Loading...
Resolution No. 2023-63, Approving Issuance and Sale of Multifamily Housing Revenue Bonds (Moon Plaza Apartments Project), Series 2023, Approving a Housing Program Pursuant to MN Statutes, Chapter 462C Resolution No. 2023- 63 Approving Issuance and Sale of a Multifamily Housing Revenue Bonds (Moon Plaza Apartments Project), Series 2023, Approving a Housing Program Pursuant to Minnesota Statutes, Chapter 462C Whereas, the City of Fridley (City) is authorized pursuant to Minnesota Statutes, Chapter 462C, as amended (Act), to finance the making or purchasing of loans with respect to multifamily housing developments within the boundaries of the City through the issuance of revenue obligations; and Whereas, pursuant to the Act, the full faith and credit of the City will not be pledged to the payment of the principal of, premium, if any, and interest on the Bonds (as defined below); and Whereas, the City has received a proposal from Roers Fridley Apartments Owner II LLC, a Minnesota limited liability company (Borrower), that the City undertake a program to finance the Project hereinafter described through the issuance of its revenue obligations in the aggregate principal amount not to exceed $50 million to finance the acquisition and construction of an approximately 250,000 square-foot rentable apartment community that will consist of an approximately 169-unit multifamily housing development for households of low and moderate income, and functionally related facilities, including an underground parking garage, expected to be known as Moon Plaza Apartments, located at approximately 6257 University Avenue NE, in the City (Project), which will be owned and operated by the Borrower; and Whereas, a public hearing on the Project and the housing finance program related thereto (Housing Program) was held this same day, after notice was published in the official newspaper of the City not less than 15 days in advance of said public hearing, and materials were made available for public inspection at the City Hall, all as required by the Act and Section 147(f) of the Internal Revenue Code of 1986, as amended (Code), at which public hearing all those appearing who desired to speak were heard and written comments were accepted; and Whereas, pursuant to Section 462C.04 of the Act, the City made timely submission of the Housing Program to the Metropolitan Council for its review and comment, and the City has received no comment from the Metropolitan Council on such program; and Whereas, no public official of the City has either a direct or indirect financial interest in the Project nor will any public official either directly or indirectly benefit financially from the Project. Now therefore, it be resolved by the City Council of the City of Fridley, Minnesota as follows: 1. The Borrower has proposed that the Issuer issue and sell its Multifamily Housing Revenue Bonds (Moon Plaza Apartments Project), Series 2023, in one or more series of tax-exempt and/or taxable bonds (Bonds), in an amount not to exceed $50 million to finance the costs of the Project, in accordance with this Resolution, an Indenture of Trust (Indenture) between the Issuer and U.S. Bank Trust Company, National Association, as trustee (Trustee), and the Resolution No. 2023-63 Page 2 Borrower, and a Loan Agreement between the Issuer and the Borrower (Loan Agreement), which will be assigned to the Trustee, under the terms of the Indenture. 2. Pursuant to the terms of the Loan Agreement, anticipated to be dated as of a date in either June or July of 2023, the Issuer will loan the proceeds of the Bonds (Loan) to the Borrower to finance a portion of the Project and, in turn, the Borrower will provide Promissory Notes to the Issuer to evidence its repayment obligation under the Loan Agreement (Notes). The Borrower has agreed, pursuant to a Regulatory Agreement anticipated to be dated as of a date in either June or July of 2023, by and between the Issuer, the Borrower, and the Trustee (Regulatory Agreement), to operate the Project as a “residential rental project” under Section 142(d) of the Code. 3. The Borrower will execute a Mortgage, Security Agreement, Assignment of Rents, and Fixture Filing (Mortgage) for the benefit of the Issuer to secure the Notes, which will then be assigned by the Issuer to the Trustee pursuant to an Assignment of Mortgage (Assignment). 4. The Borrower will execute a Subordinate Mortgage, Security Agreement, Assignment of Rents, and Fixture Filing (Subordinate Mortgage) for the benefit of the Issuer to secure the Notes, which will then be assigned by the Issuer to the Trustee pursuant to an Assignment of Mortgage (Subordinate Assignment of Mortgage). 5. The Borrower and related parties will provide other collateral and guaranties to secure the Bonds. 6. The Issuer and the Borrower will enter into a Bond Purchase Agreement (Bond Purchase Agreement) with Piper Sandler & Co. (Underwriter) providing for the purchase of the Bonds from the Issuer by the Underwriter and setting forth the terms and conditions of purchase. 7. The Borrower will prepare a Preliminary Limited Offering Memorandum (Limited Offering Memorandum), describing the offering of the Bonds, and certain terms and provisions of the foregoing documents relating to the Bonds. 8. Forms of the following documents have been submitted to the City Council: (a) Indenture; (b) Loan Agreement; (c) Regulatory Agreement; (d) Bonds (as an exhibit to the Indenture); (e) Mortgage; (f) Assignment of Mortgage; Resolution No. 2023-63 Page 3 (g) Subordinate Mortgage; (h) Subordinate Assignment of Mortgage; (i) Bond Purchase Agreement; and (j) Limited Offering Memorandum. The documents listed in (a) through (d) and (f), (g), and (i) are hereafter referred to as the “Bond Documents.” 