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HomeMy WebLinkAbout2022-110CITY OF COLUMBIA HEIGHTS, MINNESOTA RESOLUTION NO.2022-110 AUTHORIZING THE ISSUANCE, SALE, AND DELIVERY OF MULITIFAMILY HOUSING REVENUE BONDS (42ND & CENTRAL APAREMTNS PROJECT), SERIES 2022B TO PROVIDE ADDITIONAL FINANCING FOR THE COSTS OF A MULTIFAMILY HOUSING DEVELOPMENT; APPROVING THE FORMS OF AND AUTHORIZING THE EXECUTION AND DELIVERY OF THE SERIES 2022B BONDS AND RELATED DOCUMENTS; PROVIDING FOR THE SECURITY, RIGHTS, AND REMEDIES WITH RESPECT TO THE SERIES 2022B BONDS; AND TAKING CERTAIN OTHER ACTIONS BE IT RESOLVED by the City Council (the "Council") of the City of Columbia Heights, Minnesota (the "City" or "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 City 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, as, and as a condition to the issuance of such revenue bonds or other obligations under the Act, the Issuer must prepare and, adopt a housing program providing the information required by Section 462C.03, subdivision 1 a of the Act after one publication of notice in a newspaper circulating generally in the City at least fifteen (15) days before the hearing. 1.03. 42 Central Limited Partnership, a Minnesota limited partnership (the "Borrower") has requested that the Issuer issue its multifamily housing revenue bonds or other obligations, in one or more series, at one time or from time to time pursuant to the Act, in an aggregate amount not to exceed, in the aggregate principal amount not to exceed $11,000,000 (the "Obligations"), under the terms of the Act and lend the proceeds thereof to the Borrower for application by the Borrower to finance 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-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 and an outdoor playground, to be located at 800 42nd Avenue NE in the City (825 41st Avenue prior to replatting) (the Project"). 1.04. In accordance with the Act, a Program for a Multifamily Housing Development (the "Housing Program") was prepared on behalf of the Issuer with respect to the Project, and the Council of the Issuer held a public hearing on March 14, 2022 with respect to the Housing Program following one publication of a notice of public hearing in The Life, a newspaper of general circulation in the City, on February 25, 2022, a date at least fifteen (15) days before the public hearing. As required by the provisions of the Act, on or before the date the notice of public hearing was published, the Housing Program was submitted to the Metropolitan Council for review and comment. By letter dated March 7, 2022, the Metropolitan Council submitted comments to the Issuer with regard to the Housing Program. On March 14, 2022, the Council adopted the Housing Program and approved the issuance of the Obligations pursuant to Resolution No. 2022-35 (the "Original Bond Resolution"). 1.05. Pursuant to the Act and the Indenture of Trust, dated as of June 1, 2022 (the "Original Indenture"), between the Issuer and U.S. Bank Trust Company, National Association, a national banking association (the "Trustee"), the Issuer issued its Multifamily Housing Revenue Bonds (42nd & Central Apartments Project), Series 2022A, dated June 28, 2022, in the original aggregate principal amount of $9,886,000 (the "Series A Bonds"), as a portion of the Obligations authorized under the Housing Program and the Original Bond Resolution. The proceeds derived from the sale of the Series A Bonds were loaned by the Issuer to the Borrower (the "Series A Loan") pursuant to the Loan agreement, dated as of June 1, 2022 (the "Original Loan Agreement"), between the Issuer and the Borrower. The Series A Loan is evidenced by a Promissory Note, in the original principal amount of $9,886,000 (the "Series A Note"), executed by the Borrower and delivered to the Issuer on the date of issuance of the Series A Bonds, and assigned by the Issuer to the Trustee. 1.06. Pursuant to Original Bond Resolution and for the purpose of financing all or a portion of the costs of the acquisition, construction, and equipping of the Project and related costs, the Issuer authorized the issuance of the Obligations in accordance with the terms and conditions of the Act, the Housing Program, and the Original Bond Resolution, in an aggregate principal amount not to exceed $11,000,000, in any number of series, as determined in the discretion of the Mayor and the City Manager of the City (together, the "City Officials"), and the execution and delivery of the Original Indenture, the Original Loan Agreement, the Regulatory Agreement (the "Regulatory Agreement") between the City, the Borrower, and the Trustee (the "Original Regulatory Agreement"), and such other documents and certificates necessary or appropriate in connection with the issuance, sale, and delivery of the Obligations. 1.07. The Series A Bonds were issued by the Issuer pursuant to volume cap (or bonding authority) allocated to the Issuer by the State of Minnesota Department of Management & Budget ("MMB") pursuant to Certificate of Allocation No. 422, dated January 11, 2022, in accordance with the requirements of Section 146 of the Internal Revenue Code of 1986, as amended (the "Code") and Minnesota Statutes, Chapter 474A, as amended (the "Allocation Act'). 1.08. Upon request of the Borrower, the Issuer submitted a subsequent application for an allocation of additional bonding authority to MMB in the amount of $560,000. The Issuer received an additional allocation of the bonding authority of the State of Minnesota, in the amount of $560,000 pursuant to Certificate of Allocation No. 431, dated July 5, 2022, to issue tax-exempt multifamily housing revenue obligations for the Project. 