CR 96-66 Auburn North/South Housing Revenue Bonds \ 1 Y p
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April 10, 1996 y��� �� Council Report 96-66
� P K ` N
� "- ItEFUNDING ,
=- AUBURN NORTHISOUTH HOUSING REVENUE BONDS
Proposed Action
Staff recommends adoption of the following motion: Move to ap�rove Resolution 96-32,
authorizin� the issuance sale and deliverX of Multi-family Housing Refundin�Bonds in
a�gate princ�al amount in four series not to exceed $8 931 494 (the "Bonds"� authorizin� the
execution and delivery of related documents and�roviding for the securities rights, and remedies
of the holders of the Bonds �
This is the final action requested by the City Council on this item. It is understood that with this
action, staff is allowed to make minor changes to the loan document, provided the overall issue
does not exceed the amount as de�ailed above.
Overview
In 1983, the City of Hopkins approved the sale of $5.6 million in tax exempt housing bonds to
finance construction of the Auburn North and South residential projects. In 1988 and 1991, the
City Council approved action to facilitate the refunding of the existing bond debt.
Late last year the owner of this project again requested City action to refund the e�sting debt. In
November 1995, a public hearing was held and preliminary approval of the sale was granted. In
- February, the Council gave final approval to the issuance, in an amount not to exceed $7,800,000.
However, the applicant, for various reasons, never completed the sale of these bonds. The
financing has now been restructured and the applicant is asking approval for issuance of the
subject bonds. The total amount of the subject issue would be $8,931,494.
Primarv Issues to Consider
o What was the problem with the previously approved issue?
o What is the purpose of this financing?
o Does the project meet the requirements of the City policy regarding taxable/tax-exempt
financing?
o What are the implications to the City regarding this action?
o Has legal counsel reviewed this matter?
Supuorting Documents
o Resolution 96-38
o Application from Auburn Limited Partnerslup
o Letter from Parsinen Bowman Kaplan & Levy, dated �pri18, 1996
o Letter from Park Avenue, dated November 27, 1995
;-_ o L.etter from �hlers & Associates, Inc., dated April 10, 1996
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James D. �
Director�of Planning and Ec nomic Development
Council Report 96-66 - Page 2
Primarv Issues to Consider
� o What is the purpose of this financing?
Loca1 units of government are authorized to issue tax exempt and taxable revenue bonds
to facilitate projects, which it is felt will be beneficial to the community. The tax exempt
portion of the issue is able to secure a lower interest rate, and, therefore, make a project
more "financially feasible."
o Does the project meet the requirements of the City policy regarding
tazable/taz-ezempt financing?
The City of Hopkins adopted a policy regarding revenue bond financing in 1991. The
approval criteria within this policy, for the most part, relates to new canstruction projects.
At the time that the original bond was sold for the Auburn North/South Project, the City
did not have an application process nor policy regarding revenue bond financing. It is
assumed that the staff and City Council, as part of the hearing process at that time, felt
sufficiently comfortable that the project, as proposed to be undertaken, served a benefit to
the community and, therefore, approved the bond sa1e.
o What are the implications to the City regarding this action?
� These bonds and a11 such revenue bonds are secured by a pledge of repayment strictly
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 tlus process.
The City has not been informed that the owner of the subject project is in a default of
payments to bond holders.
It should also be noted that a condition of the application process requires the applicant to
pay all City legal and administrative costs.
o �as legal counsel reviewed this matter?
The City Attorney has reviewed the various documents as relate to this transaction. .
Furthermore, the City has been represented by Stepharue Galey, Holmes & Ga1ey, as
co-bond counsel.
o Other Issues
Only the tax exempt bond proceeds will be used to refund existing debt on the project.
The taxable proceeds will be taken as equity by the owner.
In the past, the City has never used the revenue bond process to finance equity. However,
Q staff is recommending approval of this issue based on the following:
• The project revenues are adequate to handle the additional debt. This finding is based
on a review by an independent financial consultant.
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� Council Report 96-66 - Page 3
� • Will assist in the estate planning process of the owner, as detailed in the letter from
� Park Avenue dated November 27, 1995.
The total amount of the issue will be $8,931,494. Of this total amount, there will be three
series of bonds. Each will have different levels of security for the bondholders.
o What was the problem with the previously approved issue?
From what staff has been told, the following items prevented the applicant from issuing
bonds, based on the previous Council approval (Resolution 96-08):
• Contingencies in the financing that were unacceptable to the applicant
• Loan amount that was able to be secured through FNMA was less than originally
anticipated
Alternatives
The City Council has the following alternatives regarding this matter:
1. Approve the action as recommended by Staff. This will a11ow the applicant to proceed
forward to prepare the necessary documents in conjunction with this transaction.
2. Deny the approval for the sale of the bonds. With this action, the Council needs to detail why
� their position has changed from the previous action on this item.
