CR 91-110 Refinancing Auburn N/S Housing Bond
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May 21, 1991
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council Report 91-110
REFINANCING AUBURN NORTH/SOUTH HOUSING BOND
Proposed Action.
Staff recommends adoption of the following motion: Approve
Resolution No. 91-68 authorizinq the sale and issuance of
$5.195.000.00 Minnesota MUlti-family Revenue Refundinq Bonds
(Auburn Apartments Project) Series 1991 and the execution of
the necessary documents.
with this action, the city Council will be approving the
final resolution necessary to facilitate the sale of bonds
for this project.
overview.
In 1983 the city of Hopkins approved the sale of 5.6 million
dollars in tax exempt housing bonds to finance Auburn North
and South Projects.
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In 1988 the city council approved the action refunding the
existing bond debt and selling new tax exempt and taxable
housing development revenue bonds for this project. The
purpose of that action was because the applicant was able to
obtain a lower interest rate with the market at that time.
Miller Schroeder is presently working with the owner of the
project to sell new bonds to refund those bonds sold in
1988. In April the City Council approved a preliminary
resolution for the issuance of these bonds and authorized a
public hearing to consider further action.
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Issues to Consider.
What are the obligations of the applicant as relates
to a bond issue of this type?
Does the city have any obligations as a result of
this action or future action on this item?
Are there any costs to the city?
What is the amount in terms of the proposed issue?
Has the City Attorney reviewed the proposed action?
What other action will the City Council be requested
to undertake?
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supporting Information.
o Resolution No. 91-68
o Letter from Holmes & Graven
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Development Director
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CR: 91-110
Page 2
Analvsis of Issues.
Based on the recommendation, the City Council has the
following issues to consider:
o What are the obligations of the applicant as relates to
a bond issue of this type?
The applicant is required to make all payments on the bonds
with revenues generated from the project.
Also, at least 20% of the dwelling units in the project must
be held available for persons of low to moderate income
level and the project cannot be converted into owner
occupied units for a minimum of ten years after 50% of the
project becomes occupied.
o Does the city have any obligations as a result of this
action or future action on this item?
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In the past, the city has financed a number of projects with
both taxable and tax exempt revenue bonds. The purpose of
this type of financing is to provide a below market interest
in order to make the project more financially feasible.
Repayment of the bond is strictly from the revenue generated
from the project. The City is under no obligation should
there be a default by the developer.
o Are there any costs to the City?
The City has certain administrative and legal costs in
conjunction with an issue of this type. Based upon the
preliminary approval, the developer has provided payment of
a $5,000.00 fee to cover the cost of these expenditures.
o What is the amount in terms of the proposed issue?
The proposed lssue would be for $5,195,000.00.
would be sold for a 30 year period.
The bonds
o Has the City Attorney reviewed the proposed action?
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Both the City Attorney and an attorney contracted with by
staff from Holmes & Graven have been provided all of the
documents as related to this transaction. Based upon their
review, they feel comfortable with the City proceeding with
this project.
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CR: 91-110
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What other action will the City council be requested to
undertake?
This is the final action required by the city Council in
conjunction with this action. If approved, the only other
responsibility by the City prior to the sale would be to
execute the necessary documents by the city Manager and
Mayor.
Alternatives.
Based upon the action recommended, the City Council has the
following alternatives:
1. Approve the action as recommended by Staff. This
will allow the final sale documents to be
completed in the subsequent bond sale to be
undertaken.
2.
Deny the action as recommended by Staff. Under
this alternative, the owner of the property would
be required to retain the existing financing on
this project or find some type of private mortgage
financing.
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3. Continue for further information.
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CITY OF HOPKINS, MINNESOTA
RESOLUTION NO. 91-68
Authorizing the issuance of the
Hopkins, Minnesota, Multifamily
Revenue Refunding Bonds
Apartments Project), Series 1991.
