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HomeMy WebLinkAbout2018-061 CCRCouncil Member JPd1 Graves introduced the following resolution and moved its adoption: RESOLUTION NO. 2018-61 RESOLUTION AUTHORIZING THE ASSIGNMENT AND ASSUMPTION OF OBLIGATIONS UNDER A CONDUIT REVENUE BOND BY NOBLE ACADEMY DBA NOMPENG ACADEMY PROJECT AND APPROVING RELATED DOCUMENTS WHEREAS, City of Brooklyn Center, Minnesota (the "City") is duly organized and existing under the Constitution and laws of the State of Minnesota; and WHEREAS, under the Minnesota Municipal Industrial Development Act, Minnesota Statutes, Sections 469.152-469.1655, as amended (the "Act"), each city of the State of Minnesota, including the City, is authorized to issue revenue bonds to finance, in whole or in part, the costs of the acquisition, construction, improvement, or extension of revenue producing enterprises, whether or not operated for profit; and WHEREAS, Educational Properties II, Inc., a Minnesota nonprofit corporation, and an affiliated business company of Noble Academy, (the "Borrower") has proposed to acquire an existing school building located at 6201 Noble Avenue North, Brooklyn Center, Minnesota, 55429 from ASG Brooklyn Center (the "Seller") for use as a public charter schoolhouse for kindergarten through grade eight (the "School Facility") and assume the obligations of the Seller related to the City's conduit Charter School Lease Revenue Bond (Odyssey Academy Project), Series 2013A (the "Bond") which were previously issued by the City to finance (i) the acquisition, renovation, construction and equipping of the School Facility; (ii) the funding of a debt service reserve fund; (iii) the payment of a portion of the interest on the Bond; and (iv) the payment of the costs of issuing the Bond (the "Project"). The School Facility will be owned by the Borrower and leased to and operated by Noble Academy (under the name Nompeng Academy), a Minnesota nonprofit corporation and public charter school (the "School"); and WHEREAS, the Borrower has requested that the City consent to an Amended and Restated Loan Agreement, dated on or after April 1, 2018 (the "Loan Agreement"), between the City, the Borrower and Minnesota Bank & Trust, a Minnesota state banking corporation ("Lender") and an Assignment and Assumption Agreement and Agreement to Amend Assumed Agreements, dated on or after April 1, 2018 (the "Assumption Agreement"), between the City, the Borrower, the Lender and the Seller which provides certain terms and conditions of the assumption of the Bond obligations and related documents; and WHEREAS, the Bond heretofore issued by the City constitutes a revenue obligation secured solely by: (i) the revenues derived from the Loan Agreement; (ii) a pledge and assignment of all School revenues, including money due to the School from the State of Minnesota Lease Aid Payment Program (the "Program"); (iii) other revenues pledged to or otherwise received by the Borrower, except for those revenues necessary for ordinary operational expenses and required under Minnesota law; (iv) a mortgage and security agreement granted by the Borrower with respect to the Project; and (v) other security provided or arranged by the Borrower or the School; and WHEREAS, following the publication of a notice (the "Public Notice") of a public hearing in the Brooklyn Center Sun-Post, the official newspaper of the City on March 8, 2018, at least 14 days before the regularly-scheduled meeting of the City Council of the City on March 26, 2018, the City RESOLUTION NO. 2018-61 Council conducted a public hearing on this date, in accordance with the requirements of Section 147(f) of the Internal Revenue Code of 1986, as amended (the "Code") and Treasury Regulations, Section 5f.103-2, at which a reasonable opportunity was provided for interested individuals to express their views on the proposal to acquire and re-finance the Project and assume the obligations under the Bond as proposed by the Borrower; NOW, THEREFORE, BE IT RESOLVED by the City Council (the "Council") of the City of Brooklyn Center, Minnesota (the "City"), as follows: 1.For the purposes set forth above, subject to the approval of the Project by DEED, as required by the Act, the Council hereby authorizes the assumption by the Borrower of the Seller's obligations with respect to the City's Charter School Lease Revenue Bond (Odyssey Academy Project), Series 2013A (the "Bond"), originally issued in the principal amount of $3,555,376. It is hereby found and determined that the Project furthers the purposes set forth in the Act and the Project constitutes a "project" within the meaning of Section 469.153, subdivision 2(b) of the Act. 2.The Bond is and shall be a special limited obligation of the City payable solely from the revenues provided by the Borrower pursuant to the Loan Agreement and from the revenues and security pledged, assigned, and granted pursuant to the following documents: (i) the Amended and Restated Mortgage, Security Agreement and Assignment of Rents, to be dated on or after April 1, 2018 (the "Mortgage"), from the Borrower, as mortgagor, to the Lender, as mortgagee; (ii) the Assignment of Lease, dated on or after April 1, 2018 (the "Assignment"), from the Borrower, as assignor, to the Lender, as assignee; and (iii) the Amended and Restated Pledge and Covenant Agreement, dated on or after April 1, 2018 (the "Pledge and Covenant Agreement"), from the School to the Lender and (v) other security provided or arranged by the Borrower or the School pursuant to other related security documents. 3.The loan repayments to be made by the Borrower under the Loan Agreement are fixed to produce revenues sufficient to provide for the prompt payment of principal of, premium, if any, and interest on the Bond, and the Loan Agreement also provides that the Borrower is required to pay all expenses of the operation and maintenance of the Project, 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 lawfully imposed taxes and special assessments levied upon or with respect to the Project and payable during the term of the Loan Agreement. 