1.09. The Borrower has requested that the Issuer issue, sell, and deliver its Multifamily Housing Revenue Bonds (42nd & Central Apartments Project), Series 2022B (the "Series B Bonds"), in the original aggregate principal amount not to exceed $560,000, as a portion of the Obligations authorized under the Housing Program and the Original Bond Resolution. 1.10. The Series B Bonds are proposed to be issued as "exempt facility bonds" the interest on which is not includable in gross income for federal income tax purposes under Sections 103 and 141(e)(1)(A) of the Code. Under the provisions of Section 147(f) of the Code and applicable Treasury Regulations, the Series B Bonds will not constitute exempt facility bonds unless the Series B Bonds are approved by the applicable elected representative of the governmental unit which issued the bond or on behalf of which the bond is issued after a public hearing following reasonable public notice. 1.11. Reasonable public notice includes publication in a newspaper of general circulation available to residents in the City no fewer than seven (7) calendar days before the public hearing. As provided in section 1.04 of this resolution, a notice of public hearing was published in The Life, a newspaper of general circulation in the City, at least seven (7) days before the public hearing held by the Council on March 14, 2022. The notice stated the time and place of the public hearing, a general description of the Project, the address of the site of the Project, the initial legal owner or principal user of the Project, and the maximum principal amount of the tax-exempt obligations to be issued to finance the Project of 11,000,000. A reasonable opportunity was provided at the public hearing for interested individuals to express their views orally or in writing with respect to the Project and the proposed issuance of revenue obligations to finance the Project. 1.12. Resolution No. 2021-53, adopted by the Council on June 22, 2021 (the "Preliminary Resolution") constitutes a reimbursement resolution and an official intent of the Issuer to reimburse expenditures with respect to the Project from the proceeds of tax-exempt revenue obligations in accordance with the provisions of Section 1.150-2 of the Regulations. Section 2. Findings, Determinations, and Declarations. Based on representations made by the Borrower to the Issuer to date, the Council hereby makes the following findings, determinations, and declarations: 2.01. The Project constitutes a "qualified residential rental project" within the meaning of Section 142(d) of the Code, and a "multifamily housing development" authorized by the Act, and furthers the purposes of the Act. The purpose of the Project is, and the effect thereof will be, to promote the public welfare by the acquisition and construction of a facility for use as a multifamily housing development designed primarily for occupancy by persons of low and moderate income. 2.02. The Issuer hereby authorizes the Borrower, in accordance with the provisions of the Act to provide for the development of the Project and the payment of the costs of the Project by such means as shall be available to the Borrower and in the manner determined by the Borrower. Section 3. Authorization to Issue the Series B Bonds, Approving the Forms of and Authorizing_ the Execution and Delivery of the Series B Bonds and Related Documents; and Providing for the Security Rights, and Remedies with Respect to the Series B Bonds. 3.01. For the purpose of financing all or a portion of the costs of the acquisition, construction, and equipping of the Project and related costs, the issuance of the Series B Bonds, in an aggregate principal amount not to exceed $560,000, in accordance with the terms and conditions of the Act, the Housing Program, the Original Bond Resolution and this resolution, is hereby approved. 3.02. The Series B Bonds, substantially in the form set forth in an Amended and Restated Indenture of Trust, dated as of or after December 1, 2022 (the "Indenture"), between the City and the Trustee, now on file with the City, are hereby approved with the amendments referenced herein. The Series B Bonds shall not constitute a debt of the City within the meaning of any state constitutional provision or statutory limitation, the Series B Bonds shall not constitute or give rise to a charge against the general credit or taxing powers of the City, the Series B Bonds shall not constitute or give rise to a pecuniary liability of the City, and the Series B Bonds shall be payable solely out of any funds and properties expressly pledged as security therefor. 3.03. The Indenture is hereby approved, and the City Officials are hereby authorized to execute and deliver the Indenture on behalf of the City. All of the provisions of the Indenture, when executed and delivered as authorized herein, shall be deemed to be a part of this resolution as fully and to the same extent as if incorporated verbatim herein and shall be in full force and effect from the date of execution and delivery thereof. The Indenture shall be substantially in the form now on file with the City with such necessary and appropriate variations, omissions, and insertions as do not materially change the substance thereof, as the City Officials in their discretion, shall determine, and the execution and delivery thereof by the City Officials shall be conclusive evidence of such determination. 