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02-26ORlG1�4AL COUnci1 File # � � � Resolution # Presented By Referred To lo 11 12 13 14 (OSCEOLA CROSSING PRO7ECT) �0��$Y 15 (a) Minnesota Statutes, Chapter 462C (the "Act) confers upon cities, or housing and 16 redevelopment authorities or port authorities authorized by ordinance to exercise on behalf of a 17 city the powers conferred by the Act, the power to issue revenue bonds to finance a program for 18 the purposes of planning, administering, making or purchasing loans with respect to one ar more 19 multi-family housing project developments within the boundaries of the city; 20 (b) The Housing and Redevelopment Authority of the City of Saint Paul, Minnesota 21 (the "HRA") has been designated, by ordinance, to exercise, on behalf of the City of Saint Paul, 22 Minnesota (the "City") the powers conferred by Minnesota Statutes, Section 462C.01 to 23 462C.081; 24 (c) The Housing and Redevelopment Authority of the City of Saint Paul, Minnesota 25 (the °IIRA"), has received a proposal from St. Paul Leased Housings Associates II Limited 26 Partnership, a lunited partnership organized under the laws of Minnesota (the "Partnership"), that 27 the IIRA undertake a program (the "Housing Program") to finance a Proj ect hereinafter 28 described, through the issuance of revenue bonds (the "Bonds") pursuant to the Act; Committee: Date RESOLUTION RECITING A PROPOSAL FOR A FINANCING PROGRAM FOR A MULTI-FAMILY RENTAL HOUSING DEVELOPMENT, GIVING PRELIMINARY APPROVAL TO THE PROJECT AND THE PROGRAM PURSUANT TO MINNESOTA STATUTES, CIIAPTER 462C, AUTHORIZING THE HOUSING AND REDEVELOPMENT AUTHORITY TO ISSUE HOUSING REVENtIE BONDS AND AUTHORIZING THE PREPARATION OF NECESSARY DOCUMENTS AND MATERIALS IN CONNECTION WITH THE SAID PROJECT AND PROGRAM �k9 29 (d) The Project to be financed by the Bonds is the acquisition, conshuction and 30 equipping of a multifamily rental housing project consisting of approximately 87 units located at 31 300 Osceola Street in the City of Saint Pau1(the "Project"); o � =�i� 32 (e) The proposal calis for the HRA to loan the proceeds realized upon the sale of the 33 Bonds to the Partnership pursuant to a revenue agreement or agreements wherein the Partnership 34 will be obligated to make payxnents at the times and in amounts sufficient to provide for the 35 prompt payment of principal of, premium, if any, and interest on the Bonds and all costs and 36 expenses of the HI2A and the City incident to the issuance and sale of the Bonds; 37 ( fl The City desires to facilitate the acquisition and construction of a mulrifamily 38 housing facility within the City; and the Project will assist the City in achieving these objectives; 39 (g) A public hearing on the Housing Program and the Project was held on this date 4o following duly published notice, at which time all persons that desired to speak were heazd; 41 (h) No public official of the City has either a direct or indirect financial interest in the 42 Project nor will any public official either directly or indirectly benefit financially from the 43 Project; and 44 (i) A form of Memorandum of Understanding has been prepazed between the IIRA 45 and the Partnership, which sets forth certain understandings by and between the HRA and the 46 Partnership pertaining to the Project, and the financing therefor. a7 NOW THEREFORE, BE IT RESOLVED by the City Council of the City of Saint 4& Paul, Minnesota, as follows: 49 1. The City hereby gives preliminary approval to the proposal of the 5o Parinership that the City undertake the Project, described above, and the program of financing 51 therefor, pursuant to Minnesota Statutes, Chapter 462C, consisting of the acquisition, 52 construction and equipping of a multifamily rental housing project within the City pursuant to the 53 Partnership's specifications and to a revenue agreement between the HRA and the Partnership on 54 such terms and conditions with provisions for revision from time to time as necessary so as to 55 produce income and revenues sufficient to pay, when due, the principal and interest on the Bonds 56 in the total principal amount of approximately $9,200,000 to be issued pursuant to the Act to 57 finance the acquisition and construction of the Project; and said agreement may also provide for 58 the entire interest of the Partnership therein to be mortgaged to the purchasers of the Bonds, or a 59 h for the holder(s) of the Bonds; and the City, acting by and through the IIRA. hereby 6o undertakes preliminarily to issue its revenue bonds in accordance with such terms and conditions; 61 2. On the basis of information a�ailable to the City it appears, and the Ciry 62 hereby finds, that the Project constitutes a multifamily housing development within the meaning 63 of subdivision 5 of Section 462C.02 of the Act; that the availability of the financing under the 64 Act and the willingness of the City to fuinish such financing will be a substantial inducement to 65 the Partnership to undertake the Project, and t1�at the effect of the Pro}ect, if undertaken, will be 66 to encourage the provision of multifamily rental housing opportunities to residents of the City, 67 and to promote more intensive development and use of land within the City; 68 3. The Project, and the program to finance the Project by the issuance of the 69 Bonds, is hereby given preliminary approval by the City subject to fmal approval by the HRA, 7o the Partnership and the purchasers of the Bonds as to ultimate details of the financing of the 71 Project, all subject to the availability of an allocation of tax exempt bonding authority for the o�.