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99-708�� Presented By Referred To �o�� F��e # qR-�o8` Resolution # RESOLUTION CITY OF SAINT PAUL, MINNESOTA ��,',`' � �--, *��.-�°�° v- Green Sheet # Committee : RESOLUTION TO DIRECT TI-IE DEPARTTvIENT OF PLANNING ECONOMIC DEVELOPMENT TO WORK WITH TI� HOUSING AND DEVELOPMENT AUTHORITY OF THE CITY OF SAINT PAUL TO PROCEED ISSUE REVENUE BOND, MODIFY THE SEVENTH PLACE REDEVELOP NT PROJECT, AND PREPARE A HOUSING TAX INCREMENT FINANCING P AN FOR THE LOWRY PROFESSIONAL BUILDING PROJECT. WIiEREAS, the Housing and Redevelopment thority of the City of Saint Paul (the "IiRA") has received a request from Avex Lowry L� ited Partnership, a Minnesota Limited Partnership (hereinafter refened to as "Company") t the HRA consider the issuance of revenue bonds and the establishment of a Housing Tax crement Financing District to finance the development of multi-family rental housing at th owry Professional Building located at 350 St. Peter Street in the City of Saint Paul, Minneso the "Project"), to be owned by the Company; and WHEREAS, the City desires to facil' ate the provision ofmulti-family rental housing inthe Ciry of Saint Paul; and 23 24 25 26 27 28 29 30 31 32 33 34 35 WHEREAS, the Project to be anced by the revenue bond will result in addirional housing units in the City of 9aint Paul and i the Downtown Community; and WHEREAS, the Project be financed will also retain and improve the taY base of the City; and NOW, Tf�REFO , BE IT RESOLVED by the Ciry Council (the "Council") of the City of Saint Paul, Minneso (the "City"), as follows: 1. The ouncil directs the Department ofPlamung and Economic Development ("PED") to proceed with actions necessary to facilitate the issuance of the revenue bond by the I�2A, including: sche ing of a public hearing on the issuance of the bonds and publication of notice of the hearings; egotiate with the Company concerning the terms of the financing; execution of a Memorand of Understanding with the Company; and similaz actions. The Council directs PED to take the actions necessary to facilitate actions by the � 1829318 Q9-�ot� 36 HRA to: (1) e�cpand the HRA's Seventh Place Redevelopment Project; and (ii) create a ho sing taY 37 inerement district encompassing the Project. PED is further directed to prepare, for re 'ew by this 38 Council and the HRA, the documents and notices required for the redevelopment pro' ct expansion 39 and tas increment distdct. 40 41 3. The Council hereby delegates to the F�RA the power and au rity to issue revenue 42 bonds to fivauce the Project, to expand the Seventh Place Redevelopment ro�ect, and to create the 43 housing T� Increment District encompassing the Project; subject in all ases to satisfaction of the 44 requirements of applicable law. 45 46 47 48 49 50 51 5z 4. The Council designates Leonazd, Street and outside counsel for the City and ihe HRA. 5. The Council designates Dougherry the bonds. Adopted: P.A. as Bond Counsel and as LLC as the undenvriter for �� qd1 �\�� Requested by Department of: Plannina & Economic Develonment r By: Adopted by Counci,d: Date Adoption Certi ied By: _ Approve y Mayor: By: _ Form Approved by City Attorney by Council Secretary Date Approv< ; al`�..�0�'{ 7/,2n jso-K � G!4 �4q9 TOTAL # OF SIGNATURE PAGES GREEN SHEET �� .,,� u��t ��„� _ ❑,�,�.�. ❑,�.�,�,,,,,�� rnrox�ox�sssrawn ❑ , / (CLIP ALL LOCATIONS FOR StGNATURE) J�"'"" �SOlv�so-sr fo aaflrarrrL /fR13 �ro isSb�. ci I�tiflib�s. 0 Q ,�reve�r�� fro�s ��x�a.� �� P��- �Q�e%y�� /!o�e�f � G/'.�a-1`e a.- /Iovdi � � ��cr'e�� t�ia�►"Taf, � �;ha.HaP � dcve o � �,Z �� IOar,` v�1;fs ;h rur L�v�" �ia,�PSl�o�� u�'/d� /ac�zd o-� 3sn T/sf- f��e� �'7��e�--t' O a� PLANNING COMMISSION CIB CAMMITTEE CIVIL SERVICE CAMMISSION RSONAL SERVICE GONiRRCTS MUST ANSWER iHF FOLLOWING QUESTIONS: Has this persoNfi�m ever worked under a cont2ct for this depa�lmeM'7 YES NO Has this pe�soNfi�m eve� he�m a city employee? VES NO Does this persoNfi�m possess a sldll not riwmallypossessed by any current city employee? YES NO Is mis perso�m� a targeted vendoR YES NO �d��S��Ji3 ;'3��l�^9: 4.f�te�dv� . : � .�,. 5� "i�.:l,�.�:. 4N�ES I�OVE�//y ��/�/ R/' �/�S! �J�! 7s d� (,�J �%+�lT �+d 'W � �� " �— � �i'��6�� - .h � � �Ia�,�Q��s ,._.,...�_...� .. -_ .. _-_: R OF TRANSACTION SOURCE �HFaxMnnon to�PUiw> CASTrttEVQ1UE BUDOE7ED (CIRCLE ON� ACTNITY NUMBER No 64629 �� YES NO - �.. �,:7�5 ' �!�� `� � 1�59 � ��'1 Interdepartmental Memorandum CITY OF SAINT PAUL TO: Council President Bostrom Councilmember Benanav Councilmember Blakey Councilmember Coleman Councilmember Harris Councilmember Lantry Councilmember Reiter FROM: Brian Sweeney Allen Carlson RE: Resolution to Direct the Department of Planning and Economic Development ta Work with the Housing and Redevelopment Authority of the City of Sai�t Paul to Proceed to Issue Revenue Bonds, Modify the Seventh Place Redevelopment Project, and Prepare a Housing Tax Increment Financing Plan for the Lowry Professional Building Project. Purpose Staff has received a request from the Avex Lowry Limited Partnership (Developer) that the Housi�g and Redevelopment Authority of the City of Saint Paul, Minnesota (HRA) consider the issuance of multrfamily revenue bonds, tax increment revenue bonds and the estabiishment ofi a Housing Tax Increment Financing District to finance the development of 112 units of multifamily rental housing in the Lowry Professional Building located at 350 St. Peter Street. The purpose of this report is to request that the City Council consider the following: Direct Department of Planning and Economic Development (PED) staff to proceed with the actions necessary to facilitate the issuance of the revenue bonds by the HRA. 2. Direct PED to take actions necessary to faci{itate actions by the HRA to expand the Seventh Place Redevelopment Project and create a housing tax increment district. 