Loading...
VII.3. Providing Preliminary Approval for the Issuance of Housing Revenue Bonds for the Benefit of Trellis Co.; BishopApril 6, 2021 Council Report 2021-035 Providing Preliminary Approval for the Issuance of Housing Revenue Bonds for the Benefit of Trellis Co. Proposed Action. Staff recommends that the Council approve the following motion: Adopt Resolution 2021-014: Providing Preliminary Approval for the Issuance of Housing Revenue Bonds. Overview: On November 17th, 2020, City Council passed a resolution giving preliminary approval to Trellis Co., to issue up to $21 million of housing revenue bonds. The resolution also authorized an application to Minnesota Management and Budget (MMB) for an allocation of the State’s available bonding pool. An application has been submitted, and Trellis Co. received an allocation to issue up to $19.8 million of housing revenue bonds. The current resolution being recommended for approval gives preliminary approval to issue an additional $1.5 million of housing revenue bonds. Approval of Resolution 2021-014 will authorize the submittal of an application to Minnesota Management and Budget for up to $1.5 million of bonding allocation. The total allocation received would be used by Trellis Co. to acquire, rehabilitate, construct, and equip an approximately 101-unit existing multifamily rental housing facility and a 45-unit new multifamily rental housing facility located at 27 Fourteenth Avenue North and 9 Seventh Avenue South for individuals and families of low and moderate income Housing revenue bonds are planned to be issued, pursuant to Minnesota Statutes, Chapter 462C. As part of the issuance, a Housing Program will be prepared and submitted to Metropolitan Council for review and comment; and a public hearing will be scheduled. The bonds require a final approval by City Council before issuance. The Bonds issued would be a limited obligation of the City payable solely from the revenues pledged to the payment and will not be a general obligation of the City and will not be secured by or payable from revenue derived from any exercise of the taxing authority powers of the City. Julie Eddington from Kennedy & Graven, the City’s bond counsel and Dan Walsh from Trellis Co. will be available for questions. Supporting Information: -Resolution 2021-014 ________________________________________ Nick Bishop, Finance Director CITY OF HOPKINS, MINNESOTA RESOLUTION NO. 2021-014 RESOLUTION PROVIDING PRELIMINARY APPROVAL FOR THE ISSUANCE OF HOUSING REVENUE BONDS BE IT RESOLVED by the City Council (the “City Council”) of the City of Hopkins, Minnesota (the “City”), as follows: Section 1. Recitals. 1.01. Pursuant to Minnesota Statutes, Chapter 462C, as amended (the “Housing Act”), the City is authorized to carry out the public purposes described in the Housing Act by providing for the issuance of revenue bonds to provide funds to finance multifamily housing developments. 1.02. Raspberry Ridge Limited Partnership, a Minnesota limited partnership, or any affiliate of Trellis Co., a Minnesota nonprofit corporation (collectively, the “Borrower”), has proposed to acquire, rehabilitate, construct, and equip an approximately 101-unit existing multifamily rental housing facility and facilities functionally related and subordinate thereto located at 27 Fourteenth Avenue North in the City (the “Rehabilitation Project”) and an approximately 45-unit new multifamily rental housing facility and facilities functionally related and subordinate thereto located at 9 Seventh Avenue South in the City (the “Construction Project,” and together with the Rehabilitation Project, the “Project”) for occupancy by individuals and families of low and moderate income. 1.03. On November 17, 2020, the City Council adopted Resolution No. 2020-061 (the “Original Resolution”), which authorized the issuance by the City of one or more series of tax-exempt or taxable revenue obligations (the “Original Bonds”) in the approximate principal amount not to exceed $21,000,000 for the benefit of the Borrower to finance all or a portion of (i) the costs of the acquisition, rehabilitation, construction, and equipping of the Project; (ii) required reserve funds, if any; (iii) capitalized interest during the rehabilitation and construction of the Project; and (iv) the costs of issuing the Bonds. 1.04. Pursuant to Section 146 of the Code, the tax-exempt revenue obligations must receive an allocation of the bonding authority of the State of Minnesota (the “State”). An application for such an allocation must be made pursuant to the requirements of Minnesota Statutes, Chapter 474A, as amended (the “Allocation Act”). Pursuant to Certificate of Allocation No. 395 issued by Minnesota Management and Budget on January 12, 2021, the City received allocation of bonding authority from the State in the principal amount of $12,400,000 with respect to the Original Bonds to be issued to finance the Rehabilitation Project. Pursuant to Certificate of Allocation No. 402 issued by Minnesota Management and Budget on January 12, 2021, the City received allocation of bonding authority from the State in the principal amount of $7,400,000 with respect to the Original Bonds to be issued to finance the Construction Project. 