3. Continue for additional information.
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Q CITY OF HOPKIN5, MINN�SOTA
RESnt,UTIUN NU 9f-32
AU1'HORI'L1NG 7'HE ISSUANC�, SALE AND D�LiV�RY Or
M[JLTIl�'AMILY HOUSINti REVLNUE BONllS IN THRCE
S�ItIF,S 1N AN AGGRFGATE PRiNCIPAL AMOUNT NOT '1'U
EXCEF,D $8,931,494 (�T'HL "RONDS"); AUTHOIt17ING TI�iL
EX�C;UTION AND DL�LIV�RY OF It�LAT�1) DOCUII�NTS;
AND PROVII)1N� 1�OR THI-; SEGUIZiTY, RTGHTS AND
REM�DIES UF THE HOLDF,RS OF SATD 130NllS
WI3�1ti;AS, tiic City of Hopkins, Minnesota (thc "Tssuer") is autliorized by the taws of
tha State c�f Mirinesoia, parlioularly Minnesoia Statutes, Cha�ters 462A and 4b2C, a� ainended
(the "Act"), to carry out the public purposes d�scribed therein a��d eontemplated thereby by
issuing its revemie 6onds to defr�y, in whole or in part, tlie development casts of a multifamily
rental housing devetc�pment, or io rcfund any such revenue bonds, aud by enterin� inlo any
agreements mac�e in connection ihei�ewilh and pledging them as sect�rity for ihe payment of the
principal of and interest on any such i�evenue bonds; snd
Q WI3�REAS, pursuant to a Trust lndeniure dated as of June 1, 1991, between the Issuer
and Natiorial Ciiy l3ank of Minneapolis, ihe Issuer issued its Multifamiiy I�ousing Revenue
Refunciin� Bnnds (Aubum Aparlments Project} Series 1991 ui the aggregate principal amount of
�5,195,()40 (the "Pri�r Bonds") and used the proceeds of lhe Prior Bc�nds to provide for lhe
finaneing c�f a I3b-unit muliif�mily rental housing dev�l�pment located within the jurisc�ietion��l
bounar3rics of the Issuer {th� "Project") far the benetit of Aubur�l Limiied Parhiership, a
Minnesota limited ��rtncrship (the "Uwner"}; and
WI irREAS, it h�s been rcpreseut�d to the Issuer by the Uwner anci Miller & Schrneder
Financial, lnc. {the "Underwriter") thal adequate srra�igcments have been or will be made with
all holders of the Prior Ronds to perntit redetnpficm and prepayment of tlte Prior Bonds; and
Wl I�R�;AS, the Issuec, by passag� of Resolutic�n No. 95-1 U3 on I)ece�mber 5, 1995,
adopied an ainended and restated housin� pro�;rant with respeei to the Project (the `°Progt�m")
pursuant to and in ecmformity wiih the Act after public hearin� thereon and afler publication of
notice in a newspaper circulating generally within the �urisdicliona] bounc�dries �f the Issuer, ai
least fifteen (15) day bei'ore ihe date of'the h��ring, as rcquired by the Act; and
WIiER�AS, on or pri�r to the date of publication of such notice, the Program was
submitted tu tlze Metropolit�n Council, �nd the Metropolit�n Council presented its favorable
comments to thc Issuer, by letier dated November 20, 1995; and no �naterial chang�s or ch�ul�es
� inconsistent will, tlie Metropoiitan Council's comments were made to the Program; and
Q WHEREAS, the Issuer proposes to refinance the Project by the issuance of (i)
Multifamily Housing Revenue Refunding Bonds (GNMA Collateralized Mortgage Loan -
Auburn Apartments Project) Series 1996A (the "Series A Bonds"); (i'i) Taxable Multifamily
Housing Revenue Bonds (GNMA Collateralized Mortgage Loan - Auburn Apartments Project)
Series 1996B (the "Series B Bonds"); and (iii) Subordinate Multifamily Housing Revenue
Refunding Bonds (Auburn Apartments Project) Series 1996C (the "Series C Bonds") (together
the Series A, B and C Bonds are hereinafter referred to as the "Bonds") under the Act pursuant to
this Resolution; and
WHEREAS, the Bonds will be issued under an Indenture of Trust, as hereinafter defined,
and the Series A Bonds and Series B Bonds will be secured by a fully modified mortgage-backed
security (the "GNMA Security") issued by the lender referenced in the Loan Agreement, as
hereinafter defined (the "Lender"), and guaranteed as to timely payment of principal and interest
by the Government National Mortgage Association ("GNMA"); and payment of the Series C
Bonds will be secured by the issuance of a note (the "Series C Borrower Note") by the Owner
pursuant to the Subordinate Loan Agreement, as hereinafter defined, and a second mortgage on
the Project pursuant to a Subordinate Mortgage, as hereinafter defined; and
WHEREAS, it is intended that interest on the Series A Bonds and Series C Bonds (the
"Ta�c-Exempt Bonds") be excluded from gross income of the holders thereof for federal incorne
tax purposes; and
Q WHEREAS, the Bonds and the interest on said Bonds shall be payable solely from the
revenue pledged therefor and the Bonds shall not constitute a debt of the Issuer within the
meaning of any constitutional or statutory limitation, nor shall the Bonds constitute nor give rise
to a pecuniary liability of the Issuer or a charge against its general credit or taxing powers and
shall not constitute a charge, lien or encumbrance, legal or equitable, upon any property of the
Issuer other than the Issuer's interest in said Project; and
WHEREAS, the GNMA Security will be backed by a mortgage loan insured by the
Federal Housing Administration (the "Mortgage Loan") made by the Lender to the Owner; and
WHEREAS, the owners of the Series C Bonds shall have no right, title or interest in the
security provided by the GNMA Security; and �
WHEREAS, in order to comply with the requirements of Section 147(� of the Internal
Revenue Code of 1986, as amended, on December 5, 1995, the City Council held a public
hearing, after publication of notice thereof in a newspaper of general �circulation in the Issuer at
least fourteen (14) days before the hearing and adopted a resolution providing preliminary
approval to the issuance of the Bonds;
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY
OF HOPKINS, T�INNESOTA, AS FOLLOWS:
