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CR 88-127 Refunding Auburn Housing . (J M ~~ June 27, 1988 ~ ~ Council Report: 88-127 o .. P I( \ REFUNDING AUBURN NORTH/SOUTH HOUSING BOND iLopos~d Action. Staff recommends adoption of the following action: ~pproval Qf R~solution qivinq preliminary approval to the sale and issuance of $5.375.000 colla~erali2ed Housinq Development Refunding Bonds (Aubu~ ~tm.ent proj ect Series 1988) and $625.000 t.axable Collateralized H~u~ina Development Bond (Auburn Apartment proiect Series 1988). Approval should be conditioned upon the applicant agreeing to pay any leqal expenses incurred by the city in conjunction with this matter. Approval of this resolution will demonstrate preliminary acceptance by the City council for Hiller & Schroeder to continue processing this item in accordance with their recommended schedule. OVerview. In 1983 the city Council approved the sale of $5,600,000 in tax exempt housing bonds to finance the Auburn North and South Project. These two townhouse projects were built by Richard Neslund and are located as follows: - Auburn South - southwest corner of Lake street & Tyler . Avenue .. - Auburn North - southWc.st corner of Highway t 7 & Van Burn . Avenue The refunding of this issue is being requested because of the lower interest rates which can be obtained in todays market. With approval by the city council of the preliminary. resolution and final resolution at a subsequent date, the applicant will be able to sell both a tax exempt and taxable bond to refinance the project and take advantage of existing lower interest rates. PrimarY Issues to Consider. o What are the obligations of the applicant as relates to an issue of this type? o Does the City have any obligation as a result of this action or future action on this item? . o Are there any costs to the city? o How were the amounts of the proposed issues determined? o Has the City Attorney reviewed this proposed action? , o What othe~ actions will the City council be requested to undertake? . supporting Information. o Resolution o~ifunding Schedule . . · J: n!" ", .- \y / CI..A.t;/ "- Jam s D. KerHga1 . Planning & Econ~ic Development DirectOl' -, ,.. ".'. .-.... .. '.' ...~ - - . . . Council Report:88-127 Page 2 Al)41vsis. Based upon the recommendation, the city Council has the following issues to consider: - Does the City have any obligation as a result of this action or future action on this item? Only preliminary approval is being requested at this time. The City has the ab.ility to deny' final appz:'oval if they feel appropriate because of additional information. The City Council should be aware that the City does not have any obligation for payment on these bonds shou1d there ever be a default. They are secured by a letter of credit from a private financial institution. - Are there any costs to the city? Any costs which the City has as relates to this item involve attorney ;. fees to review the land docwnents. The staff is recommending that the approval be conditioned upon payment of these fees by the applicant. - How was the amount of the proposed issue determined? The original issue for this project was $S,600,OOOs With payment to date the outstanding balance is $5,375,000. The $625,000 taxable bond is being sold to pay all the costs, ie. land attorney, issuance costs, legal fees, etc. which will be incurred by the applicant in conjunotion with the $5,375,000 refunding issue. - Has the city Attorney reviewed this matter? The City Attorney has met with a representative of Miller & Schroeder to discuss this item. - What other actions will the city Council be requested to undertake? If the preliminary resolution is approved, the City Council will be requested to consider two future actions in conjunction with this item: . - July 19 - approval of sale of $625,000 taxable bond. - Sept 6 - final approval of $5,375,000 refunding bonds. ~ -.- .""".7 . . Council Report:8S-127 Page 3 - What are the obligations of the applicant as relates to an issue of ., ,; this type? The major l"esponsibility of the applicant is to make the necessary land payments. Also, because this project involves a tax exempt issue; 20% of the units in the project must be maintained. for low/moderate income households for the life of the land. Alternatives. The city Councll has the following alternatives regarding this item: L. Approve the action as recommended by the staff. This will allow Hiller & Schroeder to continue processing this item. 2. Request additional information. The staff should be directed as to the information being requested. 3. Deny the resolution. This will provide Miller & Schroeder with the City Councils feeling on this matter . and will probably terminate future action. Onder this situation the applicant will be required to retain the existing land with its' higher interest rate. . .... -- - LI:::.. . , ~ . . CITY COUNCIL OF THB CITY OP HOPKINS, MINNESOTA Resolution No. RESOLUTION GIVING PRELIMINARY APPROVAL TO THE ISSUANCE AND SALE OF $5,375,000 COLLA TE RALlZED HOUSING DEVELOPMENT REVENUE REFUN DING BONDS (AUBURN APARTMENTS PROJECT), SERIES 19889 AND THE ISSUANCE AND SALE OF UP TO $625,000 TAXABLE COLLATERALIZED HOUSING DEVELOPMENT REVENUE BONDS (AUBURN APARTMENTS PROJECT), SERIES 1988. RECITALS: WHEREAS, the City of Hopkins, Minnesota (the I1lssuer") is authorIzed, pursuant to Minnesota Statutes, Chapter 462C (the "Housing Act") to develop and administer multifamily housing programs pursuant to a housing plan, which may be financed by the issuance of the housing revenue bonds ot the Issuer; and . WHEREAS, the Issuer has adopted a housing plan (tile "Housing Plan") after public hearing thereon and review and com ment by the Metropolitan Council pursuant to and in conformance with the provisions of the fiousing Act; and WHEREAS, the Issuer has prepared and approved a program within the Housing Plan (the "Program") to finance the a(,.