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HomeMy WebLinkAbout2021-145 CCRMember Ryan introduced the following resolution and moved its adoption: CITY OF BROOKLYN CENTER, MINNESOTA COUNTY OF HENNEPIN STATE OF MINNESOTA RESOLUTION N0.2021-145 RECITING A PROPOSAL FOR A HOUSING FINANCE PROGRAM FOR A MULTIFAMILY RENTAL HOUSING DEVELOPMENT, APPROVING THE PROJECT AND THE PROGRAM AND AUTHORIZING THE ISSUANCE OF CONDUIT MULTI -FAMILY HOUSING REVENUE OBLIGATIONS AND THE EXECUTION OF RELATED DOCUMENTS THE CREST APARTMENTS PROJECT) WHEREAS, the City of Brooklyn Center, Minnesota (the "City") is a home rule charter city, municipal corporation, and political subdivision duly organized and existing under the Constitution, its Charter and laws of the State of Minnesota; WHEREAS, the 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 issuing revenue bonds and notes or other obligations to finance or refinance multifamily housing developments located within the City, and as a condition to the issuance of such revenue obligations, adopt a housing program providing the information required by Section 462C.03, subdivision la, of the Act; WHEREAS, the issuance of the City's revenue obligations and in the making of a loan to finance a multifamily housing development, the City may exercise, within its corporate limits, any Athe powers that the Minnesota Housing Finance Agency may exercise under Minnesota Statutes, Chapter 462A, as amended, without limitation under the provisions of Minnesota Statutes, Chapter 475, as amended; WHEREAS, The Crest Apartments LLC, a Minnesota limited liability company (or another entity to be formed by Aeon, the "Borrower"), has requested that the City issue its housing revenue obligations, in one or more series (collectively, the "Note") under the Act and lend the proceeds thereof to the Borrower to: (1) finance the acquisition of The Crest Apartments, an existing 123-unit rental housing facility located at 6221 Shingle Creels Parkway in the City, the rehabilitation thereof to include, among other things, one additional unit, and the construction and equipping of an approximately 48-unit building to be located on the same property in the City; (ii) fund one or more reserve funds to secure the timely payment of the Note, if necessary; (iii) pay interest on the Note during the construction of the Project, if necessary; and (iii) pay the costs of issuing the Note, if necessary (collectively, the "Project"); WHEREAS, the City has prepared a housing program (the "Housing Program") to authorize the issuance by the City oftax-exempt and taxable revenue bonds in one or more series to be issued to finance the Project in an amount not to exceed $19,000,000; BR291-409-762205.v1 WHEREAS, a public hearing on the Housing Program and the Project was held by the City on this same date, following duly published notice in the Szcn Post, a newspaper of general circulation in the City, with respect to: (i) the required public hearing under Section 147(f) of the Internal Revenue Code of 1986, as amended (the "Code"); (ii) the required public hearing under Section 462C.04, subdivision 2, of the Act; (iii) the Housing Program; and (iv) approval of the issuance of the Note; WHEREAS, during said public hearing a reasonable opportunity was provided for interested individuals to express their views, both orally and in writing; and WHEREAS, the City received Certificate of Allocation No. 408, dated July 6, 2021, from Minnesota Management and Budget allocating volume cap bonding authority to the City in the amount of $19,000,000 for the Project. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Brooklyn Center, Minnesota (the "Council"), as follows. SECTION 1. LEGAL AUTHORIZATION AND FINDINGS. 1.1 Findings. The City hereby finds, detelrrlines and declares as follows: (a) The issuance and sale of the Note by the City, pursuant to the Act, is in the best interest of the City, and the City hereby determines to issue the Note and to sell the Note to Bridgewater Investment Management, Inc., a Minnesota corporation, or another financial institution selected by the Borrower (the "Lender"). The City will loan the proceeds of the Note (the "Loan") to the Borrower in order to finance the Project. (b) Pursuant to a Loan Agreement (the "Loan Agreement") to be entered into between the City and the Borrower, the Borrower will agree to repay the Loan in specified amounts and at specified times sufficient to pay in full when due the principal of, premium, if any, and interest on the Note. In addition, the Loan Agreement contains provisions relating to the construction, maintenance and operation of the Project, indemnification, insurance, and other agreements and covenants which are required or permitted by the Act and which the City and Borrower deem necessary or desirable for the financing of the Project. (c) Pursuant to an Assignment of Loan Agreement between the City, the Borrower and the Lender, (the "Assignment of Loan Agreement"), the City will pledge and grant a security interest in all of its rights, title, and interest in the Loan Agreement to the Lender (except for certain rights of indemnification and to reimbursement for certain costs and