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Q 1. For the purpose of refunding the Prior Bonds and for paying certain costs of
issuance in connection with the issuance of the Bonds and thereby refinancing the Project, and in
order to provide funds to finance the payment of interest on the obligations of the Issuer with
respect to the Project, the establishment of reserves to secure such obligations, and the payment of
a11 other expenditures incident to and necessary or convenient to carry out the purposes of the
Project, there is hereby authorized the issuance, sale and delivery of the Series A Bonds, the
Series B Bonds and the Series C Bonds, the proceeds of which, together with funds provided by
the Owner and held under the indenture for the Prior Bonds, shall be applied to redemption of the
outstanding Prior Bonds and payment of costs of issuance in connection therewith. The Bonds
shall be in such principal amounts, shall bear interest at rates, shall be numbered, shall be dated,
shall mature, sha11 be subject to redemption prior to maturity, and shall be in such form and have
such other details and provisions as may be prescribed in the Indenture of Trust, to be dated as of
April 1, 1996 (the "indenture"), between the Issuer and First Trust National Association, as
trustee (the "Trustee"), substantially in the form now on fiie with the Issuer; provided that (i) the
aggregate principal amount of the Tax-Exempt Bonds (together with any proceeds from a sales
premium on any series of Tax-Exempt Bonds) shall not exceed the lesser of $ or the
outstanding principal amount of the Prior Bonds and the aggregate principal amount of all Series
of Bonds shall not exceed $8,931,494; (ii) the maximum interest rate on the Series A Bonds shall
not exceed 8.50% per annum, the maximum interest rate on the Series B Bonds shall not exceed
10.00% per annum and the maximum interest rate on the Series C Bonds shall not exceed 9.00%
per annum; (iii) the final maturity of the Tax-Exempt Bonds shall not be later than 35 years from
the date of issuance and in no event shall the average maturity of the Tax-Exempt Bonds exceed
� 120% of the remaining average reasonably expected economic life of the Project; and (iv) there
shall be maturities or mandatory sinking fund redemptions of the Bonds so as to result in
approximate level debt service throughout the term of the Bonds. The Mayor and the City
Manager are hereby authorized and directed to confirm the principal amount of the Bonds, the
final interest rates and maturities thereof and the premium or discount on the �onds in
connection with the issuance thereof. The Bonds sha11 be special obligations of the Issuer
payable solely from the revenues provided by the GNMA Security and other funds pledged
pursuant to the Indenture. The Bonds are not to be payable from nor charged upon any funds of
the Issuer other than the revenues pledged to their payment, nor is the Issuer subject to any
liability thereon; no holders of the Bonds shall ever have the right to compel any exercise of the
taxing power of the Issuer to pay any of the principal of premium, if any, or interest on the
Bonds; the Bonds sha11 not constitute a charge, lien or encumbrance, legal or equitable, upon any
property of the Issuer, and each Bond shall recite that the Bonds, including interest thereon, are
payable solely from the revenues pledged to the -payment thereof and that no Bond shall
constitute a debt of the Issuer within the meaning of any constitutional or statutory limita.tion.
The Bonds sha11 contain a recital that they are issued pursuant to the Aict and such recital shall be
conclusive evidence of the validity and regularity of the issuance thereof. The Mayor and City
Manager are authorized and directed to prepare and execute by manual or facsimile signature the
Bonds as prescribed in the Indenture, to affix the seal of the Issuer manually or by facsimile and
to deliver them to the Trustee, together with a certified copy of this resolution and other
documents required by the Indenture, for authentication and delivery to the Underwriter.
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� 2. The City Council of the Issuer hereby authorizes and directs the Mayor and City
Manager of the Issuer (the "Mayor" and "Manager" respectively) to execute and deliver the
Indenture, affix the seal of the Issuer thereto, and to deliver the Indenture to the Trustee.
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 Issuer, which is hereby approved,
with such necessary or desirable and appropriate variations, omissions and insertions as do not
materially change the substance thereof, or as the Mayor, in his discretion, shall determine, and
the execution thereof by the Mayor shall be conclusive evidence of such determination.
3. The Mayor and the Manager are hereby authorized and directed to execute and
deliver the Loan Agreement (the "Loan Agreement") to be dated as of April l, 1996 by and
among the Issuer, the Trustee, the Lender and the Owner providing for the loan of the proceeds
of the Series A Bonds and the Series B Bonds. All of the provisions of the Loan Agreement,
when executed and delivered as authorized herein shall be in full force and efFect from the date
of execution and delivery thereof. The Loan Agreement sha11 be substantially in the form on file
with the Issuer which is hereby approved, with such variations, omissions and insertions as to not
materially change the substance thereof, or as the Mayor, in his discretion, shall determine, and
the execution thereof by the Mayor shall be conclusive evidence of such determination.
