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V.1. Public Hearing on the Approval of a Housing Program for a Multifamily Housing Development and the Issuance of Housing Revenue Bonds for the Benefit of Raspberry Ridge Limited Partnership; Bishop May 4, 2021 Council Report 2021-049 PUBLIC HEARING ON THE APPROVAL OF A HOUSING PROGRAM FOR A MULTI FAMILY HOUSING DEVELOPMENT AND THE ISSUANCE OF MULTIFAMLY HOUSING REVENUE BONDS FOR THE BENEFIT OF RASPBERRY RIDGE LIMITED PARTNERSHIP Proposed Action Approve Resolution 2021-026 Approving the Issuance of Conduit Revenue Bonds by the City of Hopkins for the Benefit of Raspberry Ridge Limited Partnership. Overview Pursuant to Minnesota Statutes, Sections 462C, as amended (the “Act”), a City is authorized to issue revenue bonds to provide financing for multifamily rental housing developments. Raspberry Ridge Limited Partnership has applied for and received authorization from Minnesota Management and Budget to issue up to $22 million of housing revenue bonds. They are asking the City of Hopkins to issue $21.3 million of conduit revenue bonds on their behalf. The bonds will be used to acquire, rehabilitate, construct and equip a 101-unit existing multifamily rental housing facility located at 27 Fourteenth Avenue North (Raspberry Ride I) and a 43-unit new multifamily rental housing facility located the southwest corner of Mainstreet and Sixth Avenue South (Raspberry Ridge II). City Council is required to conduct a public hearing on the issuance of the bonds. Following the public hearing, City Council will be asked to approve a resolution which approves the issuance of bonds, adopts a housing program and authorizes the execution of loan documents. The Bonds will not be an obligation of the City. They not secured by or payable from any property, assets or taxing power of the city. They are secured solely by the revenues and other security provided by Raspberry Ridge Limited Partnership. The bonds are not subject to any debt limitations imposed on the City and will not have any adverse impact on the City’s credit rating, even in the event of financial difficulties of Raspberry Ridge Limited Partnership. Julie Eddington from Kennedy & Graven, the City’s bond counsel and Dan Walsh from Raspberry Ridge Limited Partnership will be present on May 4th for any questions. Supporting Information • Letter from Kennedy & Graven • Resolution No. 2021-026 ____________________________________ Nick Bishop, CPA Finance Director Offices in Minneapolis Saint Paul St. Cloud Fifth Street Towers 150 South Fifth Street, Suite 700 Minneapolis, MN 55402 (612) 337-9300 telephone (612) 337-9310 fax www.kennedy-graven.com Affirmative Action, Equal Opportunity Employer JULIE A. EDDINGTON Attorney at Law Direct Dial (612) 337-9213 Email: jeddington@kennedy-graven.com April 29, 2021 Nick Bishop, Finance Director City of Hopkins 1010 First Street South Hopkins, MN 55343 Re: Resolution approving the issuance of conduit revenue bonds by the City of Hopkins for the benefit of Raspberry Ridge Limited Partnership Dear Nick, Raspberry Ridge Limited Partnership, a Minnesota limited partnership (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 of Hopkins (the “City”), known as Raspberry Ridge I (the “Rehabilitation Project”), and an approximately 43-unit new multifamily rental housing facility and facilities functionally related and subordinate thereto located at the southwest corner of Main Street and Sixth Avenue South in the City, to be known as Raspberry Ridge II (the “Construction Project,” and together with the Rehabilitation Project, the “Project”), for occupancy by individuals and families of low and moderate income. In order to finance the Project, the Borrower is requesting that the City issue one or more series of tax-exempt or taxable conduit revenue bonds (the “Bonds”) in the principal amount not to exceed $21,300,000. The Bonds will be considered “housing bonds” issued pursuant to Minnesota Statutes, Chapter 462C, as amended (the “Act”). Pursuant to Section 462C.04, subdivision 2 of the Act and Section 147(f) of the Internal Revenue Code of 1986, as amended (the “Code”), the City Council is required to conduct a public hearing on the issuance of the Bonds, which will be held on May 4, 2021. Following the public hearing, the City Council will be asked to consider the enclosed resolution, which provides final approval to the issuance of the Bonds, adopts a housing program required under Section 462C.04, subdivision 2 of the Act, and authorizes the execution of loan documents and related documents. The Bonds will be secured solely by the revenues derived from a loan agreement (the “Loan Agreement”) to be executed by the City and the Borrower and from other security provided by the Borrower, which will include a promissory note and may include a mortgage, a guaranty, and a pledge of tax credit equity. The Bonds will not constitute a general or moral obligation of the City and will not be secured by or payable from any property or assets of