Ci ty of
Housing
(Auburn
WHEREAS, the ci ty of Hopkins, Minnesota (hereinafter
the IICity") is duly organized and existing as a home rule charter
city 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, Chapters
462A and 462C, as amended (the "Actsll), the City is authorized to
carry out the public purposes described therein and contemplated
thereby by issuing its revenue bonds to defray, in whole or in
part, the development costs of a multifamily housing development,
and by entering into any agreements made in connection therewith
and pledging them as security for the payment of the principal of
and interest on any such revenue bonds~ and
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WHEREAS, the City issued its $5,600,000 Multifamily
Housing Development Revenue Bonds (Auburn Apartments Project),
Series 1983 (the "Original Bonds"), to provide funds to finance a
136-uni t multifamily housing development (the "Project II) in the
City~ and
WHEREAS, the Project is a
developmentll as defined in the Acts; and
"multifamily
housing
WHEREAS, the City issued its $5,375,000 Collateralized
Housing Development Revenue Refunding Bonds (Auburn Apartments
Project), Series 1988 (the "prior Bonds"), in order to refund the
Original Bonds and refinance the Project; and
WHEREAS, the Prior Bonds are subject to optional
redemption on September I, 1991, at a redemption pr ice of 100
percent (IOO%) of the outstanding principal amount thereof~ and
WHEREAS, the owner of the Project, Auburn Limited
Partnership, a Minnesota limited partnership, has requested the
City to issue refunding bonds in order to refinance the Project
and redeem the Prior Bonds on September 1, 1991;
WHEREAS, neither the State of Minnesota nor any
political subdivision thereof (other than the City and then only
to the extent of the trust estate pledged in the Indenture
......... hereinaf ter descr ibed) shall be I iable on such refunding bonds,
.. and such refunding bonds shall not be a debt of the State of
Minnesota or any political subdivision thereof (other than the
City and then only to the extent of the trust estate pledged in
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the Indenture), and in any event shall not give rise to a charge
against the general credit or taxing power of the City, the State
of Minnesota, or any political subdivision thereof;
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF
THE CITY OF HOPKINS, MINNESOTA:
Section I. The City hereby finds, determines, and
declares that it is in the best interest of the City that it (I)
issue its Multifamily Housing Revenue Refunding Bonds (Auburn
Apartments Project), Series 1991, in an aggregate principal
amount not exceeding $5,195,000 (the "Bondsll), (2) provide for
the use of the Bond proceeds by the Ci ty to make a loan (the
nLoan") to Auburn Limited Partnership, a Minnesota limited
partnership (the tlCompanyll) in accordance with the provisions of
a Loan Agreement, dated as of June 1, 1991, by and between the
Company and the Ci ty (the "Loan Agreement tI) and (3) to provide
for disbursement of and security for the Loan pursuant to the
terms of an Indenture of Trust, dated as of June 1, 1991 (the
"Indenturell), by and between the City and National City Bank of
Minneapolis (the "Trustee II ), in order to refinance the Project
and redeem the Prior Bonds on September 1, 1991.
Section 2. There is hereby authorized the issuance of
the Bonds which shall be dated, mature and bear interest from the
dated date payable on the interest payment dates, in the amounts
and at the rates set forth in the Indenture. The Bonds shall be
in such denominations, shall be numbered, shall be subject to
redempt ion pr ior to ma tur i ty, shall be in such form and shall
have such other details and provisions as are prescribed by the
Indenture~ provided, however, that the interest rates per annum,
not to exceed for any maturity 8.00 percent per annum, the years
of maturity not to exceed June I, 2021 for any Bond, and the
principal amount of Bonds subject to mandatory redemption in any
years, shall be established pursuant to the marketing of the
Bonds and as approved by the Mayor of the City (the "Mayor") and
the City Manager of the City (the "Managerll).
Section 3. The Bonds shall be special obligations of
the City payable solely from the repayments of the Loan and other
amounts included in or derived from the trust estate described in
the Indenture. The Bonds do not consti tute an indebtedness,
liability, general or moral obligation (except to the extent of
the trust estate pledged under the Indenture) or a pledge of the
faith and credit or any taxing power of the City, the State of
Minnesota, or any political subdivision thereof. The City hereby
authorizes and directs the Mayor and the Manager to execute, on
behalf of and under the corporate seal of the City, the
Indenture, and to deliver to the Trustee the Indenture, and
hereby authorizes and directs the execution of the Bonds in
accordance with the Indenture, and hereby provides that the
Indenture shall set forth the terms and conditions, covenants,
rights, obligations, duties, and agreements of the bondholders,
the City, and the Trustee.
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All of the provisions of the Indenture, when executed
as authorized herein, 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 on the date
hereof, and is hereby approved, with such necessary and
appropriate variations, omissions, and insertions as do not
mater ially affect the substance of the transaction and as the
Mayor and Manager, in their discretion, shall determine; provided
that the execution thereof by the Mayor and Manager shall be
conclusive evidence of such determination.
