03-819Council File # �� � 0 �
Green Sheet # 3���D�"l
RESOLUTION
�NT PAUL, NIINNESOTA �
Presented By
Referred To
Comauttee: Date
1 RESOLUTION RECITING A PROPOSAL FOR A
2 FiNANCING PROGRAM FOR A MULTI-FAMII,Y SEIVIOR RENTAL
3 HOUSING DEVELOPNIENT, GIVING PRELIIVIINARY
4 APPROVAL TO THE PROJECT AND THE PROGRAM
5 PURSUANT TO MINNESOTA STATUTES, CHAPTER 462C,
6 AUTHORiZING THE HOUSING AND REDEVELOPMENT
7 AUTHORITY TO ISSUE HOUSING REVENLTE BONDS
8 AND AUTHOIUZING THE PREPARATION OF NECESSARY
9 DOCLTMENfS AND MATERIALS IN CONNECTION
10 WITH THE SAID PROJECT AND PROGRAM
ll (GATEWAY SEIVIOR RENTAL HOUSING PROJECT)
12 (a) Minnesota Statutes, Chapter 462C (the "Act) confers upon cities, or housing and
13 redevelopment authorities or port authorities authorized by ordinance to exercise on behalf of a
14 city the powers conferred by the Act, the power to issue revenue bonds to finance a program for
15 the purposes of planning, administering, making or purchasing loans with respect to one or more
16 multi-family housing proj ect developments within the boundaries of the city;
17 (b) The Housing and Redevelopment Authority of the City of Saint Paul, Minnesota
18 (the "HRA") has been designated, by ordinance, to exercise, on behalf of the City of Saint Paul,
19 Minnesota (the "City") the powers conferred by Minnesota Statutes, Section 462C.01 to
20 462C.081;
21 (c) The Housing and Redevelopment Authority of the City of Saint Paul, Minnesota
22 (the "HRA"), has received a proposal from Gateway Senior L'united Partnership, a Minnesota
23 limited partnership (the "Borrower"), that the HRA undertake a program (the "Housing
24 Program") to finance a Project hereinafter described, through the issuance of revenue bonds (the
25 "Bonds") pursuant to the Act;
26 (d) The Project to be financed by the Bonds is the acquisition, construction and
27 equipping of a multifamily senior rental housing project consisting of approximately 121 units
28 located south of West Seventh Street between Munster and Graham Avenues in the City of Saint
29 Paul (the "ProjecY');
30 (e) The proposal calls for the IIRA to loan the proceeds realized upon the sale of the
31 Bonds to the Borrower pursuant to a revenue agreement or agreements wherein the Borrower will
32 be obiigated to make payments at the times and in amounts sufficient to provide for the prompt
33 payment of principal of, premium, if any, and interest on the Bonds and all costs and expenses of
34 the HRA and the City incident to the issuance and sale of the Bonds;
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36 ( fl The City desires to facilitate the acquisirion and construction of a multifamily
37 senior housing facility within the City; and the Project will assist the City in achieving these
38 objectives;
39 (g) A public hearing on the Housing Program and the Project was held on this date
40 following duly published notice, at which tirne 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 prepared between the HRA
45 and the Borrower, which sets forth certain understandings by and between the F3RA and the
46 Borrower pertaining to the Project, and the financing therefor.
47 NOW THEREFORE, BE IT RESOLVED by the City Council of the City of Saint
48 Paul, Minnesota, as follows:
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1. The City hereby gives preluninary approval to the proposal of the
Borrower 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 senior rental housing project within the City
pursuant to the Borrower's specifications and to a revenue agreement between the I-IRA and the
Borrower 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 $11,000,000 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 Borrower 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 appears, and the City
hereby finds, that the Project constitutes a multifamily senior 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 furnish such financing wili be a substantial
inducement to the Borrower to undertake the Project, and that the effect of the Project, if
undertaken, will be to encourage the provision of multifamily rental housing opportunities to
residents of the City, and to promote more intensive development and use of land within the City;
69 3. The Proj ect, and the program to finance the Project by the issuance of the
70 Bonds, is hereby given preliminary approval by the City subject to final approval by the HRA,
71 the Borrower and the purchasers of the Bonds as to ultimate details of the financing of the
