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HomeMy WebLinkAbout2019-158 CCRadoption: Council Member Ryan introduced the following resolution and moved its RESOLUTION NO. 2019-158 AUTHORIZING THE ISSUANCE, SALE, AND DELIVERY OF ITS CONDUIT MULTIFAMILY HOUSING REVENUE REFUNDING BONDS RELATING TO THE REE XERXES AVENUE WORKFORCE HOUSING PROJECT; ADOPTING AN AMENDED HOUSING PROGRAM PURSUANT TO MINNESOTA STATUTES, CHAPTER 462C; APPROVING THE FORMS OF AND AUTHORIZING THE EXECUTION AND DELIVERY OF THE BONDS AND RELATED DOCUMENTS; PROVIDING FOR THE SECURITY, RIGHTS, AND REMEDIES WITH RESPECT TO THE BONDS; AND GRANTING APPROVAL FOR CERTAIN OTHER ACTIONS WITH RESPECT THERETO WHEREAS, the City of Brooklyn Center, Minnesota (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; and WHEREAS, 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 1 a, of the Act; and WHEREAS, Minnesota Statutes, Section 471.656, as amended, authorizes a municipality to issue obligations to finance the acquisition or improvement of property located outside of the corporate boundaries of such municipality if the obligations are issued under a joint powers agreement between the municipality issuing the obligations and the municipality in which the property to be acquired or improved is located. Pursuant to Minnesota Statutes, Section 471.59, as amended, by the terms of a joint powers agreement entered into through action of their governing bodies, two municipalities may jointly or cooperatively exercise any power common to the contracting parties or any similar powers, including those which are the same except for the territorial limits within which they may be exercised and the joint powers agreement may provide for the exercise of such powers by one or more of the participating governmental units on behalf of the other participating units; and WHEREAS, in the issuance of the City's revenue obligations and in the making of a loan to finance or refinance a multifamily housing development, the City may exercise, within its corporate limits, any of the powers that the Minnesota Housing Finance Agency may exercise under Minnesota Statutes, Chapter 462A, as amended, including without limitation under the provisions of Minnesota Statutes, Chapter 475, as amended; and WHEREAS, Brooklyn Center AH I, LLLP, a Minnesota limited liability limited partnership ("Borrower"), has requested that the City issue its revenue refunding bonds, pursuant to the Act, in an aggregate amount not to exceed $25,300,000, in one or more series, at one time or from time to time (the "Bonds") and lend the proceeds thereof to the Borrower to (i) refund the Multifamily Housing Revenue Note (REE Xerxes Avenue Workforce Housing Project), Series 2019 (the "Prior Note") issued by the City on June 21, 2019 in the original aggregate principal amount of $17,500,000, the proceeds of which were used to finance the acquisition, construction, and equipping of an approximately 127 -unit workforce rental housing facility and related amenities to be located on the southern portion of the property at 5801 Xerxes Avenue North in the City (the "Project"); (ii) fund one or more reserve funds to secure the timely 620118v2BR291-395 payment of the Bonds, if necessary; (iii) pay interest on the Bonds during the construction of the Project, if necessary; (iv) pay the costs of issuing the Bonds; and (v) finance additional costs of the Project; and WHEREAS, Section 146(i)(6) of the Internal Revenue Code of 1986, as amended (the "Code") permits the reuse of bonding authority for affordable housing projects and treats the reuse as a refunding for tax purposes if: (i) the "refunding" occurs within 4 years after the original bonds were issued, (ii) the "refunding" bonds are issued within 6 months after the principal payment of the original bonds, and (iii) the "refunding" bonds mature within 34 years of the original issue date; and WHEREAS, the Borrower has represented to the City that the Bonds will meet the requirements of Section 146(1)(6) of the Code with respect to the reuse of a portion of the bonding authority from the City of Rochester, Minnesota (the "Rochester") Multifamily Housing Revenue Bonds (Eastgate Apartments Project), Series 2017 issued by Rochester in the original aggregate principal amount of $14,135,000 (the "Rochester Bonds"); and WHEREAS, in order to better leverage public funding by recycling bonding authority as permitted by Section 146(1)(6) of the Code, the City and Rochester wish to enter into a Joint Powers Agreement, pursuant to which Rochester consents to the issuance of the Bonds to finance, in part, the construction, acquisition, and equipping of the Project, all in accordance with Minnesota Statutes, Sections 471.59 and 471.656, as amended, and Section 147(f) of the Code. The City will use up to $7,800,000 of recycled bonding authority from the Rochester Bonds, pursuant to the Joint Powers Agreement, in order to finance a portion of the Project; and WHEREAS, the City has prepared an amended housing program providing the information required by Section 462C.03, subdivision 1a of the Act (the "Amended Housing Program") regarding the issuance by the City of one or more