-� 7z sonas. 73 4. Pursuant to Chapter 72, Saint Paul, Minnesota Administrative Code, the 74 City hereby authorizes and directs the Housing and Redevelopment Authority of the City of Saint �5 Paul, Minnesota (the "HRA") to issue the Bonds to finance the Project and to take all actions 76 necessary or desirable in connecrion therewith, and no further approval or authorization of the 77 City shall be required; provided that the IIRA may, in its discretion, authorize the Board to issue 78 the Bonds and to implement the program approved hereby, and the City hereby consents thereto; �9 5. The Partnership has agreed and it is hereby determined that any and all 80 costs incurred by the City or the �II2A in connection with the financing of the Project whether or 81 not the Project is carried to completion and whether or not approved by IIRA will be paid by the 82 Partnership: 83 6. Briggs and Morgan, Professional Associarion, acting as bond counsel, and 84 such investment bankers as may be selected by Partnership, with the consent of the HI2A, are 85 authorized to assist in the prepararion and review of necessary documents relating to the Project 86 and the financing program therefor, to consult with the City Attorney, Partnership and the 87 purchaser of the Bonds as to the maturities, interest rates and other terms and provisions of the 88 Bonds and as to the covenants and other provisions of the necessary documents and submit such 89 documents to the HRA for fmal approval; 90 7. Nothing in this Resolution or the documents prepared pursuant hereto 91 shall authorize the expenditure of any municipal funds on the Project other than the revenues 92 derived from the Project or otherwise granted to the City or the HRA. The Bonds sha11 not 93 constitute a charge, lien or encumbrance, legal or equitable, upon any praperty or funds of the 94 City or the HRA except the revenue and proceeds pledged to the payment thereof, nor shall the 95 City or the HRA be subject to any liability thereon. The holders of the Bonds shall never haue 96 the right to compel any exercise of the tasing power of the City ar HRA to pay the outstanding 97 principal on the Bonds or the interest thereon, or to enforce payment thereon against any properiy 98 of the City or the HRA. The Bonds shall recite in substance that Bonds, including the interest 99 thereon, are payable solely from the revenue and proceeds pledged to the payment thereof. The loo Bonds shall not constitute a debt of the City ar HRA within the meaning of any constitutional or loi statutory limitarion. 102 8. In anticipation of the issuance of the Bonds to fmance all or a portion of 103 the Project, and in order that completion of the Project will not be unduly delayed when 104 approved, the Partnership is hereby authorized to make such expenditures and advances toward los payment of that portion of the costs of the Project to be financed from the proceeds of the Ba�ds, 106 as the Partnership considers necessary, including the use of interim, short-term financing, subject 107 to reimbursement from the proceeds of the Bonds if any when delivered but otherwise without los liability on the part of the City or the HRA. 109 9. The form of the Memorandum of Understanding is hereby approved and 110 the Director of Planning and Economic Development for the City, in his capacity as Executive I 11 Director of the HRA, is hereby authorized to execute the same. 112 112 113 114 �, IA � �:��iiv�,L o�.-a� Adopted by the City Council of the City of Saint Paul, Miunesota this 2nd day of January, 2002. Requested by Department of: AdOpted by CounCil: Date — �l� �}_t� J�._ �,- ... � Adoption Certified by Council Secretary By: Approved by Ma7 By: PlanniIl4 & ECOnOmic Development ✓''�— ' Form Appxoved bV CitV AttoxneV l' / ) � By:� Appro by Mayor for Submission to Counci DEPARTMENT OF PLANNING & ECONOMIC DEVELOPMENT Tany Schertler, ]ntertm Director CTTY OF SAIN'I' PAUL Norm Coleman, Mayor January 2, 2002 Memo to: City Council Members From: Tony Schertler, Interim Director 25 Wur Fourth Street Saint Pau1, MN55l02 o �-�fi Telephorse: 651-266-6565 FacsimiZe: 651-?28-326I REPORT TO THE CITY COUNCIL REGARDING: Osceola Park Project Public Hearing - Resolution Reciting a Proposal for a Financing Program for a Multi-Family Rental Housing Development, Giving Preliminary Approval to the Project and Program Pursuant to Minnesota Statutes, 462C, Authorizing the Housing and Redevelopment Authority of the Ciry of Saint Paul to Issue Housing Revenue Bonds and Authorizing the Preparation of Necessary Documents and Materials in Connection with the said Project and Program. PURPOSE The Housing and Redevelopment Authority of the City of Saint Paul (HRA) has received an application from St. Paul Leased Housing Associates II, Limited Partnership, Mr. Sherman Rutzick and Dominium as equal co-general partners, requesting the HRA to issue up to $9,200,000, of Tax Exempt Multifamily Revenue Bonds ("Bonds") and to establish a TIF district to assist with the funding of the $682,000 financing gap for the purpose of constructing the Osceola Park Apartments, independent senior housing project ("ProjecY') located in District 9. The purpose of this report is to request the City Council to consider adopting the attached preliminary (inducement) resolution which would approve the following: 2. 