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xesolution #
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Presented By
Re£erred To
CITY
RESOLUTION
OF SAINT PAUL, MINNESOTA
y3
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, CHAPTER 462C,
AUTHORIZING THE HOUSING AND REDEVELOPMENT
AUTHORITY TO ISSUE HOUSING REVENUE BONDS
AND AUTHORIZING THE PREPARATION OF NECESSARY
DOCUMENTS AND MATERIALS IN CONNECTION
WITH THE SAID PROJECT AND PROGRAM
(ARBOR POINTE APARTMENTS PROJECT)
(a) Minnesota Statutes, Chapter 462C (the "Act) confers upon cities, or housing and
redevelopment authorities or port authorities authorized by ordinance to exercise on behalf of a city the
powers conferred by the Act, the power to issue revenue bonds to fmance a program for the purposes of
planning, administering, making or purchasing loans with respect to one or more multi-family housing project
developments within the boundaries of the city;
(b) The Housing and Redevelopment Authority of the City of Saint Paul, Minnesota (the "HRA")
has been designated, by ordinance, to exercise, on behalf of the City of Saint Paul, Minnesota (the "City") the
powers conferred by Minnesota Statutes, Section 462C.01 to 462C.081;
(c) The Housing and Redevelopment Authority of the City of Saint Paul, Minnesota (the "HI2A"),
has received a proposal from Arbor Pointe Limited Partnership, a limited partnership organized under the
laws of Minnesota (the 'Partnership"), that the HRA undertake a program (the "Housing Program") to finance
a Project hereinafter described, through the issuance of revenue bonds (the "Bonds") pursuant to the Act;
(d) The Project to be financed by the Bonds is the acquisition, conshuction and equipping of an
independent senior rental housing facility containing approximately 47 housing units located at Dale Street
and Maryland Avenue in the City of Saint Paul (the "Project");
(e) The proposal calls far 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;
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(fl The City desires to facilitate the acquisition and consiruction of a multifamily housing facility
within the City; and the Project will assist the City in achieving these objectives;
(g) A public hearing on the Housing Program and the Project was held on this date following duly
published notice, at which time all persons that desired to speak were heard;
(h) No public official of the City has either a direct or indirect financial interest in the Project nor
will any public official either directly or indirectiy benefit financially from the Project; and
(i) A forxn of Memorandum of Understanding has been prepazed between the HRA and the
Partnership, which sets forth certain understandings by and between the HRA and the Partnership pertaining
to the Project, and the financing therefor.
NOW THEREFORE, BE IT RESOLVED by the Ciry Council of the City of Saint Paul,
Minnesota, as follows:
1. The Cit7 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
Staxutes, Chapter 462C, consisting of the acquisition, construction and furnishing of a multi-family rental
housing facility within the City pursuant to the Parinership's specifications and to a revenue agreement
between the HRA and the Partnership on such terms and conditions 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 $3,600,000 to be issued pursuant to the Act to
fnance 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;
2. On the basis of information available to the City it appeazs, and the City hereby finds,
that the Project constitutes a multi-family housing development within the meaning of subdivision 5 of
Section 462C.02 of the Act; that the availability of the financing under the Act and the willingness of the City
to fiuzush such financing will be a substantial inducement to the Partnership to undertake the Project, and that
the effect of the Project, if undertaken, will be to encourage the provision of multi-family rental housing
opportunities to residents of the City, and to promote more intensive development and use of land within the
City;
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 ultimate details of the fmancing of the Project,
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 fmance the Project and to take a11 actions necessary or desirable in connection
therewith, and no fiirther approval or authorization of the City shall be required; provided that the I-IRA may,
in its discretion, authorize the Board to issue the Bonds and to implement the program approved hereby, and
the City hereby consents thereto;
5. The Partnership has agreed and it is hereby determined that any and all costs incurred
by the City or the FIRA in connection with the financing of the Project whether or not the Project is carried to
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completion and whether or not approved by HRA will be paid by the Partnership:
6. Briggs and Morgan, Professional Association, acting as bond counsei, and such
inveshnent bankers as may be selected by Partnership, with the consent of the HRA, aze authorized to assist
in the preparation and zeview of necessary documents relating to the Project and the fmancing progcam
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 IIRA for final approval;
7. Nothing in this Resolution or the docuxnents prepared 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 IIRA. The Bonds shall not constitute a chazge, lien or encumbrance, legal
or equitable, upon any properry or funds of the City or the HRA except the revenue and proceeds pledged to
the payment thereof, nor sha11 the City or the HRA 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 property
of the City or the HRA. The Bonds sha11 recite in substance that Bonds, including the interest thereon, are
payable solely from the revenue and proceeds pledged to the payment thereof. The Bonds shall not constitute
a debt of the City ar HRA within the meaning of any constitutional or statutory limitation.