9. It is hereby found, determined, and declared that: (a) the issuance and sale of the Bonds, the execution and delivery by the Issuer of the Bond Documents and the performance of all covenants and agreements of the Issuer contained in the Bond Documents and of all other acts and things required under the constitution and laws of the State of Minnesota to make the Bond Documents and the Bonds valid and binding obligations of the Issuer in accordance with their terms, are authorized by the Act; (b) it is desirable that the Bonds be issued by the Issuer upon the terms set forth in this Resolution and the Indenture; (c) the basic payments under the Loan Agreement are fixed to produce revenue sufficient to provide for the prompt payment of principal of, premium, if any, and interest on the Bonds issued hereunder 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 taxes and special assessments levied upon or with respect to the Project premises and payable during the term of the Loan Agreement; (d) under the provisions of Minnesota Statutes, Chapter 462C and as provided in the Loan Agreement, the Bonds are not to be payable from or charged upon any funds other than the revenue pledged to the payment thereof; the Issuer is not subject to any liability thereon; no holder of the Bonds shall ever have the right to compel any exercise by the Issuer of its taxing powers to pay the Bonds or the interest or premiums thereon, or to enforce payment thereof against any property of the Issuer except the interests of the Issuer in the Loan Agreement which have been assigned to the Trustee under the Indenture; the Bonds shall not constitute a charge, lien, or encumbrance, legal or equitable upon any property of the Issuer except the interests of the Issuer in the Loan Agreement which have been assigned to the Trustee under the Indenture; the Bonds shall recite that the Bonds are issued without moral obligation on the part of the state or its political subdivisions, and that the Bonds, including interest thereon, is payable solely from the revenues pledged to the payment thereof; and, the Bonds shall not constitute a debt of the Issuer within the meaning of any constitutional or statutory limitation. Resolution No. 2023-63 Page 4 10. The forms of the Bond Documents, Mortgage, the Limited Offering Memorandum and exhibits thereto are approved substantially in the forms submitted. The Bond Documents, in substantially the forms submitted, are directed to be executed in the name and on behalf of the City by the Mayor and City Manager, or their designees. Any other documents and certificates necessary to the transaction described above shall be executed by the appropriate City officers or their designees. Copies of all of the documents necessary to the transaction herein described shall be delivered, filed, and recorded as provided herein and in the Bond Documents. 11. The Issuer shall proceed forthwith to issue the Bonds, in the form and upon the terms set forth in the Indenture and at a net interest rate on the Series 2023A Bonds (as defined in the Indenture) not to exceed 7.0% per annum , a net interest rate on the Series 2023B Bonds (as defined in the Indenture) not to exceed 9.0% per annum, and a net interest rate on the Series 2023C Bonds (as defined in the Indenture) not to exceed 9.0% per annum. The Bonds will be purchased on substantially the terms set forth in the Indenture and this Resolution. The Mayor and City Manager are authorized and directed to prepare and execute the Bonds as prescribed herein and to deliver them to the Trustee for authentication and delivery to the original purchaser(s) thereof. 12. As requested by the Underwriter, the Issuer hereby consents to the circulation by the Underwriter of the Limited Offering Memorandum in offering the Bonds for sale; provided, however, that the Issuer has not participated in the preparation of the Limited Offering Memorandum or independently verified the information in the Limited Offering Memorandum except with respect to the information under the heading “THE ISSUER” and with respect to litigation against the Issuer relating to issuance of the Bonds (of which there is none) under the heading “LITIGATION–The Issuer”, and takes no responsibility for, and makes no representations or warranties as to, the accuracy, completeness or sufficiency of such information. 13. The Mayor and City Manager and other officers of the Issuer are authorized and directed to prepare and furnish to the Trustee certified copies of all proceedings and records of the Issuer relating to the Bonds, and such other affidavits and certificates as may be required to show the facts relating to the legality of the Bonds as such facts appear from the books and records in the officers’ custody and control or as otherwise known to them; and all such certified copies, certificates and affidavits, including any heretofore furnished, shall constitute representations of the Issuer as to the truth of all statements contained herein. 14. The approval hereby given to the various 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 the City Attorney and the Issuer officials authorized herein to execute said documents prior to their execution; and said Issuer officials are hereby authorized to approve said changes on behalf of the Issuer. The execution of any instrument by the appropriate official or officials herein authorized shall be conclusive evidence of the approval of such documents in accordance with the terms hereof. Resolution No. 2023-63 Page 5 15. The approval hereby given to the Bond Documents and the various other documents referred to in paragraph 8 above includes approval of (a) 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, the Underwriter, the City Attorney and the Issuer officials authorized herein to execute said documents prior to their execution and (b) such additional documents, agreements or certificates as may be necessary and appropriate in connection with the Bond Documents and with the issuance and sale of the Bonds and approved by Bond Counsel, the Underwriter, the City Attorney and Issuer officials authorized herein to execute said documents prior to their execution; and said City Attorney and Issuer officials are hereby authorized to approve said changes or additional documents, agreements or certificates on behalf of the Issuer. The execution of any instrument by the appropriate officer or officers of the Issuer herein authorized shall be conclusive evidence of the approval of such documents in accordance with the terms thereof and hereof. In the absence (or inability) of the Mayor or the City Manager, any of the documents authorized by this resolution to be executed by them may be executed by the Acting Mayor or the Acting City Manager, or their designees. 