� 4. The Mayor and the Manager aze hereby authorized and directed to execute the
Subordinate Loan Agreement (the "Subordinate Loan Agreement") to be dated as of April 1,
1996 by and among the Issuer, the Trustee and the Owner, providing for the loan of proceeds of
the Series C Bonds. All of the provisions of the Subordinate Loan Agreement, when executed
and delivered as authorized herein shall be in full force and effect from the date of executivn a�d
delivery thereof. The Subordinate Loan Agreement shall be substantially in the form on file with
the Issuer, which is hereby approved, with such necessary or desirable and appropriate variations, •
omissions and insertions as are not materially inconsistent with the form on file with the Issuer or
as the Mayor, in his discretion, shall determine and execution thereof by the Mayor shall be
conclusive evidence of such determination. The forms of the Series C Borrower Note (as defined
in the Indenture) and the Subordinate Multifamily Mortgage, Assignment of Rents and Security
Agreement (the "Subordinate Mortgage"), each executed by the Owner in favor the Issuer are
hereby approved and shall be in the form on file with the Issuer, with such variations as shall be
permissible in connection with any modifications� to the Subordinate Loan Agreement as
approved in accordance with the preceding sentence. � -
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5. The Mayor and the Manager are hereby authorized and directed �o execute the
Escrow Agreement (the "Escrow Agreement"), by and among the Issuer, the Owner, the Escrow
Agent (as defined therein), and the Trustee, to be dated as of April 1, 1996 relating to the
applica#ion of the proceeds of the Tax-Exempt Bonds to the redemption and prepayxnent of the
Prior Bonds. All of the provisions of the Escrow Agreement, when executed and delivered as
° authorized herein 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 Issuer, which is hereby
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� approved, with such necessary or desirable and appropriate variations, omissions and insertions
as are not materially inconsistent with the form on file with the Issuer or as the Mayor, in his
discretion, shall determine and execution thereof by the Mayor shall be conclusive evidence of
such determination.
6. The Mayor and the Manager are hereby authorized and directed to execute and
deliver the Amendment Number One to Regulatory Agreements relating to Auburn North and
Auburn South, respectively (together, the "Regulatory Agreement"), to be dated as of April l,
1996 by and between the Issuer and the Owner. All of the provisions of the Regulatory
Agreement, when executed and delivered as authorized herein 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 Issuer which is hereby approved, with such variations,
omissions and insertions as do not materially change the substance thereof, or as the Mayor, in
his discretion, shall determine, and the execution thereof by the Mayor shall be conclusive
evidence of such determination.
7. The Mayor and the Manager are hereby authorized and directed to execute the
Bond Purchase Agreement among the Issuer, the Owner, and the Undervvriter relating to the
Bonds (the "Bond Purchase Agreement"). All of the provisions of the Bond Purchase
Agreement, 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 Bond Purchase
Agreement shall be substantially in the form on file with the .Issuer, which is hereby approved,
with such necessary or desirable and appropriate variations, omissions and insertions as are not
materially inconsistent with the form on file with the Issuer or as the Mayor, in his discretion,
shall determine and execution thereof by the Mayor shall be conclusive evidence of such
determination.
8. The Trustee is hereby �appointed as Paying Agent and Bond Registrar for the
Bonds.
9. The Mayor and the Manager of the Issuer or either of them are hereby authorized
to execute and deliver, on behalf of the Issuer, such other documents and certificates as are
necessary or appropriate in connection with the issuance, sale and delivery of the Bonds,
including without limitation, assignment of the Borrower Notes, Subordinate Loan Agreement
and Subordinate Mortgage to the Trustee and/or the Lender, request and authoriza.tion to the
Trustee to authenticate and deliver the Bonds, a Tax� Certificate and a Letter of Representations
to The Depository Trust Company ("DTC") for appointment of DTC a[s securities depository for
all Bonds or any separate series of Bonds as provided in the Indenture; and such other
certificates, instnunents, and other documents as are necessary, customary, appropriate or
necessary to establish the validity or enforceability of the Bonds, or are required by Bond
Counsel to establish the validity or enforceability of the Bonds or the exclusion from gross
income of interest on the Tax-Exempt Bonds for purposes of Federal and State of Minnesota
� income taxation.
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� 10. The Mayor and the Manager of the Issuer are hereby .authorized to execute and
deliver, on behalf of the Issuer, such instruments as may be necessary and appropriate to effect
the funding of the Mortgage Loan and the purchase of the GNMA Security by the Trustee.
11. The Issuer hereby consents to the distribution of the Preliminary Official
Statement relating to the Bonds, substantially in the form on file with the Issuer. The Issuer
hereby consents to the use by the Undervvriter in connection with the sale of the Bonds of a final
Official Statement, substantially in the form of the Preliminary Official Statement described
above. The Preliminary Official Statement and the Official Sta.tement are the sole materials
consented to by the Issuer for use in connection with the offer and sale of the Bonds. The Issuer
has not participated in the preparation thereof, has not made any independent investigation of the
information contained therein and shall have no liability in connection with the contents of or use
of such offering materials.