3. Authorize the HRA to issue revenue bonds to finance the project, expand the Seventh Place Redevelopment Project and create the housing tax increment district. 4 Designate HRA bond counsel and underwriters for the bonds. Page 1 of 6 q9-7og Background/Proposai The Lowry Professional Building (Lowry) is a 12 story building with approximately 280,000 gross square feet of Class C office/retail space. Much of the bui{ding's upper floors are not leased. The building was recently purchased from the Saint Paul Port Authority by the Avex Group (Avex) which has offices in Dallas, Texas and recently in Saint Paul. Avex has approached staff requesting financial assistance regard'+ng the possibi{ity of converting floors 6 through 12 of the Lowry into 112 units of residential rental housing units. The multifamily portion of the building wili occupy approximately 120,000 gross square feet of which approximately 78,�00 square feet will be actual living space. Each individual unit will include washer/dryer, microwave, stove/oven, refrigerator, individually controlled heatinglcooling system, dishwasher, garbage disposal and window treatments. Building amenities planned wiil include a workout room, communityisocial room and access to a variety of retail services located within the building. The building is also on the skyway system with access to the new Lawson building and Landmark Towers/Saint Paul Hotel. Valet parking will also be available for an additional monthly charge in the Lowry Parking ramp. Floors 1 and 2 of the Lowry will maintain the bulk of the existing businesses. The skyway system within the building will afso be remodeled to attract additionat commercial tenants, provide improved pedestrian traffic flow and attract people to the first floor businesses. Floors 3 through 5 will be remodeled to upgrade the existing commercial office space to "B° category o�ce space. Existing tenants will be offered the opportunity to lease the remodeled space. No businesses will be displaced but may have to relocate within the building to the remodeled space. Page 2 of 6 • . .: The proposed unit mix, size and tenant rents are as follows: Unit Type # of Units Unit Size Gross Rent Efficiency- Affordable 14 470 $556 One Bedroom 70 650 $875 One Bedroom/Den 4 869 $1,005 One Bedroom/Den - Affordabie 11 869 $715 Two Bedroom 14 1035 $1,110 Total 112 Avg. unit size - 705 Based upon the above unit mix 25 units (22.3% of units) wilt be affordable to households at or below 50% of the area median income. Proposed Financing Structure Below is the proposed Source and Uses of Fund Statement: Source of Funds Uses of Funds Tax Exempt Multifamily Revenue $7,740,000 Acquisition $1,250,000 Bonds Tax lncrement Bonds 2,435,000 Construction 8,715,350 Construction fnterest Earnings 31,000 Construction Mgmt 137,500 Low Income Housing Tax Credit 710,000 Costs of Issuance 475,950 Equity STAR Grant 250,000 Underwriter's Discount 164,800 Gap Loans (STAR, MHFA, FHF, etc.) 500.000 Debt Service Reserve 202,100 Fund Capitalized Interest 540,30Q Due Diligence/Legal 80,000 Lease-up Reserve 100.000 Total $11,666,00 Toiai $11,666,00 0 0 Page 3 of 6 �(q-?08' It is proposed that the primary source of financing for the project be the use of the city's 1999 and year 2000 bonding authority to issue tax exempt multifamily revenue bonds. Should the project fiinancing close this year the city could use whatever bonding authority is available for 1999 to issue taY exempt bonds and the balance woutd be funded with taxable bonds. Once the year 2000 bonding authority becomes available January 1, 2000, the taxable bonds would be converted to tax exempt bonds. The bonds will be insured by HUD. Approximately $2.4 miliion of the project would be financed with tax exempi tax increment financing bonds. A tax increment financing housing district will have to be created to provide tax increments to pay the tax increment bonds. The Seventh Place Redevelopment Project Area will also need to be expanded to include the Lowry in order to create the housing tax increment district. The tax increment district and the use of captured real estate taxes to pay for the project would be justified because but for the development of the project the increased taxes would not be realized. The HRA or City shall have no obligation or liability to repay the bonds. The bonds wiil be secured by the revenues generated by the project and the tax increments generated. As an Issuer of the bonds, the HRA will receive an issuer's fee the first year equal to 1% of the outstanding principal balance of the bonds plus annually for the term of bonds a fee equal to one-tenth of one percent of the outstanding principal balance of the bonds. Pursuant to Federal and State bonding statutes at least 20% of the rental units must be affordable to households at or below 50°!0 of the area median income. Because tax exempt multifamily revenue bonds will be used and 20% of the units are affordable, Avex will be eligible to receive low income housing tax credits for the affordable units. This will generate approximately $710,000 of limited partner equity