3. Authorize the Executive Director of the HRA to enter into a Memorandum of Understanding (MOU) with St. Paul Leased Housing Associates II, LLC, to work towards possible issuance of the Bonds. The MOU also stipulates the terms and conditions for issuance of the Bonds should the HRA decide to issue the Bonds; and Authorize HRA to issue up to $9,200,000 of tax exempt, multifamily rental revenue bonds for the Project; and Authorize City staff to prepare a Housing Program for financing the Project prepared in accordance with the provisions of Minnesota Statutes, section 462C.03; and 4. Retain Briggs & Morgan as bond counsel and Dougherty & Company LLC as investment banker for said Bonds, authorize them to assist in the preparation and review of necessary documents relating to the Project and Housing Program and consult with the HRA, City Attorney, Owner, and purchasers of the proposed Bonds. 1 o�.-� Aporoval of the inducement resolution and execution of the Memorandum of Understandinq does not reauire or obliaate the Citv or HRA to issue bonds or cause anv action against the City or HRA arisinq from anv failure or refusal bv the City or HRA to aoprove the proiect or issuance of the Sonds. With respect to multifiamily housing bonds, Section 72.04 of Chapter 72 of the City's Administrative Code provides that the HRA be designated to exercise on behalf of the City the powers conferred by Minnesota Statutes 462C (housing programs and revenue bonds) but only unless directed and authorized to do so by resolution adopted by the City Council. Thus the reason, this proposai is initiated before the City Council rather than the HRA. PROJECT Developer, Sherman Rutzick, purchased the vacant property at Osceola and St. Clair on August 13, 1999 for $100,000, and proposed to build 78 condo units for sale to seniors. Unit sales were poor and the developer decided to bring Dominium Development & Acquisition, LLC in as a partner and to change the project to rental. The project is to be built using tax-exempt revenue bonds insured by FHA. The Project consists of a three story apartment building containing 87 independent senior housing rental units. Amenities include underground parking, elevator, laundry facility, community room, and common space. The Project will comply with the City's rental affordability requirement of 10 of the units affordable at 30% of inedian incame and 10% of the units affordable at 50% of inedian income. The estimated unit breakdown is listed below. Type 3 Studio 6 one bedroom 9 one bedroom 24 one bedroom 11 iwo bedroom 22 two bedroom 12 two bedroom 87 Total - Average Size 500 800 800 800 1000 1000 1100 907 Gross Rent $ 359 $ 387 $ 667 $ 807 $ 975 $ 1050 1150 $ 878 Affordabiltv 30% 30 % 50 % 60 % 60 % ' Affordability Requirement - 9 one bedroom units rented to persons @ 10% of inedian income and 9 one bedroom units rented to persons @ 50% of inedian income. FINANCING The Project will be funded by a combination of multifamily tax exempt bonds and federal Low Income Housing Tax Credit Program. The tax credits are not from the City's annual allocation but are 4% credits eligible for use with tax exempt bonds. (Under federal law, at least 20 percent of the units must be occupied by persons or families whose family incomes do not exceed 50 percent of area median gross income or 40 percent of the units must be occupied by persons or families whose family incomes do not exceed 60 percent of area median gross income). The estimated sources and uses of funds statement is as follows: o a.-� Sources First Mortgage * Low Income Tax Credits STAR " Letters of Credit Def Dev Fee Total Uses $8,512,000 Land 1,684,000 Construction 300,000 Cost of Issuance 349,000 Real Estate Costs 632,000 Letters of Credit Tax Credits Project Reserves Developer fee Defi Dev Fee $11,477,000 $ 348,000 8,858,000 470,000 147,000 349,000 21,000 59,000 593,000 632,000 $11,477,000 * First mortgage includes proceeds from revenue bond and TIF "" $300,000 STAR grant was awarded to the project on 11/7i01. The deferred developer fee would be taken from project cashflow. The preliminary term sheet for the Bonds is as follows: Issue Amount up to $9,200,000 Term 40 years Bond Interest Rate 5.75% Issue Date May 1, 2002 Maturity Date May 1, 2042 Placement Method Public Offering Due Diligence ProjecYs financial statements Appraisal Phase I Environmental audit Borrower St. Paul Leased Housing Associates II, LLC Bond Counsel Briggs & Morgan Underwriter pougherty & Co. LLC Trustee US Trust Security FHA bond insurance The Bonds are structured to accommodate level debt service amortization schedule. The ProjecYs operations support the annual debt service payments by a 1.11 debt service coverage ratio. FEES The non-refundable application fee of $5,000 has been received. Should the Bonds be issued, the HRA will receive an administrative fee at closing equal to 0.5% of the principal balance of the Bonds. On the first anniversary date of the Bonds the HRA will receive an additional 0.5% fee. Every year thereafter that the Bonds remain outstanding the HRA will receive an annuai administrative fee equal to 0.01 % of the outstanding principal balance of the Bonds. BUSINESS PROFILE Mr. Sherman Rutrick has been in business since 1946 and has developed hundreds of housing units and commercial properties in the Saint Paul area. Recent experience with the HRA D s.