3.04. The proceeds derived from the sale of the Series B Bonds are to be loaned by the City to the Borrower under the terms of an Amended and Restated Loan Agreement, dated as of or after December 1, 2022 (the "Loan Agreement"), between the City and the Borrower. The Loan Agreement is hereby approved, and the City Officials are hereby authorized to execute and deliver the Loan Agreement on behalf of the City. All of the provisions of the Loan Agreement, when executed and delivered as authorized herein, shall be deemed to be a part of this resolution as fully and to the same extent as if incorporated verbatim herein and shall be in full force and effect from the date of execution and delivery thereof. The Loan Agreement shall be substantially in the form now on file with the City with such necessary and appropriate variations, omissions, and insertions as do not materially change the substance thereof, as the City Officials, in their discretion, shall determine, and the execution and delivery thereof by the City Officials shall be conclusive evidence of such determination. The proceeds of the loan to be made under the terms of the Loan Agreement are hereby authorized to be applied to the payment of a portion of the costs of the acquisition, construction, and equipping of the Project and related costs, the financing of capitalized interest during construction of the Project, the funding of any required reserves, and the payment of costs of issuance. 3.05. The Borrower's repayment obligations under the Loan Agreement will be evidenced by a Promissory Note delivered by the Borrower to the City (the "Series B Note"), which will be assigned by the City to the Trustee pursuant to an assignment thereof (the "Note Assignment"). 3.06. To ensure continuing compliance with certain rental and occupancy restrictions imposed by the Act, the Allocation Act, and Section 142(d) of the Code, and to ensure continuing compliance with certain restrictions imposed by the City, the City Officials are hereby authorized and directed to execute and deliver an Amended and Restated Regulatory Agreement, dated as of or after December 1, 2022 (the "Regulatory Agreement") between the City, the Borrower, and the Trustee. The Regulatory Agreement shall be substantially in the form now on file with the City, which is hereby approved, with such omissions and insertions as do not materially change the substance thereof, as the City Officials, in their discretion, shall determine, and the execution thereof by the City Officials shall be conclusive evidence of such determination. All of the provisions of the Regulatory Agreement, when executed and delivered as authorized herein, shall be deemed to be a part of this resolution as fully and to the same extent as if incorporated verbatim herein and shall be in full force and effect from the date of execution and delivery thereof. 3.07. The City acknowledges, finds, determines, and declares that the issuance of the Series B Bonds is authorized by the Act and is consistent with the purposes of the Act and that the issuance of the Series B Bonds, and the other actions of the City under this resolution and the Loan Agreement constitute a public purpose and are in the interests of the City. In authorizing the issuance of the Series B Bonds for the financing 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 providing multifamily housing developments for low and moderate -income residents of the City and otherwise furthering the purposes and policies of the Act. 3.08. The City hereby authorizes the Series B Bonds to be issued as "tax-exempt bonds" the interest on which is not includable in gross income for federal income tax purposes and net taxable income of individuals, trusts, and estates for State of Minnesota income tax purposes. 3.09. All of the provisions of the Series B Bonds, when executed as authorized herein, shall be deemed to be a part of this resolution as fully and to the same extent as if incorporated verbatim herein and shall be in full force and effect from the date of execution and delivery thereof. The Series B Bonds shall 4 bear interest at the rates, shall be designated, shall be numbered, shall be dated, shall mature, shall be issued in the aggregate principal amount, shall be subject to redemption prior to maturity, shall be in such form, and shall have such other terms, details, and provisions as are prescribed in the Indenture, in the form now on file with the City, which form is hereby approved, with such necessary and appropriate variations, omissions, and insertions (including changes to the aggregate principal amount of the Series B Bonds, the stated maturities of the Series B Bonds, the interest rates on the Series B Bonds, and the terms of redemption of the Series B Bonds) as the City Officials, in their discretion, shall determine. The execution of the Series B Bonds with the manual or facsimile signature of the City Officials and the delivery of the Series B Bonds by the City shall be conclusive evidence of such determination. 3.10. The Series B Bonds shall not constitute general or moral obligations of the City but shall be special, limited obligations of the City payable solely from the revenues provided by the Borrower under the terms of the Loan Agreement and from the revenues and security pledged, assigned, and granted under the terms of this resolution, the Series B Bonds, the Loan Agreement, and any other security documents provided by the Borrower or any other party to secure the timely payment of the principal of, premium, if any, and interest on the Series B Bonds. As provided in the Loan Agreement, the Series B Bonds shall not be payable from or charged upon any funds other than the revenue pledged to their payment, nor shall the City be subject to any liability thereon, except as otherwise provided in this paragraph. No holder of the Series B Bonds shall ever have the right to compel any exercise by the City of any taxing powers of the City to pay the Series B Bonds or the interest or premium thereon, or to enforce payment thereof against any property of the City except the interests of the City in the Loan Agreement and the revenues and assets thereunder, which will be assigned to the Trustee under the terms of the Indenture. 