CR 96-22 Refunding North/South Housing Revenue Bonds � T Y
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January 30, 1996 ti o 5 Council Report 96-22
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: � REFUNDING
AUBURN NORTH/SOUTH HOUSING REVENUE BONDS
Proposed Action
= Staff recommends adoption of the following motion: Move to a�prove Resolution 96-08,
authorizin� the issuance, sale, and delivery of Multi-family Housing Revenue Refundin�
- �Auburn Apartments Projectl, Series 1996, in the original a�,gre ag te principal amount of
$4 940 000 and Taxable Multi-family Housin� Revenue Bonds (Auburn Apartments Project),
= Series 1996 in the ori ig nal agg,re ag te principal amount of $2,860,000, which bonds and the
= interest and any premium thereon sha11 be pavable solely from the revenues derived from the
Guaranteed Pass-through Certificate issues by the Federal National Mort�a�;e Association and
° other revenues�ledged pursuant to the Indenture of Trust: approvin� the form of and authorizin�
= the execution and delivery of the Indenture of Trust, the Bond Purchase Ag;reement, the Financing
Agreement, ` Amendments Number One to the Re u�latorv Agreements, and the Preliminarv
= Official Statement and Official Statement; approvin� the form of and authorizin� the execution
- and deliverv of the Bonds; and providing for the securities, ri�hts, and remedxes of the holders of
the Bonds
This is tHe final action requested by the City Council on this item.
- 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 e�sting bond debt.
� The owner of this project is now again requesting action to refund the e�sting debt. The Council
_ has already held a public hearing on this matter and giveri preliminary approval of the issuance.
= The total amount ofthe subject issue would be $7,800,000 ($4,940,000 tax exempt, $2,860,000
= taxable).
= Primarv Issues to Consider
= o What is the purpose of this financing?
; o Does the project meet the requirements of the City policy regarding to 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 Application from Auburn Limited Partnership
- o Resolution 96-08
3 � o Letter from Park Avenue, dated November 27, 1995.
- �
- ` �
James I�. Kerrigan, Directo of Planning and Economic Development
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Council Report 96-22 - 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
= taxable/taz-exempt 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 construction projects.
At the time that the original bond was sold for the Auburn NorthlSouth 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?
: Q These bonds and all 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 this 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 Has 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 & Galey, as
� co-bond counsel.
- o Other Issues
Only the tax exempt bond proceeds will be used to refund e�sting 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,
_ !� 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.
= • The financing meets Fannie Mae loan criteria, which are fairly strict.
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Council Report 96-22 - Page 3
` • Will assist in the estate planning process of the owner, as detailed in the letter from
� Park Avenue dated November 27, 1995_
= Alternatives
= The City Council has the following alternatives regarding this matter:
= 1. Approve the action as recommended by Staff. This will allow 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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- ��� °'` � �� CITY OF HOPKINS
G' ��'� 1010 FIRST STREET SO
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- � HOPKINS, MN 5�343
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OFFICE USE ONLY:
� � ` C�7.`' '�,+.� /��� Date Received:
�
G� 3 � 7 3L Received by :
Type of Reque�t:
Taxable Bond issue
Tax-Exempt Bond Issue
Refunding of Previous Band Issue X
APPI�ICATION FOR TASABLE/TA% EBEMPT ,
_ BOND FINANCING OR HOND REFIINDING
- (Complete as appropriate)
APPLICANT INFORMATION
1. Applicant/business name AUBiIRN LIMITF.D PAR'1NFRSHIP
= Contact person: James E_ Fier
= 742 �elve Qaks Center
= Address : 15500 Wayzata Blvd.
= City: wayzata State: t�i Zip: 55391
;
i � Telephone: (work) 475-1700 (home)
_ Fax : 475-9015
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� Interest in property:
�
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� 2. Applicant's legal counsel: Jack Rosberg
�
� F irm : Parsinen BoWman Raplan � Levy
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� � Address • 1 � �- 5th St_ Suite 1100
� C '1ty : Minneapolis State : � � ip : 55402
Telephone: (work) 333-2111 (home)
Fax : 333-6798 .
3. Applicant's architect: N/A
Address:
� City: State: Zip:
Telephone: (wor.k) (home)
Fax:
_ _ _ ___ _ __ .