-'�-� includes :the construction of the Drake Marble Building and the rehab of Cathedral Homes. Dominium, founded in 1972, is one of the largest and fastest growing apartment development and management companies in the Midwest. They own over 12,500 apartment units and manage and additional 3,000 units for fee clients. Dominium is working with PED staff on the Emerald Project and the Shepard Davem Project. ADVERSE LENDING The general partners do not have an adverse lending relationship with the HRA or the City of Saint Paul. REPAYMENT CAPACITY The ProjecYs 10 year Income Projections-Cash Flow appears to be a reasonable projection and wil{ attain a 1.11 debt coverage ratio. Operating expenses appear to be reasonable. SUPPORT The project has received support from District 9/ West 7` Rd Federation. PUBLIC PURPOSE The foilowing public purposes will be met: Project will provide housing opportunities for a variety of incomes. 2. Project meets objectives of The Housing Plan, adopted as part of the City's Comprehensive Plan, Section 6.0, Strategy 3: Ensure Availability of Affordable Housing. BOND AUTHORITY; ALLOCATION PROCESS For the past several years, the entitlement has been used for housing projects and mortgage revenue bonds or mortgage credit certificates to finance the City's singie family mortgage program. The proposed bonds will count as part of the Citys entitlement bond allocation. However, stafF believes there are sufficient funds for the single fami{y mortgage program for 2002. Therefore, issuance of rental revenue bonds would not diminish the City's single family mortgage program. Upon adoption of the inducement resolution staff will proceed to prepare a housing program to finance the proposed project. Furthermore, staff will present to the HRA a report detailing the financing of the Project and request the HRA to consider adoption of a resolution to issue and sell revenue bonds to finance the project. ATfACHMENTS City Council Resolution Prepared by: Joan Trulsen PED Project Manager- West Team 266-6694 M:\Osceola Roj\bonds\preliminary approvai CityCouncil.Rptwpd DEPAkr'f'MENT/OFFICE/COUNCII.: DATE INITIATED GREEN SHEET NO.'IOLHHZ PED/West Z'eam 12/11/Ol ' fl a•l�e CONTACT PERSON & PHONE: �/� INITTnI/DATE IN[Tlell./DATE Joan Trulsen 66694 � Z D�,u��xT Du�. 6 crty couxcn. MUST BE ON COUNCII. AGENDA BY (DATE) �I� 3 CTTY ATTORNEY CTTY CLERK — FINANCIAL SERV DIIL 4 FINANCIAL SERV/ACCTG 72AUai�2�ZQQ2 FNi1MBER 5 MAYOR(ORASST.) _CNII.SERVICECOMMLSSION ROUTING _1_ Tom Meyer PUBLIC HEARING ORDER TOTAL # OF SIGNAI'ORE PAGES _(CLIP ALL LOCATIONS FOR SIGNAT'ORE) ACTION REQUESTED: - RECOMMENDAITONS: Approve (A) or Reject (R) PERSONAI, SERVICE CONTRACTS MUST ANSWER THE FOLLOWING QUESTIONS: PLANNING COMMLSSION 1. Has this person/firm ever worked under a contract for this depaztrnent? CIB COMMITTEE Yes No CNII. SERVICE COMMISSION 2. Has this personlfinn ever been a city employee? Yes No 3. Does this person/firm possess a skill not normally possessed by any current ciTy employee? Yes No Explain all yes answers on separate sheet and attach to green sheet INITIATING PROBLEM, ISSUE, OPPORTIJNII'P (Who, What, Wheq Where, Why): RESOLUTTON GNING PRELIMINARY APPROVAL TO A MLTLTI-FAMILY RENTAL HOUSING DEVELOPMENT PROJECT AND AUTHORIZING THE HOUSING AND REDEVELOPMENT AUTHORITY TO ISSUE HOUSING REVENUE BONDS AND AUTHORIZING THE PREPARATION OF NECESSARY DOCLTMENfS AND MATERIALS IN CONNECTION WITH THE OSCEOLA CROSSING PROJECT. n ADVANI'AGES /F APPROVED: Affordable rental housing project can move forward. DISADVANTAGES IF APPROVED: None DISADVANTAGES IF NOT APPROVED: 87 units of affordable housing will not be built TOTAL AMOUNT OF 1RANSACTION: $ COST/REVENlJE BUDGETED: F[JNDINGSOURCE: ACCIVITYNUMBER: �S� c� 1 c C-�-��� b Q ��� FINANCIAL INFORMATION: (EXPLAIN) i.� C.-�� or- t#RA ��,�5 ��.�Aflr.��� M�O;ceolaPr �lFnnds�greec�heafim � � � � A . i'��U.�Ei 3 .J�.�`t:'v 0° � �E�.d�,:.`d JL �`s S�O�i i\! Vliiiti� RESOLUTION OF SAINT PAUL, MINNESOTA Piesented Itefeaed To Resolution to Declare Teneka Graves Day in 5aint Paul Council File # U'2. -� Green Sheet # �� a `I C¢ lR ` Committee Date 1 WFIEREAS, Teneka Graves, an alumna of Saint Paul's Central High School, exemplifies the meaning of altruism 2 andleadership through her commihnentto volunteering assuming leadership in projects and idenrifying needs within 3 Saint Paul communiries; and 4 WHEREAS, Teneka Graves, a participant in the Saint Paul Public Schools Fresh Force Service-Leaming and 5 Leaderslup Program, devoted an astonishing 1,200 hours to designing, researching, photographing, interviewing 6 cifizens and painfing the Downtown Saint Paul Historic Mural depicting the Landmark Center, Science Museum of 7 Minnesota and the River Center on a 10 foot by 45 foot panel, which adorns the Crrace Building; and 8 WHEREAS, Teneka Graves, while working on the mural, volunteered at the Lexington Nursing Home, tutored 9 children at the Hancock Recreation Center, partnered with the Metropolitan Council for Independent Living served 10 on 12 different committees and boards, and maintained a permanent spot on the Honor Roll; and ll WHEREAS, Teneka Graves conrinues to volunteer while being a first-yeaz student at the University of Minnesota, as 12 well as taking a more prominent role in the Fresh Force program by mentoring current participants and being a 13 liaison between Fresh Force and businesses to establish service leaming opportunities for future students, and 14 WHEREAS, because of this undeterred commihnent to serving Saint Paui in so many ways, the Narianal Community 15 Education Association awarded Teneka Graves with the 2001 Nafional Community Educarion Associafion Youfh 16 Leadership Award; now therefore be it 17 RESOLVED, that the Saint Paul City Council proudly honors and congratulates Teneka Crraves on her extraordinary 18 achievements and commitment to making Saint Paul a better place; and be it 19 FINALLY RESOLVED, that the Saint Paul City Council declares January 9, 2002 