Title
Resolution Giving Preliminary Approval of Conduit Multifamily Housing Revenue Bonds; 365 Winthrop Street S, Afton View Apartments Project, District 1, Ward 7
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WHEREAS, Minnesota Statutes, Chapter 462C (the “Act”) confers upon cities, or housing and redevelopment authorities or port authorities authorized by ordinance to exercise on behalf of a city the powers conferred by the Act, the power to issue revenue bonds to finance a program for the purposes of planning, administering, making or purchasing loans with respect to one or more multi-family housing project developments within the boundaries of the city;
WHEREAS, The Housing and Redevelopment Authority of the City of Saint Paul, Minnesota (the “HRA”) has been designated, by ordinance, to exercise, on behalf of the City of Saint Paul, Minnesota (the “City”) the powers conferred by Minnesota Statutes, Section 462C.01 to 462C.081;
WHEREAS, The HRA has received a request from TDP St. Paul Housing, LP, a Minnesota limited partnership (or another entity formed by Tareen Development Partners, the “Borrower”), that the HRA assist in financing the Project hereinafter described, through the issuance of housing revenue bonds or notes in an estimated principal amount not to exceed $20,500,000 pursuant to Minnesota Statutes, Chapter 462C (the “Bonds”);
WHEREAS, The project to be financed by the Bonds is the acquisition, construction and rehabilitation of an existing approximately 286 unit multifamily housing development consisting of two 3-story buildings located at 371 and 373 Winthrop St. S., 2180 and 2178 Londin Lane and 365 Winthrop St. S. in the City (the “Project”);
WHEREAS, The Project will be owned and operated by the Borrower;
WHEREAS, The Borrower has agreed to submit, for staff approval, a written communication plan outlining how communication with residents, as well as broader community engagement, will be managed throughout the acquisition, rehabilitation, and ongoing operation of the Project;
WHEREAS, The proposal calls for the HRA to loan the proceeds realized upon the sale of the Bonds to the Borrower pursuant to a loan agreement wherein the Borrower will be obligated to pay all costs and expenses of the HRA and the City incident to the issuance and sale of the Bonds; and
WHEREAS, under Section 147(f) of the Internal Revenue Code of 1986, as amended (the “Code”), and Section 462C.04, subdivision 2, of the Act, prior to the issuance of the Bonds a duly noticed public hearing must be held by the HRA Board;
NOW THEREFORE, BE IT RESOLVED by the Board of Commissioners of the Housing and Redevelopment Authority of the City of Saint Paul, Minnesota, as follows:
1. The HRA hereby gives preliminary approval to the multifamily rental housing Project, described above, to be undertaken by the Borrower pursuant to the Borrower's specifications.
2. The Borrower has agreed and it is hereby determined that any and all costs incurred by the City or the HRA in connection with the financing of the Project whether or not the Project is carried to completion and whether or not approved by HRA will be paid by the Borrower.
3. Nothing in this Resolution or the documents prepared pursuant hereto shall authorize the expenditure of any municipal funds on the Project other than the revenues derived from the Project. The Bonds shall not constitute a charge, lien or encumbrance, legal or equitable, upon any property or funds of the City or the HRA except the revenue and proceeds pledged to the payment thereof, nor shall the City or the HRA be subject to any liability thereon. The holders of the Bonds shall never have the right to compel any exercise of the taxing power of the City or HRA to pay the outstanding principal on the Bonds or the interest thereon, or to enforce payment thereon against any property of the City or the HRA. The Bonds shall recite in substance that the Bonds, including the interest thereon, are payable solely from the revenue and proceeds pledged to the payment hereof. The Bonds shall not constitute a debt of the City or HRA within the meaning of any constitutional or statutory limitation.
4. In anticipation of the issuance of the Bonds in an estimated principal amount not to exceed $20,500,000 to finance all or a portion of the Project, and in order that completion of the Project pursuant to the Borrower’s specifications will not be unduly delayed when approved, the Borrower is hereby authorized to make such expenditures and advances toward payment of that portion of the costs of the Project to be financed from the proceeds of the Bonds, as the Borrower considers necessary, including the use of interim, short-term financing, subject to reimbursement from the proceeds of the Bonds if and when delivered but otherwise without liability on the part of the City or the HRA.
5. The United States Department of the Treasury has promulgated regulations governing the use of the proceeds of tax-exempt bonds, all or a portion of which are to be used to reimburse the HRA or the Borrower for project expenditures paid prior to the date of issuance of such bonds. Those regulations (Treasury Regulations, Section 1.150-2) (the “Regulations”) require that the HRA adopt a statement of official intent to reimburse an original expenditure not later than 60 days after payment of the original expenditure. The Regulations also generally require that the bonds be issued and the reimbursement allocation made from the proceeds of the bonds occur within 18 months after the later of: (i) the date the expenditure is paid; or (ii) the date the project is placed in service or abandoned, but in no event more than 3 years after the date the expenditure is paid. The Regulations generally permit reimbursement of capital expenditures and costs of issuance of the bonds.
To the extent any portion of the proceeds of the Bonds will be applied to expenditures with respect to the Project, the HRA reasonably expects to reimburse the Borrower for the expenditures made for costs of the Project from the proceeds of the Bonds after the date of payment of all or a portion of such expenditures. All reimbursed expenditures shall be capital expenditures, a cost of issuance of the Bonds, or other expenditures eligible for reimbursement under Section 1.150-2(d)(3) of the Regulations and also qualifying expenditures under the Act.
Based on representations by the Borrower, other than (i) expenditures to be paid or reimbursed from sources other than the Bonds, (ii) expenditures permitted to be reimbursed under prior regulations pursuant to the transitional provision contained in Section 1.150-2(j)(2)(i)(B) of the Regulations, (iii) expenditures constituting preliminary expenditures within the meaning of Section 1.150-2(f)(2) of the Regulations, or (iv) expenditures in a “de minimus” amount (as defined in Section 1.150-2(f)(1) of the Regulations), no expenditures with respect to the Project to be reimbursed with the proceeds of the Bonds have been made by the Borrower more than 60 days before the date of adoption of this resolution of the HRA.
Based on representations by the Borrower, as of the date hereof, there are no funds of the Borrower reserved, allocated on a long term-basis or otherwise set aside (or reasonably expected to be reserved, allocated on a long-term basis or otherwise set aside) to provide permanent financing for the expenditures related to the Project to be financed from proceeds of the Bonds, other than pursuant to the issuance of the Bonds. This resolution, therefore, is determined to be consistent with the budgetary and financial circumstances of the Borrower as they exist or are reasonably foreseeable on the date hereof.
6. The adoption of this resolution does not constitute a guarantee or a firm commitment that the HRA will issue the Bonds as requested by the Borrower. Final approval of the issuance of the Bonds is contingent, among other things, on implementation of the communication plan described in the recitals of this Resolution. If, as a result of information made available to or obtained by the HRA during its review of the Project, it appears that the Project or the issuance of Bonds to finance the costs thereof is not in the public interest or is inconsistent with the purposes of the Act, the HRA reserves the right to decline to give final approval to the issuance of the Bonds. The HRA also retains the right, in its sole discretion, to withdraw from participation and accordingly not issue the Bonds should the Board of Commissioners, at any time prior to the issuance thereof, determine that it is in the best interests of the HRA not to issue the Bonds or should the parties to the transaction be unable to reach agreement as to the terms and conditions of any of the documents for the transaction.