1.05. The Borrower has determined that it requires additional tax-exempt financing for the costs of the Rehabilitation Project and has proposed that the City authorize the issuance of additional tax-exempt revenue obligations (the “Additional Bonds”) to finance additional costs of the Rehabilitation Project and make an additional application to the State for bonding authority in the amount of $1,500,000. 2 1.06. As a condition to the issuance of the Original Bonds and the Additional Bonds (together, the “Bonds”), the City must prepare and adopt a housing program providing the information required by Section 462C.03, subdivision 1a of the Housing Act (the “Housing Program”). The City Council must also grant preliminary approval of the issuance of the Bonds to finance the multifamily rental housing development referred to in the Housing Program. 1.07. Under Section 147(f) of the Internal Revenue Code of 1986, as amended (the “Code”), prior to the issuance of the Bonds, the City Council must conduct a public hearing after providing notice in a newspaper of general circulation in the City or on the City’s website at least seven (7) days before the hearing. Under Section 462C.04, subdivision 2 of the Housing 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. Section 2. Preliminary Findings. Based on representations made by the Borrower to the City to date, the City Council hereby reaffirms its findings made in Section 2 of the Original Resolution, namely that: (a) The Bonds will finance 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 the proceeds thereof, along with other available funds, will be used to finance all or a portion of the costs of the acquisition, rehabilitation, construction, and equipping of the Project, capitalized interest during the rehabilitation and construction of the Project, required reserve funds (if any), and costs of issuance of the Bonds. The City will enter into one or more loan agreements (or other revenue agreement) with the Borrower requiring loan repayments from the Borrower in amounts sufficient to repay the loan of the proceeds of the Bonds 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, 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 and otherwise furthering the purposes and policies of the Housing Act. (d) The Bonds will be special, limited obligations of the City payable solely from the revenues pledged to the payment thereof, 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. Submission of an Additional Application for an Allocation of Bonding Authority. The City Council hereby authorizes the submission of an additional application for allocation of bonding authority with respect to the Additional Bonds in the principal amount of $1,500,000 pursuant to Section 146 of the Code and the Allocation Act in accordance with the requirements of the Allocation Act. City staff and Kennedy & Graven, Chartered, acting as bond counsel to the City (“Bond Counsel”), shall take all actions, in cooperation with the Borrower, as are necessary to submit an additional application for an allocation of bonding authority in the principal amount of $1,500,000 to the office of Minnesota Management and Budget. Section 4. Public Hearing. The City Council shall meet at a future date to be determined by City staff to conduct a public hearing on the Housing Program, the Project, and the issuance of the Bonds by the City. Notice of such hearing (the “Public Notice”) will be published and/or posted as required by 3 Section 462C.04, subdivision 2 of the Housing Act and Section 147(f) of the Code. Bond Counsel is hereby authorized and directed to publish the Public Notice, in substantially the form attached hereto as EXHIBIT A, in the Sun Sailor, a newspaper of general circulation in the City. 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 5. Housing Program. Bond Counsel shall prepare and submit to the City a draft Housing Program to authorize the issuance by the City of the Bonds in an aggregate principal amount of up to $21,300,000 to finance all or portion of the acquisition, rehabilitation, construction, and equipping of the Project by the Borrower. Bond Counsel is authorized and directed to submit, on behalf of the City, the Housing Program to Metropolitan Council for review and comment pursuant to Section 462C.04, subdivision 2 of the Housing Act. Section 6. Preliminary Approval. The City Council hereby provides preliminary approval to the issuance of the Bonds in the estimated principal amount not to exceed $21,300,000, subject to: (i) a public hearing as required by the Housing Act and Section 147(f) of the Code; (ii) final approval following the preparation of bond documents; (iii) receipt of an allocation of bonding authority from the office of Minnesota Management and Budget; and (iv) 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. The Bonds shall consist of the Original Bonds previously authorized under the Original Resolution and the Additional Bonds authorized under this resolution. Section 7. Reimbursement of Costs under the Code. This Section 7 supplements Section 7 of the Original Resolution. 