Teneka Graves Day in Saint Paul. ORlG1�4AL COUnci1 File # � � � Resolution # Presented By Referred To lo 11 12 13 14 (OSCEOLA CROSSING PRO7ECT) �0��$Y 15 (a) Minnesota Statutes, Chapter 462C (the "Act) confers upon cities, or housing and 16 redevelopment authorities or port authorities authorized by ordinance to exercise on behalf of a 17 city the powers conferred by the Act, the power to issue revenue bonds to finance a program for 18 the purposes of planning, administering, making or purchasing loans with respect to one ar more 19 multi-family housing project developments within the boundaries of the city; 20 (b) The Housing and Redevelopment Authority of the City of Saint Paul, Minnesota 21 (the "HRA") has been designated, by ordinance, to exercise, on behalf of the City of Saint Paul, 22 Minnesota (the "City") the powers conferred by Minnesota Statutes, Section 462C.01 to 23 462C.081; 24 (c) The Housing and Redevelopment Authority of the City of Saint Paul, Minnesota 25 (the °IIRA"), has received a proposal from St. Paul Leased Housings Associates II Limited 26 Partnership, a lunited partnership organized under the laws of Minnesota (the "Partnership"), that 27 the IIRA undertake a program (the "Housing Program") to finance a Proj ect hereinafter 28 described, through the issuance of revenue bonds (the "Bonds") pursuant to the Act; Committee: Date RESOLUTION RECITING A PROPOSAL FOR A FINANCING PROGRAM FOR A MULTI-FAMILY RENTAL HOUSING DEVELOPMENT, GIVING PRELIMINARY APPROVAL TO THE PROJECT AND THE PROGRAM PURSUANT TO MINNESOTA STATUTES, CIIAPTER 462C, AUTHORIZING THE HOUSING AND REDEVELOPMENT AUTHORITY TO ISSUE HOUSING REVENtIE BONDS AND AUTHORIZING THE PREPARATION OF NECESSARY DOCUMENTS AND MATERIALS IN CONNECTION WITH THE SAID PROJECT AND PROGRAM �k9 29 (d) The Project to be financed by the Bonds is the acquisition, conshuction and 30 equipping of a multifamily rental housing project consisting of approximately 87 units located at 31 300 Osceola Street in the City of Saint Pau1(the "Project"); o � =�i� 32 (e) The proposal calis for the HRA to loan the proceeds realized upon the sale of the 33 Bonds to the Partnership pursuant to a revenue agreement or agreements wherein the Partnership 34 will be obligated to make payxnents at the times and in amounts sufficient to provide for the 35 prompt payment of principal of, premium, if any, and interest on the Bonds and all costs and 36 expenses of the HI2A and the City incident to the issuance and sale of the Bonds; 37 ( fl The City desires to facilitate the acquisition and construction of a mulrifamily 38 housing facility within the City; and the Project will assist the City in achieving these objectives; 39 (g) A public hearing on the Housing Program and the Project was held on this date 4o following duly published notice, at which time all persons that desired to speak were heazd; 41 (h) No public official of the City has either a direct or indirect financial interest in the 42 Project nor will any public official either directly or indirectly benefit financially from the 43 Project; and 44 (i) A form of Memorandum of Understanding has been prepazed between the IIRA 45 and the Partnership, which sets forth certain understandings by and between the HRA and the 46 Partnership pertaining to the Project, and the financing therefor. a7 NOW THEREFORE, BE IT RESOLVED by the City Council of the City of Saint 4& Paul, Minnesota, as follows: 49 1. The City hereby gives preliminary approval to the proposal of the 5o Parinership that the City undertake the Project, described above, and the program of financing 51 therefor, pursuant to Minnesota Statutes, Chapter 462C, consisting of the acquisition, 52 construction and equipping of a multifamily rental housing project within the City pursuant to the 53 Partnership's specifications and to a revenue agreement between the HRA and the Partnership on 54 such terms and conditions with provisions for revision from time to time as necessary so as to 55 produce income and revenues sufficient to pay, when due, the principal and interest on the Bonds 56 in the total principal amount of approximately $9,200,000 to be issued pursuant to the Act to 57 finance the acquisition and construction of the Project; and said agreement may also provide for 58 the entire interest of the Partnership therein to be mortgaged to the purchasers of the Bonds, or a 59 h for the holder(s) of the Bonds; and the City, acting by and through the IIRA. hereby 6o undertakes preliminarily to issue its revenue bonds in accordance with such terms and conditions; 61 2. On the basis of information a�ailable to the City it appears, and the Ciry 62 hereby finds, that the Project constitutes a multifamily housing development within the meaning 63 of subdivision 5 of Section 462C.02 of the Act; that the availability of the financing under the 64 Act and the willingness of the City to fuinish such financing will be a substantial inducement to 65 the Partnership to undertake the Project, and t1�at the effect of the Pro}ect, if undertaken, will be 66 to encourage the provision of multifamily rental housing opportunities to residents of the City, 67 and to promote more intensive development and use of land within the City; 68 3. The Project, and the program to finance the Project by the issuance of the 69 Bonds, is hereby given preliminary approval by the City subject to fmal approval by the HRA, 7o the Partnership and the purchasers of the Bonds as to ultimate details of the financing of the 71 Project, all subject to the availability of an allocation of tax exempt bonding authority for the o�.