HomeMy WebLinkAbout2021-53crTY oF' CoLUMBTA HErGrrTS, MINNESOTA
RESOLUTION NO. 202I.53
Granting Preliminary Authorization to the Issuance of Revenue Bonds or Other
Obligations under Minnesota Statutes, Chapter 462C, as amended, to Finance the Costs of
a Multifamily llousing l)evelopment; Approving the Preparation and Submission of a
Housing Program with Respect Thereto; Approving the Submission of an Application for
an Allocation of Bonding Authority; Establishing Compliance with Certain
Reimbursement Regulations under the Internal Revenue Code of 1986, as Amended; and
Taking Certain Other Actions
BE IT RESOLVED by the City Council of the City of Columbia Heights, Minnesota (the "City"), as
follows
Section 1. Recitals.
1.01. The City is a home rule charter city duly organized and existing under the Constitution and laws
of the State of Minnesota.
1.02. Pursuant to Minnesota Statutes, Chapter 462C, as amended (the "Housing Act"), the City is
authorized to carry out the public purposes described in the Housing Act by providing for the issuance of
revenue bonds or other obligations to finance multifamily housing developments located within the City. As a
condition to the issuance of revenue bonds or other obligations under the Housing Act, the City must prepare
and adopt a housing program providing the information required by Section 462C.03, subdivision la of the
Housing Act after a public hearing.
1.03. The public hearing must be held in accordance with the requirements of Section 147(t) of the
Intemal Revenue Code of 1986, as amended (the "Code"), and the regulations promulgated thereunder (the
"Regulations"), and the requirements of the Housing Act. Section ru7$) of the Code requires a public hearing
duly noticed to be held by the Council on the proposed issuance ofrevenue bonds or other obligations and the
location and nature of the proposed facility to be financed. Section 462C.04, subdivision 2 of the Housing Act
requires a public hearing to be held on the housing program after one publication of notice in a newspaper
circulating generally in the City, at least fifteen (15) days before the hearing. Section 462C.04, subdivision 2 of
the Housing Act further requires that on or before the day on which the notice of public hearing is published, the
City submit a housing program to the Metropolitan Council for its review and comment as to whether such
housing program furthers local and regional housing policies.
1.04. The Council may grant preliminary approval to the issuance of revenue bonds or other
obligations to finance the multifamily housing development referred to in a housing program, and may authorize
the submission of an application to Minnesota Department of Management and Budget ("MMB") for an
allocation of bonding authority with respect to the Bonds (as hereinafter defined) to finance the Project (as
hereinafter defined) in accordance with the requirements of Section 146 of the Code and Minnesota Statutes,
Chapter 474A, as amended (the "Allocation Act").
1.05. 825 4lst Ave Limited Partnership, a Minnesota limited partnership, or its affiliates or assigns
(the "Borrower"), has proposed that the City, pursuant to the Housing Act, issue its revenue bonds or other
obligations in an aggregate principal amount not to exceed $l1,000,000, in one or more series (the "Bonds"), the
proceeds of which will be loaned by the City to the Borrower. The Borrower will apply the proceeds of such
loan to: (i) the acquisition, construction and equipping of an approximately 62-unit workforce multifamily
rental housing development and facilities functionally related and subordinate thereto, comprised of one four-
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story apartment building including one, two, and three-bedroom units, with both surface lot and below-ground
parking, and other amenities, including multiple gathering spaces, an outdoor playground and a dog run area, to
be located at825 41st Avenue, Columbia Heights, MN 55421 (the "Project"); (ii) the funding of one or more
reserve funds to secure the timely payment of the Bonds; (iii) the payment of interest on the Bonds during the
construction of the Project; and (iv) the payment of the costs of issuing the Bonds.
Section 2. Preliminary Findings. Determinations. and Declarations. Based on representations made by
Reuter Walton Development, LLC, a Minnesota limited liability company, on behalf of the Borrower, to the
City to date, the Council hereby makes the following preliminary findings, determinations, and declarations:
2.01. The Project furthers the purposes set forth in the Housing Act and the Project constitutes a
"multifamily housing development" within the meaning of Section 462C.02, subdivision 5 of the Housing Act.