Section 4. The Mayor and the Manager are hereby
authorized and directed to accept the offer of Miller & Schroeder
Financial, Inc. (the t1Underwr iter ") contained in the Bond
Purchase Agreement, dated as of the date hereof (the "Bond
Purchase Agreement II), to execute the Bond Purchase Agreement on
behalf of the City under the corporate seal of the City, and to
deliver the Bond Purchase Agreement to the Underwr iter. The
Mayor and Manager are hereby authorized and directed to execute
and deliver the Remarketing Agreement, dated as of June I, 1991
(the IIRemarketing Agreement.') by and between the City, the
Underwr iter, the Company and the Trustee, and the Continuing
Disclosure Agreement, dated as of June 1, 1991 (the IIDisclosure
Agreement II), by and between the City, the Trustee, the Company
and the "Bank" named therein. All of the provisions of the Bond
Purchase Agreement, Remarketing Agreement and Disclosure
Agreement when executed and delivered as authorized herein, shall
be in full force and effect from the date of execution and
delivery thereof. The Bond Purchase Agreement, Remarketing
Agreement and Disclosure Agreement shall be substantially in the
form on file with the City on the date hereof, and are hereby
approved, with such necessary and appropriate variations,
omissions, and insertions as do not materially affect the
substance of the documents and as the Mayor and Manager, in their
discretion, shall determine: provided that the execution thereof
by the Mayor and the Manager shall be conclusive evidence of such
determination.
Section 5. The Mayor and Manager are hereby authorized
and directed to execute and deliver the Loan Agreement and, when
executed and delivered as authorized herein, the Loan Agreement
shall be in full force and effect from the date of execution and
delivery thereof. The Loan Agreement shall be substantially in
the form on file with the City on the date hereof, and is hereby
approved, with such necessary variations, omissions and
insertions as do not materially affect the substance of the
transaction and as the Mayor and Manager, in their discretion,
shall determine; provided that the execution thereof by the Mayor
and Manager shall be conclusive evidence of such determination.
Section 6. The Mayor and Manager are hereby authorized
and directed to execute and deliver the Regulatory Agreements,
dated as of June 1, 1991 and pertaining to the two separate sites
constituting the Project (collectively, the "Regulatory
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Agreement rr ) between the City, Trustee and Company and, when
executed and delivered as authorized herein, the Regulatory
Agreement shall be in full force and effect from the date of
execution and delivery thereof. The Regulatory Agreement shall
be substantially in the form on file with the City on the date
hereof, and is hereby approved, with such necessary variations,
omissions, and insertions as do not materially affect the
substance of the transaction and as the Mayor and Manager, in
their discretion, shall determine; provided that the execution
thereof by the Mayor and Manager shall be conclusive evidence of
such determination.
Section 7. The Mayor and Manager are hereby authorized
and directed to execute and deliver the Escrow Agreement, dated
as of June 1, 1991 (the Escrow Agreement), between the City, the
Company and First Trust National Association, and, when executed
and delivered as provided herein, the Escrow Agreement shall be
in full force and effect from the date of execution and delivery
thereof. The Escrow Agreement shall be substantially in the form
on file with the City on the date hereof, and is hereby approved,
with such necessary variations, omissions, and insertions as do
not materially affect the substance of the transaction and as the
Mayor and Manager, in their discretion, shall determine; provided
that the execution thereof by the Mayor and Manager shall be
conclusive evidence of such determination.
Section 8. All covenants, stipulations, obligations,
representa tions, and agreements of the Ci ty contained in this
resolution or contained in the Indenture, Loan Agreement,
Regulatory Agreement, Bond Purchase Agreement, Remarketing
Agreement, Disclosure Agreement, Escrow Agreement or other
documents referred to above shall be deemed to be the covenants,
stipulations, obligations, representations, and agreements of the
City to the full extent authorized or permitted by law, and all
such covenants, stipulations, obligations, representations, and
agreements shall be binding upon the City. 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
Indenture, the Loan Agreement, the Regulatory Agreement, the Bond
Purchase Agreement, the Remarketing Agreement, the Disclosure
Agreement, Escrow Agreement or other documents referred to above
shall be exercised or performed by the City, or by such members,
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, represen ta tion, or ag reemen t
herein contained or contained in the Indenture, the Loan
Agreement, the Regulatory Agreement, the Bond Purchase Agreement,
the Remarketing Agreement, the Disclosure Agreement, Escrow
Agreement or other documents referred to above shall be deemed to
be a covenant, st ipula tion, obligation, represen ta t ion, or
agreement of any officer, agent, or employee of the City in that
person's individual capacity, and neither the members of the City
Council of the City nor any officer or employee executing the
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Bonds shall be liable personally on the Bonds or be subject to
any personal liability or accountability by reason of the
issuance thereof. No provision, covenant or agreement contained
in the Indenture, the Loan Agreement, the Regulatory Agreement,
the Bond Purchase Agreement, the Remarketing Agreement, the
Disclosure Agreement, Escrow Agreement, the Bonds or in any other
document related to the Bonds, and no obligation therein or
herein imposed upon the City or the breach thereof, shall
constitute or give rise to a general obligation of the City or
any charge upon its general credit or taxing powers. In making
the agreements, provisions, covenants and representations set
forth in the Indenture, the Loan Agreement, the Regulatory
Agreement, the Bond Purchase Agreement, the Remarketing
Agreement, the Disclosure Agreement, Escrow Agreement, the Bonds
or in any other document related to the Bonds, the City has not
obligated itself to payor rerni t any funds or revenues, other
than the trust estate described in the Indenture.