-� 7z sonas. 73 4. Pursuant to Chapter 72, Saint Paul, Minnesota Administrative Code, the 74 City hereby authorizes and directs the Housing and Redevelopment Authority of the City of Saint �5 Paul, Minnesota (the "HRA") to issue the Bonds to finance the Project and to take all actions 76 necessary or desirable in connecrion therewith, and no further approval or authorization of the 77 City shall be required; provided that the IIRA may, in its discretion, authorize the Board to issue 78 the Bonds and to implement the program approved hereby, and the City hereby consents thereto; �9 5. The Partnership has agreed and it is hereby determined that any and all 80 costs incurred by the City or the �II2A in connection with the financing of the Project whether or 81 not the Project is carried to completion and whether or not approved by IIRA will be paid by the 82 Partnership: 83 6. Briggs and Morgan, Professional Associarion, acting as bond counsel, and 84 such investment bankers as may be selected by Partnership, with the consent of the HI2A, are 85 authorized to assist in the prepararion and review of necessary documents relating to the Project 86 and the financing program therefor, to consult with the City Attorney, Partnership and the 87 purchaser of the Bonds as to the maturities, interest rates and other terms and provisions of the 88 Bonds and as to the covenants and other provisions of the necessary documents and submit such 89 documents to the HRA for fmal approval; 90 7. Nothing in this Resolution or the documents prepared pursuant hereto 91 shall authorize the expenditure of any municipal funds on the Project other than the revenues 92 derived from the Project or otherwise granted to the City or the HRA. The Bonds sha11 not 93 constitute a charge, lien or encumbrance, legal or equitable, upon any praperty or funds of the 94 City or the HRA except the revenue and proceeds pledged to the payment thereof, nor shall the 95 City or the HRA be subject to any liability thereon. The holders of the Bonds shall never haue 96 the right to compel any exercise of the tasing power of the City ar HRA to pay the outstanding 97 principal on the Bonds or the interest thereon, or to enforce payment thereon against any properiy 98 of the City or the HRA. The Bonds shall recite in substance that Bonds, including the interest 99 thereon, are payable solely from the revenue and proceeds pledged to the payment thereof. The loo Bonds shall not constitute a debt of the City ar HRA within the meaning of any constitutional or loi statutory limitarion. 102 8. In anticipation of the issuance of the Bonds to fmance all or a portion of 103 the Project, and in order that completion of the Project will not be unduly delayed when 104 approved, the Partnership is hereby authorized to make such expenditures and advances toward los payment of that portion of the costs of the Project to be financed from the proceeds of the Ba�ds, 106 as the Partnership considers necessary, including the use of interim, short-term financing, subject 107 to reimbursement from the proceeds of the Bonds if any when delivered but otherwise without los liability on the part of the City or the HRA. 109 9. The form of the Memorandum of Understanding is hereby approved and 110 the Director of Planning and Economic Development for the City, in his capacity as Executive I 11 Director of the HRA, is hereby authorized to execute the same. 112 112 113 114 �, IA � �:��iiv�,L o�.-a� Adopted by the City Council of the City of Saint Paul, Miunesota this 2nd day of January, 2002. Requested by Department of: AdOpted by CounCil: Date — �l� �}_t� J�._ �,- ... � Adoption Certified by Council Secretary By: Approved by Ma7 By: PlanniIl4 & ECOnOmic Development ✓''�— ' Form Appxoved bV CitV AttoxneV l' / ) � By:� Appro by Mayor for Submission to Counci DEPARTMENT OF PLANNING & ECONOMIC DEVELOPMENT Tany Schertler, ]ntertm Director CTTY OF SAIN'I' PAUL Norm Coleman, Mayor January 2, 2002 Memo to: City Council Members From: Tony Schertler, Interim Director 25 Wur Fourth Street Saint Pau1, MN55l02 o �-�fi Telephorse: 651-266-6565 FacsimiZe: 651-?28-326I REPORT TO THE CITY COUNCIL REGARDING: Osceola Park Project Public Hearing - Resolution Reciting a Proposal for a Financing Program for a Multi-Family Rental Housing Development, Giving Preliminary Approval to the Project and Program Pursuant to Minnesota Statutes, 462C, Authorizing the Housing and Redevelopment Authority of the Ciry of Saint Paul to Issue Housing Revenue Bonds and Authorizing the Preparation of Necessary Documents and Materials in Connection with the said Project and Program. PURPOSE The Housing and Redevelopment Authority of the City of Saint Paul (HRA) has received an application from St. Paul Leased Housing Associates II, Limited Partnership, Mr. Sherman Rutzick and Dominium as equal co-general partners, requesting the HRA to issue up to $9,200,000, of Tax Exempt Multifamily Revenue Bonds ("Bonds") and to establish a TIF district to assist with the funding of the $682,000 financing gap for the purpose of constructing the Osceola Park Apartments, independent senior housing project ("ProjecY') located in District 9. The purpose of this report is to request the City Council to consider adopting the attached preliminary (inducement) resolution which would approve the following: 2. 