revenue bonds in the maximum principal amount of $25,300,000 and lend the proceeds thereof to the Borrower to finance the acquisition, construction and equipping of the Project; and ___ _ WHEREAS, a notice of public hearing (the "Public Notice") was published in accordance with the Act and Section 147(f) of the Internal Revenue Code of 1986, as amended (the "Code"), with respect to: (i) the required public hearing under the Code; (ii) the required public hearing under Section 462C.04, subdivision 2, of the Act; (iii) the Amended Housing Program; and (iv) approval of the issuance of the Bonds and on this same date, the City Council conducted a public hearing on the date hereof at which a reasonable opportunity was provided for interested individuals to express their views, both orally and in writing; and WHEREAS, the Bonds will be issued pursuant to this Resolution and the Bonds and the interest on the Bonds: (i) shall be payable solely from the revenues pledged therefor under the Loan Agreement, the Indenture, the Funding Loan Agreement and the Project Loan Agreement (all as hereinafter defined); (ii) shall not constitute a debt of the City within the meaning of any constitutional or statutory limitation; (iii) shall not constitute nor give rise to a pecuniary liability of the City or a charge against its general credit or taxing powers; (iv) shall not constitute a charge, lien, or encumbrance, legal or equitable, upon any property of the City other than the City's interest in the Loan Agreement and the Project Loan Agreement; and (v) shall not constitute a general or moral obligation of the City; and NOW, THEREFORE, BE IT RESOLVED by the City Council (the "Council") of the City of Brooklyn Center, Minnesota (the "City"), as follows: 1. Findings. The City acknowledges, finds, determines, and declares that the issuance of the Bonds is authorized by the Act and is consistent with the purposes of the Act and that the issuance of the 620118v2BR291-395 Bonds, and the other actions of the City under the Indenture, the Loan Agreement, the Project Loan Agreement, the Funding Loan Agreement, and this resolution constitute a public purpose and are in the interests of the City. 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. In authorizing the issuance of the Bonds for the financing and refinancing of the Project and the 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 providing or preserving affordable multifamily housing developments for low or moderate income residents of the City and otherwise furthering the purposes and policies of the Act. 2. Financing Structure. The Borrower has requested that the City issue, sell, and deliver the Bonds pursuant to -a Trust Indenture, dated on or after December 1, 2019 (the "Indenture"), -between the Issuer and U.S. Bank National Association, a national banking association (the "Trustee"), as the Multifamily Housing Revenue Refunding Bonds (REE Xerxes Avenue Workforce Housing Project), Series 2019 to be purchased by Dougherty & Company, LLC (the "Underwriter") pursuant to the Purchase Contract, dated on or after the date this Resolution is approved (the "Purchase Contract"), among the Underwriter, the City, and the Borrower and the proceeds derived from the sale of the Bonds will be loaned by the City to the Borrower to refinance the Prior Note and finance a portion of the cost of the Project pursuant to the terms of a Loan Agreement, dated on or after December 1, 2019, by and between the Borrower and the City (the "Loan Agreement"). Pursuant to the Loan Agreement the City will loan the proceeds of the Bonds and transferred, unexpended proceeds of the Prior Note to the Borrower. The Borrower's repayment obligations under the Loan Agreement will be evidenced by a Promissory Note delivered by the Borrower to the Issuer (the "Promissory Note"), which will be assigned by the Issuer to the Trustee pursuant to an assignment (the "Assignment of Note") and will be secured by a mortgage granting a mortgage lien on the Project or a portion thereof (the "Mortgage") to be delivered by the Borrower to the Issuer and assigned to the U.S. Bank National Association, a national banking association, as construction lender, pursuant to an assignment of mortgage (the "Assignment of Mortgage") and, upon conversion from construction to permanent_ financing, to the Trustee, acting as the Fiscal Agent for Federal Home Loan Mortgage Corporation, a shareholder -owned government-sponsored enterprise ("Freddie Mac"), as the permanent mortgage lender. The payments to be made by the Borrower under the Loan Agreement are fixed so as to produce revenue sufficient to pay the principal of, premium, if any, and interest on the Bonds when due. When executed, the right, title and interest of the City in, to and under, among other things, the Loan Agreement (except as therein provided) will be assigned to the Trustee pursuant to the Indenture. The Bonds shall bear interest at the rates, shall be numbered, shall be dated, shall mature, shall be subject to redemption prior to maturity, and shall be in such form and have such other details and provisions as may be prescribed in the Indenture, as executed in accordance with Sections 8 and 16. The Trustee is hereby appointed as the Paying Agent and the Bond Registrar for the Bonds. 