for the project. Avex has also submitted an application for STAR funds. Avex is requesting a$250,000 STAR grant which will act as the local contribution to the project to meet the 5% match requirement to avoid local government aid penalties under the tax i�crement financing statutes. The project has a$500,000 gap in financing. Avex has applied to the STAR program for a loan to fill this gap. Avex will also be applying to other agencies such as the Minnesota Housing Finance Agency and Family Housing Fund to fill this gap. The financial numbers are preliminary and still subject to change. The financing structure only re{ates to the residential portion of the building. Avex will also be spending approximately $2 million in improvements to the commercial portion of the building and parking ramp. Avex has not asked for City assistance to undertake the commercial Page 4 of 6 a�q-1 oY improvements. Project Benefits The following are some of the benefits, many of which are delineated in the Housing Plan, that the project wili provide should it go forward: Encourages the production of rentai housing, which is in great need in the downtown core. 2. Provides affordable housing to lower income households. 3. Promotes economic integration of housing uniis and diversity for the housing market. 4. Promotes linkages with the downtown employment base and transportation system, both pedestrian and mass transit. 5. Promotes an urban environment that the downtown is a good place to live, work and recreate. 6. Preserves a buildi�g that has significant architectural features. Further advantages of converting part of the buitding to housing is that it is convenient io numerous amenities such as Rice Park, Ordway Theater, Science Museum and many excellent restaurants. The project has convenient parking available, which is always a problem with the redevelopment of buildings for housing in the downtown area. The building is on the skyway system which is a benefit for tenants that may be physically challenged. The residential units would be in close proximity to major employers in the downtown core. Recommendation Staff recommends and requests the City Council to consider adoption of the attached resolution which authorizes the following: The Council directs the Department of Planning and Economic Development ("PED") to proceed with the actions necessary to facititate the issuance of the revenue bond by the HRA, including: scheduling of a public hearing on the issuance of the bonds a�d publication of notice of the hearings; negotiate with the Company concerning the terms of the financing; execution of a Memorandum of Understanding with the Company; and similar actions. Page 5 of 6 q9�'1o8' 2. The Cou�ci! directs PED to take the actions necessary to facilitate actions by the HRA to: (1) expand the HRA's Seventh Place Redevelopment Project; and (ii) create a housing tax incremeni district encompassing the Project. PED is further directed to prepare, for review by this Council and the HRA, the documents and notices required for the redevelopment project expansion and taac increment district. 3. The Council hereby delegates to the HRA the power and authority to issue revenue bonds to finance the Project, to expand the Seventh Place Redevelopment Project, and to create the housing Tax Increment District encompassing the Project; subject in all cases to satisfaction of the requirements of applicable law. 4. The Council designates Leonard, Street and Deinard, P.A. as Bond Counsel and as outside counsel for the City and the HRA. The Council designates Dougherty Summit Securities, LLC as the underwriter for the bonds. Ailen Carlson 266-6616 x:�s�D�caaLSOae�iower Page 6 of 6 �� Presented By Referred To �o�� F��e # qR-�o8` Resolution # RESOLUTION CITY OF SAINT PAUL, MINNESOTA ��,',`' � �--, *��.-�°�° v- Green Sheet # Committee : RESOLUTION TO DIRECT TI-IE DEPARTTvIENT OF PLANNING ECONOMIC DEVELOPMENT TO WORK WITH TI� HOUSING AND DEVELOPMENT AUTHORITY OF THE CITY OF SAINT PAUL TO PROCEED ISSUE REVENUE BOND, MODIFY THE SEVENTH PLACE REDEVELOP NT PROJECT, AND PREPARE A HOUSING TAX INCREMENT FINANCING P AN FOR THE LOWRY PROFESSIONAL BUILDING PROJECT. WIiEREAS, the Housing and Redevelopment thority of the City of Saint Paul (the "IiRA") has received a request from Avex Lowry L� ited Partnership, a Minnesota Limited Partnership (hereinafter refened to as "Company") t the HRA consider the issuance of revenue bonds and the establishment of a Housing Tax crement Financing District to finance the development of multi-family rental housing at th owry Professional Building located at 350 St. Peter Street in the City of Saint Paul, Minneso the "Project"), to be owned by the Company; and WHEREAS, the City desires to facil' ate the provision ofmulti-family rental housing inthe Ciry of Saint Paul; and 23 24 25 26 27 28 29 30 31 32 33 34 35 WHEREAS, the Project to be anced by the revenue bond will result in addirional housing units in the City of 9aint Paul and i the Downtown Community; and WHEREAS, the Project be financed will also retain and improve the taY base of the City; and NOW, Tf�REFO , BE IT RESOLVED by the Ciry Council (the "Council") of the City of Saint Paul, Minneso (the "City"), as follows: 1. The ouncil directs the Department ofPlamung and Economic Development ("PED") to proceed with actions necessary to facilitate the issuance of the revenue bond by the I�2A, including: sche ing of a public hearing on the issuance of the bonds and publication of notice of the hearings; egotiate with the Company concerning the terms of the financing; execution of a Memorand of Understanding with the Company; and similaz actions. The Council directs PED to take the actions necessary to facilitate actions by the � 1829318 Q9-�ot� 36 HRA to: (1) e�cpand the HRA's Seventh Place Redevelopment Project; and (ii) create a ho sing taY 37 inerement district encompassing the Project. PED is further directed to prepare, for re 'ew by this 38 Council and the HRA, the documents and notices required for the redevelopment pro' ct expansion 39 and tas increment distdct. 