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HomeMy WebLinkAbout2020-50CITY OF COLUMBIA HEIGHTS, MINNESOTA RESOLUTION NO. 2020-50 RESOLUTION AMENDING THE TERMS OF THE MULTIFAMILY HOUSING REVENUE FUNDING NOTE (GRAND CENTRAL FLATS PROJECT), SERIES 2017, AND AUTHORIZING THE EXECUTION AND DELIVERY OF DOCUMENTS IN CONNECTION THEREWITH BE IT RESOLVED by the City Council (the "Council") of the City of Columbia Heights, Minnesota (the "City" or the "Issuer"), as follows: Section 1. Recitals. 1.01. The City is a home rule charter city duly organized and existing under its Charter and the Constitution and laws of the State of Minnesota. 1.02. Pursuant to Minnesota Statutes, Chapter 462C, as amended (the "Act"), the Issuer is authorized to carry out the public purposes described in the Act by providing for the issuance of revenue bonds or other obligations to finance or refinance multifamily housing developments located within the City. 1.03. On November 13, 2017, the Council adopted Resolution No. 2017-119 (the "Note Resolution") authorizing the issuance of its Multifamily Housing Revenue Funding Note (Grand Central Flats Project), Series 2017 (the "Tax-Exempt Note"), in the original aggregate principal amount of $18,060,000. The City issued the Tax-Exempt Note on December 4, 2017 pursuant to the Act and a Funding Loan Agreement, dated as of December 1, 2017 (the "Funding Loan Agreement"), between the Issuer and Citibank, N.A., a national banking association (the "Funding Lender"). The Tax-Exempt Note is currently outstanding in the principal amount of $18,060,000. 1.04. The Tax-Exempt Note evidences a loan made by the. Funding Lender to the City (the "Funding Loan"). The City used those proceeds to make a loan (the "Borrower Loan") to Columbia Heights Leased Housing Associates III, LLLP, a Minnesota limited liability limited partnership (the "Borrower") pursuant to a Borrower Loan Agreement, dated as of December I, 2017 (the "Borrower Loan Agreement"), between the Issuer and the Borrower, to finance the acquisition, construction, and equipping of a 148-unit multifamily housing residential rental development, and facilities functionally related and subordinate thereto, located at 1069 Grandview Court NE and 4729 Grand Avenue NE in the City, known as Grand Central Flats (the "Project"). 1.05. The Borrower Loan is evidenced by a note from the Borrower to the City (the "Borrower Note"), in the maximum principal amount of $18,060,000. The Borrower proposes to amend the Borrower Note to change the timing of payments under the Borrower Note, from equal monthly principal and interest payments until final maturity (December 4, 20.50) to monthly interest-only payments for approximately ten years with monthly principal and interest payments thereafter until final maturity. The proposed change in the timing of payments will result in an average maturity of the Tax-Exempt Note that will be greater than the average maturity before the change. CL! 62-54-655746.vl 111 = I "" CLl62-54-655746.vl 1.06. The Tax-Exempt Note is a pass-through obligation relating to the Borrower Loan. The Tax-Exempt Note refers to the Borrower Note for its basic terms, and therefore an amendment made to one or more of the basic terms of the Borrower Note is an amendment to the Tax-Exempt Note. 1.07. The Issuer has been advised by Kennedy & Graven, Chartered, as bond counsel to the Issuer ("Bond Counsel"), that the proposed change in the timing of payments under the Borrower Note and the corresponding amendment to the Tax-Exempt Note (the "Amendment") constitutes a significant modification of the Tax-Exempt Note and will cause a "reissuance" of the Tax-Exempt Note for tax purposes pursuant to Section 1.1001-3 of the Treasury Regulations promulgated under the Internal Revenue Code of 1986, as amended (the "Code"). For tax purposes, upon reissuance, the Tax-Exempt Note is treated as if it is refunded on the date such changes become effective. 1.08. Under the provisions of Section 147(f)(2)(D) of the Code and applicable Treasury Regulations, the Issuer must hold a public hearing on the reissuance of the Tax-Exempt Note following reasonable public notice, which includes notice given at least seven (7) calendar days before the public hearing by electronic posting on the Issuer's primary public website in an area of that website used to inform its residents about events affecting the residents. 1.09. On June 3, 2020, a notice of public hearing was posted on the City's primary public website in an area of such website used to inform its residents about events affecting the residents (the "Notice"), notifying residents of the City that the public hearing would be held to consider the Amendment and reissuance of the Tax-Exempt Note. 1.010. On the date hereof, a public hearing was held before the Council with respect to the Amendment and reissuance of the Tax-Exempt Note, and a reasonable opportunity was provided at the public hearing for interested individuals to express their views orally or in writing. Section 2. Findings: Authorizations and Approvals. 2.01. The Council hereby consents to and approves the Amendment. 