16. The Housing Program, substantially in the form attached hereto as Exhibit A, is hereby approved. th Passed and Adopted by the City Council of the City of Fridley, Minnesota this 12 day of June, 2023. __________________________________________________ Scott J. Lund, Mayor Attest: Melissa Moore, City Clerk Resolution No. 2023-63 Page 6 Exhibit A PROGRAM FOR FINANCING AN AFFORDABLE MULTIFAMILY RENTAL HOUSING DEVELOPMENT Proposal Authority. Pursuant to Minnesota Statutes, Chapter 462C (the “Act”), the City of Fridley, Minnesota (the “City”) is authorized to develop and administer programs of making loans to finance multifamily housing developments and functionally related facilities. Minnesota Statutes, Section 462C.05, subdivision 2, provides that such multifamily housing developments can be designed to be affordable for persons or households of low to moderate income. Minnesota Statutes, Section 462C.07, provides that the City may issue revenue bonds to finance such programs and developments. This affordable multifamily rental housing development finance program (this “Program”) is undertaken by the City to finance a Project, as hereinafter described, which shall be owned and operated by Roers Fridley Apartments Owner II LLC, a Minnesota limited liability company (the “Borrower”). The City proposes to issue one or more series of tax-exempt and/or taxable revenue bonds or other obligations (the “Bonds”) pursuant to the Act to assist in financing the Project. General Description of the Project and Location. The Project consists of the acquisition and construction of an approximately 250,000-square-foot rentable apartment community that will consist of an approximately 169-unit multifamily housing development for households of low and moderate income, and functionally related facilities, expected to be known as Moon Plaza, to be located at approximately 6257 University Avenue NE in the City. The Project is designed and is intended for residency by persons or households of low to moderate income, pursuant to the Act. The Facility will consist of the following living units: Square Footage Estimated Initial Units Number of Units Per Unit Rents Per Unit 1 BR/1 Bath 50 752 $642-1,341/month 2 BR/2 Bath 68 1,000 $754-1,602/month 3 BR/2 Bath 51 1,368 $877-1,846/month Operation of the Project. The Borrower will operate the Project in accordance with applicable development restrictions, and all construction will be subject to applicable state and local building codes. The Project, as proposed, is not inconsistent with any Housing Plan adopted by the City under the Act. The Project will be available for rental to the general public. The Borrower will be required to operate the Project in accordance with state and local anti- discrimination laws and ordinances. Resolution No. 2023-63 Page 7 Bonds. The Borrower has indicated that the original principal amount of the Bonds, expected to be issued by the City no later than July of 2023, to finance the Project, and, if needed, to fund appropriate reserves and to pay the costs of issuing the Bonds, will not exceed $50,000,000. The Bonds may be structured so as to take advantage of whatever means are available or necessary and are permitted by law to enhance the security for and marketability of the Bonds. Substantially all of the net proceeds of the Bonds (the initial principal amount thereof, less amounts deposited in a reasonably required reserve or paid out as costs of issuance of the Bonds) will be used to pay the costs of the Project, including any functionally related and subordinate facilities. The Bonds will be issued pursuant to Section 462C.07, subdivision 1, of the Act and are and will be payable primarily from revenues of the Project. Allocation of Issuance Authority. An allocation of authority to issue tax-exempt bonds is required pursuant to Minnesota Statutes, Chapter 474A, and the Borrower has received such allocation from the State, pursuant to that certain Certificate of Allocation for Residential Rental Projects, Number 447, dated January 10, 2023. Monitoring. The Borrower expects to enter into suitable agreements with necessary parties to ensure consistent compliance with the objectives of this Program, as well as with the requirements of applicable law. Affordability. The Project has been designed to be affordable, and all or a portion of the units thereof shall be leased to persons or households of low to moderate income, all in accordance with the Act and other applicable state and federal laws. Furthermore, in connection with the loan to be made from the proceeds of the issuance of the Bonds, the Borrower expects to enter into certain agreements covenanting the Borrower to maintain the affordability of the Project and to ensure that a certain percentage of the units thereof are leased to persons or households of low to moderate income, all for so long as the Bonds are outstanding. Use of Bond Proceeds. The proceeds of the Bonds will be loaned to the Borrower pursuant to a loan agreement (the “Loan Agreement”) by and between the City and the Borrower. The Borrower will be required, pursuant to the Loan Agreement, to make payments sufficient to pay when due the principal of, premium, if any, and interest on the Bonds. Project Costs. The costs of the Project and the program of financing the Project, including specifically the costs of the City, generally will be paid or reimbursed by the Borrower.