12. All covenants, stipulations, obligations and agreements of the Issuer contained in
this resolution and the aforementioned documents shail be deemed to be the covenants,
stipulations, obligations and agreernents of the Issuer to the full extent authorized or permitted by
law, and all such covenants, stipulations, obligations and agreements shall be binding upon the
Issuer. Except as otherwise provided in this resolution, all rights, powers and privileges
conferred and duties and liabilities imposed upon the Issuer or the City Council, or such officers,
board, body or agency thereof as may be required or authorized by law to exercise such powers
Q and to perform such duties.
No covenant, stipulation, obligation or agreement herein contained or contained in the
aforementioned documents shall be deemed to be a covenant, stipulation, obligation or
agreement of any member of the City Council of the Issuer, or any officer, agent or employee of
the Issuer in that person's individual capacity, and neither the City Council of the Issuer nor any
officer or employee executing the Bonds sha11 be liable personally on the Bonds or be subject to
any personalliability or accountability by reason of the issuance thereof.
No provision, covenant or agreement contained in the aforementioned documents, the
Bonds or in any other document related to the Bonds, and no obligation therein or herein
imposed upon the Issuer or the breach thereof, sha11 constitute or give rise to any pecuniary
. liability of the Issuer or any charge upon its general credit or taxing powers. In making the
� agreements, provisions, covenants and representations set forth in such docuxnents, the Issuer has
not obligated itself to pay or remit any funds or revenues, other than funds and revenues derived
from the Loan Agreement and Subordinate Loan Agreement and related security instruments
. which are to be applied to the payment of the Bonds, as provided theredn and in the Indenture.
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 Issuer or 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 resolurion or any provision 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
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� Issuer and any holder from time to time of the Bonds issued under the provisions of this
resolution.
13. In case any one or more of the provisions of this resolution, or of the
aforementioned documents, or of the Bonds issued hereunder shall for any reason be held to be
legal 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 ir�valid provision
had not been contained therein.
14. The Bonds, when executed and delivered, shall contain a recital and such recital
shall be conclusive evidence of the validity of the Bonds and the regularity of the issuance
thereof, 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 and in the enactment
of this resolution, and precedent to issuance of the Bonds and precedent to the execution of the
aforementioned documents have happened, exist and have been performed as so required by law:
15. The officers of the Issuer and its attorneys, agents and employees 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. In the event that for any reason the Mayor of the Issuer is unable to carry out the
execution of any of the documents or other acts provided herein, any other member of the City
Council of the Issuer shall be authorized to act in his capacity and undertake such execution or
acts on behalf of the Issuer with full force and effect, which execution shali be valid and binding
on the Issuer. If for any reason the Manager of the Issuer is unable to execute and deliver the
documents referred to in this resolution, such documents may be executed by the Assistant
Manager of the Issuer with the same force and effect as if such documents were executed and
delivered by the Manager of the Issuer.
16. On February 6, 1996, the Issuer adopted its resolution providing for the issuance
of bonds, the proceeds of which were intended to refund the Prior Bonds. To the extent
provisions or actions provided in such prior resolution conflict with provisions contained in this
resolution, the provisions under this resolution supersede those provisions contained in the prior
resolution. ,
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� 17. This resolution shall be in full force and effect from and after its passage.
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� Adopted this day of April, 1996.
Mayor
Attest:
= City Clerk
GP:273939 v4
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� C � � � °'�� CITY OF HOPKINS
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/� � � 1010 FIRST STRE..T SOUTH
- � HOPKINS ,�'�IN 5� 3 4 3
//'� � ��� �s.�-�C�
,.!� OFFICE USE ONLY:
� .��.� G� '�z.L�c_ /����. Date Received:
i
�� 3� 7 _ 3L Received by :
� Type of Request:
� Taxable Bond Issue
� Tax-Exempt Bond Issue
Refunding of Previous Bond Issue x
APPLIC�TION FOR TA%ABLEJTA% E%EMPT
BOND FINANCING OR BOND REFUNDING
� (Complete as appropriate)
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� APPLICANT INFORMATION
1. Applicant/business name AUBURN LIMITF.D PAR'1NFRSHIP
� Contact person: James E. Fier
� 742 Twelve Oaks Center
Address : 15500 Wayzata Blvd.
� City: Wayzata State: t�i Zip: 55391
Q Teiephone: (work) 475-1700 (home)
� Fax : 475-9015
Interest in property:
� 2. Applicant' s legal counsel : Jack Rosberg
� F irm : Parsinen BoWman Kaplan & Levy
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� � Address • 100 So. 5th St. Suite 1100
� � Minn lis l�i 55402
City: �Po Stata: Zip:
� Telephone: (work) 333-2111 (home)
� Fax : 333-6798
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� 3. Applicant's architect N/A
� Address:
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Q City: State: Zip:
Telephone: (work) (home)
� Fax:
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4. Applicant's contrac�or: (If selected): N/A u
Firm:
Address:
City: State: Zip: S
Telephone: (work) (home)
Fax:
5. Property owner(s) of record: � L � TT � P � H �
742 �elve Oaks Center
Addresses : 15500 Wavzata Blvd.
City : Wavzata State : r�1 Z ip : 55391
Telephone: (work) 475-1700 (hame)
Fax : 475-9015
6. Appl.icant's business form (corporation, partnership, sole
proprietorship, etc.) and state of incorporation or
organization: •
Partnership, i.ncorporated in Minnesota
7. 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 and
relationship to the applicant. (If a corporation is not
formed, list the potential officers, directors and
stockholders):
N/A _.