expenses). (d) The obligations of the Borrower under the Loan Agreement and payment of amounts due under the Note will be secured by certain security instruments required by the Lender and in forms authorized by the Borrower to be executed by or on behalf of the Borrower in favor of the Lender, which may include: (1) a mortgage or security agreement granting a mortgage lien or security interest with respect to the Project or any portion thereof to the Lender or to the City and assigned to the Lender pursuant to an Assignment BR291-409-762205.v1 2 of Mortgage to be executed by the City (the "Mortgage Assignment"); (ii) one or more collateral assignments of the contracts between the Borrower and the architect and contractor with respect to the Project; (iii) one or more security agreements, guaranty agreements, and indemnity agreements; and (iv) other security documents that are intended to ensure timely payment of the loan and the Note (collectively, the "Security )ocuments"). (e) As determined by the Lender, the proceeds of the Note may be disbursed pursuant to a Disbursing Agreement (the "Disbursing Agreement") by and among the Lender, Borrower and a title insurance company. (f) Certain requirements of federal and state law which require that a portion of the housing units in the Project be occupied by families of low and moderate income are set forth in a Regulatory Agreement (the "Regulatory Agreement") by and among the City, Borrower and the Lender. (g) The Note will be a special, limited revenue obligation of the City. The Note shall not be payable from or a charge upon any funds other than the revenues pledged to the payment thereof, nor shall the City be subject to any liability thereon. No holder of the Note shall ever have the right to compel any exercise of the taxing power of the City to pay the Note or the interest thereon, nor to enforce payment thereof against any property of the City. The Note shall not constitute a debt of the City within the meaning of any constitutional, charter or statutory limitation. (h) It is desirable, feasible and consistent with the objects and purposes of the Act to issue the Note for the purpose of financing the costs of the Project. (i) 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. (j) The purpose of the Project is, and the effect thereof will be, to promote the public welfare by the acquisition, rehabilitation and equipping of a facility for use as a multifamily housing development designed primarily for occupancy by persons of low and moderate income. (lc) The Act authorizes (i) the acquisition, rehabilitation and equipping of the Project, (ii) the issuance and sale of the Note, (iii) the execution and delivery by the City of related documents and the performance of all covenants and agreements of the City contained therein, and (iv) the performance of all other acts and things required under the constitution and laws of the State of Minnesota to make the Note and such agreements valid and binding obligations of the City in accordance with their terms. (1) It is desirable that the Borrower be authorized, subject to the terms and conditions set forth in the Loan Agreement, which terrrls and conditions the City determines to be necessary, desirable and proper, to complete the acquisition, rehabilitation and installation of the Project by such means as shall be available to the Borrower and in BR291-409-762205.v1 3 the manner determined by the Borrower, and with or without advertisement for bids as required for the acquisition and installation of municipal facilities. (m) The payments under the Loan Agreement are fixed to produce revenue sufficient to provide for the prompt payment of principal of, premium, if any, and interest on the Note, when due, and the Loan Agreement also provides that the Borrower (or its general partner) is required to pay all expenses of the operation and maintenance of the Proj ect, including, but without limitation, adequate insurance thereon and insurance against all liability for injury to persons or property arising from the operation thereof, and all taxes and special assessments levied upon or with respect to the Project and payable during the term of the Loan Agreement. (n) The City hereby finds, determines and declares that it is in the public interest of the residents of the City that the Project be undertaken in order to further the public purposes of rehabilitating existing property and increasing the supply of decent, safe, and sanitary rental housing units available to residents of the City. 1.2 Authorization and Ratification of Project. The City does hereby authorize the Borrower, in accordance with the provisions of the Act and subject to the terms and conditions imposed by the Lender, to provide for the acquisition, rehabilitation, and equipping of the Project by such means as shall be available to the Borrower and in the manner determined by the Borrower, and without advertisement for bids as may be required for the construction and acquisition of other municipal facilities; and the City hereby ratifies, affirms, and approves all actions heretofore taken by the Borrower consistent with and in anticipation of such authority. SECTION 