is the project associated with an existing Hopkins business?
A. Yes
B. No X
3. Length of time in business:
N/A
4. Will any public official ofthe City, directly or indirectly, to the best of your knowledge, benefit by
the issuance of the City's tax-exempt financing for this project according to Minnesota Statutes,
Section 412.877
If so, please explain:
No.
4
FILING REQUIREMENTS
Return the following to the Planning & Economic Development Department.
1. Completed application.
2. An application fee of$5,000. (Make your check out to the City of Hopkins.) This fee is not
refundable and is separate from the Bond Counsel's, City Attorney's, and closing fees.
3. A public hearing notice and resolution of preliminary approval.
4. Executed letter of agreement.
(If the project requires approval by the Zoning and Planning Commission, you must apply for
these approvals prior to or with this application.)
GUIDELINES
1. The project shall not require a significant amount of public money for City improvements if the
City Council determines that the site is premature for development.
2. The notes or bonds shall be for an issue not less than $250,000.
3. Construction and subcontractors must begin within one year of preliminary approval. The City
Council may grant a time extension if just cause is shown.
4. Contractors doing work on projects funded in whole or in part by tax-exempt financing:
a. Shall not discriminate in the hiring and firing of employees on the basis of race, color, creed,
religion, national origin, sex, marital status, age, disability or the need for public assistance.
b. Shall pay employees as provided under the United States Code, Section 276A, as amended
through June 23, 1986, and under Minnesota Statutes 1985, Sections 177.41 -177.44.
5. Applicant must use the City's Bond Counsel.
6. The applicant must select a qualified financial adviser or underwriter to assist the applicant in
preparing all necessary application documents and materials. The financial adviser will submit a
letter that establishes the financial feasibility of the project. Applications may, in the alternative,
include a signed letter form a responsible financial institution indicating that the project is
economically feasible and viable and stating that bonds can be successfully sold for the project or
that an individual or institution intends to purchase all of the bonds.
7. Commercial lindustrial projects must involve an existing business that the City wishes to expand
or a new business which the City wishes to attract.
8. A housing project must provide housing opportunities that the City Council determines are
important for the community.
5
9. The Council may in its sole discretion impose conditions exceeding those required under the City
building and use codes and policies relating to exterior building material, landscaping, signage,
lighting, and such other aspects as the Council may consider appropriate on a case-by-case basis.
A new construction project or expansion of an existing project should attempt to include at least
five of the following features into the project:
a. Brick exterior
b. Building design should be a distinctive, non-generic style.
c. A noticeable increase in the size and quantity of landscape plantings over what the City
normally requires.
d. Underground irrigation of all landscaping.
e. Open space, other than required setbacks.
f. At least 10% more parking than code requires.
g. Walkway along street frontages.
10. The City is to be reimbursed and held harmless for and from any out-of-pocket expenses related to
the tax exempt financing including, but not limited to, legal fees, financial analyst fees, and bond
counsel fees. A non-refundable application fee in the amount of $5,000 must be included with the
submission of the application.
11. Applicant must pay an annual administrative fee to the City of one eighth of one percent of the
outstanding principal balance of the bond issue. This will be paid semiannually while the bonds
are outstanding at the times specified in the bond documents.
12. The Council may, in its sole discretion, withdraw its preliminary approval ofa project any time if
in its judgment the purposes of the Act will not be served by going forward with the project and
its fmancing.
6
., c
LETTER OF AGREEMENT
This letter of agreement is given by _Community Housing Development Corporation, a Non-profit
Corporation under the laws of Minnesota ("Applicant") as required by the City of Hopkins, Minnesota, in
connection with its consideration of an application for tax exempt revenue bond fmancing for the project
described as follows:
Applicant agrees as follows:
1. Applicant agrees to payor reimburse the City for any and all costs and expenses which the City
may incur in connection with its consideration of the project and the granting of tax exempt
revenue bond financing therefore, whether or not the project is preliminarily approved by the City,
whether or not the project is approved by the State of Minnesota, whether or not revenue bond
financing is finally approved by the City, whether or not the bonds are issued and sold, and
whether or not the project is carried to completion.
2. Applicant agrees to indemnify and hold the City, its officers, employees and agents harmless
against any and all losses, claims, damages, expenses or liabilities, including attorney's fees
incurred in their defense, to which the City, its officers, employees and agents may become subject
in connection with the City's consideration, issuance or sale of the bonds for Applicant's project
and the carrying out of the transactions contemplated by this agreement and any resolutions
adopted, or agreements executed by the City in connection with the issuance of its bonds for this
project.