3. Conversion. Pursuant to the Indenture, the Bonds will convert from construction financing to permanent financing (the "Conversion"). Upon the satisfaction of certain conditions to Conversion set forth in the Indenture (i) the Bonds shall be subject to mandatory tender, (ii) the purchase price of the Bonds shall be paid with amounts on deposit in with the Trustee on behalf of Freddie Mac as the permanent mortgage lender, and (iii) the Bonds shall be converted to a physical Multifamily Note with designation as Multifamily Housing Revenue Refunding Note (REE Xerxes Avenue Workforce Housing Project), Series 2019 (the "Governmental Note") which shall be purchased by NorthMarq Capital, LLC, a Minnesota limited liability company (the "Freddie Mac Seller/Servicer"). In connection with Conversion, the Funding Loan Agreement, dated on or after December 1, 2019 (the "Funding Loan Agreement"), by and between the City, U.S. Bank National Association, a national banking association, 620118v2BR291-395 in its capacity as fiscal agent (the "Fiscal Agent") will be executed and will replace and supercede the Indenture and the Project Loan Agreement, dated on or after December 1, 2019 (the "Project Loan Agreement") by and between the City, the Fiscal Agent and the Borrower will be executed and will replace and supercede the Loan Agreement. Additionally, at conversion, the Borrower will issue a project note (the "Project Note") to the City to secure its obligations under the Project Loan Agreement to be endorsed by the City to the Fiscal Agent. 4. Authorization of Bonds. The Bonds shall bear interest at the rates, shall be designated, shall be numbered, shall be dated, shall mature, shall be in the aggregate principal amount, shall be subject to redemption prior to maturity, shall be in such form, and shall have such other terms, details, and provisions as are prescribed in the Indenture, in substantially the form now on file with the City, with any - necessary and- appropriate variations, omissions, and insertions (including changes _to the -aggregate principal amount of the Bonds, the stated maturity of the Bonds, the interest rate or rates on the Bonds and the terms of redemption of the Bonds) as are approved as evidenced by the execution thereof as provided in Sections 8 and 16. The City hereby authorizes the Bonds to be issued in an amount not to exceed $25,300,000, in whole or in part, as "tax-exempt bonds," the interest on which is excludable from gross income for federal and State of Minnesota income tax purposes; provided that, if necessary, certain Bonds may be issued as taxable obligations. The Council hereby authorizes and directs the execution of the Bonds in accordance with the terms of the Indenture, and hereby provides that the Indenture shall provide the terms and conditions, covenants, rights, obligations, duties, and agreements of the owners of the Bonds, the City, and the Trustee as set forth therein. The Trustee is hereby appointed as the Paying Agent and the Bond Registrar - for the Bonds. All of the provisions of the Bonds, when executed 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 Bonds shall be substantially in the form in the Indenture on file with the City, which form is hereby approved, with such necessary and appropriate variations, omissions, and insertions (including changes to the aggregate principal amount of the Bonds, the stated maturities of the Bonds, the interest rates on the Bonds and the terms of redemption of the Bonds) as the Mayor and the City Manager (the "City Officials"), in their discretion, shall determine. The execution of the Bonds with the manual or facsimile signatures of the City Officials and the delivery of the Bonds by the City shall be conclusive evidence of such determination. Upon Conversion, the Governmental Note shall bear interest at the rates, shall be designated, shall be numbered, shall be dated, shall mature, shall be in the aggregate principal amount, shall be subject to redemption prior to maturity, shall be in such form, and shall have such other terms, details, and provisions as are prescribed in the Funding Loan Agreement, in substantially the form now on file with the City, with necessary and appropriate variations, omissions, and insertions (including changes to the aggregate principal amount of the Governmental Note, the stated maturity of the Governmental Note, the interest rates on the Governmental Note and the terms of redemption of the Governmental Note) as are approved as evidenced by the execution thereof as provided in Section 8. Pursuant to the Funding Loan Agreement, the City will assign its rights to the basic payments and certain other rights and interests under the Project Loan Agreement, the Project Loan, the Project Note, and certain moneys and securities held by the Fiscal Agent in the funds and accounts established under the Funding Loan Agreement to the Fiscal Agent. 