8. In anticipation of the issuance of the Bonds to fmance 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 fmancing, 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.
9. The form of the Memorandum of Understanding is hereby approved and the Executive
122 Director of the HRA is hereby authorized to execute the same.
__���\��aUD�
�
cil Secre
Economi evel men
"'__
' FinanCial Servi 5
DEPARTMENT/OFFICE/COUNCII,: DATE INITTATED GREEN SHEET No.: 3000115 O'� ��Q�
PED 5/12/03
CONTACi' PERSON & PHONE: � ��T�� 1PIITTAL/DATE
Tom Sanchez 1 D�r,u��T Dm. V a crrrcovricu.
M[JST BE ON O �I. AG A BY ATE) �IGN ? CrI'Y ATTORNBY � Oi _ CITY CLERK
� NQ1y�gER FINANCIAL SERV DIl2. FBJANCIAL SERV/ACCTG
S�LH�O3 �,���� �YI FOR 3 MAYOR(ORASST.) _CIVII.SERVICECOMI�IISSION_
ROi1TING � �� �� � �
ORDER
TOTAL # OF SIGNATURE PAGES _1_(CLIP ALL LOCAT[ON5 FOR SIGNATURE)
acnox �QUES�n: Signatures for City Council Resolution authorizing multi-family rental housing tu� exempt
revenue bonds for Arbor Pointe Project, Dishict 10.
RECOMMENDAITONS: Approve (A) or Reject (R) PERSONAL SERVICE CONTRACTS MiJST AIVSWER'ITIIE FOLLOWING
QUESTIONS:
PI.ANNING COM�-IISSION 1. Has this person/firm ever worked under a contract for tt�is deparhnent?
Cffi COMMITI'EE Yes No
CIVIL SERVICE COMIvIISSION 2. Has this person/fimt ever been a ciTy employee?
A STAFF Yes No
� 3. Does tivs person/firm possess a skill not nonnally possessed by any current city employee?
Yes No
Explain all yes aoswers on separate sheet and attach to green sheet
INITIATING PROBLEM, ISSUE, OPPORI'ONl'1'Y (Who, What, Wheu, Where, Why):
The project wiil result in 47 new construction, independent living, senior rental housing units.
ADVAN'I'AGES IF APPROVED:
A vacant site is improved with forty-seven new construction affordable rental housing units for seniors.
DISADVANTAGES IF APPROVED:
None
DISADVANTAGES IF NOT APPROVED:
Site remains vacant and undeveloped.
TOTAL AMOiJN1' OF 1'RANSACTION: $ COST/REVENUE BUDGETED:
FONDINGSOURCE: ACTIVI'I'YNUMBER: . � �^�� �'�
Fmr,uvciai, m�oxNrnTTON: (E�r� �9,�`t � � ����
C:�DoQUVen4 and Settiny�pce}una�m�Deakrop\GreaiShettsVSanchez - ArbocPoimeGreewAee[CCPHea`mg5-28-03 wpd
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MLJLTI-FAMILY RENTAL HOUSING PROGRAM OF THE
CITY OF SA1NT PAUL, NIINNESOTA, AND THE
HOUSiNG AND REDEVELOPMENT AUTHORITY OF
THE CITY OF SAINT PAUL, MINNESOTA
May 28, 2003
Proposal: Authoritv. The Housing and Redevelopment Authority of the City of Saint
Paul, Miunesota (the "HRt�"), proposes to issue revenue bonds and to take other actions in
furtherance of the objective 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
IIRA are acting in furtherance of their findings that the preservation of the qualiry 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 rentai housing to and for the benefit of elderly 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 are 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 ouUined 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 are
often necessary for the benefit of such persons, families, and goals and that, furtkiermore, 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 Housing Purposes. More particularly, the City and HRA find that there exists a
need for senior rental housing, alone due to a variety of factors, inciuding that the cost of new
construction of multi-family rental units may in many cases prove economically unfeasible, given
the high costs of construction and prevailing area rental levels, and that therefore appropriate
levels of public assistance may be helpful and necessary in bridging that gap.
General Description of the Proeram. This Program consists of the financing of the
acquisition, construcrion, and equipping of a senior, independent living rental housing project
consisting of a three story, 47 unit residential rental project. The initial owner of the Project will
be Arbor Pointe Limited Partnership, a Minnesota limited partnership, to be formed by Arbor
Pointe, LLC (the "Company"). The Act does not impose any income limits on the tenants.