the City (other than the interests of the City in the Loan Agreement) and will not be secured by any taxing power of the City. The Bonds will not be subject to any debt limitation imposed on the City, and the issuance of the Bonds will not have any adverse impact Error! Unknown document property name. on the credit rating of the City, even in the event that the Borrower encounters financial difficulties with respect to the Project. The Bonds have received allocation of bonding authority from the State of Minnesota pursuant to the requirements of Section 146 of the Code. The Bonds will be “private activity bonds” within the meaning of Section 141(a) of the Code but will be “exempt facility bonds” the net proceeds of which are to be used to provide a “qualified residential rental project” within the meaning of Sections 142(a)(7) and 143(d) of the Code and will not affect the City’s ability to designate up to $10,000,000 in tax-exempt bonds as “qualified tax-exempt obligations” (or “bank-qualified bonds”) for calendar year 2021. The Borrower will agree to pay the out-of-pocket expenses of the City with respect to this transaction as well as the City’s administrative fee. I will attend the City Council meeting on May 4, 2021 by video or telephone and can answer any questions that may arise during the meeting. Please contact me with any questions you may have prior to the City Council meeting. Sincerely, Julie A. Eddington CITY OF HOPKINS, MINNESOTA RESOLUTION NO. 2021-026 RESOLUTION AUTHORIZING THE ISSUANCE, SALE, AND DELIVERY OF MULTIFAMILY HOUSING REVENUE BONDS FOR THE BENEFIT OF RASPBERRY RIDGE LIMITED PARTNERSHIP AND AUTHORIZING THE EXECUTION AND DELIVERY OF DOCUMENTS RELATED THERETO 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 “Act”), the City is authorized to issue revenue bonds to provide funds to finance multifamily rental housing developments located within the City. 1.02. Raspberry Ridge Limited Partnership, a Minnesota limited partnership, or its assigns or affiliates (the “Borrower”), has proposed that the City issue one or more series of taxable or tax-exempt multifamily housing revenue bonds (the “Bonds”) in the approximate aggregate principal amount not to exceed $21,300,000, for the benefit of the Borrower, for the purposes of financing all or a portion of (i) the acquisition, rehabilitation, construction, and equipping of 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, known as Raspberry Ridge I (the “Rehabilitation Project”), and an approximately 43-unit new multifamily rental housing facility and facilities functionally related and subordinate thereto located at the southwest corner of Main Street and Sixth Avenue South in the City, to be known as Raspberry Ridge II (the “Construction Project,” and together with the Rehabilitation Project, the “Project”), for occupancy by individuals and families of low and moderate income; (ii) one or more reserve funds to secure the timely payment of the Bonds, if necessary; (iii) capitalized interest on the Bonds during the rehabilitation and construction of the Project, if necessary; and (iv) the costs of issuing the Bonds. 1.03. In accordance with the Act, the City has prepared a housing program (the “Housing Program”) to authorize the City’s issuance of the Bonds to finance the acquisition, rehabilitation, construction, and equipping of the Project. The Housing Program was prepared and submitted to Metropolitan Council for its review and comment. 1.04. In accordance with the requirements of Minnesota Statutes, Chapter 474A, as amended, the Bonds received an allocation of bonding authority from the State of Minnesota in the principal amount of $21,300,000, with $13,900,000 in principal allocated to the Rehabilitation Project and $7,400,000 in principal allocated to the Construction Project. 1.05. A notice of public hearing (the “Public Notice”) was published in the Sun Sailor, the official newspaper of and a newspaper of general circulation in the City, with respect to the required public hearing under Section 147(f) of the Internal Revenue Code of 1986, as amended (the “Code”), and Section 462C.04, subdivision 2 of the Act. 1.06. The Public Notice was published at least fifteen (15) days before the regularly scheduled meeting of the City Council, and on the date hereof, the City Council conducted a public hearing at which 2 Error! Unknown document property name. a reasonable opportunity was provided for interested individuals to express their views, both orally and in writing. Section 2. Housing Program. The Housing Program, in the form substantially on file with the City, is hereby approved. Section 3. The Bonds. 3.01. The Borrower has requested that the City issue, sell, and deliver the Bonds in the approximate principal amount not to exceed $21,300,000. The Bonds are proposed to be sold publicly and underwritten by Colliers Securities LLC, a Delaware limited liability company (the “Underwriter”). 