40 41 3. The Council hereby delegates to the F�RA the power and au rity to issue revenue 42 bonds to fivauce the Project, to expand the Seventh Place Redevelopment ro�ect, and to create the 43 housing T� Increment District encompassing the Project; subject in all ases to satisfaction of the 44 requirements of applicable law. 45 46 47 48 49 50 51 5z 4. The Council designates Leonazd, Street and outside counsel for the City and ihe HRA. 5. The Council designates Dougherry the bonds. Adopted: P.A. as Bond Counsel and as LLC as the undenvriter for �� qd1 �\�� Requested by Department of: Plannina & Economic Develonment r By: Adopted by Counci,d: Date Adoption Certi ied By: _ Approve y Mayor: By: _ Form Approved by City Attorney by Council Secretary Date Approv< ; al`�..�0�'{ 7/,2n jso-K � G!4 �4q9 TOTAL # OF SIGNATURE PAGES GREEN SHEET �� .,,� u��t ��„� _ ❑,�,�.�. ❑,�.�,�,,,,,�� rnrox�ox�sssrawn ❑ , / (CLIP ALL LOCATIONS FOR StGNATURE) J�"'"" �SOlv�so-sr fo aaflrarrrL /fR13 �ro isSb�. ci I�tiflib�s. 0 Q ,�reve�r�� fro�s ��x�a.� �� P��- �Q�e%y�� /!o�e�f � G/'.�a-1`e a.- /Iovdi � � ��cr'e�� t�ia�►"Taf, � �;ha.HaP � dcve o � �,Z �� IOar,` v�1;fs ;h rur L�v�" �ia,�PSl�o�� u�'/d� /ac�zd o-� 3sn T/sf- f��e� �'7��e�--t' O a� PLANNING COMMISSION CIB CAMMITTEE CIVIL SERVICE CAMMISSION RSONAL SERVICE GONiRRCTS MUST ANSWER iHF FOLLOWING QUESTIONS: Has this persoNfi�m ever worked under a cont2ct for this depa�lmeM'7 YES NO Has this pe�soNfi�m eve� he�m a city employee? VES NO Does this persoNfi�m possess a sldll not riwmallypossessed by any current city employee? YES NO Is mis perso�m� a targeted vendoR YES NO �d��S��Ji3 ;'3��l�^9: 4.f�te�dv� . : � .�,. 5� "i�.:l,�.�:. 4N�ES I�OVE�//y ��/�/ R/' �/�S! �J�! 7s d� (,�J �%+�lT �+d 'W � �� " �— � �i'��6�� - .h � � �Ia�,�Q��s ,._.,...�_...� .. -_ .. _-_: R OF TRANSACTION SOURCE �HFaxMnnon to�PUiw> CASTrttEVQ1UE BUDOE7ED (CIRCLE ON� ACTNITY NUMBER No 64629 �� YES NO - �.. �,:7�5 ' �!�� `� � 1�59 � ��'1 Interdepartmental Memorandum CITY OF SAINT PAUL TO: Council President Bostrom Councilmember Benanav Councilmember Blakey Councilmember Coleman Councilmember Harris Councilmember Lantry Councilmember Reiter FROM: Brian Sweeney Allen Carlson RE: Resolution to Direct the Department of Planning and Economic Development ta Work with the Housing and Redevelopment Authority of the City of Sai�t Paul to Proceed to Issue Revenue Bonds, Modify the Seventh Place Redevelopment Project, and Prepare a Housing Tax Increment Financing Plan for the Lowry Professional Building Project. Purpose Staff has received a request from the Avex Lowry Limited Partnership (Developer) that the Housi�g and Redevelopment Authority of the City of Saint Paul, Minnesota (HRA) consider the issuance of multrfamily revenue bonds, tax increment revenue bonds and the estabiishment ofi a Housing Tax Increment Financing District to finance the development of 112 units of multifamily rental housing in the Lowry Professional Building located at 350 St. Peter Street. The purpose of this report is to request that the City Council consider the following: Direct Department of Planning and Economic Development (PED) staff to proceed with the actions necessary to facilitate the issuance of the revenue bonds by the HRA. 2. Direct PED to take actions necessary to faci{itate actions by the HRA to expand the Seventh Place Redevelopment Project and create a housing tax increment district. 3. Authorize the HRA to issue revenue bonds to finance the project, expand the Seventh Place Redevelopment Project and create the housing tax increment district. 4 Designate HRA bond counsel and underwriters for the bonds. Page 1 of 6 q9-7og Background/Proposai The Lowry Professional Building (Lowry) is a 12 story building with approximately 280,000 gross square feet of Class C office/retail space. Much of the bui{ding's upper floors are not leased. The building was recently purchased from the Saint Paul Port Authority by the Avex Group (Avex) which has offices in Dallas, Texas and recently in Saint Paul. Avex has approached staff requesting financial assistance regard'+ng the possibi{ity of converting floors 6 through 12 of the Lowry into 112 units of residential rental housing units. The multifamily portion of the building wili occupy approximately 120,000 gross square feet of which approximately 78,�00 square feet will be actual living space. Each individual unit will include washer/dryer, microwave, stove/oven, refrigerator, individually controlled heatinglcooling system, dishwasher, garbage disposal and window treatments. Building amenities planned wiil include a workout room, communityisocial room and access to a variety of retail services located within the building. The building is also on the skyway system with access to the new Lawson building and Landmark Towers/Saint Paul Hotel. Valet parking will also be available for an additional monthly