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Res 1998-36 0009 RESOLUTION NO 36 - 1998 RESOLUTION APPROVING THE ISSUANCE AND SALE OF THE $150,000 SUBORDINATE HOUSING REVENUE NOTE, SERIES 1998B (NOAH'S ARK OF MINNESOTA, INC. PROJECT) AND THE $300,000 SUBORDINATE HOUSING REVENUE NOTES SERIES 1998C (NOAH'S ARK OF MINNESOTA, INC. PROJECT) AND AUTHORIZING THE EXECUTION OF DOCUMENTS RELATING THERETO BE IT RESOLVED by the City Council of the City of Fridley, Minnesota (the "City") , as follows: SECTION 1. LEGAL AUTHORIZATION AND FINDINGS. 1.1 Findings. The City hereby finds, determines and declares as follows: (a) The City is a political subdivision of the State of Minnesota and is authorized under Minnesota Statutes, Chapter 462C, as amended (the "Act") to assist the multifamily housing project herein referred to, and to issue and sell each of the Notes, as hereinafter defined, for the purpose, in the manner and upon the terms and conditions set forth in the Act and in this Resolution. (b) As required by the Act and Section 147 (f) of the Internal Revenue Code of 1986, as amended (the "Code") , the City has previously held a public hearing on the issuance of one or more revenue bonds and/or notes to finance the Project. (c) The City has on this date by separate resolution approved the issuance of its $9,300,000 Senior Housing Revenue Bonds (Noah' s Ark of Minnesota, Inc. Project) Series 1998 (the "Bonds") to finance the acquisition, construction and equipping of a seniors multi-family rental housing development for rental primarily to elderly persons (the "Project") ; (d) The issuance of the $150,000 Subordinate Housing Revenue Note, Series 1998B (Noah's Ark of Minnesota, Inc. Project) (the Series "1998B Note") and the $300,000 Subordinate Housing Revenue Notes, Series 1998C (Noah's Ark of Minnesota, Inc. Project) (the "Series 1998C Notes") (collectively, the Series 1998B Note and the Series 1998C Notes are referred to as the "Notes") to be issued on a subordinate basis to the Bonds by the City, pursuant to the Act, is in the best interest of the City, and the City hereby determines to issue the Notes, as provided herein. (e) Pursuant to a Loan Agreement (the "Loan Agreement") to be entered into between the City and Noah' s Ark of Minnesota, Inc. , a Minnesota nonprofit corporation (the "Borrower") , the Borrower has agreed to repay the Notes in specified priorities, eno ?® Page 2 -- Resolution No. 36 - 1998 amounts and at specified times sufficient to pay in full when due the principal of, premium, if any, and interest on the Notes. The Notes are issued on a subordinate basis to the Bonds and payment under the Loan Agreement will be subordinate to payment under the loan agreement relating to the Bonds. In addition, payment of, and security for, the Series 1998B Note will be senior to payment of and security for the Series 1998C Notes. A draft of the Loan Agreement is on file with the City. (f) Pursuant to a Pledge Agreement to be entered into between the City and each of the Purchasers of the Notes (as herein defined) , the City has pledged and granted a security interest in all of its rights, title, and interest in the Loan Agreement to the Purchasers (except for certain rights of indemnification and to reimbursement for certain costs and expenses) . A draft of the Pledge Agreement is on file with the City. (g) Pursuant to a Subordinate Mortgage, (the "Subordinate Mortgage") to be executed by the Borrower in favor of the City, the Borrower has secured payment of amounts due under the Loan Agreement and Notes by granting to the City a mortgage and security interest in the property described therein which mortgage and security interest shall be subordinate to the lien of the first mortgage securing the Bonds. Pursuant to an Assignment of Subordinate Mortgage executed by the City (the "Assignment") , the City has assigned the Subordinate Mortgage to the Trustee for the Bonds to administer for the Purchasers. Drafts of the Subordinate Mortgage and Assignment are on file with the City. (h) The Notes will be a special limited obligations of the City. The Notes shall not be payable from or charged upon any funds other than the revenues pledged to the payment thereof, nor shall the City be subject to any liability thereon. No holder of the Notes shall ever have the right to compel any exercise of the taxing power of the City to pay the Notes or the interest thereon, nor to enforce payment thereof against any property of the City. The Notes shall not constitute a debt of the City within the meaning of any constitutional or statutory limitation. (i) It is desirable, feasible and consistent with the objects and purposes of the Act to issue the Notes. SECTION 2. THE NOTES. 