HomeMy WebLinkAbout2021-065 CCREXTRACT OF MINUTES OF A MEETING OF THE
CITY COUNCIL OF THE
CITY OF BROOKLYN CENTER, MINNESOTA
Pursuant to due call and notice thereof, a regular or special meeting of the City Council of
the City of Brooklyn Center, Minnesota, was duly called and held via teleconference in said City
on Monday, April 26, 2021, commencing at 7*00 P.M. The teleconference was held in accordance
with Minnesota Statutes, Section 13D.021.
The following Councilmembers were present:
Butler, Elliott, Graves, Ryan
and the following were absent: Lawrence -Anderson
Member Ryan introduced the following resolution and moved its adoption:
RESOLUTION NO. 2021-65
RESOLUTION AUTHORIZING THE ISSUANCE OF CONDUIT CHARTER
SCHOOL LEASE REVENUE BONDS FOR THE TWIN LAKES STEM
ACADEMY PROJECT UNDER MINNESOTA STATUTES, SECTIONS
469.152 THROUGH 469,1655 AND APPROVING RELATED DOCUMENTS
WHEREAS, the City of Brooklyn Center, Minnesota (the "City") is duly organized and
existing under its charter, 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 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, SYH Brooklyn Center LLC, a nonprofit limited liability company the sole
member of which is Spark Youth, a Minnesota nonprofit corporation (the "Borrower"), has
represented to the City that it is proposing to assist Twin Lakes STEM Academy (formerly known
as Tesfa International School, Inc.), a Minnesota nonprofit corporation and public charter school
the "School"), in the acquisition and improvement of an existing approximately 65,000 square
foot charter school building, approximately 13 combined acres of land and related facilities located
at 6201 Noble Avenue North in the City for use as a public charter schoolhouse for kindergarten
through 8th grade, which will initially serve kindergarten through 61h grade, with plans to expand
to include 7th grade beginning with the 2023-2024 school year and 8th grade beginning with the
2024-2025 school year (the "Facility"); and
WHEREAS, the Borrower has requested that the City issue one or more series of revenue
bonds to be designated Charter School Lease Revenue Bonds (Twin Lakes STEM Academy
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Project) in an original aggregate principal amount not to exceed $10,000,000 (the "Bonds") and
loan the proceeds derived from the sale of the Bonds to the Borrower, pursuant to the terms of a
Loan Agreement, dated on or after May 1, 2021 (the "Loan Agreement"), between the City and
the Borrower to: (1) finance the acquisition and improvement of the Facility; (ii) fund certain
reserve funds; (iii) pay a portion of the interest on the Bonds; and (iv) pay the costs of issuing the
Bonds (collectively, the "Project"); and
WHEREAS, the Bonds proposed to be issued by the City to finance the Project will
constitute revenue obligations secured solely by: (1) the revenues derived from the Loan
Agreement; (ii) a pledge and assignment of the School's revenues, as more specifically set forth
in the Financing Documents defined below, including money due to the School from the State of
Minnesota Lease Aid Payment Program (the "Program"); (iii) an agreement to pay the money due
to the School from the Program to a dedicated account subject to a monthly transfer to the accounts
held by the Trustee for the benefit of the holders of the Bonds; (iv) other revenues pledged to or
otherwise received by the Borrower, except for those revenues necessary for ordinary operational
expenses and required under Minnesota law; (v) a debt service reserve fund to be held by a trustee
for the benefit of the holders of the Bonds; (vi) a first mortgage and security agreement granted by
the Borrower with respect to the Project; (vii) an operating reserve fund; and (viii) other security
provided or arranged by the Borrower or the School; and
WHEREAS, the purpose of the Act, as found and determined by the legislature, is to
promote the welfare of the state by the active attraction and encouragement and development of
economically sound industry and commerce to prevent so far as possible the emergence of blighted
and marginal lands and areas of chronic unemployment; and
WHEREAS, factors necessitating the active promotion and development of economically
sound industry and commerce are the increasing concentration of population in the metropolitan
areas and the rapidly rising increase in the amount and cost of governmental services required to
meet the needs of the increased population and the need for development of land use which will
provide an adequate tax base to finance these increased costs and the need for access to
employment opportunities for such population; and
WHEREAS, the City desires to facilitate the selective development of the community,
retain and improve the tax base and help to provide the range of services, facilities and employment