charge in the Lowry Parking ramp. Floors 1 and 2 of the Lowry will maintain the bulk of the existing businesses. The skyway system within the building will afso be remodeled to attract additionat commercial tenants, provide improved pedestrian traffic flow and attract people to the first floor businesses. Floors 3 through 5 will be remodeled to upgrade the existing commercial office space to "B° category o�ce space. Existing tenants will be offered the opportunity to lease the remodeled space. No businesses will be displaced but may have to relocate within the building to the remodeled space. Page 2 of 6 • . .: The proposed unit mix, size and tenant rents are as follows: Unit Type # of Units Unit Size Gross Rent Efficiency- Affordable 14 470 $556 One Bedroom 70 650 $875 One Bedroom/Den 4 869 $1,005 One Bedroom/Den - Affordabie 11 869 $715 Two Bedroom 14 1035 $1,110 Total 112 Avg. unit size - 705 Based upon the above unit mix 25 units (22.3% of units) wilt be affordable to households at or below 50% of the area median income. Proposed Financing Structure Below is the proposed Source and Uses of Fund Statement: Source of Funds Uses of Funds Tax Exempt Multifamily Revenue $7,740,000 Acquisition $1,250,000 Bonds Tax lncrement Bonds 2,435,000 Construction 8,715,350 Construction fnterest Earnings 31,000 Construction Mgmt 137,500 Low Income Housing Tax Credit 710,000 Costs of Issuance 475,950 Equity STAR Grant 250,000 Underwriter's Discount 164,800 Gap Loans (STAR, MHFA, FHF, etc.) 500.000 Debt Service Reserve 202,100 Fund Capitalized Interest 540,30Q Due Diligence/Legal 80,000 Lease-up Reserve 100.000 Total $11,666,00 Toiai $11,666,00 0 0 Page 3 of 6 �(q-?08' It is proposed that the primary source of financing for the project be the use of the city's 1999 and year 2000 bonding authority to issue tax exempt multifamily revenue bonds. Should the project fiinancing close this year the city could use whatever bonding authority is available for 1999 to issue taY exempt bonds and the balance woutd be funded with taxable bonds. Once the year 2000 bonding authority becomes available January 1, 2000, the taxable bonds would be converted to tax exempt bonds. The bonds will be insured by HUD. Approximately $2.4 miliion of the project would be financed with tax exempi tax increment financing bonds. A tax increment financing housing district will have to be created to provide tax increments to pay the tax increment bonds. The Seventh Place Redevelopment Project Area will also need to be expanded to include the Lowry in order to create the housing tax increment district. The tax increment district and the use of captured real estate taxes to pay for the project would be justified because but for the development of the project the increased taxes would not be realized. The HRA or City shall have no obligation or liability to repay the bonds. The bonds wiil be secured by the revenues generated by the project and the tax increments generated. As an Issuer of the bonds, the HRA will receive an issuer's fee the first year equal to 1% of the outstanding principal balance of the bonds plus annually for the term of bonds a fee equal to one-tenth of one percent of the outstanding principal balance of the bonds. Pursuant to Federal and State bonding statutes at least 20% of the rental units must be affordable to households at or below 50°!0 of the area median income. Because tax exempt multifamily revenue bonds will be used and 20% of the units are affordable, Avex will be eligible to receive low income housing tax credits for the affordable units. This will generate approximately $710,000 of limited partner equity for the project. Avex has also submitted an application for STAR funds. Avex is requesting a$250,000 STAR grant which will act as the local contribution to the project to meet the 5% match requirement to avoid local government aid penalties under the tax i�crement financing statutes. The project has a$500,000 gap in financing. Avex has applied to the STAR program for a loan to fill this gap. Avex will also be applying to other agencies such as the Minnesota Housing Finance Agency and Family Housing Fund to fill this gap. The financial numbers are preliminary and still subject to change. The financing structure only re{ates to the residential portion of the building. Avex will also be spending approximately $2 million in improvements to the commercial portion of the building and parking ramp. Avex has not asked for City assistance to undertake the commercial Page 4 of 6 a�q-1 oY improvements. Project Benefits The following are some of the benefits, many of which are delineated in the Housing Plan, that the project wili provide should it go forward: Encourages the production of rentai housing, which is in great need in the downtown core. 2. Provides affordable housing to lower income households. 3. Promotes economic integration of housing uniis and diversity for the housing market. 4. Promotes linkages with the downtown employment base and transportation system, both pedestrian and mass transit. 5. Promotes an urban environment that the downtown is a good place to live, work and recreate. 