3. Applicant hereby releases the City, its officers, agents and employees from any claims, causes of
action, losses, damages, or liabilities which it may have against the City, its officers, agents, and
employees or which it may incur in connection with the City's consideration of the application for
industrial development revenue bond financing for Applicant's project; the failure of the City, in
its discretion, to issue tax-exempt revenue bonds for Applicant's project; the issuance and sale of
the bonds; the construction of the proj ect; or any other matter or thing of any type or nature
whatsoever which may arise in connection with the foregoing.
4. Applicant is aware of the City's application and administrative fee structure for tax exempt
financing and agrees and covenants that all such fees will be paid in the amount and at the times
required.
5. I certify that the information provided in the application contains no misrepresentations,
omissions or concealments of material facts and that the information given is true and complete to
the best of my knowledge.
Dated:
7> -I ~..o 8
(Applicant)
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:' ~,bank.
~ FiveSr8r Sen<iceGuaranreed @
2690 N. Snelling Avenue, Suite 220
Roseville, MN 55113
651 604-2680
651 604-2688 fax
December 27,2007
Danielle Salus
Community Housing Development Corporation
71 0 South Second Street, Suite 603
Minneapolis, MN 55401
RE: Refinance of Raspberry Ridge
Dear Danielle:
This letter is in response to your request for a refinance of the Raspberry Ridge loan at
US Bank. This is not a commitment to lend on behalf of US Bank, but rather a brief
description of the terms under which we may lend for the proposed refmance. Final
approval of any loan requires the Bank's credit approval and due diligence by us.
Borrower Raspberry Ridge Limited Partnership
Revenue Note Amount The lesser of:
lID $4,630,000
lID 80% of appraised market value
lID An amOlmt that can be supported,
with a 1.15 debt service coverage
ratio at prevailing interest rates at
the time of closing,
Issuer City of Hopkins
Interest Rate The tax-exempt interest rate will be a fixed rate, determined
before closing. The non-bank qualified tax-exempt rate is
NOTE: This loan may be based on the Bank's cost of funds for CRA related loan, plus
done on a floating rate and 150 basis points, multiplied by the Bank's "tax exempt benefit
then the interest rate would factor" (currently .8502). Foryourreference, the Bank's eRA
be swapped to a fixed rate. Cost of Funds rate for a 25-year loan, on a 25-year amortization
schedule, was approximately 5.41 % on December 26, 2007.
This option will be explored The 150 basis points are added to the Bank's cost offunds, and
if better pricing is available. the result is multiplied by .8502. Had the loan closed today,
your tax-exempt rate would have been approximately 5.87%
(charged on an actua1l360 basis).
~
,
Raspberry Ridge
Page 2
Loan Fee
1 % of the new loan amount
Loan Tenn
25 year loan, with a 25 year amortization schedule
Collateral First Mortgage on real estate and DCC filings on all
furnishings and equipment. Assignment of leases and
rents.
Debt Service Reserve 3 months of debt service - estimated at $88,800
Replacement Reserve $300/unit per year or $30,300
Insurance Fire and extended coverage, as well as liability
(satisfactory to Bank) must be in place. Coverage must
include a provision for 12 months of rent loss.
Prepayment Penalty Should the Loan be partially or fully prepaid above the
scheduled amortization amount on the Loan, Borrower
shall pay the Bank a "Breakfunding" prepayment fee, if
any, which will be based upon the Note amount, date of
prepayment, and market rates prevailing at the time of
such prepayment. The penalty will apply at all times to
the subject Loan (even if no funds have been advanced),
because the interest rate is locked prior to the day ofloan
closing.
Closing Date: On or before 9/30/2008
Due Diligence Deposit Borrower to deposit $15,000 with the Bank as a due diligence
deposit. If the Bank does not close a loan substantially in
accordance with these terms and conditions, the Bank shall
refund the balance ofthe due diligence deposit, net of out-of-
pocket expenses (i.e. appraisal, environmental fees, etc.). If the
loan closes, the due diligence deposit shall be credited to the
Borrower and the Borrower will be assessed for the Bank's
actual out-of-pocket.
Ongoing Reporting Borrower will be required to supply the following
Requirements information to Bank.
[&] Annual audited financial statements on the Borrower;
[&] Annual financial statements on the general partner;
[&] Quarterly rent roll and operating statements on the
Property .
[&] Annual verification that property insurance coverage is
in place.