3.02. The Bonds are proposed to be issued pursuant to this resolution, the Act, and an Indenture of Trust (the “Indenture”) between the City and U.S. Bank National Association, a national banking association (the “Trustee”). 3.03. The proceeds derived from the sale of the Bonds will be loaned by the City to the Borrower (the “Loan”) pursuant to the terms of a Loan Agreement (the “Loan Agreement”) between the City and the Borrower. 3.04. The Bonds and the interest on the Bonds (i) shall be payable solely from the revenues pledged therefor under the Loan Agreement and additional sources of revenue provided by or on behalf of the Borrower; (ii) shall not constitute a debt of the City within the meaning of any constitutional or statutory limitation; (iii) shall not constitute or give rise to a pecuniary liability of the City or a charge against its general credit or taxing powers; (iv) shall not constitute a charge, lien, or encumbrance, legal or equitable, upon any property of the City other than the City’s interest in the Loan Agreement; and (v) shall not constitute a general or moral obligation of the City. 3.05. The loan repayments to be made by the Borrower under the Loan Agreement will be fixed so as to produce revenue sufficient to pay the principal of, premium, if any, and interest on the Bonds when due. Such loan repayments will be assigned to the Trustee under the terms of the Indenture. 3.06. The Borrower’s repayment obligations in respect of the Loan will be evidenced by a Promissory Note from the Borrower to the City and assigned to the Trustee and may be secured by one or more mortgage agreements or guaranties. 3.07. The City acknowledges, finds, determines, and declares that the issuance of the Bonds is authorized by the Act and is consistent with the purposes of the Act and that the issuance of the Bonds, and the other actions of the City under the Indenture, the Loan Agreement, and this resolution constitute a public purpose and are in the interests of the City. In authorizing the issuance of the Bonds to finance the Project and the 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 providing multifamily housing developments for low or moderate income residents of the City and otherwise furthering the purposes and policies of the Act. 3.08. For the purposes set forth above, there is hereby authorized the issuance, sale, and delivery of the Bonds in the approximate aggregate principal amount not to exceed $21,300,000. The Bonds shall bear interest at the rates, shall be designated, shall be numbered, shall be dated, shall mature, shall be in the aggregate principal amount, shall be subject to redemption prior to maturity, shall be in such form, and shall have such other terms, details, and provisions as are prescribed in the Indenture, substantially in the form now on file with the City, with the amendments referenced herein. The City 3 Error! Unknown document property name. hereby authorizes all or a portion of the Bonds to be issued as “tax-exempt bonds,” the interest on which is not includable in gross income for federal and State of Minnesota income tax purposes. All of the provisions of the Bonds, when executed as authorized herein, shall be deemed to be a part of this resolution as fully and to the same extent as if incorporated verbatim herein and shall be in full force and effect from the date of execution and delivery thereof. The Bonds shall be substantially in the form of the Indenture on file with the City, which form is hereby approved, with such necessary and appropriate variations, omissions, and insertions (including changes to the aggregate principal amount of the Bonds, the stated maturities of the Bonds, the interest rates on the Bonds and the terms of redemption of the Bonds) as the Mayor and the City Manager, in their discretion, shall determine. The execution of the Bonds with the manual or facsimile signatures of the Mayor and the City Manager and the delivery of the Bonds by the City shall be conclusive evidence of such determination. 3.09. The Bonds shall be special, limited obligations of the City payable solely from the revenues provided by the Borrower pursuant to the Loan Agreement and other funds pledged pursuant to the Indenture. The City Council hereby authorizes and directs the Mayor and the City Manager to execute the Bonds in accordance with the terms thereof. 3.10. All of the provisions of the Indenture, when executed as authorized herein, shall be deemed to be a part of this resolution as fully and to the same extent as if incorporated verbatim herein and shall be in full force and effect from the date of execution and delivery thereof. The Indenture shall be substantially in the form on file with the City, which is hereby approved, with such necessary and appropriate variations, omissions and insertions as do not materially change the substance thereof, and as the Mayor and the City Manager, in their discretion, shall determine, and the execution thereof by the Mayor and the City Manager shall be conclusive evidence of such determination. The Mayor and the City Manager are hereby authorized and directed to execute the Indenture, and to deliver the Indenture to the Trustee, and hereby authorizes and directs the execution of the Bonds in accordance with the terms of the Indenture, and hereby provides that the Indenture shall provide the terms and conditions, covenants, rights, obligations, duties, and agreements of the owners of the Bonds, the City, and the Trustee as set forth therein. 