03-1085Council File # � � — ,� � V
Resolution #
RESOLUTION
OF SAINT PAUL, MINNESOTA
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Presented By
Referred To
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Commictee: Date
RESOLUTION APPROVING AND AUTHORIZING THE
EXECUTION OF LOAN AGREEMENT IN CONNECTION
WITH LOAN FROM THE SA1NT PAUL FOUNDATION TO FI JND
THE TSFP/HOUSING 5000 BELOW MARKFT RATE (BMR") LOAN PROGRAM
1 A. WHEREAS, the City of Saint Paul, Minnesota (the "City") proposes to enter into a Loan
2 Agreement with the Housing and Redevelopment Authority of the City of Saint Paul, Minnesota (the
3 "Authority") and The Saint Paul Foundation, Incorparated, a Minnesota not-for-profit corporation (the
4 "Lender");
5 B. WF3EREAS, Minnesota Statutes, Chapter 462C (the "Act") confers upon cities, or housing
6 and redevelopment authorities authorized by ordinance to exercise on behalf of a city, the power to
7 develop and administer programs for the purposes of planning, administering, making or purchasing loans
8 with respect to one or more multi-family housing project developments within the boundaries of the city;
9 C. WHEREAS, the City has delegated to the Authority, by ordinance, the power to exercise,
10 on behalf of the City, the powers conferred by Minnesota Statutes, Section 462C.010 to 462C.081;
11 D. WHEREAS, the Lender has indicated that it is willing to make a loan or loans to the City
12 from time to time in the maximum outstanding principal amount of $2,500,000 (the "Loan"), on the terms
13 and conditions set forth herein, to be used by the Authority to make loans far affordable housing projects
14 in the City;
15 E. WHEREAS, the Authority and City desire to enter into this Agreement to obtain funds to
16 help finance affordable housing projects in connection with the Saint Paul Housing 5000 Initiative, and the
17 Lender desires to assist the City and Authority in accomplishing its goals under the Saint Paul Housing
18 SOOOInitiative;
19 F. WHEREAS, the City estimates that the Loan will allow the Authority, as agent for the City,
20 to originate loans for affardable housing projects in the City which projects are expected to have total
21 development costs in excess of $17,000,000; and
22 G. WHEREAS, the Lender has required, as security far the Loan, that the City enter into a
23 Deposit Account Control Agreement (the "Deposit Agreement") and a Pledge Agreement (the "Pledge
24 AgreemenP') both of even date herewith pursuant to which the City has pledged certain funds as security
25 for the Loan; and
26 H. WHEREAS, in order to close the Loan in December 2003, the City accepts $500,000 from
27 the Authority to temporarily secure the Deposit Agreement and Pledge Agreement and it is the City intent
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1 to allocate the first $500,000 of the City's 2004 Housing 5000 STAR funds to the Authority next fall after
2 review and comment by the STAR Board;
3 NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Saint Paul, Minnesota
4 (the "Council"), as follows:
5 Section l. The City hereby finds, deternunes and declares that it is in the public interest of the
6 residents of the City of Saint Paul that the Proj ect be undertaken in order to further the public purposes of
7 increasing the supply of affordable rental housing in the City.
8 Section 2. The Council hereby approves the Loan Agreement in substantially the form submitted, and
9 the Mayor and Clerk aze hereby authorized and directed to execute the Loan Agreement on behalf of the
10 City. The Mayor, or his designee, of the City is hereby authorized to negotiate and agree to any
11 amendments, deletions or revisions to the Loan Agreement prior to its execution which do not
12 substantially change the rights or obligations of the Authority, the City or the Lender under the Loan
13 Agreement.
14 Section 3. The authority to approve, execute and deliver future amendments to the Loan Agreement
15 after their execution is hereby delegated to the Mayor, or his designee, subject to the following conditions:
16 (a) such amendments do not materially adversely affect the interests of the City; (b) such amendments do
17 not contravene or violate any policy of the City; and �) such amendments are acceptable in form and
18 substance to the Saint Paul City Attorney or other counsel retained by the City to review such amendments.
19 Section 4. The authorization hereby given shall be further construed as authorization for the execution
20 and delivery of such certificates and related items as may be required to demonstrate compliance with the
21 agreement being authorized and the terxns of this Resolution. The execution of any instrument by the
22 Mayor shall be conclusive evidence of the approval of such instruments in accordance with the terms
23 hereof. In the absence of the Mayor, any instrument authorized by this paragraph to be executed and
24 delivered may be executed by the officer of the City authorized to act in his place and stead.
25 Section 5. The Council hereby accepts the Program Guidelines in Exhibit A and delegates to the
26 Authority the authority to make loans on behalf of the City to assist for the next twelve years to assist in
27 the financing of affordable housing projects.
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Adopted by the City Council of the City of Saint Paul, Minnesota this day of
December, 2003.