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� J
� 8. If the applicant is a partnership, li=t the general partners
� and any limited partners with more than 5% interest. (If the
� partnership is not for.ned, give as much data as possible
concerning the potential partners):
�� General Partner: R. Neslimd Co_
� Limited Partners: Mabeth Neslund
i
� Richard Neslund
�
,
3
�
�
�
�
�
�
�
�
s'
� 9. List any cities to which you have previously applied for
= taxable/tax exempt bond financing within the last five years:
�
' Fdpn Prairie
� I0. Has the applicant ever been in bankruptcy? If yes, please
= explain:
= No
11. Has the applicant ever defaulted on any bond or mortgage
commitment? If yes, please explain:
No
` �
PROJECT INFORMATION
I. Pro j ect name . AUBiJRN
�
2. Legal description of the site: Lot l, Black 1 Auburn North and
Lots 9 to 74 and Outlot A, Block 1, u; City o H ins,
Hennepin County, Minnesota
3. Brief description of the nature of the business, such as
, principal servic�s or pr�oducts, etc.:
Residential renta]. property
4. Amount of bond issue requested: $ 8,500,000.00
5. Who is lending interim financing, and in what amount: NoNE
�
BIISINESS INFORMATION
1. Number of employees in Hopkins?
FuI.I Time Part Time
A. Before this project: I 2
B. After this project: 1 2
2. Projected annual sales: $ 1,570,000
3. Projected annual payroll: $ 50,000
4. Is the project associated with an existing Hopkins business?
A. Yes X
B. Na •
g .
,
= �
� • � 5. If this project is associated with an existing Hopkins
� business, which of the following apply:
; A. Relocation
� Q B. Expansion
C. Rehabilitation
= D_ Refunding of a previous bond issue x
- 6. Will you occupy this project after completion?
A. Yes
= B. No X
- 7. If no, state name of future lessees and status of commitments
_ or lease agreements:
Cisrently 129 of the 136 units in the pzoject are occupied bv
_ residents under leases that generally are one year in duration.
8. Estimated date of construction N�A Completion N/A
Q 9. Will any public official of the 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 412.87? �,
If so, please explain:
FILII�1rG REOIIIREMENTS
You must provide all of the following items with your application,
unless the Director of Planning & Economic Development waives a
requirement:
l. If the project requires approval by the Zoning and Planning
Q Commission, you must apply for these approvals prior to or with
this application. If Zoning or Planning Commission approval is
not required, you must submit a list of property owners and
their addresses, for your property and for all properties
within 350 feet. An abstract company must certify this list.
Abstract companies are listed in the yellow pages.
_d
2. A written opinion, with supporting justification, from an p
expert acceptable to the Director of Planning & Econamic
Development, to document that the development will not
adversely e£fect similar, existing developments. This �
requirement may be waived if there are no similar developments
in the area of your project.
3. A public hearing notica and resolution of preliminary approval.
Yvu must have �hese items prepared by the City's bond counsel.
4. 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 Counsels', City Attorneys', or closing fees.
PROC�DIIRE
1. Return this application to the Community Development
Department.
2. The City Council will hold a publ.ic heari.ng and decide whether
to approve your application. City staff will notify you of the
meeting.
REQIIIREMENTS FOR TAR BOND FINANCING �^
Your application must meet the following requirements for approval
o� taxable/tax-exempt bond financing:
2. The project shaZl not require a significant amount of pubiic
money for City improvements if the City CounciI. 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 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 f iring of �
employees on the basis of race, color, creed, religion,
national origin, sex, marital status, age, disabil.itv 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.
� � � _' ,
c. Shall employ Minnesota residents in at least SOo of the
- jobs created by the project. In addition, at least 600 or
= these employees shall be residents of the seven-county
= metropolitan area. Residential status shall be determined
� as of the date of the project's approval by the City
= Council. However, if the contractor can show that these
= quotas are not possible because of a shortage of qualified
= personnel in specific skills, the contractor may request a
- release from the City Council of the two residency
= requirements. These requirements shall continue for the
= length of the construction project.
= d. Shall be active participants in a State of Minnesota
apprentice program, approved by the Department of Labor
- and Industry.
e. The above requiraments shall apply to all subcontractors
working on the project.
5. You must use the City's Bond Counsel.
6. The project must involve an existing business that the City
� wishes to expand or a new business which the City wishes to
attract. A business is the manufacturing, distribution, sale,
storage or making of any merchandise, real estate, produce
food, housing or services which will produce income for one or
more individuals. An existing business is a commercial project
that has operated for at least one year in the City. A new
business is a commercial project which does not qualify as an
existing business.
a. Existing business criteria: The City will consider any
expansion, relocation or rehabilitation of an existing
business for approval.
b. New business criteria: The City will only consider a new
business for approval if it:
(1) Offers at least 400 hours per week of new,
year-around employment, or
(2) Involves the rehabilitation of a vacant or scheduled
to be vacated structure, or
(3) Is within a designated development or redevelopment
target area, and
a (4) Has a low potential for creating pollution.