G
4. Applicant's contractor: (If selected): N/A
Firm:
Address:
City: State: Zip; �
Telephone: (wcrk) (hame)
Fax:
5. Property owner ( s) of record : � L �� P ��
742 Twelve Oaks Center
Addresses : 7 5500 wavzata Blvd_ --
City : Wa ata State _ l�i Z ip : 55391
Telephone : (work) 475-1700 ( home )
Fax : 475-9015
6. Applicant's business form (corporation, partnership, sol.e
proprietorship, etc.) and state af incorporatian or
organization: �
Partnership, incor�orated in Minnesota
7. If the applicant is a corporation, list the offic�rs, directors
and stockholders holding more than 5% of the stocic of the
corporation. 5tate their name, address, `.elephone and
relationship to the applicant. (If a corporation is not
formed, list the potential officers, directors and
stockhoiders):
N/A _
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� 8. If the applicant is a partnership, li=_t the general partners
and any limited partners with more than 5a interest. (If the
- partnership is not formed, give as much data as possible
concerning the potential partners):
A General Partner: R_ Neslund Co.
Limited Partners: Mabeth Neslurid
Richard Neslund
9. List any cities to which you have previously applied for
taxable/tax exempt bond financing within the last five years:
Fi�n Prairie
;� 10. 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
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PR'"JECT INFORMATZON
1. Project name: A��
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2. Legal description of the site: Lot 1, Biock l Auburn North and
Lots 9 to 74 and Outlot A, Block 1, urn u; City o H ins,
Henr�epin County, Minnesota
3. Brief description of the nature of the business, such as
, principal services or products, etc.:
Residential rental property
4. Amount of bond issue requested: $ 8.500.000•00
5. Who is lending interim financing, and in what amount: NOI�1E
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BIISINESS INFORMATION
l. Number of employees in Hopkins?
Full Time Part Time
A. Before this project: 1 2
B. Aftcr this project: 1 =Z
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. No �
. �
. 5. If this project is associated with an existing Hc�kins
business, which of the following apply:
A. Relocation
B. Expansion
� C. RehabiZitation
D_ Refunding of a previous bor�d issue x
6. Will �•ou occupy this project after completion?
A. Yes
B. No X
7. If no, state name of future lessees and status of commitments
or Zease agreements:
- Currently 129 of the 136 imits in the p�oject are ied by
residents iu�der leases that generally are one year in duration
8. Estimated date af construction N�A C�mpletion: N/A
_� 9. Will any pubiic official of the City, direetly or indirectly,
_ to the best of your knowiedge, benefit by the issuance of the
= City�s tax-exempt financing for this project according to
_ Minnesota Statutes, Section 4Z2.87? �,
= If so, please explain:
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FILII�TG REOIIIREMENTS
You must provide all o� the following items with your application.
unless the Director of Planning & Economic Development waives a
requirement:
1. If the project requires approval. by the Zoning and Planning
� Commission, �ou 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.
n
2. A written opinion, with supporting justification, from an
e}cpert acceptable to the Director of Planning & Economic
Development, to document that the development will not
adversely effect similar, existing developments. This �
requirement may be waived if there are no similar developments
in the area af your project.
3. A pu�lic hParing notice and resolution of preliminary approval.
You must have these 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 fes is not refundable and is separate from
the Bond Counsels', City Attorneys', or closing fees.
PROCEDIIRE
1. Return this application to the Community Development
Department.
2. The City Council will hold a public hearing and decide whether
to approve your application. City staff will notify you of the
meeting.
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REOIIIREMENTS FOR TAR BOND FINANCING
Your application must meet the foZlowing requirements for approval
of taxable/tax-exempt bond financing:
1. The project shall not require a signif icant amount of public
money for City improvements if the City Council 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 preli.minary
approval. The City Council may grant a tim� extension if just
cause is shown.
4. Contractors doing work on projects funded in whole or in part
by tax-exempt �inancing:
a. Shall not discriminate in the hiring and f iring o� �
employees on the basis of race, color, creed, religion,
national origin, sex, marital status, age, disabiiity or
. the need for public assistance.
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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 177.4I. - I77.44.
'� c. Sha11 employ Minnesota residents in at least 8Do of the
jobs created by th� project. In addition, at least 60% of
_ these employees shall be residents of th.e seven-county
= metropolitan area. Residential status shall be determined
- as of the date of the projec 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 skilis, the contractor may request a
= release from the City Council of the two residency
_ requirements. These requirements shall cantinue 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 requirements srall apply to all subcontractors
� working on the project.