2.02. The City hereby grants preliminary approval to the issuance of the Bonds for the purposes
referenced in this resolution, in an aggregate principal amount not to exceed $l1,000,000, subject to final
approval by the City of the Bonds and the documents providing forthe purchase and sale of the Bonds and the
loan of the proceeds of the Bonds to the Borrower. In all events, it is understood, however, that the Bonds shall
not constitute a pecuniary liability or charge, lien, or encumbrance, legal or equitable, upon any funds, assets,
taxing powers, or any other property of the City except the City's interest in the Loan Agreement (as hereinafter
defined); and the Bonds, when, as, and if issued shall recite in substance that the Bonds, including interest
thereon, are payable solely from the revenues received from the Loan Agreement and other property pledged to
the payment thereof, and shall not constitute a general or moral obligation of the City. The Bonds shall not
constitute a debt of the City within the meaning of any constitutional or statutory limitation. The owners of the
Bonds shall never have the right to compel any exercise of the taxing powers of the City to pay the outstanding
principal of the Bonds, or the interest thereon or to enforce payment thereof against any property of the City.
2.03. The proceeds of the Bonds will be loaned to the Borrower and the proceeds of the loan will be
applied to: (i) the acquisition, construction, and equipping of the Project; (ii) the funding of one or more reserve
funds to secure the timely payment of the Bonds; (iii) the payment of interest on the Bonds during the
construction of the Project; and (iv) the payment of the costs of issuing the Bonds. The City will enter into a
loan agreement (or other revenue agreement) with the Borrower (the "Loan Agreement") requiring loan
repayments from the Borrower in amounts sufficient to repay the loan when due and requiring the Borrower to
pay all costs of maintaining and insuring the Project, including taxes thereon.
2.04. In preliminarily authorizing the issuance of the Bonds and the financing of the acquisition,
construction, and equipping of the Project and related costs, the City's purpose is and the effect thereof will be
to promote the public welfare of the City and its residents by retaining and improving multifamily housing
developments and otherwise fuithering the purposes and policies of the Housing Act.
Section 3. Council to Conduct a Public Hearing. The Council shall conduct a public hearing with
respect to the proposal to undertake and finance the Project under the terms of a housing program and the
issuance of the Bonds, as requested by the Borrower. The notice of public hearing shall be in the form required
by Section 147(D of the Code (and applicable Regulations) and the Housing Act, and shall be published once in
a newspaper of general circulation in the City at least fifteen (15) days prior to the date of the public hearing. At
the public hearing, a reasonable opportunity shall be provided for interested individuals to express their views,
both orally and in writing, on the Project and the proposed issuance of the Bonds. Kennedy & Graven,
Chartered, bond counsel to the City ("Bond Counsel"), is hereby authorized and directed to publish a notice of
the public hearing as provided in this Section 3.
Section 4. Preparation and Submission of a Housing Program. The Council hereby authorizes the
preparation of a housing program by Bond Counsel, with respect to the issuance by the City of revenue bonds or
other obligations in an amount not to exceed $11,000,000 to finance the Project, and to submit such housing
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program to the Metropolitan Council for its review and comment on or before the date of publication of the
notice of public hearing in accordance with the Housing Act.
Section 5. Submission of an Application for an Allocation of Bonding Authority. Under Section 146 of
the Code, the Bonds must receive an allocation of the bonding authority of the State of Minnesota. An
application for such an allocation must be made pursuant to the requirements of the Allocation Act. The
Council hereby authorizes the submission of an application for an allocation of bonding authority to MMB
pursuant to Section 146 of the Code and in accordance with the requirements of the Allocation Act. The Mayor,
City Manager, and Bond Counsel are hereby authorized and directed to take all actions, in cooperation with the
Borrower, as are necessary to submit an application for an allocation of bonding authority to MMB.
Section 6. Costs. The Borrower shall pay to the City any and all costs incurred by the City in
connection with the Bonds or the financing of the Project, whether or not the financing of the Project is carried
to completion, and whether or not the Bonds or operative instruments are executed and delivered.
Section 7. Reimbursement of Costs under the Code.
