Loading...
HomeMy WebLinkAboutResolution No. 2007-054CITY OF COLUMBIA HEIGHTS, MINNESOTA RESOLUTION N0.2007-54 ADOPTING A HOUSING PROGRAM WITH RESPECT TO A SENIOR HOUSING PROJECT; GRANTING PRELIMINARY APPROVAL FOR T)EIE ISSUANCE OF MULTIFAMILY HOUSING REVENUE BONDS TO FINANCE THE PROJECT; AND AUTHORIZING THE REIMBURSEMENT OF EXPENDITURES MADE IN ANTICIPATION OF THE ISSUANCE OF 5UCII BONDS Section 1. Recitals. 1.01. Pursuant to Minnesota Statutes, Chapter 462C, as amended (the "Act"), the City is authorized and empowered to develop and administer programs to finance multifamily housing developments within its boundaries. The Act authorizes the City to issue bonds and loan the proceeds to a borrower to finance multifamily housing developments. Each loan must be made for the construction or the long-term financing of a multifamily housing development and substantially all of the proceeds of each. loan must be used to pay the cost of a multifamily housing development, including property functionally related and subordinate to it. A multifamily housing development may consist of a combination of a multifamily housing development and a new or existing health care facility, as defined in Minnesota Statutes, Section 469.153, if the following conditions are satisfied: (i) the multifamily housing development is designed and intended to be used for rental occupancy; (ii) the multifamily housing development is designed and intended to be used primarily by elderly or physically handicapped persons; and (iii) nursing, medical, personal care, and other health related assisted living services are available on a 24-hour basis in the development to the residents. 1.02. On August 18, 1987, the City issued its Health Care Facility Revenue Bonds (Crest View Lutheran Home Project), Series 1987 (the "Series 1987 Bonds"), in the original aggregate principal amount of $4,400,000, for the benefit of Crest View Corporation, a Minnsesota nonprofit corporation (the "Corporation"), formerly known as Crest View Lutheran Home, for the purpose of financing the reconstruction, improvement, rehabilitation and equipping, including the construction of a building addition to Crest View Home, a 122-unit licensed nursing facility located at 4444 Reservoir Boulevard N.E. in the City ("Crest View Home"), including the discharge and refinancing of certain outstanding indebtedness of Crest View Lutheran Home incurred therefor. On May 19, 1991, the City issued its Board and Care Facility Revenue Bonds (FHA Insured Mortgage Loan -Royce Place Project), Series 1991A (the "Series 1991A Bonds"}, in the original aggregate principal amount of $2,770,000, and its Board and Care Facility Revenue Bonds (Royce Place Project), Series 1991B (the "Series 1991B Bonds"), in the original aggregate principal amount of $560,000. The Series 1991A Bonds and the Series 1991B Bonds (collectively, the "Series 1991 Bonds") were issued to provide funds to the Corporation to finance the costs of the acquisition, construction, and equipping of Royce Place, a 50-unit board and care facility located at 1515 44th Avenue N.E. in the City ("Royce Place"). On March 31, 1998, the City issued its Multifamily and Health Care Facilities Revenue Bonds (Crest View Project), Series 1998 (the "Series 1998 Bonds"}, in the original aggregate principal. amount of $10,130,000. The Series 1998 Bands were issued to defease the Series 1987 Bands and the Series 1991 Bonds, to redeem certain other outstanding indebtedness of the Corporation, and to finance certain improvements to the existing facilities of the Corporation. On January 24, 2002, the City issued its: (i) Multifamily Housing Revenue Bonds (GNMA Collateralized Mortgage Loan -Crest View ONDC I Project), Series 2002A-1 in the original aggregate principal amount of $5,000,000 (the "Series 2002A-1 Bonds"), (ii) Multifamily Housing Revenue Bonds (GNMA Collateralized Mortgage Loan -Crest View ONDC I Project}, Taxable Series 2002A-2 in the original aggregate principal amount of $110,000 (the "Series 2002A-2 Bonds" and, collectively with the Series 2002A-1 Bonds, the "Series 2002 Bonds"); and (iii) Multifamily Housing Revenue Note (Crest View ONDC I Project}, Subordinate Series 2002B (the "Series 2002 Note"), in the original aggregate principal amount of $200,000. The Series 2002 Bonds and the Series 2002 Note (collectively, the "Series 2002 Obligations") were issued to finance the acquisition, development, construction, and equipping by Crest View ONDC I, a Minnesota nonprofit corporation ("Crest View ONDC I"}, of Crest View on 42nd, a 50-unit multifamily housing assisted-living and memory-loss facility far seniors located at 900 - 42nd Avenue N.E., in the City ("Crest View on 42nd"). 