6. Preserves a buildi�g that has significant architectural features. Further advantages of converting part of the buitding to housing is that it is convenient io numerous amenities such as Rice Park, Ordway Theater, Science Museum and many excellent restaurants. The project has convenient parking available, which is always a problem with the redevelopment of buildings for housing in the downtown area. The building is on the skyway system which is a benefit for tenants that may be physically challenged. The residential units would be in close proximity to major employers in the downtown core. Recommendation Staff recommends and requests the City Council to consider adoption of the attached resolution which authorizes the following: The Council directs the Department of Planning and Economic Development ("PED") to proceed with the actions necessary to facititate the issuance of the revenue bond by the HRA, including: scheduling of a public hearing on the issuance of the bonds a�d publication of notice of the hearings; negotiate with the Company concerning the terms of the financing; execution of a Memorandum of Understanding with the Company; and similar actions. Page 5 of 6 q9�'1o8' 2. The Cou�ci! directs PED to take the actions necessary to facilitate actions by the HRA to: (1) expand the HRA's Seventh Place Redevelopment Project; and (ii) create a housing tax incremeni district encompassing the Project. PED is further directed to prepare, for review by this Council and the HRA, the documents and notices required for the redevelopment project expansion and taac increment district. 3. The Council hereby delegates to the HRA the power and authority to issue revenue bonds to finance the Project, to expand the Seventh Place Redevelopment Project, and to create the housing Tax Increment District encompassing the Project; subject in all cases to satisfaction of the requirements of applicable law. 4. The Council designates Leonard, Street and Deinard, P.A. as Bond Counsel and as outside counsel for the City and the HRA. The Council designates Dougherty Summit Securities, LLC as the underwriter for the bonds. Ailen Carlson 266-6616 x:�s�D�caaLSOae�iower Page 6 of 6 �� Presented By Referred To �o�� F��e # qR-�o8` Resolution # RESOLUTION CITY OF SAINT PAUL, MINNESOTA ��,',`' � �--, *��.-�°�° v- Green Sheet # Committee : RESOLUTION TO DIRECT TI-IE DEPARTTvIENT OF PLANNING ECONOMIC DEVELOPMENT TO WORK WITH TI� HOUSING AND DEVELOPMENT AUTHORITY OF THE CITY OF SAINT PAUL TO PROCEED ISSUE REVENUE BOND, MODIFY THE SEVENTH PLACE REDEVELOP NT PROJECT, AND PREPARE A HOUSING TAX INCREMENT FINANCING P AN FOR THE LOWRY PROFESSIONAL BUILDING PROJECT. WIiEREAS, the Housing and Redevelopment thority of the City of Saint Paul (the "IiRA") has received a request from Avex Lowry L� ited Partnership, a Minnesota Limited Partnership (hereinafter refened to as "Company") t the HRA consider the issuance of revenue bonds and the establishment of a Housing Tax crement Financing District to finance the development of multi-family rental housing at th owry Professional Building located at 350 St. Peter Street in the City of Saint Paul, Minneso the "Project"), to be owned by the Company; and WHEREAS, the City desires to facil' ate the provision ofmulti-family rental housing inthe Ciry of Saint Paul; and 23 24 25 26 27 28 29 30 31 32 33 34 35 WHEREAS, the Project to be anced by the revenue bond will result in addirional housing units in the City of 9aint Paul and i the Downtown Community; and WHEREAS, the Project be financed will also retain and improve the taY base of the City; and NOW, Tf�REFO , BE IT RESOLVED by the Ciry Council (the "Council") of the City of Saint Paul, Minneso (the "City"), as follows: 1. The ouncil directs the Department ofPlamung and Economic Development ("PED") to proceed with actions necessary to facilitate the issuance of the revenue bond by the I�2A, including: sche ing of a public hearing on the issuance of the bonds and publication of notice of the hearings; egotiate with the Company concerning the terms of the financing; execution of a Memorand of Understanding with the Company; and similaz actions. The Council directs PED to take the actions necessary to facilitate actions by the � 1829318 Q9-�ot� 36 HRA to: (1) e�cpand the HRA's Seventh Place Redevelopment Project; and (ii) create a ho sing taY 37 inerement district encompassing the Project. PED is further directed to prepare, for re 'ew by this 38 Council and the HRA, the documents and notices required for the redevelopment pro' ct expansion 39 and tas increment distdct. 40 41 3. The Council hereby delegates to the F�RA the power and au rity to issue revenue 42 bonds to fivauce the Project, to expand the Seventh Place Redevelopment ro�ect, and to create the 43 housing T� Increment District encompassing the Project; subject in all ases to satisfaction of the 44 requirements of applicable law. 45 46 47 48 49 50 51 5z 4. The Council designates Leonazd, Street and outside counsel for the City and ihe HRA. 5. The Council designates Dougherry the bonds. Adopted: P.A. as Bond Counsel and as LLC as the undenvriter for �� qd1 �\�� Requested by Department of: Plannina & Economic Develonment r By: Adopted by Counci,d: Date Adoption Certi ied By: _ Approve y Mayor: By: _ Form Approved by City Attorney by Council Secretary Date Approv< ; al`�..�0�'{ 7/,2n jso-K � G!4 �4q9 TOTAL # OF SIGNATURE PAGES GREEN SHEET �� .,,� u��t ��„� _ ❑,�,�.�. ❑,�.�,�,,,,,�� rnrox�ox�sssrawn ❑ , / (CLIP ALL LOCATIONS FOR StGNATURE) J�"'"" �SOlv�so-sr fo aaflrarrrL /fR13 �ro isSb�. ci I�tiflib�s. 0 Q ,�reve�r�� fro�s ��x�a.� �� P��- �Q�e%y�� /!o�e�f � G/'.�a-1`e a.