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Resolution giving preliminary approval to the issuance of conduit Multifamily Housing Revenue Bonds on behalf of 115 Plato LP, for the Plato Apartments at Farwell Yards Project, at 115 Plato Boulevard West, District 3, Ward 2
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WHEREAS, the Housing and Redevelopment Authority of the City of Saint Paul, Minnesota (the “HRA”) is a body corporate and politic and political subdivision duly organized and existing under the Constitution and laws of the State of Minnesota; and
WHEREAS, pursuant to Minnesota Statutes, Chapter 462C, as amended (the “Act”), the HRA has been authorized by the City Council of the City of Saint Paul, Minnesota (the “Council”) to exercise, the powers conferred by Minnesota Statutes, Section 462C.01 to 462C.081 to issue revenue bonds to provide funds to finance multifamily rental housing developments located within the City of Saint Paul, Minnesota (the “City”); and
WHEREAS, 115 Plato, LP, a Minnesota limited partnership (or another entity to be formed by or affiliated with Buhl Investors, the “Borrower”) has proposed that the HRA issue its revenue bonds or other obligations in the approximate aggregate principal amount of up to $11,000,000, in one or more series, to be issued at one time or from time to time, bearing taxable or tax exempt interest at fixed and/or variable rates, to be offered publicly and/or privately placed (the “Bonds”); and
WHEREAS, the proceeds of the Bonds are proposed to be loaned by the HRA to the Borrower to be applied by the Borrower to (i) finance the acquisition of property and the demolition of an existing building thereon and the construction, and equipping of a 4-story, approximately 63-unit rental housing facility and related amenities all to be located at 115 Plato Boulevard West in the City (the “Project”); (ii) fund one or more reserve funds to secure the timely payment of the Bonds, if necessary; (iii) pay interest on the Bonds during the renovation of the Project, if necessary; and (iv) pay the costs of issuing the Bonds; and
WHEREAS, as a condition to the issuance of the Bonds, the HRA must adopt a housing program providing the information required by Section 462C.03, subdivision 1a of the Act (the “Housing Program”). Under Section 462C.04, subdivision 2 of the Act, a public hearing must be held on the housing program after one publication of notice in a newspaper circulating generally in the HRA at least 15 days before the hearing; and
WHEREAS, under Section 147(f) of the Internal Revenue Code of 1986, as amended (the “Code”), prior to the issuance of the Bonds, the Board of Commissioners must conduct a public hearing after one publication of notice in a newspaper circulating generally in the HRA at least 15 days before the hearing; and
WHEREAS, the HRA conducted a public hearing this same date with respect to the proposal to undertake and finance the Project and the proposed issuance of the Bonds, as requested by the Borrower; and
NOW THEREFORE, BE IT RESOLVED by the Board of Commissioners of the Housing and Redevelopment Authority of the City of Saint Paul, Minnesota (the “Board”), as follows:
Section 1. Preliminary Findings. Based on representations made by the Borrower to the HRA to date, the Board of Commissioners hereby makes the following preliminary findings, determinations, and declarations:
(a) The Project consists of the acquisition, construction, and equipping of a multifamily rental housing development designed and intended to be used for rental occupancy.
(b) The proceeds of the Bonds will be loaned to the Borrower and the proceeds of the loan will be applied to: (i) the acquisition, construction, and equipping of the Project; (ii) the funding of one or more reserve funds to secure the timely payment of the Bonds, if necessary; (iii) the payment of interest on the Bonds during the construction of the Project, if necessary; and (iv) the payment of the costs of issuing the Bonds. The HRA will enter into one or more loan agreements (or other revenue agreements) with the Borrower requiring loan repayments from the Borrower in amounts sufficient to repay the loan when due and requiring the Borrower to pay all costs of maintaining and insuring the Project, including taxes thereon
(c) In preliminarily authorizing the issuance of the Bonds and the financing of the acquisition, construction, and equipping of the Project and related costs, the HRA’s purpose is to further the policies of the Act.
(d) The Bonds will be special, limited revenue obligations of the HRA payable solely from the revenues pledged to the payment thereof, will not be a general or moral obligation of the HRA, and will not be secured by or payable from revenues derived from any exercise of the taxing powers of the HRA.
Section 2. Public Hearing. The Board conducted a public hearing on the Housing Program, the Project, and the issuance of the Bonds by the HRA on the date hereof for which proper notice was published as required by Section 462C.04, subdivision 2 of the Act and Section 147(f) of the Code. At the public hearing reasonable opportunity was provided for interested individuals to express their views, both orally and in writing, on the Project, the Housing Program, and the proposed issuance of the Bonds.
Section 3. Housing Program. Kennedy & Graven, Chartered, acting as bond counsel for the HRA (“Bond Counsel”) prepared and submitted to the HRA a Housing Program to authorize the issuance by the HRA of up to approximately $11,000,000 in revenue bonds in one or more series to finance the acquisition, construction, and equipping of the Project by the Borrower. The Housing Program is hereby approved, subject to final approval by the Council.
Section 4. Preliminary Approval. The Board hereby provides preliminary approval to the issuance of the Bonds in the approximate principal amount of up to $11,000,000 to finance all or a portion of the costs of the Project pursuant to the Housing Program, subject to: (i) the preparation of bond documents and approval by the HRA, the Borrower and the purchaser of the Bonds as to ultimate details of the financing of the Project; (ii) approval of the project by the Council, and (iii) final determination by the Board that the financing of the Project and the issuance of the Bonds are in the best interests of the HRA and the City.
Section 5. Reimbursement of Costs under the Code.
5.01. 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.
5.02. 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 the proceeds of the Bonds will reimburse the Borrower for the expenditures made for costs of the Project after the date of payment of all or a portion of such expenditures. All reimbursed expenditures shall be capital expenditures, costs 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 minimis” 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.
5.03. 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.
Section 6. Costs. The Borrower will pay the administrative fees of the HRA and pay, or, upon demand, reimburse the HRA for payment of, any and all costs incurred by the HRA in connection with the Project and the issuance of the Bonds, whether or not the Bonds are issued.
Section 7. Commitment Conditional. 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. 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.