4.As provided in the Loan Agreement, the Bond shall not be payable from nor charged upon any funds other than the revenues pledged to its payment, nor shall the City be subject to any liability thereon, except as otherwise provided in this paragraph. No holder of the Bond shall ever have the right to compel any exercise by the City of any taxing powers to pay the Bond 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 has been assigned to the Lender under the terms of a Pledge Agreement from the City to the Lender. The Bond recites that the Bond is issued pursuant to the Act, and that the Bond, including interest and premium, if any, thereon, is payable solely from the revenues and assets pledged to the payment thereof, and the Bond shall not constitute a debt of the City within the meaning of any constitutional, statutory or charter limitations. 5. The Mayor and City Manager (the "City Officials") and other officers, employees, and agents of the City are hereby authorized to execute and deliver, on behalf of the City, the Loan Agreement and the Assumption Agreement, the documents other listed in Section 2 to which it is a party, and such other documents as are necessary or appropriate in connection with the assumption of RESOLUTION NO. 2018-61 obligations of the S, including various certificates of the City, the Information Return for Tax-Exempt Private Activity Bond Issues, Form 8038, a certificate as to arbitrage and rebate, and similar documents (the "Financing Documents"). All of the provisions of the Financing Documents, 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 Financing Documents shall be substantially in the forms on file with the City which are hereby approved, with such omissions and insertions as do not materially change the substance thereof, or as the City Officials, in their discretion, shall determine, and the execution of the Financing Documents by the City Officials shall be conclusive evidence of such determination. 6.Except as otherwise provided in this resolution, all rights, powers, and privileges conferred and duties and liabilities imposed upon the City or the City Council by the provisions of this resolution or of the Financing Documents shall be exercised or performed by the City or by such members of the City Council, or such officers, board, body, or agency thereof as may be required or authorized by law to exercise such powers and to perform such duties. No covenant, stipulation, obligation, or agreement herein contained or contained in the Financing Documents shall be deemed to be a covenant, stipulation, obligation, or agreement of any member of the City Council the City, or any officer, agent, or employee of the City in that person's individual capacity, and neither the City Council of the City nor any officer or employee executing the Bond shall be liable personally on the Bond or be subject to any personal liability or accountability by reason of the issuance thereof. No provision, covenant, or agreement contained in the Financing Documents, the Bond or in any other document relating to the Bond, and no obligation therein or herein imposed upon the City or the breach thereof, shall constitute or give rise to 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 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 Bond, as provided therein. 7.Except as herein otherwise expressly provided, nothing in this resolution or in the Financing Documents expressed or implied, is intended or shall be construed to confer upon any person or firm or corporation, other than the City or any holder of the Bond, any right, remedy, or claim, legal or equitable, under and by reason of this resolution or any provisions hereof, this resolution, the Financing Documents and all of their provisions being intended to be and being for the sole and exclusive benefit of the City and any holder from time to time of the Bond. 8.In case any one or more of the provisions of this resolution, other than the provisions contained in Sections 5, 7 and 8 hereof, or of the Financing Documents, or of the Bond 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 Financing Documents, or of the Bond, but this resolution, the Financing Documents, and the Bond shall be construed and endorsed as if such illegal or invalid provisions had not been contained therein. 9.The Bond contains a recital that it was issued pursuant to the Act, and such recital shall be conclusive evidence of the validity of the Bond 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 Bond, 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. RESOLUTION NO. 2018-61 10.The officers of the City, bond counsel, other attorneys, engineers, 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, and the Bond for the full, punctual, and complete performance of all the terms, covenants, and agreements contained in the Bond, the Financing Documents, and this resolution. In the event that for any reason any of the City Officials is unable to carry out the execution of any of the Financing Documents or other acts provided herein, such Financing Documents may be executed and such actions may be taken by any official or employee of the City or the City delegated the duties of any such City Official with the same force and effect as if such Financing Documents were executed and delivered by such City Official. 11.The Borrower has agreed and it is hereby determined that any and all costs incurred by the City in connection with the assumption of the obligations of the seller will be paid by the Borrower. It is understood and agreed that the Borrower shall indemnify, defend and hold harmless the City against all liabilities, losses, damages, costs and expenses (including attorney's fees and expenses incurred by the City) arising with respect to the project or the Bond or the transactions contemplated in this resolution, as provided for and agreed to by and between the Borrower and the City in the Loan Agreement. 12. This resolution shall be in full force and effect from and after its passage. March 26. 2018 Date Mayor ATTEST: City Clerk The motion for the adoption of the foregoing resolution was duly seconded by Councilmember Kris Ia-n and upon vote being taken thereon, the following voted in favor thereof: Tim Wi]]sn, PbrquiRihJer, Pprfl Gr, Kis Ia=m-Artrsm, can Ryan and the following voted against the same: whereupon said resolution was declared duly passed and adopted.