1.03. Crest View on 42nd is currently owned and operated by Crest View ONDC I and is expected to be transferred to the Corporation in connection with the issuance of the proposed revenue refunding bonds referred to in Section 1.04. 1.04. The Borrower has requested that the City issue its: (i) Multifamily and Health Care Facilities Revenue Refunding Bonds (Crest View Project), Series 2007A (the "Series 2007A Bonds"), in the approximate aggregate principal amount of $21,500,000; and (ii) Taxable Multifamily and Health Care Facilities Revenue Refunding Bonds (Crest View Project), Series 2007B (the "Series 2007B Bonds"), in the approximate aggregate principal amount of $1,000,000 (the Series 2007A Bonds, and the Series 2007B Bonds are hereinafter referred to collectively as the "Series 2007 Bonds"). The proceeds of the Series 2007 Bonds will be applied to (i} refund the outstanding principal amount of the Series 1998 Bonds and the Series 2002 Obligations, and pay or prepay certain other indebtedness of the Borrower; (ii) finance capital improvements (the "Improvements") to certain facilities owned by the Borrower, including Royce Place, The Boulevard, a 74-unit senior housing facility located at 4458 Reservoir Boulevard N.E. in the City ("The Boulevard"), Crest View Home; and Crest View on 42nd (collectively, the "Facilities"); (iii) fund one or more reserve funds; and (iv) pay the costs of issuing the Bonds. 1.05. The Series 2007 Bonds are proposed to be issued as obligations the interest on which is not includable in gross income for federal income tax purposes pursuant to Section 145 of the Internal Revenue Code of 1986, as amended (the "Code"). Pursuant to Section 147(f) of the Code, and the regulations promulgated thereunder, the City is required to conduct a public hearing on the issuance of the Series 2007 Bonds. A notice of such public hearing, prepared in accordance with the requirements of Section 147(f) of the Code, and the regulations promulgated thereunder, was published in a newspaper of general circulation in the City at least fifteen (15) days prior to the date of the public hearing. 1.06. Prior to consideration of this resolution, the City Council of the City will conduct a public hearing on the date hereof with respect to the proposal to issue the Series 2007 Bands, as requested by the Corporation. Section 2. Housing Pro am. 2.01 The City has prepared a housing program (the "Housing Program" or "Program"), a copy of which is attached hereto as EXHIBIT A, providing for the (i) refunding of the outstanding principal amount of the Series 1998 Bonds and. the Series 2002 Obligations, and the payment or prepayment of certain other indebtedness of the Corporation; (ir) financing of capital iinprovelnents to the Facilities; (iii) funding of one or more reserve funds; and (iv) paying the costs of issuing the Bands. 2.02 The City has arranged for publication of a notice of public hearing on the Program, all in conformance with the requirements of the Act. 2.03 The Housing Program was prepared and submitted to the Metropolitan Council for its review on March 22, 2007. The preparation of the Housing Program and the submission of the Housing Program to the Metropolitan Council are hereby ratified, confirmed, and approved, with such amendments as are approved by the City Manager. Section 3. Reimbursement 3.01 The United States Department of the Treasury has promulgated final regulations governing the use of the proceeds of tax-exempt bonds, all or a portion of which are to be used to reimburse the City or a borrower from the City for project expenditures paid prior to the date of issuance of such bonds. Those regulations (Treasury Regulations, Section 1.150-2) (the "Regulations") require that the City adopt a statement of official intent to reimburse an original expenditure not later than sixty days after payment of the original expenditure. The Regulations also generally require that the bonds be issued and the reunbursement allocation made from the proceeds of the bonds occur within eighteen months after the later o£ (i) the date the expenditure is paid; or (ii) the date the project is placed in service or abandoned, but in no event more than three years after the date the expenditure is paid. The Regulations generally permit reimbursement of capital expenditures and costs of issuance of the bonds. 