�
- 5. You must use the City's Bond Counsel.
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; 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 Qr services whicY�� 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 gualify as an
' existing business.
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� a. Existing business criteria: The City will consider any
� � expansion, relocation or rehabilitation vf an existing
business for approval.
I 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 schedul.ed
to be vacated structure, or
(3) Is within a designated development or redevelopment
target area, and
� (4) Has a low potential for creating pollution.
7. The project must exceed minimum code requirements by including
at least five of the following �eatures into the project:
a. Brick
b. Building design should be a distinctive, non-generic
style.
c. A noticeable increase in the size and quantity of
landscape plantings over what the City normally requires.�
d. Underground irrigation of all landscaping.
e. Open space, other than required setbacks.
f. At least 14% more parking than code requires.
g. Walkway along street frontages.
h. All parking stall widths at least ten feet.
i. All sigrs shall be at least 20% smaller or fewer than
allo�ed by code. �
8. City staff shall review compliance with the appropriate request
for refunding of previous band issues.
oi*-C -- J�r t�
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.
�Z, - �C�� s� oo d �
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A�REEMENT
I, by signing this application, agree to the following:
1. I have read and will abide by ail the requirements of the
City for taxable/tax-exempt financing. I will also commit
all contractors, subcontractors and any other 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 agres to pay all costs involved in the legal 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
f inal approval, regardless of preliminary approval or the
degree of construction completed.
AUBURN LIMITED PARTNERSHIP
by R. Neslund Co a IrIl�i Corp. , Partner �
'�� a! .. �.t. �,_t:3_�ra
� ��� Applicant Date
by James E. Fier, Yice President
financap
� � � . • . . � . � � City of Hopkins, Minn�sota . �
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� Resolution Number 96-8
A resolution of the City Council of the Ciry of Hopkins, Minnesota, authorizing
the issuance, sate, and delivery of Multifamily Housing Revenue Refanding '
Bonds (Auburn Apartments Project), Series 1996, in the oreginal aggregate
principal amount of up to $4,940,Q00, and Taxable Multifamily Housing
Revenue Bonds (Auburn Apartments Project), Series 1996, in the original
aggregate principal amount of up to $2,860,000, which bonds and the interest
and any premium thereon shall be payable solely from the revenues derived
from the Guaranteed Mortgage Pass-through Certificate issued by the Federal
� National Mortgage Association and other revenues pledged pursuant to the
� . Indenture of Trust; �approving the form of and authorizing the execution and '
° delivery of the Indehture of Trust, the Bond Purchase Agreement, the Financing ��
Agreement, Amendments Number One to the Regulatory Agreements, and the
Preliminary Official Statement and Official Statement; approving the fotm of
: and authorizing the execution and delivery of the Bonds; and providing for the
= securities, rights, and remedies of the holders of the Bonds
WHEREAS, the City of Hopkins, Minnesota (the "Issuer"), is a home-rule charter
_ � city duly organized and existing under the Constitution and laws of the State of
= Minnesota; and
= WHEREAS, pursuant to the Constitution and laws of the State of Minnesota,
= particulazly Minnesota Statutes, Chapters 462A and 462C, as amended (the "Acts"), the
= Issuer is authorized to issue its revenue bonds or obligations in such principal amount as,
_ in the opinion of the Issuer, is necessary to provide sufficient funds for achieving the
' purposes of the program and a multifamily housing development, including the payment
' of interest on the bonds and obligations of the Issuer, the establishment of reserves to
; secure such bonds and obligations, and the payment of a11 other expenditures of the Issuer
° incident to and necessary or convenient to carry out the purposes of the program and the
� multifamily housing development, as well as to issue bonds or notes for the purpose of
� refunding any bonds or notes of the Issuer then outstanding; and
�
' WHEREAS, the Issuer has heretofore issued its Multifamily Housing Revenue
Refunding Bonds (Auburn Apartments Project), Series 1991 (the "1991 Bonds"), the
proceeds of which were loaned to Auburn Limited Partnership (the "Borrower") to
finance a 136-unit multifamily rental housing facility located within the jurisdictional
boundaries of the Issuer (the "Project"); and
WHEREAS, the Issuer, by passage of I',esolution No. 95-103 on December 5,
� 1995, adopted an amended and restated housing program with respect to the Project (the
"Program") pursuant to and in conformity with the Acts after public hearing thereon and
1
after one publication of notice. in a newspaper circulati�ag generally within the . .