2. THE NOTE. 2.1 Authorized Maximum Amount Form of Note and Interest Rate. (a) The Note is hereby approved and shall be issued pursuant to this Resolution in substantially Lite form on file with the City Manager of the City with such appropriate variations, omissions and insertions as are necessary and appropriate and are permitted or required by this Resolution, and in accordance with the further provisions hereof. The Note shall be issued in a denomination equal to its entire principal amount. The Note shall mature in the year and amount and be subject to redemption as therein specified, as such may be modified by agreement of the Lender, Borrower and the City; and the principal amount of the Note that may be outstanding hereunder is expressly limited to $19,000,000. The actual amount of the Note shall be determined by the agreement of the Lender and the Borrower and the Mayor and the City Manager (the "Authorized Officers") as evidenced by their execution of the Note. (b) The Note will bear interest at the fixed or variable rates determined by the Borrower and the Lender, and set forth in the Note as executed by the Authorized Officers; provided that such rates shall be subject to adjustment pursuant to the terms as set forth in the Note, this Resolution, the Loan Agreement, the Assignment of Loan Agreement, a Loan Purchase Agreement or similar agreement with respect to the purchase of the Note by the Lender and dated as of the date of delivery of the Note, between the Borrower (or its general BR291-409-762205.v1 t} partner) and the Lender, (the "Loan Purchase Agreement"), or the Security Documents. The sale of the Note to the Lender at a purchase price equal to its stated amount is hereby accepted. 2.2 The Note. The Note shall be dated as of the date of delivery to the Lender, shall be payable at the times and in the manner and shall be subject to such other terms and conditions as are set forth therein. 2.3 Execution of Note. The Note shall be executed on behalf of the City by the Authorized Officers. In case any Authorized Officer whose signature shall appear on the Note shall cease to be such officer before the delivery of the Note, such signature shall nevertheless be valid and sufficient for all purposes, the same as if such signatory had remained in office until delivery. In the event of the absence or disability of any Authorized Officers, such officer(s) of the City as, in the opinion of the City Attorney, may act in their behalf, shall without further act or authorization of the Council execute and deliver the Note. 2.4 Disposition of the Proceeds of the Note. Upon delivery of the Note to the Lender, the Lender shall, on behalf of the City, disburse the purchase price thereof for payment of Project costs in accordance with the terms of the Loan Agreement, any Disbursing Agreement and any Loan Purchase Agreement. 2.5 Registration of Transfer. The City will cause to be kept at the office of the City Manager of the City a Note Register for the Note in which, subject to such reasonable regulations as it may prescribe, the City shall provide for the registration of transfers of ownership of the Note. The Note shall be initially registered in the name of the Lender and, subject to the limitations on transfer provided herein, shall be transferable upon the Note Register for such Note by the Lender in person or by its agent duly authorized in writing, upon surrender of such Note together with a written instrument of transfer satisfactory to the City Manager of the City, duly executed by the Lender or its duly authorized agent. The City will require, as a precondition to any transfer, that the transferee provide to the City an investor letter or certification in a form satisfactory to the City and other evidence satisfactory to the City that the transferee is a financial institution or other accredited investor under the securities laws. The following form of assignment shall be sufficient for purposes of assigning the Note. For value received hereby sells, assigns and transfers unto the attached Note of the City of Brooklyn Center, Minnesota, and does hereby irrevocably constitute and appoint attorney to transfer said Note on the books of said City, with full power of substitution in the premises. The undersigned certifies that the transfer is made in accordance with the provisions of Sections 2.5, 2.7 and 2.8 of the Resolution authorizing the issuance of the Note. Dated: Registered Owner BR291-409-762205.v1 5 Upon such transfer the City Manager of the City shall note the date of registration and the name and address of the successor Lender in the applicable Note Register for such Note and in the registration blank appearing on such Note; subject to receipt of a purchaser letter or certification as required by Section 2.8 hereof. 