Section 9. The Ci ty hereby consents to the
distr ibution of the Preliminary Off icial Statement relating to
the Bonds, substantially in the form on file with the Clerk on
the date hereof. The Ci ty hereby consents to the use by the
Underwriter in connection with the sale of the Bonds of the Final
Official Statement, substantially in the form of the Preliminary
Official Statement on file with the Clerk: provided that the
Mayor may consent to such variations, omissions, and insertions
as are not materially inconsistent with the form on file with the
Clerk on the date hereof. The Preliminary Official Statement and
the Final Official Statement are the sole materials consented to
by the City for use in connection with the offer and sale of the
Bonds. The City has consented to the distribution of the
Preliminary Official Statement and Final Official Statement, but
has not participated in the preparation of such documents, made
any independent investigation or review of the same, or approved
such documents, or information contained therein, and assumes no
responsibility for the sufficiency, accuracy or completeness of
such documents, except for the information contained therein
under the caption "THE ISSUER."
Section IO. Except as herein otherwise expressly
provided, nothing in this resolution or in the Indenture,
expressed or implied, is intended or shall be construed to confer
upon any person, firm, or corporation other than the City, the
holders of the Bonds, the Trustee, and the Company to the extent
expressly provided in the Indenture, any right, remedy, or claim,
legal or equitable, under and by reason of this resolution or any
provision hereof or of the Indenture or any provision thereof.
This resolution, the Indenture and all of their provisions are
intended to be for the sole and exclusive benefit of the City,
the holders from time to time of the Bonds issued under the
provisions of this resolution and the Indenture, and the Company
to the extent expressly provided in the Indenture.
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Section II. In case anyone or more of the provisions
of this resolution or of the Indenture 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 Indenture or of the Bonds,
but this resolution, the Indenture, and the Bonds shall be
construed as if such illegal or invalid provision had not been
contained therein. The terms and condi tions set forth in the
Indenture, the creation of the funds provided for in the
Indenture, the provisions relating to the application of the
proceeds derived from the sale of the Bonds pursuant to and under
the Indenture, and the application of all revenues, collateral,
and other monies are all commitments, obligations, and agreements
on the part of the Ci ty contained in the Indenture, and the
invalidi ty of the Indenture shall not affect the commitments,
obligations, and agreements on the part of the City to create
such funds and to apply said revenues, other monies, and proceeds
of the Bonds for the purposes, in the manner, and according to
the terms and conditions described in the Indenture, it being the
intention hereof that such commi tments on the part of the City
are as binding as if contained in this resolution separate and
apart from the Indenture.
Section 12. The City Council 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 of them
by or in connection with this resolution and the Indenture and
the other documents referred to above for the full, punctual, and
complete performance of all the terms, covenants, and agreements
contained in the Bonds, the Indenture and the other documents
referred to above, and this resolution.
Section 13. The Mayor and Manager are authorized and
directed to execute and deliver any and all certificates,
agreements or other documents which are required by the
Indenture, the Loan Agreement, the Bond Purchase Agreement, the
Regulatory Agreement, the Remarketing Agreement, the Disclosure
Agreement, the Escrow Agreement or any other certificates or
documents which are deemed necessary by bond counsel to evidence
the validity or enforceability of the Bonds, the Indenture or the
other documents referred to in this resolution, or to evidence
compliance with Section 142 or Section 148 of the Internal
Revenue Code of 1986, as amended; 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 is unable to
execute and deliver those documents referred to in this
resolution, any other 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. If for any
reason the Manager of the City is unable to execute and deliver
the documents referred to in this resolution, such documents may
be executed and delivered by any other officer of the City or
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member of the City Council with the same force and effect as if
such documents were executed and delivered by the Manager of the
City.