[&] Semi-annual verification that all real estate taxes have
been paid.
'.
:"
Raspberry Ridge
Page 3
Reqwrements Prior To Loan Closing is also subject to receipt, analysis and
Closing acceptance of the following items:
00 Appraisal & market study commissioned and
acceptable to Bank;
00 Phase I environmental site assessment acceptable
to Bank (preferably commissioned by Bank);
00 Commitment for Title Insurance;
00 AL T A survey certified to Bank, Borrower and title
company;
00 Evidence of property insurance naming Bank as
mortgagee:
lID Borrowing entity's organizational legal documents;
lID Copies of plans and specifications;
lID Final detailed budget of all project costs;
lID Final pro forma of the income and expenses for
the Property;
00 All documentation required for a tax-exempt status
for the Revenue Note (non-Bank qualified)
00 The above listing is not all-inclusive and the Bank
may reauire additional information.
Covenants: Borrower is to insure that the following requirements are
complied with:
. Debt Coverage Ratio (the "DCR") of 1.0 to 1.0 will be
reqwred and is to be monitored on an annual basis. A
DSC ratio default will not occur unless the DSC is less
than 1.0: 1.0. The DCR will be calculated by dividing
the actual Net Operating Income (NOI) from the
property by the Debt Service payment. NOI is
determined by taking the actual income from the
Property and subtracting the actual operating expenses
and replacement reserves. Debt Service is defined as
the interest and principal payments required under the
Permanent Loan.
. Secondary Financing: The Borrower shall not incur
any additional debt beyond the Loan secured by the
Property without prior written Bank approval.
. Maintenance of Property: At all times, the Borrower is
to maintain the Property in good working order.
Closing Costs: All costs associated with closing the proposed transaction
will be paid by the Borrower, including, but not limited to,
the cost of the appraisal, Phase I environmental site
assessment, survey, title insurance, construction
inspections, any outside Bank legal fees, recording fees,
etc.
.' '
.~
Raspberry Ridge
Page 4
This lending proposal is subject to complete due diligence and underwriting, including
credit approval, satisfactory loan documentation, and other loan closing requirements.
All costs related to the proposed financing, including but not limited to the appraisal,
environmental reports, legal costs, survey, and title insurance will be the responsibility of
the Borrower
If the above proposed loan terms are acceptable to you, please indicate your acceptance
of this proposal by signing in the space provided below. This signed letter and the due
dilige~~s\~hOUld be returned to U.S. Bank's Co~ding Group on or
before l:ItHy, 2008. If the letter is not returned by R. 2008 the proposed ~
terms and conditions for the proposed loans will automatically expire. -Thank you for the
opportunity to submit this proposal on the Property.
Sincerely,
TYlChj ~~
Mary Ruch
Vice President
AGREED AND ACCEPTED:
By: Raspberry Ridge Limited Partnership
BY.~ -/
. Date: "a - .. Q <i
[Authorized Signer]
. Equal Credit Opportunity Disclosures
The Federal Equal Credit Opportunity Act prohibits creditors from discriminating against credit applicants on
the basis ofrace, color, religion, national origin, sex, marital status, age (provided the applicant has the capacity
to enter into a binding contract); because all or part ofthe applicant's income derives from any public assistance
program; or because the applicant has in good faith exercised any right under the Consumer Credit Protection
Act. The federal agency that administers complia~ce with this law concerning this creditor is the Office of the
Comptroller ofthe Currency, Customer Assistance Unit, 1301 McKinney Avenue, Suite 3710, Houston, TX
77010.
If the Applicant's applicati.on for credit is denied, Applicant has the right to a statement ofthe specific reasons
for denial. To obtain the statement, the Applicant must write to: U.S. Bank
2690 North Snelling Avenue, Suite 220
Roseville, MN 55113
Attn: Mary Ruch
. or call (651) 604 - 2687 within 60 days from the day that Applicant is notified of U.S. Bank's decision. U.S.
Bank will provide the Applicant with the written statement of reasons within 30 days of receiving
Applicant's request. Please retain a copy of this application and disclosures for your records.
:... J I . .. ; *'
Raspberry Ridge
Page 5
Section 236 Notice: Anti-terrorism Act
To help the government fight the funding of terrorism and money laundering
activities, Federal law requires all financial institutions to obtain, verify, and
record information that identifies each person who opens an account.
What this means for you: When you open an account, we will ask for your
name, address, date of birth, and other information that will allow us to
identify you. We may also ask to see your driver's license or other identifying
documents
"'-" .,-., ...... -.