:�.. jurisdictional boundaries of�the �ssuer, at least fifteen (15) days before the date of the
hearing, as required. by the Acts; and �
W�IEREAS, on or prior to the date of publicatiox� of such notice, the Program was
submitted to the Metropolitan Council, and the Metropolitan Council presented its
favorable comments to the Issuer, by letter dated November 20, 1995; and no material
changes or changes inconsistent with the Metropolitan Council comments were made to
- the Program; and
- WHEREAS, the Issuer has developed the Program to provide a means of
financing decent, safe, and sanitary housing for low and moderate income residents of the
= City of Hopkins at rents they can afford. and further (1) to provide for and promote the
_ . - public health, safety, morals, and welfare; (2) to provide �for �efficient and well-planned
urban growth and development, including the elimination and prevention of potential
urban blight, and the proper coordination of industrial facilities with the public services, �
= mass transportation and multifamily housing developments and (3) t�. assist persons of �
- low and moderate income in obtaining safe and sanitary housing at rents which they can
- afford, which constitute valid public purposes for the issuance of revenue bonds under the
Acts; and
= WHEREAS, the Issuer proposes to refinance the Project and finance the Program
:� pursuant to the Acts and this Resolution by the issuance of Multifamily Housing Revenue
Refunding Bonds (Auburn Apartments Project), Series 1996 (the "Taac Exempt Bonds"),
= in the original aggregate principal amount of $4,940,000, and Taxable Multifamily
- Housing Revenue Bonds (Auburn Apartments Project), Series 1996 (the "Taxable
- Bonds"), in the original aggregate principal amount of $2,860,000 (hereinafter referred to
- collectively as the `Bonds"); and
WHEREAS, the Bonds will be issued under an Indenture of Trust, as hAreinafter
= defined; and will be secured by a Guaranteed Mortgage Pass-through Certificate issued
- by the Federal National Mortgage Association (the "Pass-through Certificate") and a
= pledge and assignme::t of certain other revenues, all in accordance with the term� of the
= Indenture of Trust, and the Bonds and the interest on the Bonds shall be payable solely
= from the revenues 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 of taxing powers and shall not consritute 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 public hearing with respect to the Program satisfied the
- requirerrients of Section 147(fl of the Internal Revenue Code of 1986, as amended;
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� NOW, THEREFORE, BE IT RESOLVED BY THE CITY COLTNCIL OF.THE . �
� � CITY OF HOPKINS, MINNESOTA, AS FOLLOWS: .
1. For the purpose of refmancing the acquisition, construction and
installation of the Project and related costs of the Program, including the payment of
interest on the Bonds, the esta.blishment of a reserve to secure the bonds, and the payment
of all other expenditures of the Issuer incident to and necessary or convenient to carry out
the purposes of the Program and the Project, there is hereby authorized the issuance, sale
and delivery of the Bonds in the original aggregate principal amount not to exceed
$7,800,000, the proceeds of which shall be applied to the redemption of the 1991 Bonds
and to the payment of other costs related to the Program and Project. The Bonds shall be
in such principal amounts of Tax Exempt Bonds and Taxable Bonds, shall be numbered, �
° shall be dated, shall mature, shall be subject to redemption prior to maturity, and shall be �
in such fo�n and hav� such other details and provisions as�are prescribed in the Indenture . • �
of Trust, dated as of March l, 199fr (the "Indenture"), between the Issuer and First Trust
National Association, as trustee (the "Tru_�tee"), substantially in the form now on file with
the Issuer. The Tax Exempt Bonds shall bear interest at the rates established by the
- marketing of the Bonds; provided that no interest rate shall exceed six and one-half
percent per annum. The Taxable Bonds shall bear interest at the rates established by the
- marketing of the Bonds; provided that no interest rate shall exceed nine percent per
- annum. Notwithstanding the preceding, the Mayor may establish ar change the maturity
= dates for the Bonds, the principal amotu�t of the Bonds maturing on any date of maturity,
:� the principal amounts of the Bonds subject to redemption, and the dates of redemption of
= the Bonds. The forrns of the Bonds included in the Indenture are approved in substantially
= the forms in the Indenture, subject to such changes not inconsistent with this resolution and
applicable law, and subject to such changes that are approved by the Mayor of the Issuer.