7 .01 The United States Department of the Treasury promulgated Section 1 .150-2 of the Regulations,
which governs the use of the proceeds of tax-exempt bonds, all or a portion of which are to be used to reimburse
the City or the Borrower for project expenditures paid prior to the date of issuance of such bonds. Section
1.150-2 of the Regulations requires that the City adopt a statement of official intent to reimburse an original
expenditure not later than sixty(60) days after payment of the original expenditure. Section 1.150-2 of the
Regulations also generally requires that the bonds be issued and the reimbursement allocation made from the
proceeds of the bonds occur within eighteen (18) months after the later of: (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 (3) years after the date
the expenditure is paid. The Regulations generally permit reimbursement of capital expenditures and bond costs
of issuance.
7.02 To the extent any portion of the proceeds of the Bonds will be applied to expenditures with
respect to the Project, the City reasonably expects to reimburse the Borrower for the expenditures made for costs
ofthe Project from the proceeds ofthe Bonds after the date ofpayment ofall or a portion ofsuch expenditures.
All reimbursed expenditures shall be capital expenditures, a cost of issuance of the Bonds, or other expenditures
eligible for reimbursement under Section 1.150-2(d)(3) of the Regulations and qualifuing expenditures under the
Housing Act.
7.03 Based on representations by the Borrower, other than (i) expenditures to be paid or reimbursed
from sources other than the Bonds, (ii) expenditures permitted to be reimbursed under prior regulations pursuant
to the transitional provision contained in Section 1.150-2Q)QXiXB) 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 minimis" amount (as defined in Section 1.150-2(fXl) of the Regulations), no expenditures
with respect to the Project to be reimbursed with the proceeds of the Bonds have been made by the Borrower
more than sixty (60) days before the date of adoption of this resolution of the City.
7.04 Based on representations by the Borrower, as of the date hereof, there are no funds of the
Borrower 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 financing for the expenditures
related to the Project to be financed from proceeds of the Bonds, other than pursuant to the issuance of the
Bonds. This resolution, therefore, is determined to be consistent with the budgetary and financial circumstances
of the Borrower as they exist or are reasonably foreseeable on the date hereof.
Section 8. Commitment Conditional
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8.01. The adoption of this resolution does not constitute a guaranty or firm commitment that the City
will issue the Bonds as requested by the Borrower. If, as a result of information made available to or obtained
by the City during its review of the Project, it appears that the Project or the issuance of the Bonds to finance or
refinance the costs thereof is not in the public interest or is inconsistent with the purposes of the Housing Ac!
the City reserves the right to decline to give final approval to the issuance of the Bonds. The City retains the
right in its sole discretion to withdraw from participation and accordingly not to issue the Bonds, or issue the
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 interests of the City not to issue the Bonds, or to issue the Bonds in an amount less
than the amount referred to in this resolution, 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 this bond financing transaction.
8.02. The City's obligation to proceed with the issuance of the Bonds to finance the costs of the
Project is conditioned upon the consideration and adoption by the Council of a final resolution granting final
approval to the issuance of the Bonds following a duly noticed public hearing in accordance with the Housing
Act and Section 147(D of the Code.
8.03. The City's obligation to proceed with the issuance of the Bonds to finance the costs of the
Project is also conditioned upon the City granting all necessary approvals with respect to the Project, including
but not limited to zoning and land use approvals.
Section 9. Bond Counsel Is Empowered to Take All Necessary Actions. Bond Counsel is hereby
designated as bond counsel with respect to the Bonds and is hereby authorized to take all actions necessary to
prepare required documents to permit the issuance of the Bonds and to submit such documents to the Council
for its final approval.
Section 10. Effective Date. This Resolution shall be in full force and effect from and after its passage.
Approved this 22"d day of June, 202l,by the City Council of the City of Columbia Heights, Minnesota.
Offered by: Jacobs
Seconded by: Novitsky
RollCall: All Ayes
This resolution was declared duly passed and adopted on the 22"d day of June, 2021 .lt was signed by the Mayor
and attested to by the City Clerk on the 24h day of June, 2021.
{^ad| Merque/ s imrtla, Wor
Attest:lM, rr't^
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