.
COMMUNITY HOUSING DEV.ELOPMENT CORPORATION
710 s 2ND ST., STE. 603
MINNEAPOLIS, MN 55401-22!:j2
4141
PAY \
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DOLLARS L!J ~::::"_
P.O. Box 64689 . St. Paul, MN 55164
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Housing Development Corporation
Community Housing Development Corporation (CHDC) is a non-profit corporation
formed in 1991 to help address the need for stable, attractive, affordable housing.
Conceived by Charles R. Krusell of Minneapolis, CHDC was initially established in
response to a major change in federal housing policy. Legislation passed in 1990
pointed out that a massive number of privately owned low and moderate income
housing developments were threatened by neglect and conversion to market rate
rents. It called for these developments to be converted to non-profit ownership as the
cornerstone of an effort to preserve affordability. Mr. Krusell was skilled at seeing the
long-range implications of a government action. He envisioned a new non-profit or-
ganization that could assist in the development of a new generation of projects funded
by Low-Income Housing Tax Credits and making use of an array of other funding
methods.
CHDC is now one of the largest non-profit providers of affordable family housing in
Minnesota. The majority of our properties are in the Twin Cities metropolitan area,
and several are scattered throughout greater Minnesota.
As a non-profit, CHDC is available to de-
velopment residents, community organiza-
tions, government agencies and the busi-
ness community as a service. Most of the
preservation properties come to our atten-
tion by referral from residents of a threat-
ened property, private commercial lenders
and investors, HUD or Minnesota Hous-
ing. Building owners also call directly af-
ter hearing about us from the sellers of
properties we have
purchased earlier.
Many of these are
properties are in
various stages of se-
vere distress because
of deferred mainte-
nance, financial
mismanagement, or
criminal and drug
activity by existing
tenants.
CHDC is committed to working with
residents and the communities where
our properties are located. We believe
these relationships enhance the living
environment at our properties, im-
prove operations and strengthen
communities.
Long-term agreements with
service providers include:
· Catholic Charities of Mpls/St Paul
· Families Moving Forward
· Hennepin ACT Team
· Hopkins Senior Center
· Mahtomedi Public Schools
· Mental Health Resources
· Simpson Housing Services
· Trinity Lutheran Church
6/W
2007 CHDCBoard
Mr. Richard Jefferson, President
Ms. Carolyn Olson, Secretary-Treasurer
Mr. Richard Brustad, Vice President
Ms. Dorothy Davey
Ms. Allison Boisvert
Ms. Sandra Johnson
612-332-6264
Housing Development Corporation
Year
1988
1991
1992
1993
1994
1995
1996
1998
1999
2000
2001
2002
2003
2004
2005
2007
Development # Units Location Population
Lasalle Commons 63 Minneapolis Single Adults
Trinity Housing 120 Minneapolis Senior
Echo Flats 20 Minneapolis Family
Prairie Meadows 168 Eden Prairie Family
Olson Towne Homes 92 Minneapolis Family
Unity Place 112 Brooklyn Center Family
The Glenwood 80 Minneapolis Single Adults
Zinsmaster 36 Minneapolis Family
Alden 68 Minneapolis Single Adults
Hamline Properties 58 St Paul Family
Raspberry Ridge 101 Hopkins Senior / Family
Willow 28 Little Falls Family
Woodland Court 80 Park Rapids Senior
Diamond Hill 66 Minneapolis Family
Evergreen-Hutchinson 62 Hutchinson Senior
Evergreen-Minneapolis 88 Minneapolis Single Adults
Hopkins Village 161 Hopkins Senior
Riverside Homes 191 Minneapolis Family
Albright Townhomes 89 Minneapolis Family
Franklin Lane 66 Anoka Senior
Morrison Village 57 Minneapolis Family
Park Plaza Apartments 134 Minneapolis Family
Seven Corners Apartments 248 Minneapolis Family
Hanover Townhomes 96 St Paul Family
Jefferson Townhomes 5 Minneapolis Family
Talmage Green 26 Minneapolis Family
Trinity on Lake 24 Minneapolis Family
Vadnais Highlands 35 Vadnais Heights Family
Buffalo Court 48 Buffalo Family
Lincoln Place 48 Mahtomedi Family
Oakland Square 31 Minneapolis Family
New Beginnings 4 Minneapolis Family
Brandes Place 16 Fridley Family
Haralson Apartments 36 Apple Valley Single Adults