7. The project must exceed minimum code requirements by including
at least five of the following features into the project:
a. Brick
. .
b• Building design should be a distinctive, non-generic
style.
c. A noticeable increase in the size and quantity oi.
landscape plantings over what the City normally require�
d. Underground ir�igation af all landscaping.
e. Open space, other than required setbacks.
f. At least 10% more parking than code requires.
g. Walkway along street frontages.
h. All parking stall widths at least ten feet.
i. AlI signs shall be at least 20% smal�er or fewer than
allowed by code. �
8. City staff shall review compliance with the appropriate request
fvr refunding of previous bond issues.
o�.-e -
9. You must pay an administrative fee to the City of
percent of the bond issue with a maximum of $10,000 at closing.
The City will credit the application fee against the
administrative fee.
� �-¢�2-� S 00 0 �
AGREEMENT
I, by signing this application, agree to the Foliowing:
l. I have read and will abide by a11 the requirements of the
City for taxabZe/tax-exempt financing. I wi11 alsa commit
all contractors, subcontractors and any ot2ier major
contributors to the project to all segments applicable to
them. I am aware that failure to comply by myself or any
of the above can result in cancellation of the resolution.
2. The above information is true and correct.
3. I agree to pay all costs involved in the Zegal and fiscal
review of this project. These costs include the Bond
Counsel and City Attorney, and all costs involved in the
issuance of the bonds to finance the project.
4. I understand that the City reserves the right to deny
final approval, regardless of preliminary approval or the
degree of constructian completed.
AUBURN LIMITm PARTNERSHIP
by R. Neslund Co.� a MN Corp., Partner
= �'� .,,� �_ . -.�� •.� � r s � ; ;�, - � S �
� ��� Applicant Date
by James E. Fier, Vice President
financap
� 86123336798 PARSINEN BOXXAHa�APLkN 04/08196 11:19 P,002/OOZ
�
_ s i
� '
= �� PARSIN�N BOWMAN KAPLAN 8� L�W P.A. �
_ � � otromeys dt rQw
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� �
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_ oa,ras n[s4wnna,w Apri18, 1996 �ac1c A. R05betg
- 10HN P/1���NkN � �
_ (612) 34Z-03dZ
P.06R�A LEW �
' LII�NEY kAF✓�N .
NCI, i+. RC15Rr"RC
- JOHW F B4NNLF b[ �• 7aznes Kezr�igan �j� �QC��� Q� �� s ��
_ „p�,� � Economic Development Directar 935-1834
ra�ewa�w�,��uaSE�� City of Hapkins
1010 First StreeC South
l ����' c �� �opkins, MN 55343
ro��tt� r� 3C����cws� �
,°""" n°r �" Re: Aubwc�t Apartnnents Bond Refunding
- _ E BUPKh H�NO$
�ownFO � Rua��+ Deaz Jim
o.:v�a A oPaisrc�u
_ �,�N�, �,�,r Stefanie Cyaley indicated that you xequested soxne clarifiicatioa as to why Mr. Nes�und
t�,oY a�,�y, has eiected to proceed vvith an FH,A bond structure ratheX than FN11�A.
� `ufE�ENR ��Ar_
n,� f .���t : Generally, there �'e two reasons. The FNMA underwriting process moved extremely
��N� M�,,tNS slawly and, when proposed commit�ents were �nally isscted, they were subject to
HkUt'Cf,alnrcpqryig m�ay unaccepta.ble qu��ifications, zncl.uding sevetal m�tters wluch Mr. Nesluatd
�R, M M,�rA, be�ieved he �iad reached prior app�ovat aa with FNMA., �n additian, the FNM,4, �oan
,�.�.Y,•.,�o�,�, amiounts were substantia�ly below Mr. �1'esiuQd's ex�ectatio�s. The FHA structu�
aMVm+,wr:,s,;Nr•qr.n solved bot� of these problems az�d Mr. Neslund made the election to move forward
with FHA.
�.e.n+��eN� wvu��
f�`t.�."��R" I� you ha�ve further questions, please call.
vnwoa Gou�r+
IEFfREr R JOKrdS�N V ery � �
7
a�.�ou.'ra c�E�rK�k
cwor i:,rrE�e ���� �
Jack A. Rosberg
rAR:e�c
cc: Stefanie Craley
Jim Fier
� south fitFh st►ee)
svile i 100
minrteapotis
minneso�� o1303G4A1
55A�2
teI 612 333 2111
tpx 612 333 679& A�MRFft7FCl�MMEfr_enj{awpfFK7aYF5 AWC7FLOway[,�FfylJw7147flOPA10.°FFJJVtNiLAWFfRnit
__
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_ �rF �vn�'/.nt��. 1�t'•
- . 7{2 TW@LVE OAKS CENTER � 15500 W4YTATA S�YO. � WAY24T4, MN 55�91 ' PHQNE 6i1/�J'Y17Q0 • F4I 612/47$-9015
_ NpvembAr 27, I99S
_ Mr. ?fm $�t3g,sn .