3. Authorize the Executive Director of the HRA to enter into a Memorandum of Understanding (MOU) with St. Paul Leased Housing Associates II, LLC, to work towards possible issuance of the Bonds. The MOU also stipulates the terms and conditions for issuance of the Bonds should the HRA decide to issue the Bonds; and Authorize HRA to issue up to $9,200,000 of tax exempt, multifamily rental revenue bonds for the Project; and Authorize City staff to prepare a Housing Program for financing the Project prepared in accordance with the provisions of Minnesota Statutes, section 462C.03; and 4. Retain Briggs & Morgan as bond counsel and Dougherty & Company LLC as investment banker for said Bonds, authorize them to assist in the preparation and review of necessary documents relating to the Project and Housing Program and consult with the HRA, City Attorney, Owner, and purchasers of the proposed Bonds. 1 o�.-� Aporoval of the inducement resolution and execution of the Memorandum of Understandinq does not reauire or obliaate the Citv or HRA to issue bonds or cause anv action against the City or HRA arisinq from anv failure or refusal bv the City or HRA to aoprove the proiect or issuance of the Sonds. With respect to multifiamily housing bonds, Section 72.04 of Chapter 72 of the City's Administrative Code provides that the HRA be designated to exercise on behalf of the City the powers conferred by Minnesota Statutes 462C (housing programs and revenue bonds) but only unless directed and authorized to do so by resolution adopted by the City Council. Thus the reason, this proposai is initiated before the City Council rather than the HRA. PROJECT Developer, Sherman Rutzick, purchased the vacant property at Osceola and St. Clair on August 13, 1999 for $100,000, and proposed to build 78 condo units for sale to seniors. Unit sales were poor and the developer decided to bring Dominium Development & Acquisition, LLC in as a partner and to change the project to rental. The project is to be built using tax-exempt revenue bonds insured by FHA. The Project consists of a three story apartment building containing 87 independent senior housing rental units. Amenities include underground parking, elevator, laundry facility, community room, and common space. The Project will comply with the City's rental affordability requirement of 10 of the units affordable at 30% of inedian incame and 10% of the units affordable at 50% of inedian income. The estimated unit breakdown is listed below. Type 3 Studio 6 one bedroom 9 one bedroom 24 one bedroom 11 iwo bedroom 22 two bedroom 12 two bedroom 87 Total - Average Size 500 800 800 800 1000 1000 1100 907 Gross Rent $ 359 $ 387 $ 667 $ 807 $ 975 $ 1050 1150 $ 878 Affordabiltv 30% 30 % 50 % 60 % 60 % ' Affordability Requirement - 9 one bedroom units rented to persons @ 10% of inedian income and 9 one bedroom units rented to persons @ 50% of inedian income. FINANCING The Project will be funded by a combination of multifamily tax exempt bonds and federal Low Income Housing Tax Credit Program. The tax credits are not from the City's annual allocation but are 4% credits eligible for use with tax exempt bonds. (Under federal law, at least 20 percent of the units must be occupied by persons or families whose family incomes do not exceed 50 percent of area median gross income or 40 percent of the units must be occupied by persons or families whose family incomes do not exceed 60 percent of area median gross income). The estimated sources and uses of funds statement is as follows: o a.-� Sources First Mortgage * Low Income Tax Credits STAR " Letters of Credit Def Dev Fee Total Uses $8,512,000 Land 1,684,000 Construction 300,000 Cost of Issuance 349,000 Real Estate Costs 632,000 Letters of Credit Tax Credits Project Reserves Developer fee Defi Dev Fee $11,477,000 $ 348,000 8,858,000 470,000 147,000 349,000 21,000 59,000 593,000 632,000 $11,477,000 * First mortgage includes proceeds from revenue bond and TIF "" $300,000 STAR grant was awarded to the project on 11/7i01. The deferred developer fee would be taken from project cashflow. The preliminary term sheet for the Bonds is as follows: Issue Amount up to $9,200,000 Term 40 years Bond Interest Rate 5.75% Issue Date May 1, 2002 Maturity Date May 1, 2042 Placement Method Public Offering Due Diligence ProjecYs financial statements Appraisal Phase I Environmental audit Borrower St. Paul Leased Housing Associates II, LLC Bond Counsel Briggs & Morgan Underwriter pougherty & Co. LLC Trustee US Trust Security FHA bond insurance The Bonds are structured to accommodate level debt service amortization schedule. The ProjecYs operations support the annual debt service payments by a 1.11 debt service coverage ratio. FEES The non-refundable application fee of $5,000 has been received. Should the Bonds be issued, the HRA will receive an administrative fee at closing equal to 0.5% of the principal balance of the Bonds. On the first anniversary date of the Bonds the HRA will receive an additional 0.5% fee. Every year thereafter that the Bonds remain outstanding the HRA will receive an annuai administrative fee equal to 0.01 % of the outstanding principal balance of the Bonds. BUSINESS PROFILE Mr. Sherman Rutrick has been in business since 1946 and has developed hundreds of housing units and commercial properties in the Saint Paul area. Recent experience with the HRA D s.