� The issuance and delivery of the Bonds shall be conclusive evidence that the Mayor has
_ approved all provisions of the Bonds as issued and any changes to the forms of the Bonds
on file with the Issuer on the date hereof.
�
� 2. The Bonds shall be special obligations of the Issuer payable solely from
: the revenues provided by the Pass-through Certificate and other funds pledged pursuant
� to the Indent�e. The City Council of the Issuer hereby authorizes and directs tl�z Mayor
� and the Manager of the Issuer (the "Mayor" and the "Manager," respectively) to execute
= and deliver the Indenture, and hereby authorizes and directs the execution of the Bonds in
� accordance with the Indenture, and hereby provides that the Indenture shall provide the
; forms and conditions, covenants, right�, obligations, duties, and agreements of the
� bondholders, the Issuer, and the Trustee, as set forth therein.
�
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� All 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 of the Indenture. The Indenture shall be substantially in the form now on file
� with the Issuer, with such necessary and appropriate variations, omissions, and insertions
as do not materially change the substance thereof, or as the Mayor, in the Mayor's
3
discretion, shall determine,� and the execution thereof by the Mayor shall be conclusive ��
' Q �evidence of such deternunation. � �
3. The Mayor and Manager are hereby authorized and directed to execute and
deliver Amendment Number One to the Regulatory Agreement, dated as of March 1,
1996, by and between the Issue: and the Borrower, relating to Auburn Apartments North,
and Amendment Number One to the Regulatory Agreement, dated as �f March l, 1996
by and between the Issuer and the Borrower, relating to Auburn Apartments South
(hereinafter referred to collecdvely as the "Amendments"). All of the provisions of the
Amendments, 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 their date of execution and delivery. The
- : ' Amendments shall be substantially in the forms now on file with the Issuer, with such
� variations, omissions, and insertions as do not mat�rially change the substance thereof, or
_ � as the M�yor, in the Mayor's discretion, shall determine, and the execution•thereof by the •
Mayor shall be conclusive evidence of such deternunation.
4. The Mayor and Manager are hereby authorized and directed to execute and �
- deliver the Financing Agreement (the "Financing Agreement"), dated as of Mazch l, �
- 1996, among the Issuer, the Trustee, and the Borrower, providing for thP loan of the
� proceeds of the Bonds to the Borrower. All of the provisions of the Financing
Agreement, when executed and delivered as authorized herein, shall be deemed to be a
�� part of this Resolution as fully and to the same �xtent as if incorporated verbatim herein
` and shall be in full force and effect from the date of execution and delivery of the
= Financing Agreement. The Financing Agreement shall be substantially in the form now
_ on file with the Issuer with such variations. omissions, and insertions as do not materially
= change the substance thereof, or as the Mayor, in the Mayor's discretion, sha11 determine,
= and the execution thereof by the Mayor shall be conclusive evidence of such
- determination.
= 5. The Mayor and Manager are hereby authorized and directed to execute the
° Bond Purchase Agreement, among the Issuer, Miiler & Schroeder Financial, Ina (the
_ "Underwriter"), and the Borrower (the "Bond Pi�rchase Agreement"), relati�g to the
' Bonds. 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 of the Bond Purchase Agreement. The Bond
_ Purchase Agreement shall be substantially in the form now on file with the Issuer, with
� such necessary and appropriate variations. omissions, and insertions as do not materially
= change the substance thereof, or as the Mayor. in the Mayor's discretion. shall determine,
- and the execution thereof by the Mayor shall be conclusive evidence of such
= determination. �
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' _ 6. The Trustee is hereby appointed the custodian of the funds and accounts .
� created under the Indenture and the paying agent and bond registrar with respect to the
Bonds. �
7. The Mayor, Manager, and Clerk of Issuer (the "Clerk") are liereby
authorized to execute and deliver, on behalf of the Issuer such other certificates,
instruments, and other documents as are necessary, customary, or appropriate in
connection with the issuance, sale, and delivery of the Bonds, or aze necessary to
esta.blish the validity or enforceability of the Bonds, or are required by Co-bond Counsel
to establish the validity or enforceability of the Bonds or the exclusion from gross income
of interest on the Bonds for purposes of Federal and State of Minnesota income taxation
(including a certificate as to the status of the Bonds as"arbitrage bonds," an information
Return for Tax-Exempt Private Activity Bonds Issues, Form 8038 (Rev. March 1995),
� UCC-1 financing statements, and, if necessary, a Blanket Issuer Letter of Representations �
to The Depository Tntst Company).