- /Iovdi � � ��cr'e�� t�ia�►"Taf, � �;ha.HaP � dcve o � �,Z �� IOar,` v�1;fs ;h rur L�v�" �ia,�PSl�o�� u�'/d� /ac�zd o-� 3sn T/sf- f��e� �'7��e�--t' O a� PLANNING COMMISSION CIB CAMMITTEE CIVIL SERVICE CAMMISSION RSONAL SERVICE GONiRRCTS MUST ANSWER iHF FOLLOWING QUESTIONS: Has this persoNfi�m ever worked under a cont2ct for this depa�lmeM'7 YES NO Has this pe�soNfi�m eve� he�m a city employee? VES NO Does this persoNfi�m possess a sldll not riwmallypossessed by any current city employee? YES NO Is mis perso�m� a targeted vendoR YES NO �d��S��Ji3 ;'3��l�^9: 4.f�te�dv� . : � .�,. 5� "i�.:l,�.�:. 4N�ES I�OVE�//y ��/�/ R/' �/�S! �J�! 7s d� (,�J �%+�lT �+d 'W � �� " �— � �i'��6�� - .h � � �Ia�,�Q��s ,._.,...�_...� .. -_ .. _-_: R OF TRANSACTION SOURCE �HFaxMnnon to�PUiw> CASTrttEVQ1UE BUDOE7ED (CIRCLE ON� ACTNITY NUMBER No 64629 �� YES NO - �.. �,:7�5 ' �!�� `� � 1�59 � ��'1 Interdepartmental Memorandum CITY OF SAINT PAUL TO: Council President Bostrom Councilmember Benanav Councilmember Blakey Councilmember Coleman Councilmember Harris Councilmember Lantry Councilmember Reiter FROM: Brian Sweeney Allen Carlson RE: Resolution to Direct the Department of Planning and Economic Development ta Work with the Housing and Redevelopment Authority of the City of Sai�t Paul to Proceed to Issue Revenue Bonds, Modify the Seventh Place Redevelopment Project, and Prepare a Housing Tax Increment Financing Plan for the Lowry Professional Building Project. Purpose Staff has received a request from the Avex Lowry Limited Partnership (Developer) that the Housi�g and Redevelopment Authority of the City of Saint Paul, Minnesota (HRA) consider the issuance of multrfamily revenue bonds, tax increment revenue bonds and the estabiishment ofi a Housing Tax Increment Financing District to finance the development of 112 units of multifamily rental housing in the Lowry Professional Building located at 350 St. Peter Street. The purpose of this report is to request that the City Council consider the following: Direct Department of Planning and Economic Development (PED) staff to proceed with the actions necessary to facilitate the issuance of the revenue bonds by the HRA. 2. Direct PED to take actions necessary to faci{itate actions by the HRA to expand the Seventh Place Redevelopment Project and create a housing tax increment district. 3. Authorize the HRA to issue revenue bonds to finance the project, expand the Seventh Place Redevelopment Project and create the housing tax increment district. 4 Designate HRA bond counsel and underwriters for the bonds. Page 1 of 6 q9-7og Background/Proposai The Lowry Professional Building (Lowry) is a 12 story building with approximately 280,000 gross square feet of Class C office/retail space. Much of the bui{ding's upper floors are not leased. The building was recently purchased from the Saint Paul Port Authority by the Avex Group (Avex) which has offices in Dallas, Texas and recently in Saint Paul. Avex has approached staff requesting financial assistance regard'+ng the possibi{ity of converting floors 6 through 12 of the Lowry into 112 units of residential rental housing units. The multifamily portion of the building wili occupy approximately 120,000 gross square feet of which approximately 78,�00 square feet will be actual living space. Each individual unit will include washer/dryer, microwave, stove/oven, refrigerator, individually controlled heatinglcooling system, dishwasher, garbage disposal and window treatments. Building amenities planned wiil include a workout room, communityisocial room and access to a variety of retail services located within the building. The building is also on the skyway system with access to the new Lawson building and Landmark Towers/Saint Paul Hotel. Valet parking will also be available for an additional monthly charge in the Lowry Parking ramp. Floors 1 and 2 of the Lowry will maintain the bulk of the existing businesses. The skyway system within the building will afso be remodeled to attract additionat commercial tenants, provide improved pedestrian traffic flow and attract people to the first floor businesses. Floors 3 through 5 will be remodeled to upgrade the existing commercial office space to "B° category o�ce space. Existing tenants will be offered the opportunity to lease the remodeled space. No businesses will be displaced but may have to relocate within the building to the remodeled space. Page 2 of 6 • . .: The proposed unit mix, size and tenant rents are as follows: Unit Type # of Units Unit Size Gross Rent Efficiency- Affordable 14 470 $556 One Bedroom 70 650 $875 One Bedroom/Den 4 869 $1,005 One Bedroom/Den - Affordabie 11 869 $715 Two Bedroom 14 1035 $1,110 Total 112 Avg. unit size - 705 Based upon the above unit mix 25 units (22.3% of units) wilt be affordable to households at or below 50% of the area median income. Proposed Financing Structure Below is the proposed Source and Uses of Fund Statement: Source of Funds Uses of Funds Tax Exempt Multifamily Revenue $7,740,000 Acquisition $1,250,000 Bonds Tax lncrement Bonds 2,435,000 Construction 8,715,350 Construction fnterest Earnings 31,000 Construction Mgmt 137,500 Low Income Housing Tax Credit 710,000 Costs of Issuance 475,950 Equity STAR Grant 250,000 Underwriter's Discount 164,800 Gap Loans (STAR, MHFA, FHF, etc.) 500.000 Debt Service Reserve 202,100 Fund Capitalized Interest 540,30Q Due Diligence/Legal 80,000 Lease-up Reserve 100.000 Total $11,666,00 Toiai $11,666,00 0 0 Page 3 of 6 �(q-?08' It is proposed that the primary source of financing for the project be the use of the city's 1999 and year 2000 bonding authority to issue tax exempt multifamily revenue