-'�-� includes :the construction of the Drake Marble Building and the rehab of Cathedral Homes. Dominium, founded in 1972, is one of the largest and fastest growing apartment development and management companies in the Midwest. They own over 12,500 apartment units and manage and additional 3,000 units for fee clients. Dominium is working with PED staff on the Emerald Project and the Shepard Davem Project. ADVERSE LENDING The general partners do not have an adverse lending relationship with the HRA or the City of Saint Paul. REPAYMENT CAPACITY The ProjecYs 10 year Income Projections-Cash Flow appears to be a reasonable projection and wil{ attain a 1.11 debt coverage ratio. Operating expenses appear to be reasonable. SUPPORT The project has received support from District 9/ West 7` Rd Federation. PUBLIC PURPOSE The foilowing public purposes will be met: Project will provide housing opportunities for a variety of incomes. 2. Project meets objectives of The Housing Plan, adopted as part of the City's Comprehensive Plan, Section 6.0, Strategy 3: Ensure Availability of Affordable Housing. BOND AUTHORITY; ALLOCATION PROCESS For the past several years, the entitlement has been used for housing projects and mortgage revenue bonds or mortgage credit certificates to finance the City's singie family mortgage program. The proposed bonds will count as part of the Citys entitlement bond allocation. However, stafF believes there are sufficient funds for the single fami{y mortgage program for 2002. Therefore, issuance of rental revenue bonds would not diminish the City's single family mortgage program. Upon adoption of the inducement resolution staff will proceed to prepare a housing program to finance the proposed project. Furthermore, staff will present to the HRA a report detailing the financing of the Project and request the HRA to consider adoption of a resolution to issue and sell revenue bonds to finance the project. ATfACHMENTS City Council Resolution Prepared by: Joan Trulsen PED Project Manager- West Team 266-6694 M:\Osceola Roj\bonds\preliminary approvai CityCouncil.Rptwpd DEPAkr'f'MENT/OFFICE/COUNCII.: DATE INITIATED GREEN SHEET NO.'IOLHHZ PED/West Z'eam 12/11/Ol ' fl a•l�e CONTACT PERSON & PHONE: �/� INITTnI/DATE IN[Tlell./DATE Joan Trulsen 66694 � Z D�,u��xT Du�. 6 crty couxcn. MUST BE ON COUNCII. AGENDA BY (DATE) �I� 3 CTTY ATTORNEY CTTY CLERK — FINANCIAL SERV DIIL 4 FINANCIAL SERV/ACCTG 72AUai�2�ZQQ2 FNi1MBER 5 MAYOR(ORASST.) _CNII.SERVICECOMMLSSION ROUTING _1_ Tom Meyer PUBLIC HEARING ORDER TOTAL # OF SIGNAI'ORE PAGES _(CLIP ALL LOCATIONS FOR SIGNAT'ORE) ACTION REQUESTED: - RECOMMENDAITONS: Approve (A) or Reject (R) PERSONAI, SERVICE CONTRACTS MUST ANSWER THE FOLLOWING QUESTIONS: PLANNING COMMLSSION 1. Has this person/firm ever worked under a contract for this depaztrnent? CIB COMMITTEE Yes No CNII. SERVICE COMMISSION 2. Has this personlfinn ever been a city employee? Yes No 3. Does this person/firm possess a skill not normally possessed by any current ciTy employee? Yes No Explain all yes answers on separate sheet and attach to green sheet INITIATING PROBLEM, ISSUE, OPPORTIJNII'P (Who, What, Wheq Where, Why): RESOLUTTON GNING PRELIMINARY APPROVAL TO A MLTLTI-FAMILY RENTAL HOUSING DEVELOPMENT PROJECT AND AUTHORIZING THE HOUSING AND REDEVELOPMENT AUTHORITY TO ISSUE HOUSING REVENUE BONDS AND AUTHORIZING THE PREPARATION OF NECESSARY DOCLTMENfS AND MATERIALS IN CONNECTION WITH THE OSCEOLA CROSSING PROJECT. n ADVANI'AGES /F APPROVED: Affordable rental housing project can move forward. DISADVANTAGES IF APPROVED: None DISADVANTAGES IF NOT APPROVED: 87 units of affordable housing will not be built TOTAL AMOUNT OF 1RANSACTION: $ COST/REVENlJE BUDGETED: F[JNDINGSOURCE: ACCIVITYNUMBER: �S� c� 1 c C-�-��� b Q ��� FINANCIAL INFORMATION: (EXPLAIN) i.� C.-�� or- t#RA ��,�5 ��.�Aflr.��� M�O;ceolaPr �lFnnds�greec�heafim � � � � A . i'��U.�Ei 3 .J�.�`t:'v 0° � �E�.d�,:.`d JL �`s S�O�i i\! Vliiiti� RESOLUTION OF SAINT PAUL, MINNESOTA Piesented Itefeaed To Resolution to Declare Teneka Graves Day in 5aint Paul Council File # U'2. -� Green Sheet # �� a `I C¢ lR ` Committee Date 1 WFIEREAS, Teneka Graves, an alumna of Saint Paul's Central High School, exemplifies the meaning of altruism 2 andleadership through her commihnentto volunteering assuming leadership in projects and idenrifying needs within 3 Saint Paul communiries; and 4 WHEREAS, Teneka Graves, a participant in the Saint Paul Public Schools Fresh Force Service-Leaming and 5 Leaderslup Program, devoted an astonishing 1,200 hours to designing, researching, photographing, interviewing 6 cifizens and painfing the Downtown Saint Paul Historic Mural depicting the Landmark Center, Science Museum of 7 Minnesota and the River Center on a 10 foot by 45 foot panel, which adorns the Crrace Building; and 8 WHEREAS, Teneka Graves, while working on the mural, volunteered at the Lexington Nursing Home, tutored 9 children at the Hancock Recreation Center, partnered with the Metropolitan Council for Independent Living served 10 on 12 different committees and boards, and maintained a permanent spot on the Honor Roll; and ll WHEREAS, Teneka Graves conrinues to volunteer while being a first-yeaz student at the University of Minnesota, as 12 well as taking a more prominent role in the Fresh Force program by mentoring current participants and being a 13 liaison between Fresh Force and businesses to establish service leaming opportunities for future students, and 14 WHEREAS, because of this undeterred commihnent to serving Saint Paui in so many ways, the Narianal Community 15 Education Association awarded Teneka Graves with the 2001 Nafional Community Educarion Associafion Youfh 16 Leadership Award; now therefore be it 17 RESOLVED, that the Saint Paul City Council proudly honors and congratulates Teneka Crraves on her extraordinary 18 achievements and commitment to making Saint Paul a better place; and be it 19 FINALLY RESOLVED, that the Saint Paul City Council declares January 9, 2002 Teneka Graves Day in Saint Paul.