02-713ORIGiI�AL
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Presented By
Referred To
Council File # � %S. � � � �
Resolution #
RESOLUTION RECITING A PROPOSAL FOR A
FINANCING PROGRAM FOR A MLJLTI-FAMILY RENTAL
HOUSING DEVELOPMENT, GIVING PRELIMINARY
APPROVAL TO THE PROJECT AND THE PROGRAM
PURSUANT TO MINNESOTA STATLTTES, CHAPTER 462C,
AUTHORIZING THE HOUSING AND REDEVELOPMENT
AUTHORITY TO ISSUE HOUSING REVENUE BONDS
AND AUTHORIZING THE PREPARATION OF NECE5SARY
DOCUMENTS AND MATERIALS 1N CONNECTION
WITH THE SAID PROJECT AND PROGRAM
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13 (STRAUS APARTMENTS PROJECT)
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15 (a) Minnesota Statutes, Chapter 462C (the "Act) confers upon cities, or housing and redevelopment
16 authorities or port authorities authorized by ordinance to exercise on behalf of a city the powers conferred by
17 the Act, the power to issue revenue bonds to fmance a program for the purposes of planning, administering,
18 making or purchasing loans with respect to one or more multi-family housing project developments within
19 the boundaries of the city;
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21 (b) The Housing and Redevelopment Authority of the City of Saint Paul, Minnesota (the "HRA") has been
22 designated, by ordinance, to exercise, on behalf of the City of Saint Paul, Minnesota (the "City") the powers
23 conferred by Minnesota Statutes, Section 462C.01 to 462C.081;
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25 (c) The Housing and Redevelopment Authority of the City of Saint Paul, Minnesota (the "HRA"), has
26 received a proposal from Straus Apartments Limited Partnership, a limited partnership organized under the
27 laws of Minnesota (the "Partnership"), that the IIRA undertake a program (the "Housing Program") to finance
28 a Project hereinafter described, through the issuance of revenue bonds, which may be issued in the form of
29 one or more notes (the "Bonds") pursuant to the Act;
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(d) T'he Project to be financed by the Bonds is the acquisition of an existing building located at 350 Sibley
Street and its renovation into a multifamily rental housing project consisting of approximately 49 units;
(e) The proposal calls for the HRA to loan the proceeds realized upon the sale of the Bonds to the
Partnership pursuant to a revenue agreement or agreements wherein the Partnership will be obligated to make
payments at the times and in amounts sufficient to provide for the prompt payment of principal of, premium,
if any, and interest on the Bonds and all costs and expenses of the HRA and the City incident to the issuance
and sale of the Bonds;
Green Sheet # e1 O�� S S
39 ORIGI�AL �'�-���
40 (fl The City desues to facilitate the acquisition and construction of a multifamily housing facility within
41 the City; and the Project will assist the City in achieving these objectives;
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43 (g)A public hearing on the Housing Program and the Project was held on this date following duly
44 published notice, at which time all persons that desired to speak were heard; and
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46 (h)No public official of the City has either a direct or indirect financial interest in the Project
47 nor will any public official either directly or indirectly benefit financially from the Project.
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NOW THEREFORE, BE IT RESOLVED by the City Council of the City of Saint Paul,
Minnesota, as follows:
1. The City hereby gives preliminary approval to the proposal of the Partnership that the City
undertake the Project, described above, and the program of financing therefor, pursuant to Minnesota
Statutes, Chapter 462C, consisting of the acquisition, construction and equipping of a multifamily rental
housing project within the City pursuant to the Partnership's specifications and to a revenue agreement
between the HRA and the Partnership on such terms and condifions with provisions for revision from time to
time as necessary so as to produce income and revenues sufficient to pay, when due, the principal and interest
on the Bonds in the total principal amount of approximately $5,500,000 to be issued pursuant to the Act to
finance the acquisition and construction of the Project; and said agreement may also provide for the entire
interest of the Partnership therein to be mortgaged to the purchasers of the Bonds, or a trustee for the
holder(s) of the Bonds; and the City, acting by and through the HRA hereby undertakes preliminarily to issue
its revenue bonds in accordance with such terms and conditions;
64 2. On the basis of information auailabie to the City it appears, and the City hereby finds, that the
65 Project constitutes a multifamily housing development within the meaning of subdivision 5 of Section
66 462C.02 of the Act; that the availability of the financing under the Act and the willingness of the City to
67 furnish such financing will be a substantial inducement to the Partnership to undertake the Project, and that
68 the effect of the Project, if undertaken, will be to encourage the provision of multifamily rental housing
69 opporhxnities to residents of the City, and to promote more intensive development and use of land within the
70 City;
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3. The Project, and the program to finance the Project by the issuance of the Bonds, is hereby
given preliminary approval by the City subject to final approval by the HRA, the Partnership and the
purchasers of the Bonds as to ulfimate details of the financing of the Project, all subject to the availability of
an alloca6on of tas exempt bonding authority for the Bonds.