2.6 Mutilated, Lost or Destroyed Note. In case the Note shall become mutilated or be destroyed or lost, the City shall, if not then prohibited by law, cause to be executed and delivered a new Note of like outstanding principal amount, number and tenor in exchange and substitution for and upon cancellation of such mutilated Note, or in lieu of and in substitution for such Note destroyed or lost, upon the payment by the Lender of the reasonable expenses and charges of the City in connection therewith, and in the case of a Note destroyed or lost, the filing with the City of evidence satisfactory to the City with indemnity satisfactory to it. If the mutilated, destroyed or lost Note has already matured or been called for redemption in accordance with its terms it shall not be necessary to issue a new Note prior to payment. 2.7 Ownership of Note. In accordance with the policy of the City, the Lender will be required to execute and deliver an investor letter or certification to the City, confirming that the Lender is either (a) a "qualified institutional buyer" as defined in Rule 144A promulgated under the Securities Act of 1933, as amended (the "1933 Act"), that purchases the Note for its own account or for the account of a qualified institutional buyer, or (b) an "accredited investor" as defined in Regulation D promulgated under the 1933 Act, that purchases the Note for its own account and without registration under state or other securities laws, pursuant to an exemption for such sale. The City may deem and treat the person in whose name the Note is last registered in the Note Register and by notation on the Note, whether or not such Note shall be overdue, as the absolute owner of such Note for the purpose of receiving payment of or on account of the Principal Balance, redemption price or interest and for all other purposes whatsoever, and the City shall not be affected by any notice to the contrary. 2.8 Limitation on Note Transfers. The Note will be issued to a "qualified institutional buyer" or an "accredited investor" and without registration under state or other securities laws, pursuant to an exemption for such sale; and accordingly the Note may not be assigned or transferred in whole or part, except to another "accredited investor" or "qualified institutional buyer". The City will require, as a precondition to any transfer, that the transferee provide to the City an investor letter or certification substantially in the form required of, and delivered upon issuance of the Note by the Lender in accordance with Section 2.7 hereof and other evidence satisfactory to the City that the transferee is a "qualified institutional buyer" or other "accredited investor". SECTION 3. MISCELLANEOUS. 3.1 Severability. If any provision of this Resolution shall be held or deemed to be or shall, in fact, be inoperative or unenforceable as applied in any particular case in any jurisdiction or jurisdictions or in all jurisdictions or in all cases because it conflicts with any provisions of any constitution or statute or rule or public policy, or for any other reason, such circumstances shall not have the effect of rendering the provision in question inoperative or unenforceable in any other case or circumstance, or of rendering any other provision or provisions contained herein invalid, inoperative, or unenforceable to any extent whatever. The invalidity of any one or more phrases, BR291-409-762205.v 1 6 sentences, clauses or paragraphs contained in this Resolution shall not affect the remaining portions of this Resolution or any part thereof. 3.2 Authentication of Transcript. The officers of the City are directed to furnish to Bond Counsel certified copies of this Resolution and all documents referred to herein, and affidavits or certificates as to all other matters which are reasonably necessary to evidence the validity of the Note. All such certified copies, certificates and affidavits, including any heretofore fuimished, shall constitute recitals of the City as to the correctness of all statements contained therein. 3.3 Authorization to Execute Agreements. The foams of the proposed Note, the Loan Agreement, the Assignment of Loan Agreement, Regulatory Agreement and the Mortgage Assignment (collectively, and together with any Loan Purchase Agreement, any Disbursing Agreement, the Security Documents and such other documents as Bond Counsel considers appropriate in connection with the issuance of the Note, the "Financing Documents") are hereby approved in substantially the forms on file with the City Manager of City, together with such additional details therein as may be necessary and appropriate and such modifications thereof, deletions therefiom and additions thereto as may be necessary and appropriate and approved by Bond Counsel prior to the execution of the documents, and the Authorized Officers are authorized to execute, in the name of and on behalf of the City, the Financing Documents to which the City is a party. In the event of the absence or disability of any of the Authorized Officers, such officers Athe City as, in the opinion of the City Attorney for the City, may act on their behalf shall without further act or authorization of the Council do all things and execute all instruments and documents required to be done or executed by such absent or disabled officers. The execution of any instrument by the appropriate officer or officers of the City herein authorized shall be conclusive evidence of the approval of such documents in accordance with the terms hereof. The electronic signature of a party to the Financing Documents, including