Under federallaw, at least 20 percent of 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 expected base monthly rents will be approximately as follows:
One Bedroom
Two Bedroom
$379 - $766
$910
132Q548v2
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Location. This Program is limited to the Project. The Project is located at 1215 Dale
Avenue in Saint Paul, Minnesota.
Revenue Bonds. The amount of revenue bonds required to finance this Program is
approximately $4,000,000. The proceeds will fmance the acquisition, construction, 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 an elderly multifamily rental housing development within
the meaning of Mimiesota Statutes, Section 462C.02, Subd. 5. The HRA will issue multifamily
housing revenue bonds (the "Bonds") pursuant to Minnesota Statutes, Chapter 462C.07, Subd. l,
and loan the proceeds of the Bonds to the Company to finance the Project. The HRA will loan
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 structured so as to take advantage
of whatever means aze available or necessary and are permitted by law to enhance the security for
and marketability of the Bonds. Substantially all of the net proceeds of the Bonds (the initial
principal amount thereof, less any amounts deposited in a reasonably required reserve ar paid out
as costs of issuance of the Bonds) will be used to pay the costs of the Project, inciuding any
functionally related and subordinate facilities.
The HRA has adequate existing capacity to administer, monitor and supervise the Project
in order to insure that the Project will be consistent with the IIItA's Housing Plan. The Company
will construct the Project in compliance with all applicable development restrictions, and all new
construction 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-discriminafion laws and ordinances.
The costs 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.
Housing 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.
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.
Meeting Needs; Methods. The Program will meet the need for rental housing for elderly
persons. The City and HRA 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 HRA will monitar the implementation 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 HRA's Program.
1320548v2
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CITY COUNCIL OF T'HE CITY OF SA1NT PAUL, MINNESOTA
REPORT TO TI� CITY COUNCIL DATE: May 28, 2003
REGARDING: PiTBLIC 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 City 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.
The Housing and Redevelopment Authority of the City of Saint Paul (IIRA) has received request from
Arbor Pointe L'united Partnership, comprised of Arbor Pointe LLC., whose partners aze Frisch
Properties, LLC, and Stonebridge Development and Acquisition, LLC, requesting the HRA to issue up
to $3,600,000, of T� Exempt Mulfifamily Revenue Bonds (`Bonds") and for assistance to fund a
financing gap of $1,286,000, for the purpose of constructing the Arbor Pointe Apartments, a 47 unit
independent senior housing project ("ProjecY') located in District 10.
The purpose of this report is to request the City Council to consider adopting the attached preliminary
(inducement) resolution which would approve the following:
Authorize the Executive Director of the HRA to enter into a Memoranduxn of Understanding
(MOU) with Arbar Pointe Limited Partnership and to work towards possible issuance of the
Bonds. The MOU also stipulates the terms and conditions for issuance of the Bonds should the
IIRA decide to issue the Bonds; and
2. Authorize HRA to issue up to $3,600,000 of tax exempt, mulfifamily rental revenue bonds for
the Project; and
Authorize City staff to prepare a Housing Program for financing the Project prepazed in
accordance with the provisions of Minnesota Statutes, section 462C.03; and
4. Retain Briggs & Morgan as bond counsel for said Bonds and 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.
Aqqroval of the inducement resolution and execution of the Memorandum of Understandin¢
does not require or obligate the Citv or H12A to issue bonds or cause anv action against the Citv
or HRA arising from anv failure or refusal by the City or HRA to approve the project or
issuance of the Bonds.
O1-So�,
With respect to multifamily housing bonds, Section 72.04 of Chapter 72 of the City's Administrative
Code provides that the IIF2A 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 proposal is
inifiated before the City Council rather than the IIRA.
PROJECT
The Project consists of a three story apartment building containing 47 independent senior rental
housing units. Amenities include: underground heated pazking, elevator, laundry facility and common
gathering space. The Project will comply with the City's rental affordability requirement of 10% of the
units afFordable at 30% of inedian income and 10% of the units afFordable at 50% of inedian income.
The estimated unit breakdown follows:
Tvoe
5 one bedroom/1 bath
5 one bedroom/1 bath
8 one bedroom/1 bath
11 two bedroom/2 bath
6 two bedroom/2 bath
12 two bedroom/2 bath
Sq. Ft. Size Gross Rent Affordabiltv
750 $ 379 30 % *
750 $ 667 50 % *
750 $ 766 60 %
981 $ 910 60 %
1039 $ 910 60 %
1094 $ 910 60 %
* HRA Affordability Requirement: 10 one bedroom units.