4. Pursuant to Chapter 72, Saint Paul, Minnesota Administrative Code, the City hereby authorizes
and directs the Housing and Redevelopment Authority of the City of Saint Paul, Minnesota (the "HRA") to
issue the Bonds to finance the Project and to take a11 actions necessary or desirable in connection therewith,
and no further approval or authorization of the City sha11 be required; provided that the HRA may, in its
discretion, authorize the Board to issue the Bonds and to implement the program approved hereby, and the
City hereby consentsthereto;
5. The Partnership has agreed and it is hereby determined that any and all costs incurred by the
City or the HRA in connection with the financing of the Project whether or not the Project is carried to
completion and whether or not approved by HRA will be paid by the Partnership:
Carlsoap/Strauss/CC Bond
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6. Bnggs and Morgan, Professional Association, acting as bond counsel, and such investment
bankers as may be selected by Partnership, with the consent of the HRA, are authorized to assist in the
prepazation and review of necessary documents relating to the Project and the fmancing program therefor, to
consult with the City Attorney, Partnership and the purchaser of the Bonds as to the maturities, interest rates
and other terms and provisions of the Bonds and as to the covenants and other provisions of the necessary
documents and submit such documents to the HI2A for final approval;
7. Nothing in this Resolution or the documents prepazed pursuant hereto shall authorize the
expenditure of any municipal funds on the Project other than the revenues derived from the Project or
otherwise granted to the CiTy or the HRA. The Bonds sha11 not constitute a charge, lien or encumbrance,
legal or equitable, upon any property or funds of the City or the I-IRA except the revenue and proceeds
pledged to the payment thereof, nor shall the City or the HIZA be subject to any liability thereon. The holders
of the Bonds shall never have the right to compel any exercise of the taxing power of the City or HRA to pay
the outstanding principal on the Bonds or the interest thereon, or to enforce payment thereon against any
properry of the City or the IIRA. The Bonds shall recite in substance that Bonds, including the interest
thereon, aze payable solely from the revenue and proceeds pledged to the payment thereof. The Bonds shall
not constitute a debt of the City or HRA within the meaning of any constitutional or statutory limitation.
8. In anticipation of the issuance of the Bonds to finance all or a portion of the Project, and in
order that completion of the Project will not be unduly delayed when approved, the Partnership is hereby
authorized to make such expenditures and advances toward payment of that portion of the costs of the Project
to be financed from the proceeds of the Bonds, as the Partnership considers necessary, including the use of
interim, short-term financing, subject to reimbursement from the proceeds of the Bonds if any when delivered
but otherwise without liability on the part of the City or the HRA.
Adopted by the City Council of the City of Saint Paul, Minnesota this 7`" day of August, 2002
Adoption Cez
By:
Approved by
By:
Fosm Approve
�y
Carlsoap/Strauss/CC Bond
Adopted by CounCil: Date �-a O'�
Requested by Department of:
DEPARI'MCNT/OFFICE/COUNCIL: DATE INI1'IATED GREEN SHEET Nor 202155 O a� ��
PED July 23, 2002 '
CONTACI' PERSON & PHONE: INITTAI✓DATE INl'[7AIJDATE
Allen Cazlson, 266-6616 � z nsraa�rngN•r Dix crrY cLIIUc
MUST BE ON COUNCII. AGENDA BY (DATE) �IGN _
MIMBER 3 CI'1'Y ATTORNEY McCali 6 COUNCIL RESEARCH
Arrgust 7, 2002 - PIIBLICIIEe1RING FoR
ROUTING 5 flNANCIAL SERV DIIL _ FINANCIAL SERV/ACCTG
ORDER
4 MAYOR (OR ASST.) 1 TEAM LEADER
TOTAL # OF SIGNATiTRE PAGES 1_(CLIP ALL LOCATIONS FOR SIGNATURE)
ACTION REQUESTED:Sign attached resolution reciting a proposal far a financing program for conversion of
Straus Building into multi-family rental housing; giving preliminary approval of the project; authorizing the HRA
to issue housing revenue bonds and prepazation of redevelopment agreement.