3.11. The Mayor and the City Manager are hereby authorized and directed to execute and deliver the Loan Agreement, a Bond Purchase Agreement between the City, the Borrower, and the Underwriter, and all other documents and assignments related to the Loan required to be executed by the City. All of the provisions of such documents, when executed and delivered as authorized herein, shall be deemed to be a part of this resolution as fully and to the same extent as if incorporated verbatim herein and shall be in full force and effect from the date of execution and delivery thereof. The aforementioned documents shall be substantially in the forms on file with the City which are hereby approved, with such omissions and insertions as do not materially change the substance thereof, and as the Mayor and the City Manager, in their discretion, shall determine, and the execution thereof by the Mayor and the City Manager shall be conclusive evidence of such determinations. 3.12. The City will not participate in the preparation of the Preliminary Official Statement or the Official Statement (together, the “Official Statement”) relating to the offer and sale of the Bonds and will make no independent investigation with respect to the information contained therein, including the appendices thereto, except for the information set forth in the Official Statement regarding the City and certain matters relating to litigation, and the City assumes no responsibility for the sufficiency, accuracy, or completeness of such information. Subject to the foregoing, the City hereby consents to the distribution and the use by the Underwriter of the Official Statement in connection with the offer and sale of the Bonds. The Official Statement is the sole material consented to by the City for use in connection with the offer and sale of the Bonds. 4 Error! Unknown document property name. 3.13. The City hereby authorizes the Borrower to provide such security for payment of its obligations under the Loan Agreement and for payment of the Bonds, and the City hereby approves the execution and delivery of such security. Section 4. Additional Findings and Certifications. 4.01. The Bonds are authorized to be issued in one or more series in the approximate aggregate principal amount not to exceed $21,300,000. 4.02. To ensure compliance with certain rental and occupancy restrictions imposed by the Act and Section 142(d) of the Code, and to ensure compliance with certain restrictions imposed by the City, the Mayor and City Manager are also hereby authorized and directed to execute and deliver a Regulatory Agreement with respect to the Rehabilitation Project (the “Rehabilitation Regulatory Agreement”) between the City, the Borrower, and the Trustee and a Regulatory Agreement with respect to the Construction Project (the “Construction Regulatory Agreement,” and together with the Rehabilitation Regulatory Agreement, the “Regulatory Agreements”) between the City, the Borrower, and the Trustee. All of the provisions of the Regulatory Agreements, when executed and delivered as authorized herein, shall be deemed to be a part of this resolution as fully and to the same extent as if incorporated verbatim herein and shall be in full force and effect from the date of execution and delivery thereof. The Regulatory Agreements shall be substantially in the forms on file with the City which are hereby approved, with such omissions and insertions as do not materially change the substance thereof, or as the Mayor and the City Manager, in their discretion, shall determine, and the execution thereof by the Mayor and the City Manager shall be conclusive evidence of such determination. 4.03. The Mayor and the City Manager are authorized and directed to execute any additional documents deemed necessary to carry out the intentions of this resolution and to complete the financing described herein, so long as City staff and legal counsel approve such documents. 4.04. The Mayor, the City Manager, and the Finance Director of the City are hereby authorized to execute and deliver, on behalf of the City, such other documents and certificates as are necessary or appropriate in connection with the issuance, sale, and delivery of the Bonds, including various certificates of the City, an Information Return for Tax-Exempt Private Activity Bond Issues, Form 8038, an endorsement of the City to the tax certificate of the Borrower, and similar documents, and all other documents and certificates as shall be necessary and appropriate in connection with the issuance, sale, and delivery of the Bonds. The City hereby authorizes Kennedy & Graven, Chartered, as bond counsel (“Bond Counsel”), to prepare, execute, and deliver its approving legal opinions with respect to the Bonds. 