Loading...
HomeMy WebLinkAbout1999-131 CCRadoption: Member Kay Lasman introduced the following resolution and moved its RESOLUTION NO. 99-131 RESOLUTION APPROVING PARTICIPATION IN THE PRESERVATION OF INTEREST REDUCTION PAYMENTS UNDER SECTION 236 OF THE NATIONAL HOUSING ACT (SHINGLE CREEK TOWER PROJECT) WHEREAS, pursuant to Minnesota Statutes, Chapter 462C (the "Act"), the City of Brooklyn Center, Minnesota (the "City") is authorized to develop and administer programs to finance the acquisition and rehabilitation of multifamily housing developments under the circumstances and within the limitations set forth in the Act. Minnesota Statutes, Section 462C.07 provides that such programs for multifamily housing developments may be financed by revenue bonds issued by the City; and WHEREAS, the City has, at the request of Boca Limited Partnership, a Minnesota limited partnership (the "Owner") approved a program providing for the acquisition and rehabilitation of a 122 unit residential facility known as Shingle Creek Tower located at 6221 Shingle Creek Parkway, Brooklyn Center, Minnesota (the "Facility') and has issued its $7,200,000 Multifamily Housing Revenue bonds (Shingle Creek Tower Project) Series 1999 (the `Bonds'); and WHEREAS, the proceeds from the sale of Bonds will be used to fund a loan to the Owner to finance a portion of the costs of acquiring and remodeling the Facility, including the purchase of an existing loan (the "Loan") made under Section 236 of the National Housing Act, as amended, which loan is secured by a mortgage (the "Section 236 Mortgage"); and WHEREAS, in conjunction with the Loan, the United Stated Department of Housing and Urban Development ("HUD") makes "Interest Reduction Payments" to the maker of the Loan on behalf of the Owner so that the Loan bears interest at the rate of I% per annum with principal payments based on a forty (40) year amortization schedule; and WHEREAS, in order to maintain the Interest Reduction Payments, the HUD regulations require that the Loan and Section 236 Mortgage be held by a state or local governmental entity; and WHEREAS, the City will acquire the Loan and Section 236 Mortgage using funds provided to the Owner from proceeds of the Bonds or from equity investment in an allocation of Low-Income Housing Tax Credits under Section 42 of the Internal Revenue Code; and WHEREAS, upon acquisition of the Loan, the City will act as the "Holder" of the promissory note evidencing the Loan, and as the "Mortgagee" under the Section 236 Mortgage securing the Loan, and in accordance with Section 236 of the HUD regulations, the City will enter into a Section 236 Interest Reduction Payment Contract" whereby HUD will make the Interest Reduction Payments to the City in its capacity as the Mortgagee; and WHEREAS, in accordance with the requirements of Section 236, the Minnesota Housing Finance Agency ("MHFA") has agreed to be responsible for monitoring the compliance of the Owner with Section 236 as set forth in a "Regulatory Agreement" to be entered into by and between MHFA and the Owner; and RESOLUTION NO. 99-131 WHEREAS, the Interest Reduction Payments will decrease the cost of the debt service necessary to support the Loan, which in turn will (i) allow the Owner to charge lower rents to the residents of the Facility, and (ii) increase the amount of funding available for the rehabilitation of the Facility and thereby improve the quality of the affordable housing units being provided to qualified low-income families in accordance with the terms of the Regulatory Agreement; and 1 WHEREAS, the City will not incur additional financial risk in the acquisition of the Loan because the Owner will be providing the necessary funds to acquire the Loan, and the Owner will agree to indemnify and hold the City harmless from and against any claims or financial losses that the City may incur in its capacity as the Mortgagee; and WHEREAS, forms of the following documents have been presented to the City Council and are on file with the City Clerk: (a) Participation Agreement between the City and Norwest Bank Minnesota, National Association (the "Trustee"), (b) Agreement for Interest Reduction Payments dated October 1, 1999, between the Owner, the City and the Department of Housing and Urban Development acting through the Federal Housing Commission (the IRP Agreement") and (c) a Regulatory Agreement dated between the MHFA, the City and Owner (the "Regulatory Agreement"). NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Brooklyn Center, Minnesota, that the City does hereby consent to the use of a portion of the proceeds from the sale of the Bonds issued by the City for the acquisition of the Loan and Section 236 Mortgage encumbering the Facility. - BE IT FURTHER RESOLVED that the City shall act as the "Mortgagee" under the Section 236 Mortgage, and that the Participation Agreement, IRP Agreement and Regulatory* Agreement are hereby approved in substantially the forms submitted, and contingent upon execution by MHFA of the Regulatory Agreement, the Mayor and City Manager are authorized to execute the IRP Agreement, participation Agreement and Regulatory Agreement in substantially the forms submitted. Auzust 23. 1999 Date ATTEST: City Clerk Mayor The motion for the adoption of the foregoing resolution was duly seconded by member Ed Nelson and upon vote being taken thereon, the following voted in favor thereof Myrna Kragness, Debra Hlstrom, Kay Tasman, Ed Nelson, and Robert Peppe; and the following voted against the same: none, whereupon said resolution was declared duly passed and adopted.