2 .1 Authorized Amount and Form of Notes. The Notes issued pursuant to this Resolution shall be in substantially the form attached as Exhibits A and B hereto, with such appropriate variations, omissions and insertions as are permitted or required by this Resolution, and in accordance with the further provisions hereof. The Series 1998B Note in the amount of $150,000 shall be issued to Craig C. Avery, an individual. The Series 1998C Notes in the aggregate amount of $300,000 shall be issued in the 0005'1 Page 3 -- Resolution No. 36 - 1998 amount of $200,000 to Craig C. Avery Company, a Minnesota corporation, and in the amount of $100,000 to Ark Development, Inc. , a Minnesota corporation. The foregoing are each referred to as a Purchaser and collectively referred to as the Purchasers. Each Note shall be registered to such individuals or entities as designated by the respective Purchaser thereof. The Series 1998B Note will be issued in exchange for the cash purchase price thereof. The Series 1998C Notes will be issued in exchange for development services provided by the Purchasers to the Borrower with respect to the Project. Each Note shall bear interest at the rates set forth in the respective Notes, which rates shall not exceed 9.00% for the Series 1998B Note and 9.00% for the Series 1998C Notes. 2.2 The Notes. Each Note shall be dated as of the date of delivery to the Purchaser thereof, shall be payable at the times and in the manner, shall bear interest at the rate, and shall be subject to such other terms and conditions as are set forth therein. 2.3 Execution. The Notes shall be executed on behalf of the City by the signatures of its Mayor and City Manager or Clerk and shall be sealed with the seal of the City; provided that the seal may be intentionally omitted as provided by law. In case any officer whose signature shall appear on the Note shall cease to be such officer before the delivery of the Note, such signature shall nevertheless be valid and sufficient for all purposes, the same as if such officer had remained in office until delivery. In the event of the absence or disability of the Mayor, the City Manager or Clerk, such officers of the City as, in the opinion of the City Attorney, may act in their behalf, shall without further act or authorization of the City Council execute and deliver the Notes. 2 .4 Delivery of Initial Note. Before delivery of the Notes there shall be filed with the Purchasers the following items: (1) an executed copy of each of the following documents: (a) the Loan Agreement; (b) the Pledge Agreement; (c) the Subordinate Mortgage; (d) the Assignment; (2) an opinion of Counsel for the Borrower as prescribed by the Purchasers and Bond Counsel; (3) the opinion of Bond Counsel as to the validity and tax exempt status of the Notes; Page 4 -- Resolution No. 36 - 1998 (4) a 501 (c) (3) determination letter from the Internal Revenue Service evidencing that the Borrower is exempt from income taxation under Section 501 (c) (3) of the Code; (5) such other documents and opinions as Bond Counsel may reasonably require for purposes of rendering its opinion required in subsection (3) above or that the Purchaser may reasonably require for the closing. 2.5 Disposition of Note Proceeds. Upon delivery of the Series 1998B Note to the Purchaser thereof, the Purchaser shall transfer $150,000 in immediately available funds to the Trustee for the Bonds for deposit into the Construction Fund. Upon delivery of the Series 1998C Notes to the Purchasers thereof, the Purchasers shall accept receipt of the Notes in exchange for development services provided to the Borrower relating to the development of the Project. 2.6 Registration of Transfer. The City will cause to be kept at the office of the City Manager a Note Register in which, subject to such reasonable regulations as it may prescribe, the City shall provide for the registration of transfers of ownership of the Notes. The Notes shall be initially registered in the name of the respective Purchasers thereof and shall be transferable upon the Note Register by each Purchaser in person or by its agent duly authorized in writing, upon surrender of the applicable Note together with a written instrument of transfer satisfactory to the City Manager, duly executed by the Purchaser or its duly authorized agent. The following form of assignment shall be sufficient for said purpose. For value received hereby sells, assigns and transfers unto the within Note of the City of Fridley, Minnesota, and does hereby irrevocably constitute and appoint attorney to transfer said Note on the books of said City with full power of substitution in the premises. The undersigned certifies that the transfer is made in accordance with the provisions of Section 2.9 of the Resolution authorizing the issuance of the Note. Dated: Registered Owner Upon such transfer the City Manager shall note the date of registration and the name and address of the new Purchaser in the Note Register and in the registration blank appearing on the Note. 00083 IIIPage 5 -- Resolution No. 36 - 1998 2.7 