2.02. The Mayor and City Manager (together the "City Officials") are hereby designated as the representative of the City with respect to the Amendment. The City Officials and such additional person or persons, if any, duly designated by the Issuer in writing to act on its behalf are authorized and directed to execute and deliver any and all certificates, agreements, other documents which are required by the Funding Loan Agreement or the Borrower Loan Agreement, or any other agreements, certificates, or documents which are deemed necessary by Bond Counsel, to complete and carry out the Amendment and the reissuance of the Tax-Exempt Note, the intention of this resolution and establish the validity or enforceability of the Tax-Exempt Note or the exclusion from gross income of interest on the Tax-Exempt Note for purposes of federal income taxation and State of Minnesota taxation (including, but not limited, to the execution of an Information Return for Tax-Exempt Private Activity Bond Issues, Form 8038 (Rev. September 2018) and an endorsement to a tax certificate of the Borrower relating to arbitrage, rebate, and other tax matters). 2.03. As provided in the Funding Loan Agreement and the Note Resolution, the Tax-Exempt Note is not payable from or charged upon any funds other than the revenues pledged to its payment, nor is the City subject to any liability thereon, except as otherwise provided herein. The Tax-Exempt Note will continue to be a special, limited obligation of the Issuer payable solely from the revenues provided by the Borrower pursuant to the Borrower Loan Agreement and other funds pledged pursuant to the Funding Loan Agreement. 210 = 1 "" CL162-54-655746.vl CL!62-54-655746.vl CL162-54-65�46.vl 2.04. No provision, covenant, or agreement contained in the Funding Loan Agreement, the Borrower Loan Agreement, the Tx-Exempt Note, the Borrower Note or in any other document relating to the Tax-Exempt Note or the Borrower Note, and no obligation therein or herein imposed upon the Issuer or the breach thereof, shall constitute or give rise to any pecuniary liability of the Issuer or any charge upon the general credit or taxing powers of the Issuer. 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 Borrower Loan Agreement, including payments that the Borrower is required to make under the Borrower Loan Agreement in amounts and at times sufficient to pay the principal of, premium, if any, and interest on the Tax-Exempt Note as the same become due and payable, as provided therein and in the Funding Loan Agreement. Section 3. Miscellaneous. 3.01. Except as otherwise provided in this resolution, all rights, powers and privileges conferred and duties and liabilities imposed upon the Issuer by the provisions of this resolution or of the aforementioned documents shall be exercised or performed by the Issuer or by such members of the Council, the City Officials, or such officers, employees, or agents thereof as may be required or authorized by law to exercise such powers 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 Council, the City Officials, or any officer, agent, or employee of the City in that person's individual capacity, and neither the Council, nor the City Officials, nor any officer or employee who executed the Tax-Exempt Note shall be liable personally on the Tax-Exempt Note or be subject to any personal liability or accountability by reason of the issuance and reissuance thereof. 3.02. Except as herein otherwise expressly provided, nothing in this resolution or in the aforementioned documents, the Tax-Exempt Note, or in any other document relating to the Tax-Exempt Note, expressed or implied, is intended or shall be construed to confer upon any person, firm, or corporation, other than the Issuer or any holder of the Tax-Exempt Note, any right, remedy, or claim, legal or equitable, under and by reason of this resolution or any provisions 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 Issuer and any holder from time to time of the Tax-Exempt Note. 3 .03. In case any one or more of the provisions of this resolution, the Funding Loan Agreement, the Borrower Loan Agreement, or the Tax-Exempt Note shall for any reason be held to be illegal or invalid, such illegality or invalidity shall not affect any other provision of this resolution, or of the aforementioned documents, or of the Tax-Exempt Note, but this resolution, the aforementioned documents, and the Tax-Exempt Note shall be construed and endorsed as if such illegal or invalid provisions had not been contained therein. 3.04. The officers of the Issuer, Bond Counsel, other attorneys, and other agents or employees of the Issuer are hereby authorized to do all acts and things required of them by or in connection with this resolution, the Funding Loan Agreement, the Borrower Loan Agreement, the Tax-Exempt Note, and the Amendment for the full, punctual, and complete performance of all the terms, covenants, and agreements contained in the Tax-Exempt Note, the aforementioned documents, and this resolution. If for any reason the Mayor or City Manager is unable to execute and deliver the documents referred to in this resolution, such documents may be executed by any member of the Council or any officer of the Issuer delegated the duties of the Mayor or the City Manager with the same force and effect as if such documents were executed and delivered by the Mayor or the City Manager. 310 = I "" CLJ62-54-655746.vl CLJ62-54-655746.vl CL162-54-65�46.vl 3.05. The Borrower shall pay directly or through the Issuer any and all costs paid or incurred by the Issuer or imposed on the Issuer in connection with the transactions authorized by this resolution. Section 5. passage. Adopted: June 10, 2020. Offered by: Buesgens Seconded by: Williams Roll Call: All Ayes ATTEST: Effective Date. This resolution shall be in full force and effect from and after its Donna Schmitt, Mayor 410 = 1 11 11 CL162-54-655746.vl CL162-54-655746.vl CLI62-54-65�46.vl