Section 15. All costs incurred by the City in
connection with the issuance, sale and delivery of the Bonds and
the execution and delivery of the Indenture, the Loan Agreement,
the Regulatory Agreement, the Bond Purchase Agreement, the
Remarketing Agreement, the Disclosure Agreement, the Escrow
Agreement or any other agreement or instrument relative to the
Bonds, whether or not actually issued or delivered, shall be paid
by the Company or reimbursed by the Company to the City.
Section 16. This resolution shall be in full force and
effect from and after its passage.
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ATTEST:
Adopted by the City Council on May 21, 1991.
Mayor
City Clerk
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STEFANIE N. GALEY
Attorney at U1W
HOLMES & GRAVEN
CHARTERED
470 Pill&bury Centtr, Mlnneapolii, MlnMsola $~
(61;2) 337-9300
DIrect Dill.! (612) 3379212
May 15, 1991
City of HopkIns
1010 First Street South
Hopkins, MlnneKlta ~5343
Attention~ James D. Kerrigan
Planning- and E~o(lomlc Development Director
$5,195,000 CIty of Hopkins, Minnesota MultIfamily Housing Revenue
Refunding Bondl:l (Auburn Apartments Project) Series 1991
Dear Mr. Kerrigan:
ReI
We hElve repl'e~ented the Ctty of Hopkins (the rrrsSU"Jr") in connection with the
request by Auburn Apartments Limited Partnership (the l1(;ompany") tha.t the Issuer
issue the above-caDtioned bonds (the "Bonds"), the proceet1s of which will be
a.pplied to refund the Lssuer's $51375,000 CollateralizBd Housing Development
Revenue Refunding Bonds (Auburn Apartments Project) Sedes HISS (the "1989
Bonds"), the pI'ooeed~ of which 1988 Bonds were aDplied to l"";'lfund the ~uer's
$5,BOOJOOO CollaterAlized Multifamily Hou:;lng Development Revenue Bond.,
(Auburn Apartments Project) Series 1983 (the 1'1983 Bonds"). The fJrocesds of the
1983 Bonds were applied to construct a l36-unlt multifamily rental housing
develOpment lQ(~ated in the City of Hopkins. The City Council of the City will
consider finilll at>proval of the Bonds at its meeting on Tuesday, May 21, 1991. You
have asked us to provide this letter to the Issuer for eonsit'leratlon nt Hm.t meetIng.
The Bonds are proposed to be is:-;ued by the Is:;;uer pursullnt to A Tt-\1'it Lndenture (the
"Indenture") between the Issuer and Ntltional City Bank of Miml\"!apolls, as trustee.
The proceeds of tht~ Bonds will be loaned to the Company pur3uont to the terms of
the Loan Agreement between the Issuer and the Company (the "Loan Agreement").
The payment of the Bonds is ~ecured by an irrevocable dlre~t pay letter ot credIt
(the ~etter or Credit") issued by The Sumltomo Trll.$t and Banking Company,
Limited acting through its New York Branch (the "Bank"). On each date for
payment of principal or interest on the Bonds, the Trustee will submit .Ii draft to
the Bank and will apply moneylS received from the Bank pursuant to such draft to
payments on the Bonds on such date. The Company is obHgated pursuant to the
ReimbUl"Sement Agreement with the Bank (the "Relmbursment Agreement") to
immediately relmbur:ie the Bank for payments ma.de by the Bank under the Letter
of Credit. Although the Loan Agreement provides that the Company will pay to
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May 15t 1991
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the Trustee amounts sufficient to pay principal Wld interest on the Bonds on the
dates when such amounts are due, it is intended that such payment3 will actually be
made by the Bank PUr:iU&ht to the Letter of Credit, lind therefore the Company'i
payments will flow directly to the Bank in reimbursement to th~ Bank. In order to
secure its obllgation~ unde!" the Reimbursement Agreement find the Loan
Agreement, th~ Company ha.s granted to the Bank and the Trustee 8. mortgage lien
on the project pursuant to the Amended and Rsstatement Combination Mortgage,
Seourity Agreement 8.nd FIxture FinAt'!(!!ng Statement. The Tr"J3tee hlL.~ agreed that
ft will not exerciB~ rem~dia~ pursuant to the Mortgag~ as long 9.S the Bank is
honoring its ooligations under the Letter at Credit. The Issuer, 1:he Company a.nd
the Tru,tee will 9015(1 enter into two Regulatory Agreements which obligate the
Company to eomply with the low and moderate income set-aside requirements
applicable to the proj~t pUl'!>uant to the provisions of the Internal Revenue Code.