�► of 1Topkiai
2QI0 F�tat S`�taet 5wt�
� Sap�as, b�N SS343
R�: Aubaxn Townhomo�
� Drar Mr. Y.c�ig�n:
This ie�er � iotedt�ed es s follo�v-up Lo our dL�cassion wi� yau on
Novembar 2U, 1995 �d t� � wa provic'lod ta ytou tl�att daY rnga�g t�8 abo�ve-
nfeteaced mattct. Yt is oar w�era�vadi�g th�t tt�e City t�f Hopkias �s a�
apprppriat,n 000cern �g tt�a p�cblic pu�pora 6ehi�d iasuante o�f t!� pxopostd
3eri� B Bonds. �Ve wu�r�and t�t tbi� is an tmusustl circumstaac4 a+beto Mt,
Nesluad and Auburn 1,3mit�ed �mea�h�p a�e reqtus�; �SSUanc� of the S�es B
$onds fa� the p�rpase � leYera�ing ax financ�t►g out a poxtion of the equity oa thc
P��
F'irst kx me 'b�gin bY x�umiag m you tt�t i! iu nat our int�mt ro ia a�ay .�-
waY J�P�� t6o fma�cial s�abili#y of tt�c pro,jat b�t this fu�anciag. I beticve that .
�u �vill fmd d�a fi�nc'r� imfo�rmation whic� �+e havo provided and whictt yout fi�cal
coaault�at rrill ievi�w confirms w�r po�0ic�n �t thz ptajoct caa suppart ttu fiaancing
uadar a co�++ative a�al�rsis. Oac a�odvstiou u drivca by e�a�e aad �ifi tsx
ptaanic�g, i�n i maaaet evhich a+�1i ��an+e trie P��'� �8 �ts a�bitity as s qt�liry
to�►n�o�tc� �evelopmeot wtth�► ffia c.it�y ot Sop�da�.
As �t of Mr. Ne�hu�d's e�tate pla�auia$ prooes�, we ideati�ied tbat t�er+s
wa�d be si�tifrr�ut � fOr � faaea b�.ged upAn � riet eqvity poaition in
t$ia Ps'Qja;t, tip� bis d�6. Mr. N�sl`und aad bis vwcious iuve,� � Lavc
� a �� � �y o,r g��� �h► �-t��y �� �3� ��cnm t�
� ciry of �opbns and odt« soburbau commu�es. Yt is Mr_ xes[und'� goat and
Qesi�na to see contimtity 9n tt� maimtenan�e of A,uburn �s a quatitY Pro1� �d in t�e
quauty of n�a�cnent au�d owne�p.
oiuta�.oi
._. . . _ - - E.
lvsr. r�nn �ccrig�t �
Nove�nbe�c 27,1945.
�z
Nt�r. Nwluad in concarned tf�t i� t�e eveut. of his �, tii:t he�rs m�gta be
fv�ea i�o a rapia s� of rl� proJect iu ar�er ta raiae mo�cy to pay es�te ea�c�
�bfe ta hia oqcidty #lwein. Th�s could r+e.wit {a t6e sala of tha pmject to �n
aper�tor tl�t ww�d not �n or de�vet tl� same qwliry. A�ativeiy, it migbt
be poas�'b�e �or �}�t tp r�a�sot thc proja� at t�at timc tn isi.st cash with ar�
�o pay �tch t�xea. Finweva�r, d� term� of such P�ng m�bt not be aa favorable
ss is piesea��► avsil�bl�. lbis miE6t ir,sult iu ie,� futute s►tability fa�r tb� project aAd
$� 1�� mainf�iaing the quaiity c� the pc�oject tq ahicb t�e city has gr�wn
soa��u.
By iu�ui3ng tbe Ser},,es B 8and�s, Mr. �+iestwaci caa �ve�rage a�t ttte rqwity in
tbe proJect oq �avozabk te�ms. w�d comp�'omisiag the finattcia�l iu�grity af the
A�y�. BY �8 � na eq�ity i� �he pea�ea, ic then be�ccomes possibk fo�r Mr.
rtsestund o� tta�sfex aubs�ntia�t it�reSt ttrereYa tio tl�e A�uburA I.iutited �rshi}�
witba�t si�iPlcagt giflt ta�c conseque�ea. Siace aubsta�tia� 4wn�'9hip wllt 8lteady
liave b�oea► !�'�ns� chuir�g M�t. Nesiund's liftkime, tho� in�te�sb wou�d be
exc�ttided fz+om �uc estalt at de� and wau,ld not be a�tsjcx�r �a estata ta�xes. �
We b�ILC.we tb�at a�al pablic interest is servod by aPprovi�g thit finat�eing,
�a o�cd�sr �u aeeure t�e loqg term t�as�c3at atability di tbs ptojact wd co�+dauity a�ad .
Lbe qual�y a� ita m�a�gem�aoi and oQetadon,
Yowr c�s�deratioti i� g�'eat�Y aFP�ciatecl.
Since�aly,
a�,,....i,,� '� . ..�"�
� ,
�llmCi �. F1Gi
OYt�104.0I
�
Ehlers and Associates, Inc.
� LEADERS IN PUBLIC FINANCE
April 10, 1996
T0: Jim Kerrigan, City of Hopkins
FR: Mark Ruff
RE: Auburn Townhomes Refinancing
We have reviewed preliminary financing documents for the proposed
Auburn townhomes refinancing.
Based upon the information provided to us, it appears that the cash
flow for the project meets industry standards and that the
refinancing should not materially affect the viability of the
units, based upon past performance.
Please ca11 with questions or comments.
�
�
OFFICES IN MINNEAPOLIS, MN AND BROOKFIELD, WI
2950 Norwest Center.90 South Seventh Street. Minneapolis, MN 55402-4100
Telephone 612-339-8291 . FAX 612-339-0854