5. Limitation of Liability. The Bonds and the Governmental Note shall be special, limited revenue obligations of the City payable solely from the revenues provided by the Borrower pursuant to the Loan Agreement, the Project Loan Agreement, and other funds pledged pursuant to the applicable 620118v2BR291-395 Financing Documents; the City does not pledge its general credit or taxing powers or any funds of the City to the payment of the Bonds or the Governmental Note. No provision, covenant or agreement contained in the aforementioned documents, the Bonds, the Governmental Note or in any other document relating to the Bonds or the Governmental Note, and no obligation therein or herein imposed upon the City or the breach thereof, shall constitute or give rise to a general or moral obligation of the City or 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 and the Project Loan Agreement which are to be applied to the payment of the Bonds and the Governmental Note, as provided therein and as assigned to the Trustee or the Fiscal Agent, under the Indenture or the Funding Loan Agreement, respectively. - -- - 6. Approval of Amended Housing Program,• Compliance with Certain Rental and Occupancy Restrictions as to the Project. The Amended Housing Program is hereby adopted, ratified, and approved in all respects. The City Manager is hereby authorized to do all other things and take all other actions as may be necessary or appropriate to carry out the Amended Housing Program in accordance with the Act and any other applicable laws and regulations. To ensure compliance with certain rental and occupancy restrictions imposed by the Act and Section 142(d) of the Code and to ensure compliance with certain restrictions imposed by the City, the Project will be subject to a Regulatory Agreement, dated as of or after December 1, 2019 (the "Regulatory Agreement"), among the City, the Borrower, and the Trustee. 7. Joint Powers Agreement. The Joint Powers Agreement is hereby approved and the Mayor and the City Manager are hereby authorized to execute and deliver such agreement in substantially the form on file with the City, together with such omissions and insertions as do not materially change the substance thereof, or as the Mayor and the City Manager, in their discretion, shall determine are appropriate and in the best interests of the City, and the execution of the Joint Powers Agreement by the Mayor and the City Manager shall be conclusive evidence of such determination. In accordance with the Joint -Powers Agreement, the _City _is -authorized to reuse bonding authority from the Rochester Bonds -in - an amount not to exceed $7,800,000. 8. Approval of Forms, Execution. The City Officials are hereby authorized and directed to execute and deliver the Indenture, the Loan Agreement, the Bonds, the Purchase Contract, the Regulatory Agreement, the Joint Powers Agreement, the Assignment of Mortgage, the Assignment, the Project Loan Agreement, the Funding Loan Agreement, the Governmental Note, the assignment of the Project Note, and any consents or such other documents and certificates as are necessary or appropriate in connection with the issuance, sale, and delivery of the Bonds, including without limitation various certificates of the City, the Information Return for Tax -Exempt Private Activity Bond Issues, Form 8038, a letter prepared in accordance with Section 42(m)(2)(D) of the Code evidencing the determination of the City, as the issuer of the Bonds, based on conclusions of a third party analyst, that the amount of tax credits to be allocated to the Project will not exceed the amount necessary for the financial feasibility of the Project and its viability as a qualified low-income housing project, a certificate as to arbitrage and rebate and similar documents (collectively, 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 currently on file with the City, which are hereby approved, with such necessary and appropriate variations, omissions and insertions as do not materially 620118v2BR291-395 change the substance thereof, and as the City Officials, in their discretion, shall determine, and the execution thereof by the City Officials shall be conclusive evidence of such determination. 9. Bond Opinion. The City hereby authorizes Kennedy & Graven, Chartered, as bond counsel, to prepare, execute, and deliver its approving legal opinions with respect to the Bonds. 10. Official Statement. The City has not participated in the preparation of the Official Statement relating to the offer and sale of the Bonds (the "Official Statement"), and has made no independent investigation with respect to the information contained therein, including the appendices thereto, and the City assumes no responsibility for the sufficiency, accuracy, or completeness of such information, except for the information under the captions "THE ISSUER" and "ABSENCE OF LITIGATION=The Issuer." Subject to the foregoing, the City hereby consents to the -distribution and - the use by the Underwriter of the Official Statement in connection with the offer and sale of the Bonds. The Official Statement is the sole material consented to by the City for use in connection with the offer and sale of the Bonds. 11. Council Authority; No Personal Liability. 