8. The Mayor, Manager, and Clerk are hereby authorized to execute and
= deliver, on behalf of the Issuer, such instniments as may be necessary and appropriate to �
effect the transfer of the Mortgage Note (the "Note") and "the Multifamily Mortgage,
Assignment of Rents, and Security Agreement (the "Mortgage") to the Lender (as defined
in the Indeniure) in connection with the Trustee's receipt of the Pass-through Certificate
including, without limitation, an endorsement of the Note to the Trustee, and assignment
_� of the Mortgage to the Trustee. The Trustee is hereby authorized to accept the Pass-
through Certificate from the Federal National Mortgage Association. ,
= 9. The Issuer hereby consents to the distribution of the Preliminary Official
Statement, relating to the Bonds (the "Preliminary Official Statement'�. The Issuer
= hereby consents to the use by the Underwriter of the final Official Statement,
substantially in the form of the Preliminary Official Statement described above (the
- "Official Statement"), in connection with the offer and sale of the Bonds. The
Preliminary Official Statement and the Official Statement aze the sole materials
consented to by the Issuer for use in connection with the offer and sale of the Bonds. The
= Issuer has not par�icipated in the preparation of the Preliminary Official Statement or the
Official Statement and takes no responsibility for and makPs no representation or
- warranty as to the accuracy or completeness of such information.
= 10. All covenants, stipulations, obligations, and agreements of the Issuer
= contained in this resolution an3 the aforementioned certificates, instruments, and
- documents shall be deemed to be the covenants, stipulations, obligations, and agreements
= 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. No covenant,
= stipulation, obligation, or agreement herein contained or contained in the aforementioned
� certificates, instnunents, or 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 capaciry, and neither the City
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- Council of the Issuer nor any officer or employee executing the Bonds sha11 be liable •�
� personally on the Bonds or be subject to any personal liability or accountability by �eason
of the issuance thereof. �
No provision, covenant, or agreement contained in the aforemenfioned
certificates, instruments, or documents, or in 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 chazge
- • upon its general credit or taxing powers. In making the agreements, provisions,
covenants, and representations set forth in such documents, the Issuer has not obligated
itself to pay or remit any funds or revenues, other than funds and revenues derived from
the Financing Agreement which aze to be applied to the payment of the Bonds, as
provided therein and in the Indenture. . �
- 11. Except as herein otherwise expressly provided, �othing in this resoiution •
or in the aforementioned documents expressed or implied, is intended or shall be
constnled 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 resolution or any provision hereof,
- this resolution, the afor�mentioned documents and all of their provisions being intended
= to be and being for the sole and exclusive benefit of the Issuer and any holder from time
° to time of the Bonds issued under the provisions of this resolution.
= �
- 12. 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 illegal or invalid, such illegality or invalidity shall not affeet 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 provision had not been contained therein.
13. The Bonds, when execufed and delivered, shai� contain a recital that they
aze issued pursuant to the Acts, 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 and in the
- enactment of this resolution, and precedent to issuance of the Bonds, and precedent to the
� execution of xhe aforementioned documents have happened, exist, and have been
_ performed as so required by law.
= 14. 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 certificates, instnunents, or documents, and the Bonds for
;� the full, punetual, and complete performance of all the terms, covenants, and agreements
� contained in the Bonds, the aforementioned certificates, instruments, and documents, and
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this resolution. In the event that €or any.reason the Mayor of the Issuer is unable to carry
� out the execution � of ariy of the documents or other acts provided herein, any other '
member of the City Council of the Issuer sha11 be authorized to act in the capacity of the
N1�ayor and undertake such execution or acts on behalf of the Issuer with full force and
- effect, which executions or acts shall be valid and binding on the Issuer. If for any Peason
the Manager or Clerk of the Issuer aze 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 the Deputy Clerk, respectively, with the same force and effect as if such
docuxnents were executed and delivered by the Manager or Clerk of the Issuer. If the
person whose signature appears on any of the foregoing cert%ficates, instruments, or
_ documents as the Mayor, Manager, or Clerk shall cease to be the May�r, '_Vlanager, or
Clerk, respectively, before the date of issuance of the Bonds such signature shall,
nevertheless, be valid and sufficient for all purposes.
- 15. This resolution shall be in full force and ef�ect from and after its passage.