~uisition, construct ion and installation of a 136.-unit multifamily r~ntal housing development (the "Project"), "". located in the City of Hopkinsf and constructed, owned and operated by Richard ._co Neslund (the "Developer''), and whereas the City Council has approved the Program and the Minnesota Housing Finance Agency has approved the Program, all in conformance with the provisions of the Housing Act; and WHEREAS, the Issuer has issued its $5,600,000 Multifamily Housing Revenue Bonds (Auburn Apart ments Project), dated as of October 1~ 1983 (the "Prior Bonds"), in order to finance the Project; and WHEREAS, the Company has requested that the Issuer give preliminary approval tor the issuance of revenue reCunding bonds of the Issuer pursuant to the Housing Act for the purpose of refunding the outstanding Prior Bonds and obtaining more favorable long term financing COr' the Project; and WHEREAS, the Company has requested that the [ssuer give preliminary appl"oval for the issua.nce of additional taxable revenue bonds of the Issuer purs'Jant to the Housing Act (or the purpose of paying certain costs of refunding the Prior Bonds and certain other costs; NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF HOPKINS, MINNESOTA: 1 .. ,. . , II Section 1. For the purpose of refunding the Prior Bonds, the City Council of the tuue~ hereby giV" preliminary approval to the Issuance and saJe of $5,3'15,000 Collateralized Housing Development Rev'llnue Refunding Bonda (Auburn Apartment. Project), Series 1988 (the "R.efunding Bonds"). ~c:t~on 2. For the purpose of paying cf:rtain costs of refunding the Pr~or Bonds and tor certain other costs of the Project, the City Council ot the Issuer hereby rives preHminary approval to the Issuance and salE' of lip to $625,000 Taxable Collateralized: Housing Development Revenue Bonds (Auburn Apartments ProJect), Series 1988 (the "Taxa~le Bonds"). ^\ Section 3. The RefulIlding Bonds and the Taxable Bonds shall be special obUgatlol1l of the Issuer, payable solely from the re.,enues received from the Project and property pledged to the payment thereof. Section 4. Miller & Scl".roeder fl'lnanci:ll, Inc. is hereby d~signated as underwriter of the Refunding Bonds and the Taxable> Bonds. Adopted by the City Council on July 5, 1988. Mayor' , {SEAL] ATTEST: City Clerk . 2 A . II ']. ,11 ~n'c' ~jH1m'".r,1 iHl'(I) 1-lt12 .6\..'(,2 ..... \-1- . I "I! j-r,'d )1 hc'r ::;t .It<'' (1l(\.1l lZK.(' 122 ~ ' I It .j Miller & Schroeder Financial, lne. -~~~-- --.._~-------~~..- - ~- -~- ~-- .--_.-_.~-_..~.~ -- .~~_.._. ---~._-~- ._~--'.'~-~ --~--'~ -, ~_. ..._.._.,._.-..~P--_.,--~., N"rtnw('Ml'rn hn;m<:lall:,'nll'f' i'A.") '..'rH" Awnu... :-;"\wb -I' U, P,,\ 7;-{<I. ~ IU1I1<'."",ll'. !\.Ilnlw,,-'l:' 'i'i4'W (M 2) K' 1.\ 'i00 $5,375,000 CrTY OF HOPKINS, MINNESOTA COLLATERALIZED HOUSING DEVEWPKEN'T REVENUE REFUNDING BONDS (AUBURN APAR'I'tIENTS PROJECl") SERIES 1988 I and 'I $625,000 CITY OF HOPKINS, MINNESOTA ..' TAXABLE COLlATERALIZED HOUSING DEVEIDPKENT REVEMUB BONDS (AUBURN APARTKENT PROJEcr) SERIES 1988 REFUNDING SCHEDULE . ~ ~pTIVITY RESPONSIBLE PARTY June 22 Send draft of Induce- Bond Counsel ment Resolution to the city of Hopkins for the refunding bonds & the ta~- able tail. July 5 Receive preliminary ap- city council proval for refunding Miller & Schroeder bonds & Taxable Tail from city- July 6 Distribute Bond docu- Bond Counsel ments for refunding. Disclosure Counsel July 18 Drafting Session Bond Counsel Submit Refunding docu~ Miller & Schroeder ments to S&P. Developer & Counsel Disclosure counsel July 20 Market Taxable Tail Miller & Schroeder July 21 Resubmit to S&P w/changes Bond Counsel & circulate revised oisclosure counsel Docwnents Revised 6/23/88 H~uart,.,,: Min""apoIi>. Minn<-sllU &oneh ()ffi,,:~: St.w... Ik.h, Ulik>mU . Soon F",nci:;(<>. C~lilOf1lu . St. Pout. Minnc<oU . Mil"..uk... Wiw:"".in' Columbuo, Ohio . HoooIulu. tt..... ~to,.'" rIK- Sc-l.:....." 1,,-.ro.l:l.W ....1ICI:t....C~1DIl ~ ---- ~ -' . . -2- July 25 Second Drafting Session Bond Counsel Miller & Schroeder Developer , Counsel Disclosure Counsel July 26 Print preliminary Miller & Schroeder Official statement Disclosure Counsel July 27 Set rate for Taxable Tail Miller & Schroeder Developer August 2 City Council approval Miller & Schroeder for Taxable Tail Week of August 1 Receive rating from Miller & Schroeder . Rating Agency Bond Counsel Market Bonds Developer & Counsel Close Taxable Tail Trustee August 5 Set Bond Rate Developer Miller & Schroeder August 10 Print Bonds Miller & Schroeder August 15 Deliver Bonds to Trustee Printer & Trustee Print Final Official statement .~I September 6 Pre-Closing Bond counselt Miller & Schroeder Developer & Counsel I' Disclosure Counsel Trustee Final approval for re- city council funding bonds Miller & Schroeder September 7 Closing All parties above Notice to Bondholders Trustee .1 . I ..'1