bonds. Should the project fiinancing close this year the city could use whatever bonding authority is available for 1999 to issue taY exempt bonds and the balance woutd be funded with taxable bonds. Once the year 2000 bonding authority becomes available January 1, 2000, the taxable bonds would be converted to tax exempt bonds. The bonds will be insured by HUD. Approximately $2.4 miliion of the project would be financed with tax exempi tax increment financing bonds. A tax increment financing housing district will have to be created to provide tax increments to pay the tax increment bonds. The Seventh Place Redevelopment Project Area will also need to be expanded to include the Lowry in order to create the housing tax increment district. The tax increment district and the use of captured real estate taxes to pay for the project would be justified because but for the development of the project the increased taxes would not be realized. The HRA or City shall have no obligation or liability to repay the bonds. The bonds wiil be secured by the revenues generated by the project and the tax increments generated. As an Issuer of the bonds, the HRA will receive an issuer's fee the first year equal to 1% of the outstanding principal balance of the bonds plus annually for the term of bonds a fee equal to one-tenth of one percent of the outstanding principal balance of the bonds. Pursuant to Federal and State bonding statutes at least 20% of the rental units must be affordable to households at or below 50°!0 of the area median income. Because tax exempt multifamily revenue bonds will be used and 20% of the units are affordable, Avex will be eligible to receive low income housing tax credits for the affordable units. This will generate approximately $710,000 of limited partner equity for the project. Avex has also submitted an application for STAR funds. Avex is requesting a$250,000 STAR grant which will act as the local contribution to the project to meet the 5% match requirement to avoid local government aid penalties under the tax i�crement financing statutes. The project has a$500,000 gap in financing. Avex has applied to the STAR program for a loan to fill this gap. Avex will also be applying to other agencies such as the Minnesota Housing Finance Agency and Family Housing Fund to fill this gap. The financial numbers are preliminary and still subject to change. The financing structure only re{ates to the residential portion of the building. Avex will also be spending approximately $2 million in improvements to the commercial portion of the building and parking ramp. Avex has not asked for City assistance to undertake the commercial Page 4 of 6 a�q-1 oY improvements. Project Benefits The following are some of the benefits, many of which are delineated in the Housing Plan, that the project wili provide should it go forward: Encourages the production of rentai housing, which is in great need in the downtown core. 2. Provides affordable housing to lower income households. 3. Promotes economic integration of housing uniis and diversity for the housing market. 4. Promotes linkages with the downtown employment base and transportation system, both pedestrian and mass transit. 5. Promotes an urban environment that the downtown is a good place to live, work and recreate. 6. Preserves a buildi�g that has significant architectural features. Further advantages of converting part of the buitding to housing is that it is convenient io numerous amenities such as Rice Park, Ordway Theater, Science Museum and many excellent restaurants. The project has convenient parking available, which is always a problem with the redevelopment of buildings for housing in the downtown area. The building is on the skyway system which is a benefit for tenants that may be physically challenged. The residential units would be in close proximity to major employers in the downtown core. Recommendation Staff recommends and requests the City Council to consider adoption of the attached resolution which authorizes the following: The Council directs the Department of Planning and Economic Development ("PED") to proceed with the actions necessary to facititate the issuance of the revenue bond by the HRA, including: scheduling of a public hearing on the issuance of the bonds a�d publication of notice of the hearings; negotiate with the Company concerning the terms of the financing; execution of a Memorandum of Understanding with the Company; and similar actions. Page 5 of 6 q9�'1o8' 2. The Cou�ci! directs PED to take the actions necessary to facilitate actions by the HRA to: (1) expand the HRA's Seventh Place Redevelopment Project; and (ii) create a housing tax incremeni district encompassing the Project. PED is further directed to prepare, for review by this Council and the HRA, the documents and notices required for the redevelopment project expansion and taac increment district. 3. The Council hereby delegates to the HRA the power and authority to issue revenue bonds to finance the Project, to expand the Seventh Place Redevelopment Project, and to create the housing Tax Increment District encompassing the Project; subject in all cases to satisfaction of the requirements of applicable law. 4. The Council designates Leonard, Street and Deinard, P.A. as Bond Counsel and as outside counsel for the City and the HRA. The Council designates Dougherty Summit Securities, LLC as the underwriter for the bonds. Ailen Carlson 266-6616 x:�s�D�caaLSOae�iower Page 6 of 6