3.02 The City reasonably expects to reimburse the Corporation for a portion of the expenditures made for costs of the Improvements from the proceeds of the Series 2007 Bonds in an approximate amount of $3,000,000 after the date of payment of all or a portion of the costs of the Improvements. All reimbursed expenditures shall be capital expenditures, a cost of issuance of the Series 2007 Bonds or other expenditures eligible for reimbursement under Section 1.150-2(d)(3) of the Regulations and also qualifying expenditures under the Act. 3.03 Based on representations by the Corporation, other than (i} expenditures to be paid or rembursed from sources other than the Series 2007 Bonds, (ii) expenditures permitted to be reimbursed under prior regulations pursuant to the transitional provision contained in Section 1.150-2(j)(2)(i)(B) of the Regulations, (iii) expenditures constituting preliminary expenditures within the meaning of Section 1.150-2(f)(2) of the Regulations, or (iv) expenditures in a "de minimus" amount (as defined in Section 1.150-2(f)(1) of the Regulations), no expenditures for the Project have been made by the Corporation more than sixty (60) days before the date of adoption of this resolution. 3.04 Based on representations by the Corporation, as of the date hereof, there are no funds of the Corporation reserved, allocated on a long term-basis or otherwise set aside (or reasonably expected to be reserved, allocated on a long-term basis or otherwise set aside) to provide permanent fmancing for the expenditures related to the Project to be financed from proceeds of the Series 2007 Bonds, other than pursuant to the issuance of the Series 2007 Bonds. This resolution, therefore, is determined to be consistent with the budgetary and financial circumstances of the Corporation as they exist or are reasonably foreseeable on the date hereof. Section 4. Preliminary Approval Granted. 4.01. The issuance of the Series 2007 Bonds to redeem and prepay the Series 1998 Bonds and the Series 2002 Obligations Bonds, finance the Improvements, fund one or more reserve funds, and pay the costs of issuing the Series 2007 Bonds is hereby preliminarily approved subject to the mutual agreement of the City, the Corporation and the initial purchaser of the Series 2007 Bands as to the details of the Series 2007 Bands and provisions for their payment. In all events, it is understood, however, that the Series 2007 Bonds shall not constitute a charge, lien or encumbrance, legal or equitable, upon any property of the City except the City's interest in the loan or financing agreement with respect to the Series 2007 Bonds and the Facilities, and the Series 2007 Bonds, when., as, and if issued, shall recite in substance that the Series 2007 Bonds, including interest thereon, are payable solely from the revenues received from the Facilities and property pledged to the payment thereof, and shall not constitute a general or moral obligation of the City. 4.02. The law fine of Kennedy & Graven, Chartered is authorized to act as Band Counsel and to assist in the preparation and review of necessary documents relating to the Facilities and the Series 2007 Bonds issued in connection therewith. The Mayor, City Manager and other officers, employees and agents of the City are hereby authorized to assist Bond Counsel in the preparation of such documents. 4.03. The Corporation has agreed to pay or reimburse the City for any and all costs paid or incurred by the City in connection with the Series 2007 Bonds. The Corporation has also agreed to pay the administrative fee of the City in the event the Series 2007 Bonds are issued. Section 5. Termination of Preliminary Approval. All commitments of the City expressed herein are subject to the condition that by April 9, 2008, the City, the Corporation and the initial purchaser of the Series 2007 Bonds will have agreed to mutually acceptable terms and conditions of the loan or financing agreement, the Series 2007 Bonds and of the other instruments and proceedings relating to the Series 2007 Bonds and their issuance and sale. If