Veterans & Community Housing 140 Minneapolis Single Adults
Elliot Park Apartments 30 Minneapolis Family
Slater Square Apartments 162 Minneapolis Single/Family
2007 CHDC Board
Mr. Richard Jefferson, President
Ms. Carolyn Olson, Secretary-Treasurer
Mr. Richard Brustad, Vice President
Ms. Dorothy Davey
Ms. Allison Boisvert
Ms. Sandra Johnson
612-332-6264
Housing Development Corporation
Year Development # Units
1988 Lasalle Commons 63
1991 Trinity Housing 120
1992 Echo Flats 20
Prairie Meadows 168
1993 Olson Towne Homes 92
Unity Place 112
1994 The Glenwood 80
Zinsmaster 36
1995 Alden 68
Hamline Properties 58
Raspberry Ridge 101
Willow 28
1996 Woodland Court 80
1998 Diamond Hill 66
Evergreen-Hutchinson 62
1999 Evergreen-Minneapolis 88
Hopkins Village 161
Riverside Homes 191
2000 Albright Townhomes 89
Franklin Lane 66
Morrison Viliage 57
Park Plaza Apartments 134
Seven Corners Apartments 248
2001 Hanover Townhomes 96
Jefferson Townhomes 5
2002 Talmage Green 26
2003 Trinity on Lake 24
Vadnais Highlands . 35
Buffalo Court 48
Lincoln Place 48
2004 Oakland Square 31
2005 New Beginnings 4
Brandes Place 16
Haralson Apartments 36
Veterans & Community Housing 140
2007 Elliot Park Apartments 30
Slater Square Aparhnents 162
Property Management Services
BDC Management Co.
612-371-0766
Location Population
Minneapolis Single Adults
Minneapolis Senior
Minneapolis Family
Eden Prairie Family
Minneapolis Family
Brooklyn Center Family
Minneapolis Single Adults
Minneapolis Family
Minneapolis Single Adults
St Paul Family
Hopkins Senior / Family
Little Falls Family
Park Rapids Senior
Minneapolis Family
Hutchinson Senior
Minneapolis Single Adults
Hopkins Senior
Minneapolis Family
Minneapolis Family
Anoka Senior
Minneapolis Family
Minneapolis Family
Minneapolis Family
St Paul Family
Minneapolis Family
Minneapolis Family
Minneapolis Family
Vadnais Heights Family
Buffalo Family
Mahtomedi Family
Minneapolis Family
Minneapolis Family
Fridley Family
Apple Valley Single Adults
Minneapolis Single Adults
Minneapolis Family
Minneapolis Single/ Family
Asset Management Services
Development Services
JLPope Associates
612-331-3333
Development Services
Broen Housing Consultants
651-645-8474
Raspberry Ridge
Preliminary scope of work
Aprill,2008
The following tasks have been identified by the resident co-operative, management, and the
owner. JL Pope Associates is working with the co-operative and the contractor to prioritize
certain tasks. Items in italics have been added/revised since the 1/23/2008 meeting with the City.
Kitchen cabinet replacement, countertops, and sinks: 83 units need replacement.
Bathroom vanity replacement and sink: all units need replacement.
Windows and Patio doors in townhomes: 5 buildings need replacement.
Fences & Retaining walls: The retaining wall around the perimeter of the building
(E.27'h St./26 Ren Ct) will not need to befully replaced. We are in discussion with the
Historical Society regarding its repair.
Water heaters in townhomes: 12 need replacement.
Water meters in townhomes: 3 buildings need replacement.
Furnaces in townhomes: 20 need replacement.
Foundation cracks & Concrete stoops in townhomes
Pinhole leaks in pipes in apartment building: We have discussed with City staffwhat the
best approach might be. The City has changed its water treatment in the hopes of
decreasing the incidence of this occurring in the future. Staff did not recommend
replacing entire runs of plumbing.
Elevator updates: Flannery Construction staff is having an elevator contractor look at the
elevator.
GFIs & Smoke detectors
Dumpster enclosures
Flannery Construction staff is having a roofing contractor look at the apartment building
roof
Overview of the Property
Raspberry Ridge is made up of an apartment building (the former junior hi~h school, renovated
in 1980) and townhomes. The address of the apartment building is 27 - 141 Avenue North. The
townhomes are just east of the building.
In the apartment building, there are 65 units (34-1 Bedroom, 5-1 Bedroom Accessible, 26-2
Bedroom). The building has one elevator, as well as a 'bridge' connecting the two wings of the
building. Since 2001, windows have been replaced in phases in this building. The bridge was
also replaced in 2001.