3.11. The City acknowledges and hereby approves any one or more security documents, including but not limited to the Series B Note. All such security documents, if any are delivered, shall be substantially in the forms authorized and approved by the Borrower. 3.12. The Series B Bonds, when executed and delivered, shall contain a recital that they are issued in accordance with the Act, and such recital shall be conclusive evidence of the validity of the Series B 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 Series B Bonds, and to the execution of the aforementioned documents to happen, exist, and be performed precedent to the execution of the aforementioned documents have happened, exist, and have been performed as so required by law. The Series B Bonds shall also recite that the Series B Bonds, including interest and premium, if any, thereon, are payable solely from the revenues and assets pledged to the payment thereof, and the Series B Bonds shall not constitute a debt of the City within the meaning of any constitutional or statutory limitations. 3.13 The City Officials are hereby designated as the representatives of the City with respect to the issuance of the Series B Bonds and the transactions related thereto. The City Manager is authorized, upon request, to furnish certified copies of all proceedings and records of the City relating to the Series B Bonds, and such other affidavits and certificates as may be required to show the facts relating to the Series B Bonds as such facts appear from the books and records in the custody and control of the City; and all such certified copies, certificates, and affidavits, including any heretofore furnished, shall constitute representations of the City as to the truth of all statements contained therein. The City Officials are hereby further authorized to execute and deliver, on behalf of the City, all other certificates, instruments, and other written documents that may be requested by Kennedy & Graven, Chartered, as bond counsel to the City ("Bond Counsel'), the Trustee, the Borrower, or other persons or entities in conjunction with the issuance of the Series B Bonds and the expenditure of the proceeds of the Series B Bonds. Without imposing any limitations on the scope of the preceding sentence, the City Officials are specifically authorized to execute and deliver such other documents and certificates as are necessary or appropriate in connection with the 5 issuance, sale, and delivery of the Series B Bonds, including a Bond Purchase Agreement between the City, the Borrower, and Colliers Securities LLC, as original purchaser of one or more series of the Series B Bonds (the "Underwriter"), an assignment of Series B Note, if necessary, one or more general certificates of the City, an Information Return for Tax -Exempt Private Activity Bond Issues, Form 8038, with respect to the Series B Bonds, an endorsement to any tax certificates as to arbitrage, rebate, and other federal tax matters executed and delivered in connection with the issuance of the Series B Bonds, appropriate amendments to the Housing Program, and all other documents and certificates as the City Officials shall deem to be necessary or appropriate in connection with the issuance, sale, and delivery of the Series B Bonds (the "Financing Documents"). The City Officials are hereby further authorized and directed to execute and deliver all other instruments and documents necessary to accomplish the purposes for which the Series B Bonds are to be issued. Section 4. Additional Findings and Certifications. 4.01 The City will not participate in the preparation or distribution of any official statements or other disclosure documents relating to the offer and sale of the Series B Bonds (the "Disclosure Documents"), except only for certain information relating specifically to the City as approved by the City Officials, and will make no independent investigation with respect to the information contained in the Disclosure Documents, including the appendices thereto, and the City assumes no responsibility for the sufficiency, accuracy, or completeness of such information. Subject to the foregoing, the City hereby consents to the distribution and the use by the Underwriter of the Disclosure Documents in connection with the offer and sale of the Series B Bonds to be offered and sold pursuant to such Disclosure Documents. The Disclosure Documents are the sole materials consented to by the City for use in connection with the offer and sale of the Series B Bonds. 