the events set forth herein do not take place within the time set forth above, or any extension thereof, and the Series 2007 Bonds are not sold within such time, this Resolution will expire and be of no further effect. Section 6. Withdrawal by City. The adoption of this Resolution does not constitute a guaranty or fern commitment that the City will issue the Series 2007 Bonds as requested by the Corporation. The City retains the right in its sole discretion to withdraw from participation and accordingly not to issue the Series 2007 Bonds, or issue the Series 2007 Bonds in an amount less that the amount referred to herein, should the City at any time prior to issuance thereof determine that it is in the best interest of the City not to issue the Series 2007 Bonds, or to issue the Series 2007 Bonds in an amount less than the amount referred to in paragraph 2.01 hereof, or should the parties to the transaction be unable to reach agreement as to the terms and conditions of any of the documents required for the transaction. 'ection 7. effective Date. 'T'his Resolution shall be in full force and effect from and afier its passage. Dated this 9"' day of Apri12007. Offered by: Diehm Second by: Williams Roll Call: Ayes: Peterson, Williams, Nawrocki, Diehm, ~~} a L~' ~~_ L. Pe erso ATTEST: ~'"~ f; ~ ~ Patricia Muscovitz CMC ;. Deputy City Clerk/Council Secretary EXIHBIT A CITY OF COLUMBIA HEIGHTS, MINNESOTA AMENDED AND RESTATED PROGRAM FOR A MULTIFAMILY HOUSING DEVELOPMENT Pursuant to Minnesota Statutes, Chapter 4620 (the "Act"), the City of Columbia Heights, Minnesota (the "City") is authorized to develop and administer programs to finance the acquisition and construction of multifamily housing developments under the circumstances and within the limitations set forth in the Act. A multifamily housing development may consist of a combination of a multifamily housing development and a new or existing health care facility, as defined in Minnesota Statutes, Section 469.153, if the following conditions are satisfied: (i) the multifamily housing development is designed and intended to be used for rental occupancy; (ii) the multifamily housing development is designed and intended to be used primarily by elderly or physically handicapped persons; and (iii} nursing, medical, personal care, and other health related assisted living services are available on a 24- hour basis in the development to the residents. Minnesota Statutes, Section 46X.07 provides that such programs for multifamily housing developments maybe financed by revenue bonds issued by the City. On August 18, 1.987, the City issued its Health Care Facility Revenue Bonds (Crest View Lutheran Home Project), Series 1987 (the "Series 1987 Bonds"), in the original aggregate principal amount of $4,400,000, for the benefit of Crest View Lutheran Home, a Minnesota nonprofit corporation ("Crest View Lutheran Home"), for the purpose of financing the reconstruction, improvement, rehabilitation and equipping, including the construction of a building addition to Crest View Home, a 122-unit licensed nursing facility located at 4444 Reservoir Boulevard in the City ("Crest View Home"), including the discharge and refinancing of certain outstanding indebtedness of Crest View Lutheran Home incurred therefor. On May 19, 1991, the City issued its Board and Care Facility Revenue Bonds (FHA Insured Mortgage Loan -Royce Place Project), Series i99iA (the "Series i99iA Bonds"), in the original aggregate principal amount of $2,770,000, and its Board and Care Facility Revenue Bonds (Royce Place Project}, Series 1991E (the "Series 1991B Bonds"}, in the original aggregate principal amount of $560,000. The Series 1991A Bonds and the Series I991B Bonds (collectively, the "Series 1991 Bonds") were issued to provide funds to Crest View Lutheran Home to finance the costs of the acquisition, construction, and equipping of Royce Place, a 50-unit board and care facility located at 4444 Reservoir Boulevard in the City ("Royce Place"). On March 31, 1998, the City issued its Multifamily and Health Care Facilities Revenue Bonds (Crest View Project), Series 1998 (the "Series 1998 Bonds"}, in the original aggregate principal amount of $10,130,000. The Series 1998 Bonds were issued to defease the Series 1987 Bonds and the Series 1991 Bonds, to redeem certain other outstanding indebtedness of Crest View Corporation, a Minnesota