RECOMIvIENDATIONS: Approve (A) or Reject (R) PERSONAI. SERVICE CONTRACTS MUST ANSWER THE FOLLOWING
� QUESTIONS:
PLANNING CONA�IISSION 1. Has this person/f¢m ever worked under a contract for this depaztrnent?
CIB COMIvII1"I'EE Yes No
CIVII. SERVICE COMIvIISSION 2. Has thu pecson/fi�m ever been a ciTy employee?
Yes No
3. Does this person/firm possess a skill not �omtally possessed by any current ciry employee�
Yes No
Explain all yes answers on separate sheet and attach to green sheet
INITIATING PROBLEM, ISSUE, OPPORTUIVITY (Who, What, When, Where, Why):
Sherman and Associates, Inc. (Developer) purchased the vacant, historical Straus Building located at 350 Sibley
Street and Fifth Street. The Developer is proposing to convert the building into 49 units of rental housing of which
10 units will be affordable to households at or below 30% of AMI. The first floor will be 7,800 sq. ft. of
commercial space. In order to finance the project the Developer is requesting the HRA to issue up to $5.5 million
of housing revenue bonds which will be paid back from project revenues and tas increments generated from the
$10.6 million development. PursuanT to Minnesota Statutes 462C the City Council must hold a public hearing,
approve a housing program for the project and authorize the HRA the authority to issue said bonds. The City
Council is only giving pzeliminary approval. Fina1 approval for the bonds will be with the HRA on August 14,
2002.
ADVANTAGESIFAPPROVED:
The bonds will be sold to U.S. Bank as a private placement mortgage note, thus there will be no investor banking
fee. Approximately $1.725 million will be retired within 18 months of the issuance of the bonds. The primazy
advantage of the bonds will be tha production of 49 units of housing of which 20% will be afFordable to very low
income households. Secondly, a historic building will be restored and reused. Thirdly, a blighted, unsafe birilding
will be restored thereby adding value to the neighborhood. Fourth, repayment of the bonds does posed a liability or
obligation to the City. CeY1�'
DISADVANTAGESIFAPPROVED:
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nisnnvnrrraces iF xor nrPxovEn: The building will remain vacant and a public safety nuisance. U` � v v ��
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TOTAL AMOUNI' OF 1'RANSACTION: N��- � � COST/REVENUE BUDGETED: �O/�,
FUNDING SOURCE: ACTIVIT'Y NUMBER: sQ F�C'� C �
FINANCIAL INFORMATTON: (EXPLAIN) This item will be budgeted for when it goes before the FII2A on August 14, 2002.
0 3.-��
MUI,TI-FAMILY RENTAL HOUSING PROGRAM OF THE
CITY OF SAlNT PAUL, MINNESOTA, AND THE
HOUSING AND REDEVELOPMENT AUTHORITY OF
Tf� CITY OF SAINT PAUL, MINNESOTA
August 7, 2002
Proposal; Authoritv. The Housing and Redevelopment Authority of the City of Saint
Paul, Minnesota (the "I-IRA"), proposes to issue revenue bonds and to take other actions in
furtherance of the objecrive of financing the acquisition, conshuction, and equipping of the
multi-family rental housing project described herein (this "Program") pursuant to applicable
authority conferred upon the HRA by the laws of the State of Minnesota, including without
limitation Minnesota Statutes, Chapter 462C, as the same may be amended from time to time
(collectively, the "Act").