FINANCING
The Project will be funded by a combination of multifamily tas exempt bonds and federal Low Income
Housing Tas Credit Program. The tax credits are not from the City's annual allocation but are 4%
credits eligible for use with t� exempt bonds. (The maximum rents must be affordable at no more
than 60 percent of area median income.) Rather than finance with the HUD insurance program it is
proposed that the bonds be purchased under the US Bank's direct bond purchase program. The
partners would be required to provide a personal guarantee. Because this is a direct purchase, the
bonds will be non-rated. The interest rate is estimated at 5.6 %. (This is the model for the Osceola
Park project financing.)
The Bonds are structured to accommodate a level debt service amortization schedule. The Project's
income from operafions will support the annual debt service payments by a 1.10 debt service coverage
ratio.
The Project will be funded by a combination of multifamily tax exempt bonds and the federal low
income housing tax credit program. The tas credits are not from the City's annual allocation but are
4% credits eligible for use with tax exempt bonds. (The masimum rents must be affordable at no more
than 60 percent of area median income.) The Total Development Cost is $7,362,264.
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The estimated sources and uses of funds statement is as follows:
Sources Uses
IIItA Revenue Bonds $3,594,100 Land
LIHTC 1,746,615 Conshuction
NEAR Loan 1,286,000 Constr Loan Int.
Accrued Interest 52,398 Real Estate Closing Costs
Deferred Dev Fee 683,150* Cost of Issuance
Tax Credit Fees
Project Reserves
Accrued Expenses
Developer Fee
Total
$7,362,264
$ 434,906
5,119,160
248,000
145,906
260,867
25,756
75,400
52,398
999,870*
$7,362,264
* For low income housing tax credit purposes the developer fee is maximized. However, the developer
fee (cash) is to be received in installments during the construction, completion and rent-up is $316,720.
The balance of the fee will be deferred.
Subordinate Financing
Arbor Pointe LLC, has requested $1,286,000 in subordinate gap financing. The gap fmancing proposal
from the developer has been reviewed and recommended for approved by the PED Credit Committee
for future HRA Board consideration. The City Council is not being asked to approve any gap financing
or obligate the HRA.
The HRA cannot loan CDBG funds directly to a private developer for new construction but may grant
funds to a neighborhood nonprofit for their participation in the project. It is proposed that the HRA
grant $1,286,000 in CDBG funds to the NEAR community development organization after which they
would loan the CDBG funds to the project. The NEAR loan to the project would be for a term of 40
yeazs, at 1% simple interest and subordinate to the bonds/first mortgage. The loan would be secured by
a note, mortgage, assignxnent of leases and rents and a UCC. The grant agreement between NEAR and
the Hf2A would require the assignment of the loan and collateral documents to the HRA after the
project has been occupied for one year. NEAR would be responsible for all elements of the CDBG
requirements, construction monitoring and any resolution of neighborhood concerns during
construction and rent-up. Annual repayment of the loan would be determined after review of an annual
financial statement supported by an annual audit. Payment would come from 50% of cashflow from
operations and would begin in year six. A balloon payment would be required at the end of the term.
FEES
The non-refundable application fee of $5,000 was paid previously. 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 second 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 annual administrative fee equal
to 0.01% of the outstanding principal balance of the Bonds.
BUSINESS PROFILE
Mr. Gerald Frisch has been in business since 1961 and has owned or developed over 500 housing units
in the Saint Paul area. The Frisch Properties, LLC., was organized in 1998 to develop new real estate
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projects. Experience with the I� includes :the New York Bingo Palace and New York Deli
(formerly Payne Reliever) and the River Town Homes, LLC., a Minnesota limited liability company
formed by Gerald E. Frisch and David R. Engfer.
Stonebridge Development and Acquisition, LLC., was formed in 1997 by Andrew Chase, Dave
Anderson and Wallace Johnson. The partners, as individuals, have ea�tensive experience in building
and selling residential real estate at an annual value of $100 million. Most recently, Mr. Johnson is a
partner in the Osceola Pazk Project (senior housing).
ADVERSE LENDING
The HRA or the City of Saint Paul does not have an adverse lending relationship with Mr. Frisch,
Frisch Properties LLC., Stonebridge Development and Acquisition, LLC., or it partners.
SUPPORT
The project received support from the District 10 Community Council.
PUBLIC PURPOSE
The following public purposes will be met:
1. 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 single family mortgage program. Because the Arbor
Pointe Apartments will be owned by a for-profit entity, the proposed bonds will count as part of the City's
entitlement bond allocation for 2003. However, staff believes that the single family mortgage program is
amply funded for 2003. 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 I�RA a report detailing the financing of the
Project and request the IIRA to consider adoption of a resolution to issue and sell revenue bonds to
finance the project.
Attachments:
City Council Resolution
Prepared by: Tom Sanchez
PED Project Manager
266-6617