4.05. Except as otherwise provided in this resolution, all rights, powers, and privileges conferred and duties and liabilities imposed upon the City or the City Council by the provisions of this resolution or of the aforementioned documents shall be exercised or performed by the City or by such members of the City Council, or such officers, board, body or agency thereof as may be required or authorized by law to exercise such powers and to perform such duties. No covenant, stipulation, Bond or agreement herein contained or contained in the aforementioned documents shall be deemed to be a covenant, stipulation, Bond or agreement of any member of the City Council, or any officer, agent or employee of the City in that person’s individual capacity, and neither the City Council nor any officer or employee executing the Bonds shall be personally liable on the Bonds or be subject to any personal liability or accountability by reason of the issuance thereof. 5 Error! Unknown document property name. No provision, covenant or agreement contained in the aforementioned documents, the Bonds, or in any other document relating to the Bonds, and no Bond therein or herein imposed upon the City or the breach thereof, shall constitute or give rise to a general or moral Bond of the City or any pecuniary liability of the City or any charge upon its general credit or taxing powers. In making the agreements, provisions, covenants, and representations set forth in such documents, the City has not obligated itself to pay or remit any funds or revenues, other than funds and revenues as described herein which are to be applied to the payment of the Bonds, as provided therein. 4.06. Except as herein otherwise expressly provided, nothing in this resolution or in the aforementioned documents expressed or implied is intended or shall be construed to confer upon any person or firm or corporation, other than the City, any holder of the Bonds issued under the provisions of this resolution, any right, remedy or claim, legal or equitable, under and by reason of this resolution or any provisions hereof, this resolution, the aforementioned documents, and all of their provisions being intended to be and being for the sole and exclusive benefit of the City, and any holder from time to time of the Bonds issued under the provisions of this resolution. 4.07. In case any one or more of the provisions of this resolution, other than the provisions contained in the first sentence of Section 3.09 hereof, or of the aforementioned documents, or of the Bonds issued hereunder shall for any reason be held to be illegal or invalid, such illegality or invalidity shall not affect any other provision of this resolution, or of the aforementioned documents, or of the Bonds, but this resolution, the aforementioned documents, and the Bonds shall be construed and endorsed as if such illegal or invalid provisions had not been contained therein. 4.08. The Bonds, when executed and delivered, shall contain a recital that they are issued pursuant to the Act, and such recital shall be conclusive evidence of the validity of the Bonds and the regularity of the issuance thereof, and that all acts, conditions, and things required by the laws of the State of Minnesota relating to the adoption of this resolution, to the issuance of the Bonds, and to the execution of the aforementioned documents to happen, exist, and be performed precedent to the execution of the aforementioned documents have happened, exist, and have been performed as so required by law. 4.09. The officers of the City, Bond Counsel, other attorneys, engineers, and other agents or employees of the City are hereby authorized to do all acts and things required of them by or in connection with this resolution, the aforementioned documents, and the Bonds, for the full, punctual, and complete performance of all the terms, covenants, and agreements contained in the Bonds, the aforementioned documents, and this resolution. If for any reason the Mayor or the City Manager is unable to execute and deliver the documents referred to in this resolution, such documents may be executed by any member of the City Council or any officer of the City delegated the duties of the Mayor or the City Manager with the same force and effect as if such documents were executed and delivered by the Mayor or the City Manager. 4.10. The Borrower shall pay the administrative fee of the City on the date of issuance of the Bonds as provided in the Loan Agreement. 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 5. Effective Date. This resolution shall be in full force and effect from and after its approval. The approvals contained in the resolution are effective for one year after the date hereof. 6 Error! Unknown document property name. Approved by the City Council of the City of Hopkins, Minnesota this 4th day of May, 2021. Jason Gadd, Mayor ATTEST: Amy Domeier, City Clerk