Purposes. In creating this Program, the City of Saint Paul, Minnesota (the "City"), and
HRA are acting in furtherance of their findings that the preservation of the quality of life in the
City is in part dependent upon the maintenance and provision of adequate, decent, safe, sanitary,
and affordable housing stock; that accomplishing the goals of this Program is a public purpose
and will benefit the residents of the City; that the need exists within the Ciry to provide in a
timely fashion additional affordable rental housing to and for the benefit of persons residing and
expected to reside within the City; that there exist or are expected to exist persons within the City
who are and will be able to benefit from and aze in need of the Program; that the Program is
necessary in view of the limited resources that may be available to such persons relative to the
expenses involved in accomplishing the type of objectives outlined in this Program in the
absence of one or more of the forms of assistance described herein or otherwise available
pursuant to the Act; and that the City and HRA hereby find that such forms of assistance aze
often necessary for the benefit of such persons, families, and goals and that, furthermore, the
successful implementation of the objectives of the kind described in this Program has been found
to provide impetus for the development of other housing in the City, as well as the general
development of the City, by other persons who are not the beneficiaries of such governmentally
sponsored or assisted activities.
Rental Housin� Puraoses. More particularly, the City and HI2A find that there exists a
need for multifamily rental housing, alone due to a variety of factors, including that the cost of
consriuction of multi-family rental units may in many cases prove economically unfeasible,
given the high costs of consriuction and prevailing area rental levels, and that therefore
appropriate levels of public assistance may be heipful and necessary in bridging that gap.
General Description of the Proeram. This Program consists of the financing of the
acquisition of an existing building and its renovation into a multifamily rental housing project
consisting of an 49 unit residential rental project. The initial owner of the Project will be Straus
Apartments Limited Partnership, a Minnesota limited partnership, (the "Company"). Under the
Act, at least 20 percent of the housing units in the Project will be affordable by persons and
families with adjusted gross income not in excess of 80 percent of inedian family income as
estimated by the United States Department of Housing and Urban Development. Under federal
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law, at least 20 percent of the units must be occupied by persons or families whose family
incomes do not exceed 50 percent of azea 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 azea median
�oss income. The expected base monthiy rents will be approximately as follows:
Studio
$653
One Bedroom $761 - $960
Two Bedroom $908 - $1,300
Location. This Program is lunited to the Project. The Project is located at 350 Sibley
Street in Saint Paul, Minnesota.
Revenue Bonds. The amount of revenue bonds required to finance this Program is
approximately $5,500,000. The proceeds will finance the acquisition, conshuction, and
equipping of the Project and pay costs of issuing the bonds, and may be used to establish a
reserve.
The Project will be operated as a multifamily rental housing development within the
meaning of Minnesota Statutes, Section 462C.02, Subd. 5. The HRA will issue multifamily
housing revenue bonds (the "Bonds") pursuant to Minnesota Statutes, Chapter 462C.07, Subd. 1,
and loan the proceeds of the Bonds to the Company to finance the Project. The HRA willloan
the proceeds from the sale of the Bonds to the Company pursuant to a revenue agreement (the
"Loan Agreement") by and between the HRA and the Company. The Company 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. The Bonds may be shuctured 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 a11 of the net proceeds of the Bonds
(the initial principal amount thereof, less any 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 I-IRA has adequate existing capacity to administer, monitor and supervise the Project
in order to insure that the Project will be consistent with the HI2A's Housing Plan. The Company
will construct the Project in compliance with all applicable development restrictions, and a11 new
constnxction and rehabilitation of the existing buildings is subject to applicable state and local
building codes. The Company will be required to operate the Project in accordance with state
and local anti-discrimination laws and ordinances.
The wsts of the Project and the Program undertaken to finance the Project, including
specifically the costs to the HRA, will be paid or reimbursed by the Company.
Housin¢ Plan. The City and HRA hereby adopt the Comprehensive Housing Plan of the
City of Saint Paul as the housing plan relating to the Project.
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Monitorin¢. The Program will be monitored by the HRA. The HRA expects to enter into
or continue suitable agreements with necessary parties to ensure consistent compliance with the
objectives of this Program, as well as with the requirements of applicable law.
Meetine Needs; Methods. The Program will meet the need for rental housing. The City
and IIRA believe that this Program will help meet the identified needs under this Program. The
specific methods anticipated to be used include the issuance of revenue bonds under the Act to
provide feasible financing for various aspects of the Program so undertaken. The IIRA will
monitor the implementafion of this Program pursuant to its loan agreement for the Project.
Authorization. The Program is undertaken pursuant to Minnesota Statutes, Chapter 462C
and is consistent with the III2A's Program.
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