nonprofit corporation ("Crest View Corporation"}, formerly known as Crest View Lutheran Home, and to finance certain improvements to the existing facilities of Crest View Corporation. On January 24, 2002, the City issued its: (i) Multifamily Housing Revenue Bonds (GNMA Collateralized Mortgage Loan -Crest View ONDC I Project}, Series 2002A-1 in the ariginal aggregate principal amount of $5,000,000 (the "Series 2002A-1 Bonds"), (ii) Multifamily Housing Revenue Bonds (GNMA Collateralized Mortgage Loan -Crest View ONDC I Project), Taxable Series 2002A-2 in the original aggregate principal amount of $110,000 (the "Series 2002A-2 Bonds" and, collectively with the Series 2002A-1 Bonds, the "Series 2002 Bonds"); and (iii) Multifamily Housing Revenue Note (Crest View ONDC I Project), Subordinate Series 2002E (the "Series 2002 Note"), in the original aggregate principal amount of $200,000. The Series 2002 Bands and the Series 2002 Note (collectively, the "Series 2002 Obligations"} were issued to finance the acquisition, development, construction, and equipping by Crest View ONDC I, a Minnesota nonprofit corporation ("Crest View ONDC I), of Crest View on 42nd, a 50-unit multifamily housing assisted-living and memory-loss facility for seniors located at 900 - 42nd Avenue N.E., in the City ("Crest View on 42nd"). The City has received a proposal that it approve a housing program (the "Program''}, with respect to the issuance of revenue bonds under the Act. The proceeds derived from the sale of the revenue bonds (the "Bonds"), to be issued pursuant to the Program will be loaned to Crest View Corporation, a Minnesota nonprofit corporation, or a related organization, or an organization to be formed (the "Borrower"), and applied to: (i) refund the outstanding principal amount of the Series 1998 Bonds and the Series 2002 Obligations, and pay or prepay certain other indebtedness of the Borrower; (ii) finance capital improvements to certain facilities owned by the Borrower, including Royce Place, The Boulevard, a 74-unit senior housing facility located at 4444 Reservoir Boulevard in the City ("The Boulevard"), Crest View Home; and Crest View on 42nd (collectively, the "Facilities"); (iii) fund one or more reserve funds; and (iv) pay the costs of issuing the Bonds. The City, in establishing the Program, has considered the information contained in the City's comprehensive plan. The Facilities will be financed and refinanced in accordance with the requirements of Subdivisions 1 and 2 of Section 46X.05 of the Act. Section A. Definitions. The following terms used in this Program shall have the following meanings, respectively: "Act" shall mean Minnesota Statutes, Chapter 462C, as amended. "Bonds" shall mean the revenue bonds to be issued by the City. "Borrower" shall mean Crest View Corporation, a Minnesota nonprofit corporation, or a related organization, or an organization to be formed. "City" shall mean the City of Columbia Heights, Minnesota. "Facilities" shall mean Royce Place, The Boulevard, Crest View Home; and Crest View on 42nd. "Land" shall mean the real property upon which the Facilities are situated. "Program" shall mean this program for the financing of the Facilities pursuant to the Act. Section B. Program Far Financing the Project. It is proposed that the City establish this Program to finance and refinance the Facilities at a cost and upon such other terms and conditions as are set forth herein and as may be agreed upon in writing between the City, the initial purchaser of the Bonds and the Borrower. The City expects to issue the Bonds as soon as the terms of the Bonds have been agreed upon by the City, the Borrower, and Piper Jaffray & Co, as the initial purchaser of the Bonds. The proceeds of the Bonds will be loaned to the Borrower to finance and refinance the Facilities, to fund required reserves and to pay the costs of issuing the Bonds. It is expected that a trustee will be appointed by the City to monitor the construction of capital improvements to the Facilities and the payment of principal and interest on the Bonds. It is anticipated that the Bonds will have a maturity of approximately thirty years or less and will bear interest at fixed rates consistent with the market at the time of issuance. The City will hire no additional staff for the administration of the Program. Insofar as the City will be contracting with