There are 36 townhomes (26-2 bedroom, 10-3 bedroom). Since 2003, roofs have been replaced
in phases. We have begun replacement of windows and patio doors. We would like to complete
replacement in the remaining 5 buildings through this rehab project.
Housing Development Corporation
Year Development # Units Location Population
1988 Lasalle Commons 63 Minneapolis Single Adults
1991 Trinity Housing 120 Minneapolis Senior
1992 Echo Flats 20 Minneapolis Family
Prairie Meadows 168 Eden Prairie Family
1993 Olson Towne Homes 92 Minneapolis Family
Unity Place 112 Brooklyn Center Family
1994 The Glenwood 80 Minneapolis Single Adults
Zinsmaster 36 Minneapolis Family
1995 Alden 68 Minneapolis Single Adults
Hamline Properties 58 St Paul Family
Raspberry Ridge 101 Hopkins Senior/Family
Willow 28 Little Falls Family
1996 Woodland Court 80 Park Rapids Senior
1998 Diamond Hill 66 Minneapolis Family
Evergreen-Hutchinson 62 Hutchinson Senior
1999 Evergreen-Minneapolis 88 Minneapolis Single Adults
Hopkins Village 161 Hopkins Senior
Riverside Homes 191 Minneapolis Family
2000 Albright Townhomes 89 Minneapolis Family
Franklin Lane 66 Anoka Senior
Morrison Village 57 Minneapolis Family
Park Plaza Apartments 134 Minneapolis Family
Seven Corners Apartments 248 Minneapolis Family
2001 Hanover Townhomes 96 St Paul Family
Jefferson Townhomes 5 Minneapolis Family
2002 Talmage Green 26 Minneapolis Family
2003 Trinity on Lake 24 Minneapolis Family
Vadnais Highlands 35 Vadnais Heights Family
Buffalo Court 48 Buffalo Family
Lincoln Place 48 Mahtomedi Family
2004 Oakland Square 31 Minneapolis Family
2005 New Beginnings 4 Minneapolis Family
Brandes Place 16 Fridley Family
Haralson Apartments 36 Apple Valley Single Adults
Veterans & Community Housing 140 Single Adults
2007 Elliot Park Apartments 30 Family
Slater Square Apartments 162 Single/ Family
Housing Development Corporation
Community Housing Development Corporation (CHDC) is a non-profit corporation
formed in 1991 to help address the need for stable, attractive, affordable housing.
Conceived by Charles R. Krusell of Minneapolis, CHDC was initially established in
response to a major change in federal housing policy. Legislation passed in 1990
pointed out that a massive number of privately owned low and moderate income
housing developments were threatened by neglect and conversion to market rate
rents. It called for these developments to be converted to non-profit ownership as the
cornerstone of an effort to preserve affordabiIity. Mr. Krusell was skilled at seeing the
long-range implications of a government action. He envisioned a new non-profit or-
ganization that could assist in the development of a new generation of projects funded
by Low-Income Housing Tax Credits and making use of an array of other funding
methods.
CHDC is now one of the largest non-profit providers of affordable family housing in
Minnesota. The majority of our properties are in the Twin Cities metropolitan area,
and several are scattered throughout greater Minnesota.
To qevf3/op, preserve. and operate
affordable. housing
for the benefit ofre~iqents,
neighborhoods and communities
Our Services
As a non-profit, CHDC is available to de-
velopment residents, community organiza-
tions, government agencies and the busi-
ness community as a service. Most of the
preservation properties come to our atten-
tion by referral from residents of a threat-
ened property, private commercial lenders
and investors, HUD or Minnesota Hous-
ing. Building owners also call directly af-
ter hearing about us from the sellers of
properties we have
purchased earlier.
Many of these are
properties are in
various stages of se-
vere distress because
of deferred mainte-
nance, financial
mismanagement, or
criminal and drug
activity by existing
tenants.
Oakland Sql/are
CHDC is committed to working with
residents and the communities where
our properties are located. We believe
these relationships enhance the living
environment at our properties, im-
prove operations and strengthen
communities.
Long-term agreements with
service providers include:
· Catholic Charities of Mpls/St Paul
· Families Moving Forward
· Hennepin ACT Team
· Hopkins Senior Center
· Mahtomedi Public Schools
· Mental Health Resources
· Simpson Housing Services
· Trinity Lutheran Church
6/ffl