Adopted by the City Council of the Issuer this day of February, 1996.
i �
' Charles D. Redepenning
= Mayor
Attest:
�
: James A. Genellie
� Clerk
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� GP237285 v2
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7
N _
� P�►�uc AvE�vuE
u F' �t' ,� i % n 'r ��. 1 ` ('.
.��z Twe�vE oAKS cENTER � 15500 WAYTA7A B�yO. • WAYZ�T4, iYIN SSa91 • PMONE 611/175-1790 • FAX 6127475-9015
NOvCIIIE�en Z7� �995
- Mt. 7�m $�Hg�a
CitY a� �
1QI0 Pfi�t S�oet 5wtb
�ap�as, D� SS3a3
R�: Aubwn Towatwt�
- Deat Mx. �g9n:
�� Tbis k�er i� inteutied ai a�'o1low-up :o our dL�cuasion �vith �►ou aa
November 21�, 1995 �md t]� ietter ws pcuviJod to you �t day r�g�ing tJ�e �vo-
refere�ced paa�ter �t is cwr underafa�adiag tiwt tbe City t�f $opklus bas �
= �UpY'QD� � i'�8 � I�� P��4 be�mel �ssua�e af ths p�topa�d
= Serie� 8 B�ctds. We ua�doKapnd tt�t tbis is an unust�tl cincl�msta�ce �+�e'o Mr.
- �Tesluttd and Au6in�n L3mit+ed Paatne��p are requ�s� �ssuanco of she Sar�es B
�oads fa�r the p�upase c� Itv�ag a�r fimncang oat a paztian of the equity on thc
A�,�
F'irss 1�t m�e br�n by �5�ain� Ea y�ou th�t it i� maa aur i�eat to in sny .�.
way jeop�diz� the fia�cial stability of thc pro� �ct bjr this fmaaciag. I beli�v� that .
you �vill fittd tba � i�f`ornt�tion whu� �►e hsve pm�vidod �+d whith youY `�Ca1
c�l�t aill n:vie,w oonfirmc onr �icsa �t the piajoct c�t a�ppart tI� Ba�can$
uadrx a oa�asa�vati,v�e anatysis. Onr morivsti4n � drivca by cs�e aad �ft �c
ptaan3ng, in :� abic� �+i11 a�a�e the pe+�xt's YonB rante atability as � qt�tliry
to�� de�reit�meat witb�► t1�a City ot Bqp;dn�.
As part af Mr. Ne�luad'a estats pl�nmag prooe.t�, we ide�tified tb�at ti�
wdu�ld be sigAifirar�t atpoau� fOr e�ato � bw.�ed u�n his �►et equity po�rtion in
� P�l«�, �a his dadth�. btr. Nalund aad his v�ucious it�►eslauaqt a�u bavc
�rid a lo„g t�rm history ot Pr�v�B qa�ty muld-ta�mllY houdng Pr'ojocti within ti�e
C�ty of HOptaos �d vt�a� wbuurb� cotr.m�mities. �t is Mr_ Ne�und'� goai snd
�` desiz� � sea conti�wity ia thE maiatcnan�t af Aaiburn as a q�atitY prajea �td 'ut We
qua�l�ity of �� and ownar�.
mutaa.ot
Mr. I'im �ctrig�n �
Nwetnbar Z7, �995.
�x
.
Mx. xw�a i� concarnea t�t iu �e avart af hi� aeath, t�ia� �eirs m�ghc be
fatmd it►4o a rapid �qtle of thc pivJoct ist order ta t�ae mone3r to �ay �tt8 tax�
a�budbie iri his equdty tbwe�e�e. 'Tbis c,ouid reautt ia t� sale of the pivjett t4 �n
cper�or tb� woi�ld �a �paian3a or deliver r�e saan� qw]ity. A2cer�ativatY n�
ba ��e for hu� �t tio r�i��x thc ptojax et tbat time to raisc ca� with w'�ich
� PaY � t9xee. Saa►eveir, d� tenu� of suclt t�n�u�c�g migbt �ot be aa favorable
�s is presa�tly avsiLb�le, 'This mi�ht �cutt i� k,�s futt� stsbility for t�c projerr,t aad
� 1� �E � q� �� P�� � which t3�e city h�s gxt�+n
acx�t000�.