Mutilated, Lost or Destroyed Note. In case any Note issued hereunder shall become mutilated or be destroyed or lost, the City shall, if not then prohibited by law, cause to be executed and delivered a new Note of like outstanding principal amount, number and tenor in exchange and substitution for and upon cancellation of such mutilated Note, or in lieu of and in substitution for such Note destroyed or lost, upon the Purchaser's paying the reasonable expenses and charges of the City in connection therewith, and in the case of a Note destroyed or lost, the filing with the City of evidence satisfactory to the City with indemnity satisfactory to it. If the mutilated, destroyed or lost Note has already matured or been called for redemption in accordance with its terms it shall not be necessary to issue a new Note prior to payment. 2 .8 Ownership of Note. The City may deem and treat the person in whose name a Note is last registered in the Note Register and by notation on the Note whether or not such Note shall be overdue, as the absolute owner of such Note for the purpose of receiving payment of or on account of the Principal Balance, redemption price or interest and for all other purposes whatsoever, and the City shall not be affected by any notice to the contrary. 2. 9 Limitation on Note Transfers. The Notes have been issued without registration under state or other securities laws, pursuant to III an exemption for such issuance; and accordingly the Notes may not be assigned or transferred in whole or part, nor may a participation interest in any Note be given pursuant to any participation agreement, except upon receipt of a written opinion of Bond Counsel that an exemption exists for such transfer. 2 .10 Issuance of New Notes. Subject to the provisions of Section 2. 9, the City shall, at the request and expense of a Purchaser, issue new notes, in aggregate outstanding principal amount equal to that of the Note surrendered, and of like tenor except as to number, principal amount, and the amount of the monthly installments payable thereunder, and registered in the name of the Purchaser or such transferee as may be designated by the Purchaser. SECTION 3. MISCELLANEOUS. 3.1 Severability. If any provision of this Resolution shall be held or deemed to be or shall, in fact, be inoperative or unenforceable as applied in any particular case in any jurisdiction or jurisdictions or in all jurisdictions or in all cases because it conflicts with any provisions of any constitution or statute or rule or public policy, or for any other reason, such circumstances shall not have the effect of rendering the provision in question inoperative or unenforceable in any other case or circumstance, or of rendering any other provision or provisions herein contained invalid, III e"?v 94 Page 6 -- Resolution No. 36 - 1998 inoperative, or unenforceable to any extent whatever. The invalidity of any one or more phrases, sentences, clauses or paragraphs in this Resolution contained shall not affect the remaining portions of this Resolution or any part thereof. 3.2 Authentication of Transcript. The officers of the City are directed to furnish to Bond Counsel certified copies of this Resolution and all documents referred to herein, and affidavits or certificates as to all other matters which are reasonably necessary to evidence the validity of the Notes. All such certified copies, certificates and affidavits, including any heretofore furnished, shall constitute recitals of the City as to the correctness of all statements contained therein. 3.3 Authorization to Execute Agreements. The forms of the proposed Loan Agreement, the Assignment, the Subordinate Mortgage and the Pledge Agreement, are hereby approved in substantially the form on file with the City, together with 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 and the City Attorney prior to the execution of the documents, and the Mayor and City Manager or Clerk of the City are authorized to execute the Loan Agreement, the Assignment and the Pledge Agreement in the name of and on behalf of the City and such other documents as Bond Counsel consider appropriate in connection with the issuance of the Notes. In the event of the absence or disability of the Mayor, the City Manager or the City Clerks, such officers of the City as, in the opinion of the City Attorney, may act in their behalf shall without further act or authorization of the City Council do all things and execute all instruments and documents required to be done or executed by such absent or disabled officers. The execution of any instrument by the appropriate officer or officers of the City herein authorized shall be conclusive evidence of the approval of such documents in accordance with the terms hereof. PASSED AND ADOPTED BY THE CITY COUNCIL OF THE CITY OF FRIDLEY THIS 8TH DAY OF JUNE, 1998. 441J J RG 0 1N - MAYOR ATTEST: WILLIAM A. CHAMPA - CIT CLERK