Loading...
HomeMy WebLinkAbout2025-053 Prelim Bond Lincoln Ave (Medtronic - PHASE II)CITY OF COLUMBIA HEIGHTS, MINNESOTA RESOLUTION NO.2025-053 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 (PHASE In; APPROVING THE PREPARATION AND SUBMISSION OF A HOUSING PROGRAM WITH RESPECT THERETO; APPROVING THE SUBMISSION OF APPLICATIONS FOR BONDING AUTHORITY; ESTABLISHING COMPLIANCE WITH CERTAIN REIMBURSEMENT REGULATIONS UNDER THE INTERNAL REVENUE CODE OF 1986; 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 its Charter and 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 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 (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 facilities 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. Columbia Heights I Limited Partnership, a Minnesota limited partnership, or another entity to be formed by Lincoln Avenue Capital Management LLC, a Delaware limited liability company, or 4904-5476-2312.1 affiliated therewith, successor thereto, or assign 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 $30,000,000, 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 the acquisition, construction, and equipping of an approximately 134-unit multifamily rental housing development and facilities functionally related and subordinate thereto, to be located at or about the central portion of the site located at 800 53rd Ave NE in the City ("Phase I" or the "Project"); (ii) the funding of one or more reserve funds to secure the timely payment of the Bonds, if necessary; (iii) the payment of interest on the Bonds during the construction of the Project, if necessary; and (iv) the payment of the costs of issuing the Bonds, if necessary. 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 $30,000,000, subject to final approval by the City of the Bonds following the public hearing referred to in Section 1 and the documents providing for the issuance 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 the purposes referenced Section 1.05 of in this resolution. The City will enter into a loan 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 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 City Manager is hereby authorized and directed to set a date for such public hearing and to cause notice thereof to be published. 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 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 2 4904-5476-2312.1 for interested individuals to express their views, both orally and in writing, on the Project and the proposed issuance of the Bonds. Kutak Rock LLP, 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 as directed by the City Manager. Section 4. Preparation and Submission of a Housing Program. The Council hereby authorizes the preparation of the 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 $30,000,000 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 requirements of the Housing Act. Section 5. Submission of Applications for Allocations 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 one or more applications for allocations of bonding authority pursuant to Section 146 of the Code and in accordance with the requirements of the Allocation Act, in the maximum aggregate principal amount of $30,000,000 with respect to the Project. The Mayor and the City Manager and Bond Counsel are hereby authorized and directed to take all actions, in cooperation with the Borrower, as are necessary to submit applications for allocations of bonding authority to the Minnesota Department of Management and Budget. 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. The Borrower shall also comply with the administrative fee policy of the City respecting conduit revenue bond issues. 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 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- 4904-5476-2312.1 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 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 than 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 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. Offered by: Buesgens Seconded by: James Roll Call: All Ayes, Spriggs Absent 4 4904-5476-2312.1 This resolution was declared duly passed and adopted and was signed by the Mayor and attested to by the City Clerk on the 91 day of June, 2025. VV A ada Ma'rqu Simula, Attest: i - wo Sara Ion, City Clerk 4904-5476-2312.1 STATE OF MINNESOTA ) COUNTY OF ANOKA ) ss. CITY OF COLUMBIA HEIGHTS ) I, the undersigned, being the duly qualified and acting City Clerk of the City of Columbia Heights, Minnesota (the "City"), do hereby certify that I have carefully compared the attached and foregoing extract of minutes of a special meeting of the City Council held on June 9, 2025, with the original thereof on file in my office and the same is a full, true and complete transcript therefrom insofar as the same relates to preliminarily granting approval for the issuance by the City of multifamily housing revenue bonds and declaring the City's official intent to reimburse expenditures made in anticipation of the issuance of such bonds. WITNESS My hand as Clerk and the corporate seal of the City this day of , 2025. City Clerk City of Columbia Heights, Minnesota 4904-5476-2312.1