all acknowledgements, authorizations, directions, waivers and consents thereto (or any amendment or supplement thereto) shall be as valid as an original signature of such party and shall be effective to bind such party to the Financing Documents. Any electronically signed Financing Documents shall be deemed (1) to be "written" or in writing," (ii) to have been signed, and (iii) to constitute a record established and maintained in the ordinary course of business and an original written record when printed from electronic files. For purposes hereof, (1) "electronic signature" means (a) a manually signed original signature that is then transmitted by electronic means or (b) a signature obtained through DocuSign, Adobe or a similarly digitally auditable signature gathering process, (ii) "transmitted by electronic means" means sent in the form of a facsimile or sent via the internet as a portable document format ("pdf') or other replicating image attached to an electronic mail or internet message; and, (iii) "electronically signed document" means a document transmitted by electronic means and containing, or to which there is affixed, an electronic signature. 3.4 Future Amendments. The authority to approve, execute and deliver future amendments to the Financing Documents entered into by the City in connection with the issuance of the Note and consents required under the Financing Documents is hereby delegated to the Authorized Officers of the City, 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 BR291-409-762205.v1 7 or consents are acceptable in form and substance to the counsel retained by the City to review such amendments. 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. 3.5 Governmental Program. The City has established a governmental program of acquiring purpose investments for qualified residential rental projects. The governmental program is one in which the following requirements of § 1.1484 (b) of the federal regulations relating to tax-exempt obligations shall be met: (a) the program involves the origination or acquisition of purpose investments; (b) at least 95% of the cost of the purpose investments acquired under the program represents one or more loans to a substantial number of persons representing the general public, states or political subdivisions, 501(c)(3) organizations, persons who provide housing and related facilities, or any combination of the foregoing; (c) at least 95% of the receipts fiom the purpose investments are used to pay principal, interest, or redemption prices on issues that financed the program, to pay or reimburse administrative costs of those issues or of the program, to pay or reimburse anticipated future losses directly related to the program, to finance additional purpose investments for the same general purposes of the program, or to redeem and retire governmental obligations at the next earliest possible date of redemption; (d) the program documents prohibit any obligor on a purpose investment financed by the program or any related party to that obligor fiom purchasing bonds of an issue that finances the program in an amount related to the amount of the purpose investment acquired from that obligor; and (e) the City shall not waive the right to treat the investment as a program investment. 3.6 Adoption of Housing Prom. The preparation of the Housing Program is hereby ratified, confirmed, and approved in all respects. The Housing Program is hereby adopted, ratified, and approved. The City Manager of the City is hereby authorized to do all other things and take all other actions as may be necessary or appropriate to carry out the Housing Program in accordance with the Act and any other applicable laws and regulations. 3.7 Costs; Indemnification by Borrower. The Borrower has agreed and it is hereby determined that any and all costs incurred by the City in connection with the financing of the Project whether or not the Project is carried to completion will be paid by the Borrower, as the case may be. It is understood and agreed that the Borrower shall indemnify the City against all liabilities, losses, damages, costs and expenses (including attorney's fees and expenses incurred BR291-409-762205.v1 $ by the City) arising with respect to the Project, the Financing Documents, or the Note, as further provided for and agreed to by and between the Borrower and the City in the Loan Agreement. 3.8 Headings; Terms. Paragraph headings in this resolution are for convenience of reference only and are not a part hereof, and shall not limit or define the meaning of any provision hereof. Capitalized terms used, but not defined, herein shall have the meanings given them in, or pursuant to, the Financing Documents. This Resolution shall be in full force and effect from and after its approval. This Resolution shall be in full force and effect fi•om and after its approval. November 22 2021 Date y /eP ATTEST: City Clerk Mayor The motion for the adoption of the foregoing resolution was duly seconded by Mayor Elliott and upon vote being taken thereon, the following voted in favor thereof: Butler, Elliott. Graves, Lawrence -Anderson, Ryan and the following voted against the same: None BR291-409-762205.v1 g