In order to accomplish th~ refunding of the 198B Bonds~ the lasuer is also being
a.sk~d to enter into an Escrow Agreement with the Comp.6ny and First Trust
National M8ocia.tion 11..'1 Escrow Ag~:mt, In its capacity ~s 'T'rt!ste~ for the 1988
Bond':> providing for the investment of the proceeds of the Bon~ until the
redemption date Ior such 198H Bond8. Because the proceeds of 'thl:' BOflrls will be
invested in U.~. treasury oblif!ations in aecordancf' with tht~ tt~rms of the 1988
Indentul"e, the obligations of the Issuer !:lnd the Company with r(..~::;pect to the 1988
Bon& will tet'mtna.te on the date of issuance of the Bonds.
Because the orlgina.l Letter of Credit will terminate on June {i, 1998 lJnl~~ it is
renewed or extended prior to that date, the Bonds are subject to ;..nan<'lfltory tender
and temarketing on ,]wle 1, 1998. A new official stHt<;m~nt wUl be l}i'eptfxM with
the participation of the Issuer describing the security fol.' thf: Bards at that tlme..
Although it hi cOlltemplated that the Letter of Crt'!dit will be renewed or a.
substitute letter of credit providM at that time~ it b possible thnt {rom IlIld aft(!!'
that date, or some futme date when the extended OT" silDstitute letter of credit
expires, the Bonds will nQ long(:l'" be se~ur-ed by 8 Lettor of Crpdlt or comparable
~ecurity. In order to provi(1e for the remarketing of the BO~lds \in the mandatot.y
purchase date:>, the Issuer is asked to enter into the Remarketing Agl-eernent with
the Company and Miller &. Schroeder Financial, Inc., ctesi[{natlng Miller &:
~hroeder fU> the remarketing agent for the Bonds unless termInated or l"eplaced.
The ~uer is also befng asked to enter into a ContinuIng DIsclosure Agreement in
connedion w1th this finanefng. This doC'ument is beiflg In~lu('ier.11Jj this financing In
order to address continuing diselo~urf;! recommendatimk:, whi<..":h E1r'\~ cUl'r~i\tly being
promulgated by the Government Finance Officers A~;,o('futi[)n Hnd the Arnert~an
'Bankers Association. Because these are guidelines only, the agrc~~rnent is Cairly
general in format, and provides 8s the only obligution of the b::.l1t':f tha.t it shall
deliver to the Trustee any informatIon with respect to the Bond<j that is known to
the financIal officer of the fusuer and the IssUe!" deems relevant a.nd material to s
decision to sell, purchase or own the Bonds. This obligation will be an ongoing
obligation throughout the term of the Bonds.
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We have reviewed the Jndenture, the Loan Agreement, the R~-"ulatOl"Y Agreements,
the Bond Purchase Agteement, the Remarketing Agreement, the Escrow
Agreement, the Continuing Dis~losure Agreement and the form DC Prellrnlnarl
Official Statement to be dbtributed to prospective bUYl;!rs ot Hit:! Bonds. The form
of the Bonds, the Indenture and the Preliminary Official Statemtlilt all clea.rly state
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May 15, 1991
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that the Bonds are not a general obligation of the Issuer but rather are special
limited obligations payable solely tram revenues to be derived from the Loan
Agreement, the Letter ot Credit and other sources speoftically identified in such
doouments. The Bonda do not constitute a charge against the general oredlt or
taxing power of the Issuer. Pursuant to the Loan Agreement, the Bond Purchase
Agreement and the Remarketing Agreement, the Company has agreed to indemnify
the Issuer against any llabUitias which may arise from the ~uer'5 partiolpation in
financing the project excepting only those Uabilitioo which might arise from gross
negligence or willful mIsconduct of the Issuer. We believe that the documents
contain the appropriate provisions to protect the bsuer trom liability in tha event
of a default on the Bon~
The foregoing d~ument& whIch required execution by the Issuer are in due form
and a.ppropriate for approval by the city Council of the Issuer. We will continua to
review all proposed ch8J1i'e8 to such documents and advi8e the Mayor and City
Manager ot our 89proval prior to final execution ot the documents.
Sin~erely ,
~
SNGskg
cc: Jerre Miller