4.02 The authority to approve, execute and deliver future amendments to the Financing Documents and consents required under the Financing Documents is hereby delegated to the City Officials, subject to the following conditions: (a) such amendments or consents do not materially adversely affect the interests of the City; (b) such amendments or consents do not contravene or violate any policy of the City, (c) such amendments or consents do not require the consent of the holder or such consent has been obtained; and (d) such amendments or consents are acceptable in form and substance to Bond Counsel and the City attorney. The authorization hereby given shall be further construed as authorization for the execution and delivery of such certificates and related items as may be required to demonstrate compliance with the agreements being amended and the terms of this resolution. The execution of any instrument by the City Manager shall be conclusive evidence of the approval of such instruments in accordance with the terms hereof. In the absence of the City Manager, any instrument authorized by this paragraph to be executed and delivered may be executed by the officer of the City authorized to act in his or her place and stead. The City Manager may impose any terms or conditions on the execution and delivery of any such amendment or supplement as the City Manager deems appropriate. 4.03 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 of the City, or any officer, agent, or employee of the City in that person's individual capacity, and neither the Council of the City nor any officer, agent, or employee executing the Series B Bonds or any such documents shall be personally liable on the Series B Bonds or such documents or be subject to any personal liability or accountability by reason of the issuance of the Series B Bonds or the execution and delivery of such documents. No provision, covenant, or agreement contained in the aforementioned documents, the Series B Bonds, or in any other document relating to the Series B Bonds, and no obligation therein or herein imposed upon the City or the breach thereof, shall constitute or give rise to a general or moral obligation of the City or any pecuniary liability of the City or any charge upon its general credit or taxing powers. In making the agreements, provisions, covenants, and representations set 11 forth in such documents, the City has not obligated itself to pay or remit any funds or revenues, other than funds and revenues derived from the Loan Agreement, which are to be applied to the payment of the Series B Bonds, as provided therein. 4.04 Except as herein otherwise expressly provided, nothing in this resolution or in the aforementioned documents expressed or implied, is intended or shall be construed to confer upon any person or firm or corporation, other than the City, and any holders of the Series B 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 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 City, the Borrower, the Underwriter, and any beneficial owners from time to time of the Series B Bonds issued under the provisions of this resolution. 4.05 In case any one or more of the provisions of this resolution, other than the provisions limiting the liability of the City, or of the aforementioned documents, or of the Series B Bonds issued hereunder 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 Series B Bonds, but this resolution, the aforementioned documents, and the Series B Bonds shall be construed and endorsed as if such illegal or invalid provisions had not been contained therein. 4.06 In anticipation of the issuance of the Series B Bonds to finance all or a portion of the Project, and in order that completion of the Project will not be unduly delayed when approved, the Borrower is hereby authorized to make such expenditures and advances toward payment of that portion of the costs of the Project to be financed from the proceeds of the Series B Bonds, as the Borrower considers necessary, including the use of interim, short-term financing, subject to reimbursement from the proceeds of the Series B Bonds if and when delivered but otherwise without liability on the part of the City. 4.07 The officers of the City, Bond Counsel, the City attorney, other attorneys, and other agents or employees of the City are hereby authorized to do all acts and things required of them by or in connection with this resolution, the aforementioned documents, or the Series B Bonds, for the full, punctual, and complete performance of all the terms, covenants, and agreements contained in the Series B Bonds, the aforementioned documents, and this resolution. 4.08 The staff of the City is hereby authorized, in cooperation with Bond Counsel, to take all steps necessary and desirable to proceed to develop the Housing Program and to issue the Series B Bonds. 4.09 The Borrower has agreed to pay the administrative fees of the City in accordance with the applicable policies and procedures of the City. It is hereby determined that any and all costs incurred by the City in connection with the financing of the Project will be paid by the Borrower. 4.10. It is understood and agreed by the Borrower that the Borrower shall indemnify the City against all liabilities, losses, damages, costs, and expenses (including attorneys' fees and expenses incurred by the City) arising with respect to the Project and the Series B Bonds, as provided for and agreed to by and between the Borrower and the City in the Loan Agreement. 4.11. The financing transaction represented by the Series B Bonds is subject to all existing policies and procedures of the City and is also subject to any conduit bond policies and procedures subsequently adopted by the City to the extent the provisions thereof are intended to be applied retroactively to conduit revenue obligations issued prior to the adoption of such conduit bond policies and procedures. 7 Section 5. Effective Date. This resolution shall be in full force and effect from and after its passage. Adopted: November 28, 2022 Offered by: Buesgens Seconded by: Jacobs Roll Cal: All Ayes ATTEST: �ara, City Clerk < z Ama a Marquez Simula, Mayor 8