opportunities required by the population, including school facilities; and the Project will assist the
City in achieving those objectives and will enhance the image and reputation of the community;
and
WHEREAS, under the terms of the Act and Section 147(f) of the Internal Revenue Code
of 1986, as amended (the "Code"), the Bonds may not be issued as tax-exempt bonds unless the
City Council of the City (the "Council") approves the Bonds after a public hearing following
publication of a notice published in accordance with the requirements of the Act and the Code and
the applicable Treasury Regulations; and
WHEREAS, following the publication of a notice of a public hearing as required by the
Act and the Code, the Council opened and continued a public hearing on April 12, 2021, and
conducted such public hearing on the date hereof at which a reasonable opportunity was provided
BR291-411-711162.v3 2
for interested individuals to express their views on the proposal to undertake and finance the
Project and the proposed issuance of the Bonds (the "Public Hearing"), and
NOW THEREFORE BE IT RESOLVED by the City Council of the City of Brooklyn
Center, Minnesota, as follows:
1. In anticipation of the approval of the Project by the State of Minnesota, Department
of Employment and Economic Development and all other necessary entities and the issuance of
the Bonds to finance all or a portion of the Project, for the purposes set forth above, there is hereby
authorized the issuance, sale, and delivery of the Bonds in one or more series in an aggregate
principal amount not to exceed $10,000,000. If the Bonds are issued in more than one series, the
separate series shall be separately designated in such manner as is deemed appropriate by the
Mayor and the City Manager of the City (collectively, the "City Officials"), in their discretion.
The Bonds shall be issued under the terms of an Indenture of Trust, dated on or after May 1, 2021
(the "Indenture"), between the City and U.S. Bank National Association, as trustee (the "Trustee").
The Bonds shall bear interest at fixed rates established by the terms of the Indenture. The Bonds
shall be designated, shall be numbered, shall be dated, shall mature, 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 on file with the City, with the amendments
referenced herein. The City hereby authorizes the Bonds to be issued as "tax-exempt bonds" the
interest on which is excluded from gross income for federal and State of Minnesota income tax
purposes. Any separate series of Bonds may be issued as "taxable bonds" if deemed necessary
and appropriate by the City Officials and bond counsel. The Bonds will be purchased by Piper
Sandler & Co. (the "Underwriter") pursuant to a Bond Purchase Agreement, dated on or after April
29, 2021 among the City, the Underwriter, the Borrower, and the School (the "Bond Purchase
Agreement").
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 forms in the Indenture on file with the City, which forms are hereby
approved, with such necessary and appropriate variations, omissions, and insertions (including
changes to the aggregate principal amount of each series of the Bonds, the stated maturities of each
series of the Bonds, the principal amount of Bonds maturing on each maturity date, the interest
rates on the Bonds, and the terms of redemption of the Bonds) as the City Officials, in their
discretion, shall determine. The execution of the Bonds with the manual or facsimile signatures
Athe City Officials and the delivery of the Bonds by the City shall be conclusive evidence of such
determination.
2. The Bonds shall be special limited obligations 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: (1) the Mortgage,
Security Agreement and Assignment of Rents, to be dated on or after May 1, 2021 (the
"Mortgage"), fiom the Borrower, as mortgagor, to the Trustee, as mortgagee; (ii) the Assignment
of Lease, dated on or after May 1, 2021 (the "Assignment"), from the Borrower, as assignor, to
the Trustee, as assignee; and (ii1) the Pledge and Covenant Agreement, dated on or after May 1,
2021 (the "Pledge Agreement"), from the School to the Trustee. The proceeds of the Bonds will
BR291-411-711162.v3 3
be disbursed pursuant to a Disbursing Agreement, dated on or after May 15 2021 (the "Disbursing
Agreement"), among the Borrower, the Trustee, and a disbursing agent to be selected by the
Borrower (the "Disbursing Agent"), and will be subject to the provisions of a Tax Regulatory
Agreement, dated on or after May 1, 2021 (the "Tax Regulatory Agreement"), among the
Borrower, the School, and the Trustee. Pursuant to a Bank Qualified Fee Agreement between the
City and the Borrower (the "BQ Agreement") or as otherwise provided in the Indenture and the
Loan Agreement, the Borrower will agree to compensate the City for any impact the Bonds may
have on the City's ability to designate its govertimental purpose bonds in 2021 as bank qualified.