Adoption Certified by Council Secretary
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By:
Approved by M �: Date� 1� � l�7
By:
Requested by Department of:
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Form Approved by City torney
By:
Approved by
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Adopted by Council: Date //1��, �/�07/�/�3
Approved by Director, Office of Financial
Services �
By:
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AA-ADA-EEO Employer
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E�ibit A - Program Guidelines
TSPF/HOUSING 5000 BELOW-MARKFT RATE (`BMR") LOAN PROGRAM -$2.SM
Terms of The Saint Paul Foundation ("TSPF" Partici�ation in Housine 5000
TSPF will provide City/IIRA with 52.5 million revolvin� 12 year Line of Credit ("LOC") for
low-interest rate construction loans, �uarantees and term loans for Housing 5000 projects that
meet TSPF criteria for affordable housing. This LOC maintained by TSFP is eligible for Saint
Paul Housing 5000 projects that have at least 20% of the units affordable to households with
incomes at or below 50% of the area median income, with at least half of those units (10%)
affordable to households with incomes at or below 30% of area median income.
Pro�am funds of $2.5 million (and related loan repayments) through this revolving LOC will be
used for 12 year, by the City, through its HRA, to originate construction loans, loan guarantees,
and term loans. The HRA will originate below-market rate loans to assist the projects that meet
TSFP criteria.
TSFP LOC will be secured by City funds of $SOQOOQ ($1 of City funds to each $5 of TSPF
fixnds). City collateral funds will be deposited with a local bank acceptable to TSPF. The City
annually, through its HRA, will make repayments to TSFP from third party Developer of interest
and principal drawn from the LOC.
The short term BMR loan will be at a 1% interest rate (construction loans/guarantees for less
than 2 years). The term BMR loan rate will also be 1% (20 - 30 year amortization schedule and
with balloon payxnent in 6 or fewer years). L,oans to housing projects using TSPF funds
originated by the HRA will be subordinate to first lien debt. HRA staff will originate HRA
Board approved loans to third party Developers after taking them through normal PED Resource
Team and Credit Committee review including establishing a loan risk rating.
To reduce administration for TSPF, there will be an annual report prepared by City's PED
Department which will provide to TSPF results of the program to date, status of BMR loan
originations, fund balances, affordable projects assisted, Vendor Outreach and Affirmative
actions goals etc.
Benefits of the 12 year TSPF/Housing 5000 BMR Loan Program anclude:
1) The Program would generate $17 million ofhousing loans and $22.6 million
of total development costs. The initial program funds of $2.5 million would
leverage loans in excess of 6.8 toL City leverage on Yhe collateral is estimated at
34 to 1.
2) Program savings on BMR loans would be over $2.0 million.
3) Minunal administration required by the TSPF staff.
City, HRA and TSPF will enter into an Loan, Pledge and Deposit Agreements outlining the
conditions above and responsibilities of the City and IIRA for accessing and repaying TSPF
funds over the life of the program.
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Green Sheet Green Sheet Green Sheet Green Sheet Green Sheet Green Sheet
I Departmerrtloffice/wuncil: � Date Initiated:
; PE -P,�;�g&��o���..e��„�„t � 02-DEG03 � Green Sheet NO: 3008614
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� i Deoar6nent SeM To Person I' te
i Conqct Person & Phone: � �
i Bob Geurs i � 0 lannin & Economic Develo Bob Geursll'om Me er I
i 266-6653 � quj9n 1 lanoin & Economic Devdo � De ariment Director �
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� Must Be on Council qgenda by (Date): I Number Z itv Attomev i
' 10.DEG03
For
Routing 3 inanci Services
Ordef 4 avor's Office I Mavor/Assisffint I
5 ouncil �
6 ,Ciri Clerk CiN Clerk i
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Total # of Signature Pages _(Clip All Locations for Signature)
Action Requested:
Approval of City Council Resolution approving execution of a loan agreement with The Saint Paui Foundation for $2.SM. This will
create a new Housing 5000 Below Mazket Rate Loan Program to assist affordable projects in St. Paul for the next 12 yeazs. City will
provide $500,000 in collaterai to secure the Line of Credit.
Recommendations: Approve (A) or Reject (R): Personal Service ContrncGs Must Mswer the Following Questions: �
Planning Commission 1. Has this person/firm ever worked under a confract for this department?
CIB Committee Yes No
Civil Service Commission 2. Has this person/firm ever been a city employee?
i Yes No
3. Does this person/firm possess a skill not nortnally possessed by any
current city employee?
Yes No
F�cplain all yes answers on separate sheet and attach to green sheet
Initiating Problem, Issues, Opportunity (Who, What, When, Where, Why):
The Saint Paul Foundarion wishes to assist City's Housing 5000 by providing a revolving Line of Credit for affordable projects at 1%
� for the next twelve yeazs.
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AdvanWqes If Approved:
I Addirional low cost capital to assist with Housing 5000.
DisadvanWpes If Approved:
None that aze laiown.
I Disadvantages If Not Approved: !
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l i i ToWi qmount of 500000 CostlRevenue Budgeted: y
I Transaction: �
� Funainq source: HRA General Fund Activity Number:
�� Financial information:
(Explain)