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 aforementioned 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 aforementioned documents shall be deemed to be a covenant, stipulation, obligation or agreement of any member of the City Council, or any officer, agent or employee of the City in that person's individual capacity, and neither the City Council nor any officer or employee executing the Bonds or the Governmental Note shall be personally liable on the Bonds or the Governmental Note or be subject to any personal liability or accountability by reason of the issuance thereof. Except as otherwise expressly provided herein, nothing in this resolution or in the aforementioned 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 Bonds or the Governmental Note issued under the provisions of this resolution, any right, remedy or claim, legal or equitable, under and by reason of this resolution or any provisions hereof, this resolution, the aforementioned 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 Bonds or the Governmental Note issued under the provisions of this resolution. 12. Severability. In case any one or more of the provisions of this Resolution, other than the provisions contained Section 5, or of the aforementioned documents, or of the Bonds or the Governmental Note 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 aforementioned documents, or of the Bonds or the Governmental Note, but this Resolution, the aforementioned documents, and the Bonds or the Governmental Note shall be construed and endorsed as if such illegal or invalid provisions had not been contained therein. 13. Valid i . The Bonds, when executed and delivered, shall contain a recital that they are issued pursuant to the Act, and such recital shall be conclusive evidence of the validity of the Bonds 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 Bonds, and to the 620118v2BR291-395 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. 14. Authorization; Direction. 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 Bonds, for the full, punctual, and complete performance of all the terms, covenants, and agreements contained in the Bonds, the aforementioned documents, and this resolution. If for any reason either of the City Officials is unable to execute and deliver the documents referred to in this Resolution, such documents may be executed by any member of the City Council or any officer of the City delegated the duties of such City Officials with the same force and effect as if such documents were executed and delivered by - such -City Officials. -- 15. cia s. 15. Ci Costs. The Borrower shall pay the City's administrative fee in connection with the issuance of the Bonds, as provided in the Loan Agreement, and pay, or, upon demand, reimburse the City for payment of, any and all costs incurred by the City in connection with the Project and the issuance of the Bonds, whether or not the Bonds are issued, including any costs for attorneys' fees. The Borrower shall indemnify 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 Bonds, as provided for and agreed to by the Borrower in the Loan Agreement. 16. Future Amendments. The authority to approve, execute and deliver future amendments to the Financing Documents herein authorized entered into by the City in connection with the issuance of the Bonds and any consents required under the Financing Documents is hereby delegated -to----the -City - Officials upon consultation with the City's Bond Counsel, subject to the following conditions: (a) such amendments or consents do not require the consent of the holder of the Bonds or such consent has been obtained; (b) such amendments or consents to not materially adversely affect the interests of the City; (c) such amendments or consents do not contravene or violate any policy of the City; and (d) such amendments or consents are acceptable in form and substance to the City's Bond Counsel. 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 Officials shall be conclusive evidence of the approval of such instruments in accordance with the terms hereof. In the absence of either of the City Officials, any instrument authorized by this paragraph to be executed and delivered may be executed by the officer of the City or the City authorized to act in his/her place and stead. 17. 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 §1.148-1(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 from the purpose investments are used to pay principal, interest, or redemption prices on issues that financed the program, to pay or reimburse 620118v2BR291-395 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 from 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. 18. Effective Date. This Resolution shall be in full force and effect from and after its approval. November 12, 2019 Date Mike Elliott, Mayor ATTEST: ab&5 . Barb Suciu, City Clerk The motion for the adoption of the foregoing resolution was duly seconded by Councilmember Lawrence -Anderson and upon vote being taken thereon, the following voted in favor thereof: Elliott, Graves, Lawrence -Anderson, Ryan and the following voted against the same: None. whereupon said resolution was declared duly passed and adopted. 620118v2BR291-395