The Council hereby authorizes and directs the City Officials to execute and deliver the Indenture
to the Trustee, and 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 Borrower and the School will provide certain ongoing
reports to the holders of the Bonds pursuant to the Continuing Disclosure Agreement, dated on or
after May 1, 2021 (the "Continuing Disclosure Agreement"), among the Borrower, the School,
and the Trustee.
3. The loan repayments to be made by the Borrower under the Loan Agreement are
I to produce revenues sufficient to provide for the prompt payment of principal of, premium,
if any, and interest on the Bonds issued under this resolution when due, 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.
provided in the Loan Agreement, the Bonds shall not be payable from nor
charged upon any funds other than the revenue pledged to their payment, nor shall the City be
subject to any liability thereon, except as otherwise provided in this paragraph. No holder of the
Bonds shall ever have the right to compel any exercise by the City of any taxing powers to pay the
Bonds 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 will be assigned to the Trustee under the terms of the Indenture. The Bonds
shall recite that the Bonds are issued pursuant to the Act, and that the Bonds, including interest
and premium, if any, thereon, are payable solely from the revenues and assets pledged to the
payment thereof, and the Bonds shall not constitute a debt of the City within the meaning of any
charter, constitutional or statutory limitations.
5. The City Officials are hereby authorized and directed to execute and deliver the
Loan Agreement, the Indenture, the BQ Agreement, the Bond Purchase Agreement, and such other
documents as the City's bond counsel considers appropriate in connection with the issuance of the
Bonds (collectively, the "City Documents"). The forms of the City Documents and all other
documents listed in Sections 1 and 2 hereof and exhibits thereto, and any consents and such other
documents 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 8 03 8, a certificate as to arbitrage and rebate, and
similar documents (collectively, the "Financing Documents") are approved substantially in the
BR291-411-711162.v3 4
forms on file with the City Manager. Subject to the provisions of Section 14 hereof, the City
Documents, in substantially the forms submitted, are directed to be executed in the name and on
behalf of the City by the City Officials. Subject to the provisions of Section 14 hereof, the Bonds
are to be in executed the name of and on behalf of the City by the City Officials, and are to be
delivered to the Trustee for authentication and delivery to the Underwriter. Any other Financing
Documents and certificates necessary to the transaction described above may be executed by one
or more appropriate officers of the City.
All of the provisions of the Financing Documents, 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.
6. The City hereby authorizes Kennedy &Graven, Chartered, as bond counsel to the
City, to prepare, execute, and deliver its approving legal opinion with respect to the Bonds.
7. The City has not participated in the preparation of the Preliminary Official
Statement or the Official Statement relating to the offer and sale of the Bonds (collectively, the
"Official Statement"), and has made no independent investigation with respect to the information
contained therein (other than with respect to information provided under the captions "THE
ISSUER" and "ABSENCE OF LITIGATION — The Issuer," as it relates to the City), including
the appendices thereto, and the City assumes no responsibility for the sufficiency, accuracy, or
completeness of such information. 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.
8. Except as otherwise provided in this resolution, all rights, powers, and privileges
conferred and duties and liabilities imposed upon the City or the 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 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 Council, or any officer, agent, or employee of the City in that person's
individual capacity, and neither the Council nor any officer or employee executing the Bonds shall
be liable personally on the Bonds or be subject to any personal liability or accountability by reason
of the issuance thereof.
No provision, covenant, or agreement contained in the aforementioned documents, the
Bonds or in any other document relating to the Bonds, 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 malting 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 Bonds, as provided therein and in the Indenture.
BR291-411-711162.v3 S
9. Except as herein otherwise expressly provided, 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 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 issued under the provisions of this resolution.
10. In case any one or more of the provisions of this resolution, other than the
provisions contained in Section 4 hereof, or of the aforementioned documents, or of the Bonds
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, but this resolution, the aforementioned documents, and the Bonds shall be construed
and endorsed as if such illegal or invalid provisions had not been contained therein.
11. 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
A the State of Minnesota relating to the adoption of this resolution, to the issuance of the Bonds,
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.
12. 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. In the event that for any reason either
of the City Officials is unable to carry out the execution of any of the documents or other acts
provided herein, such documents may be executed and such actions may be taken by any official
or employee of the City delegated the duties of any such City Official with the same force and
effect as if such documents were executed and delivered by such City Official.
13. The Boivower has agreed and it is hereby determined that the Borrower will pay
the City's issuance fee and any and all costs incurred by the City in connection with the financing
of the Project. 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 attorneys
fees and expenses incurred by the City) arising with respect to the Project or the Bonds, as provided
for and agreed to by and between the Borrower and the City in the Loan Agreement.