underwriters, legal counsel, bond counsel, the trustee, and others, all of whom will be reimbursed from bond proceeds and revenues generated by the Program, limited administrative costs will be paid from the City's budget with respect to this Program. The Borrower will pay an administrative fee to the City to pay or reimburse such administrative costs. The Bonds will not be general obligation bonds of the City, but are to be paid only from properties pledged to the payment thereof, which may include additional security such as additional collateral, insurance or a letter of credit. Section C. Standards and Requirements Relating to the Financing of the Facilities Pursuant to the Pro rg am. The following standards and requirements shall apply with respect to the operation of the Facilities by the Borrower pursuant to this Program: (1 } Substantially all of the proceeds of the sale of the Bonds will be applied to (i) refund the Series 1998 Bonds and the Series 2002 Obligations, and pay or prepay certain other indebtedness of the Borrower; (ii) finance capital improvements to the Facilities; (iii) fund appropriate reserves; and (iv) pay the costs of issuing the Bonds. The proceeds will be made available to the Borrower pursuant to the terms of the Bond offering, which will include certain covenants to be made by the Borrower to the City regarding the use of proceeds and the character and use of the Facilities, (2) The Borrower, and any subsequent owner of the Facilities, will not arbitrarily reject an application from a proposed tenant because of race, color, creed, religion, national origin, sex, marital status, or status with regard to public assistance or disability. (3) The Facilities are designed primarily for rental to and occupancy by elderly persons. Section 46X.05, Subdivision 4 of the Act provides that the limitations set forth in Section 4620.05, Subdivision 2 of the Act are not applicable. Subsection D. Evidence of Com lip ance. The City may require from the Borrower at or before the issuance of the Bonds, evidence satisfactory to the City of the ability and intention of the Borrower to complete the capital improvements to the Facilities, and evidence satisfactory to the City of compliance with the standards and requirements of the City for the financing set forth herein; and in connection therewith, the City or its representatives may inspect the relevant books and records of the Borrower in order to confirm such ability, intention and compliance. In addition, the City may periodically require certification from either the Borrower or such other person deemed necessary concerning compliance with various aspects of this Program. Subsection E. Issuance of Bonds. To finance the Program authorized by this Section the City will by resolution authorize, issue and sell its revenue bonds in a maximum aggregate principal amount of $22,500,000. The Bonds will. be issued pursuant to Section 4620.07, Subdivision 1 of the Act, and will be payable primarily from the revenues of the Program authorized by this Section. The costs of the Project, including costs of issuance of the Bonds and required reserve funds, are presently expected to be in excess of the principal amount of the Bonds. It is expected that the Borrower and its affiliates will contribute to the Project the difference between the total costs of the Project and the principal amount of the Bonds available to finance the Project. The costs of the Project may change between the date of preparation of this program and the date of issuance of the Bonds. The Bonds are expected to be issued in May, 2007. Subsection F. Severability. The provisions of this Program are severable and if any of its provisions, sentences, clauses or paragraphs shall be held unconstitutional, contrary to statute, exceeding the authority of the City or otherwise illegal or inoperative by any court of competent jurisdiction, the decision of such court shall not affect or impair any of the remaining provisions. Subsection G. Amendment. The City shall not amend this Program, while Bonds authorized hereby are outstanding, to the detriment of the holders of such Bonds. Subsection H. State Ceiling. None of the state ceiling for private activity bonds, pursuant to Section 146 of the Internal Revenue Code of 1986, as amended, and Chapter 474A of Minnesota Statutes, will be applied for with respect to the Bonds.