8Y iu�ing tbe See�as B�oods, Mr. Nea3wad caa Iavarage a�t the eqwity jn
the pt�ecx o� favorabk �a�ms, wit�d comptomisiag the fi�na�sciai i�ocgrity v!f t6c
pmye�cx. By �o�ci,pg dse rwc eqet�ty iu� she ptajocc, it then bacomes possibk for Mr.
�esi�u►d. oo traasfe�t aut�st�tial i�tere�c t6�zeYa tio ti� A,ubur4 I.iatited �ts�ip
witbart si�icant gtfft tax con8equ�. S�nce SubStauda� Gwnei'�bfp �►ii181�ady
have b�eaat brans�e�red �g �r. Nesiu►nd's lif'ezime, thvsa i�sts wou�d be
axcit�ded fi�+om hi�c cstatt at deat6 �d wou�d oot b� s�ubject �a estatr auces. �
`�c br�icv� tt�t a xral p�blic ittterert is se��d by aPP�B ��g•
la c�der tc aseure t6e long ter�t �laaadal siability of tha projerct aacl caz�daaity and �
the qutali�ty a� i� m�gem+oat �d oQet�n.
Youx ca�a� i� g�y apDraiated.
Sinc��rely,
a,,,,,,r,� '� . ..��J °
�
xama �. Ficr
aru:a�.o�
�
� � ��
� Eh�ers �nd A��socia�es.inc.
� �
y� IE�OfBS 1M PtIBLIC flNANCF
� y
��. �.
November 29, 1995
TO: dim Ke�rigan, City of Hopkins
FR Mark Ruff
RE: Review of Aubucn Townhome Refinancing
A,s req�, E�tlerslPubiioo�p has review'ed tha pr�eIiminary financing doceitnents celated to the r�finattcing
o� the 136 wiit tental develop�eeent knovm as Auburn Townhomes. In ge�etal, we have found tltat the
refinanciag should not jeoQsrdize the long-term viability of the units and in some ways may cnhance tfye
P%i�
Attaahed is a sources arid uses for the rc�nancing. Curtently, the autstandi�g balanee of the t�uc exempt
bonds is $5.16 mitlion. The pro�osal is to issue $7.8 million of new debt consisting o�$5 mitlion of tax-
e�empt boads and 52.8 of taxabfe bonds. The new debt is to be insured by the Fadera.l National Mortgage
Association (FNMA} which m�s the bonds wiil be rated Aaa with aa average interest �ate o�n the xnortgage
of approximatefy 6.8%. This debt wi11 be �ixed rate �nanciu�g with 30 yeat amottization with s 20 year ternn.
;� FNMA has very stringent underwriting criteria for these types of financing. The loan to value ratio can be
no higher than 85 0. Any neoded tepairs wilI be funded at closing atong with a eepiacemetit reserves to be
set aside to pay fo�' any futur� known capital costs over the n¢xt 10 y�ars. T'he ceplacement reserve is
` estimated to bc 5130,000 at ciosing with an addi4ional 530,000 per ycar rc�quircd as att anttual deposit. �n
= addition, FNMA has the ability to replace the managcmtnt company xf the project does not meet certain
= - operrating standsrds.
= A concem �'or the refina�ncing is t6at the hishe,t total debt vviq increase annuai debt service by app�oximately
_' $IOO,Q00, Howevet, cun�ent c$sfi ftows for the project indicate that the dcbt service coverage shou�d be
_. appmxima#ely 14Q% to � SO°k, which is 20'�o to 30'/o higher than an a�erage apaAment financing. If the
= refi�ancing were not accomplished at this time with this tyQe of ftnancing, it is �ikely that an aft�rnat,ive
� refinancing wou�d res�'.t int higher interest ratos for thc project wit�t a m►uch lower debt service eo�vera�e.
= As you can sce, approximately $2 million of th� taxable bond procecds wi11 be witfidraw�t fro�n the projeat
� as equity and will be distributed to the owner. The nse of these procoeds is anore of a policy consid�ra.tion
� than a risk tia the financisl viabifity af the proje��
� We will fotward a copy of thc app�aisal and engit�rs repott on #he condition of the units as soon as we
= receiv� them Please contaet us v►�ith 2my questions or comrn�ents
�
OFFICES IN MfNNEAPOLlS, MN ANb BROOK�IELD, Wt
2950 Narvvest Center . 90 South Seventh Street. MinnQapalis, MN 5S40Z-4100
TelephonQ 612-339-8291 . FAX 612-339-nase __ . __ _ _ —