14. The approval hereby given to the various Financing Documents referred to above
includes approval of such additional details therein as may be necessary and appropriate and such
modifications thereof, deletions therefrom and additions thereto as may be necessary and
appropriate and approved by bond counsel to the City, the appropriate City staff person, or by the
officers authorized herein to execute or accept, as the case may be, said documents prior to their
execution; and said officers or staff members are hereby authorized to approve said changes on
behalf of the City. The execution of any instrument by the appropriate officer or officers of the
BR291-411-711162.v3
City herein authorized shall be conclusive evidence of the approval of such document in
accordance with the terms hereof. In the event of absence or disability of either City Official, any
Athe documents authorized by this Resolution to be executed by the City may be executed without
further act or authorization of the Council by any member of the Council or any duly designated
acting official, or by such other officer or officers of the City as, in the opinion of the City Attorney,
may act in their behalf.
The authority to approve, execute and deliver future amendments to Financing Documents
entered into by the City in connection with the issuance of the Bonds and consents required under
the Financing Documents is hereby delegated to the City Officials, subject to the following
conditions: (a) such amendments or consents do not require the consent of the respective holders
Athe 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 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
Officials shall be conclusive evidence of the approval of such instruments in accordance with the
terms hereof. In the absence of the City Officials 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/her
place and stead.
15. On the basis of information available to the City, it appears, and the City hereby
finds, that the Project constitutes properties, real and personal, used or useful in connection with
one or more revenue producing enterprises within the meaning of Subdivision 2(b) of Section
469.153 of the Act; that the Project furthers the purposes stated in Section 469.152; that the
availability of the financing under the Act and willingness of the City to furnish such financing
will be a substantial inducement to the Borrower to undertake the Project, and that the effect of the
Proj ect, if undertaken, will be to assist in the prevention of the emergence of blighted and marginal
land, to help prevent chronic unemployment, to help the surrounding area retain and eventually
improve the tax base, to provide the range of service and employment opportunities required by
the population, to help prevent the movement of talented and educated persons out of the state and
to areas within the State where their services may not be as effectively used, and to promote more
intensive development and use of land within the City and surrounding communities.
16. In accordance with Section 469.154 of the Act, the City Manager is hereby
authorized and directed to submit the proposal for the Project to Minnesota Department of
Employment and Economic Development ("DEED"). The City Manager and other officers,
employees and agents of the City are hereby authorized to provide DEED with any preliminary
information needed for this purpose, and the City Manager is authorized to initiate and assist in
the preparation of such documents as may be appropriate to the Project, if it is approved.
17. In accordance with Section 469.154, subdivision 7, of the Act, the officers,
employees, and agents of the City are hereby authorized and directed to encourage the Borrower
and the School to provide employment opportunities to economically disadvantaged or
unemployed individuals. Such individuals may be identified by such mechanisms as are available
BR291-411-71 1162.v3 7
to the Borrower and the School, such as a first source agreement in which the Borrower and the
School agrees to use a designated State employment office as a first source for employment
recruitment, referral, and placement.
18. The City has established a governmental program of acquiring purpose investments
for qualified 501(c)(3) organizations' 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 from 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 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.
19. This resolution shall be in full force and effect from and after its passage.
The motion for the adoption of the foregoing resolution was duly seconded by member Butler, and
after full discussion thereof and upon vote being taken thereon, the following voted in favor
thereof:
Butler, Elliott, Graves, Roman
and the following voted against the same:
None.
whereupon said resolution was declared duly passed and adopted.
BR291-411-711162.v3 g
STATE OF MINNESOTA
COUNTY OF HENNEPIN
CITY OF BROOKLYN CENTER
I, the undersigned, being the duly qualified and acting Clerk of the City of Brooklyn Center,
DO HEREBY CERTIFY that I have compared the attached and foregoing extract of minutes with
the original thereof on file in my office, and that the same is a full, true and complete transcript of
the minutes of a meeting of the City Council of said City duly called and held on the date therein
indicated, insofar as such minutes relate to approving the issuance of conduit revenue bonds to
finance the acquisition and improvement of an existing charter school facility for Twin Lalces
STEM Academy (formerly known as Tesfa International School Inc.)
WITNESS my hand this day of
2021.
BR291-411-711162.v3