HomeMy WebLinkAbout2024-101 RW University Ave Project BondingCITY OF COLUMBIA HEIGHTS, MINNESOTA
RESOLUTION NO.2024-101
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 HOUSING DEVELOPMENT; 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
INTERNAL REVENUE CODE OF 1986, AS AMENDED; AND TAKING CERTAIN
OTHER ACTIONS
BE IT RESOLVED by the City Council (the "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
1 a of the Housing Act after a public hearing.
1.03. The public hearing must be held in accordance with the requirements of Section 147(f) of
the Internal Revenue Code of 1986, as amended (the "Code"), and the regulations promulgated thereunder
(the "Regulations"), and the requirements of the Housing Act. Section 147(f) of the Code requires a public
hearing duly noticed to be held by the Council. on the proposed issuance of revenue 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. Reuter Walton Development, LLC, a Minnesota limited liability company, or another
entity to be formed by Reuter Walton Development, LLC or affiliated therewith, successor thereto, or assign
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thereof (collectively, 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 $20,000,000, 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
108-unit 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 and garage parking, and other amenities, including multiple gathering spaces, an outdoor
playground and a dog run area, to be located at or about 3901 University Avenue NE in the City (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 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 $20,000,000, subject to final
approval by the City of the Bonds and the documents providing for the 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 furthering the purposes and policies of the Housing Act.
Section 3. Council to Conduct a Public Hearin. 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(f) of the Code (and applicable Regulations) and the Housing Act, and shall be
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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 $20,000,000 to finance the Project, and to submit
such housing 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 tinder 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 of the Project from the proceeds of the Bonds after the date of payment of all or a portion of such
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
qualifying 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 1.150-20)(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 minimis" amount (as defined in Section 1.150-
2(f)(1) of the Regulations), no expenditures with respect to the Project to be reimbursed with the proceeds
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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.
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 Act, 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(f) 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.
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This resolution was declared duly passed and adopted and was signed by the Mayor and attested to by the
City Clerk on the 9" day of December, 2024.
Offered by: James
Seconded by: Spriggs
Roll Call: All Ayes
Attest:
Alon, Clerk
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