7.01. 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 sixty (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 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 the Bonds. 7.02. 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 Housing 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 sixty (60) days before the date of adoption of this resolution of the City. 4 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. Section 8. Costs. The Borrower will pay the administrative fees of the City and 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. Section 9. Commitment Conditional. The adoption of this resolution does not constitute a guaranty or firm commitment that the City will issue the Bonds as requested by the Borrower. The City retains the right in its sole discretion to withdraw from participation and accordingly not to issue the Bonds, or issue the Bonds in an amount less than the amount referred to herein, should the City at any time prior to issuance thereof determine that it is in the best interest of the City not to issue the Bonds, or to issue the Bonds in an amount less than the amount referred to in Section 6 hereof, or should the parties to the transaction be unable to reach agreement as to the terms and conditions of any of the documents required for the transaction. Section 10. Effective Date. This resolution shall be in full force and effect from and after its passage. Approved by the City Council of the City of Hopkins, Minnesota this 6th day of April, 2021. Jason Gadd, Mayor ATTEST: Amy Domeier, City Clerk A-1 EXHIBIT A NOTICE OF PUBLIC HEARING CITY OF HOPKINS, MINNESOTA NOTICE OF PUBLIC HEARING ON THE APPROVAL OF A HOUSING PROGRAM FOR A MULTIFAMILY HOUSING DEVELOPMENT AND THE ISSUANCE OF MULTIFAMILY HOUSING REVENUE BONDS UNDER MINNESOTA STATUTES, CHAPTERS 462C AND 474A, AS AMENDED NOTICE IS HEREBY GIVEN that the City Council of the City of Hopkins, Minnesota (the “City”) will hold a public hearing on Tuesday, _______________, 2021, at or after 7:00 p.m. [at City Hall, located at 1010 First Street South in the City,] to consider a proposal that the City approve and authorize the issuance of one or more series of taxable or tax-exempt revenue obligations (the “Bonds”), pursuant to Minnesota Statutes, Chapters 462C and 474A, as amended (the “Act”), for the purposes of providing financing for all or a portion of (i) the costs of the acquisition, rehabilitation, construction, and equipping of an approximately 101-unit existing multifamily rental housing facility and facilities related and subordinate thereto located at 27 Fourteenth Avenue North in the City and an approximately 45-unit new multifamily rental housing facility and facilities functionally related and subordinate thereto located at 9 Seventh Avenue South in the City (the “Project”) for occupancy by individuals and families of low and moderate income; (ii) any required reserve funds; (iii) capitalized interest during the rehabilitation and construction of the Project; and (iv) costs of issuing the Bonds. Raspberry Ridge Limited Partnership, a Minnesota limited partnership, or any affiliate of Trellis Co., a Minnesota nonprofit corporation (collectively, the “Borrower”), will own the Project. The aggregate principal amount of the proposed Bonds is estimated not to exceed $21,300,000. Following the public hearing, the City 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. 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. At the time and place fixed for the public hearing, the City Council will give all persons who appear at the hearing an opportunity to express their views with respect to the proposal. In addition, interested persons may direct any questions or file written comments respecting the proposal with the City Manager, at or prior to said public hearing. [Due to the ongoing COVID-19 pandemic, members of the City Council and City staff will either participate in the meeting by telephone or other electronic means pursuant to Minnesota Statutes, Section 13D.021, or in-person at the City Council’s regular meeting place at Hopkins City Hall, 1010 1st St. S., Hopkins, Minnesota. The City will provide an update on the meeting method/type for the hearing on the City’s website at www.hopkinsmn.com as the meeting gets closer and those details can be finalized with certainty. Additionally, questions or comments related to the public hearing may be emailed to A-2 nbishop@hopkinsmn.com, made by phone at 952-548-6330, or mailed to 1010 First Street South, Hopkins, MN 55343. Comments submitted through these methods must be received by Tuesday, ______________, 2021 at 12:00 p.m. in order to be considered during the hearing.] Dated: [Date of Publication] BY ORDER OF THE CITY COUNCIL OF THE CITY OF HOPKINS, MINNESOTA /s/ Amy Domeier City Clerk City of Hopkins, Minnesota HP110-103 (JAE) 708726v1