72 Project, all subj ect to the availability of an allocation of taac exempt bonding authority for the
73 Bonds.
74 4. Pursuant to Chapter 72, Saint Paul, Minnesota Administrarive Code, the
75 City hereby authorizes and directs the Housing and Redevelopment Authority of the City of Saint
76 Paul, Minnesota (the "HRA") to issue the Bonds to finance the Project and to take all actions
77 necessary or desirable in connection therewith, and no further approval or authorization of the
78 City shall be required; provided that the HRA may, in its discretion, authorize the Board to issue
79 the Bonds a��d to implement the program approved hereby, and the City hereby consents thereto;
80 5. The Borrower has agreed and it is hereby detemiined that any and all costs
81 incurred by the City ar the HRA in connection with the financing of the Project whether or not
82 the Project is canied to completion and whether or not approved by ARA will be paid by the
83 Borrower:
o3-�r�
84 6. Briggs and Morgan, Professional Association, acting as bond counsel, and
85 such investment hankers as may be selected by Borrower, with the consent of the HRA, aze
86 authorized to assist in the prepararion and review of necessary documents relating to the Project
87 and the financing pro�ram therefor, to consult with the City Attomey, Borrower and the
88 purchaser of the Bonds as to the maturiries, interest rates and other terms and provisions of the
89 Bonds and as to the covenants and other provisions of the necessary documents and submit such
90 documents to the FIlZA for final approval;
91 7. Nothing in this Resolution or the documents prepazed pursuant hereto
92 shall authorize the expenditure of any municipal funds on the Project other than the revenues
93 derived from the Project or otherwise granted to the City or the HRA. The Bonds shall not
94 constitute a charge, lien or encumbrance, legal or equitable, upon any property or funds of the
95 City or the IIRA except the revenue and proceeds pledged to the payxnent thereof, nor shall the
96 City or the HRA be subj ect to any liability thereon. The holders of the Bonds shall never have
97 the right to compel any exercise of the taxing power of the City or HRA to pay the outstanding
98 principal on the Bonds or the interest thereon, or to enforce payment thereon against any property
99 of the City ar the HRA. The Bonds shall recite in substance that Bonds, including the interest
100 thereon, are payable solely from the revenue and proceeds pledged to the payment thereo£ The
101 Bonds shall not constitute a debt of the City or HRA within the meaning of any constitutional or
102 statutory limitation.
103 8. In anticipation of the issuance of the Bonds to finance all or a portion of
104 the Project, and in order that completion of the Project will not be unduly delayed when
105 approved, the Borrower is hereby authorized to make such expenditures and advances toward
106 payment of that portion of the costs of the Project to be financed from the proceeds of the Bonds,
107 as the Borrower considers necessary, including the use of interim, short-term financing, subject
108 to reimbursement from the proceeds of the Bonds if any when delivered but otherwise without
109 liability on the part of the City or the HRA.
110 9. The form of the Memorandum of Understanding is hereby approved and
ll 1 the Executive Director of the HRA is hereby authorized to execute the same.
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113 Adopted by the City Council of the City of Saint Paul, Minnesota this 3rd day of
114 September, 2003.
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RequesYed by Department of �� �
Adopted
Adoptio�
Approve�
� � ���PProve d Finan�ial ervices '
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� Green Sheet Green Sheet Green Sheet Green Sheet Green Sheet Green Sheet �
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DepartmenUoffice/council: Date Initiated:
I" PE - P1a�mmg&EconomicDevelopment 11-AU6-03 Green Sheet NO: 3004044
Contact Person & Phone:
DepartmeM Sent To Person � InitiaUDa
Joan Trulsen 0 lannin & Economic Develo
6$694 q5gjyn 1 lannin & Economic Develo De artment Director
Must Be on Council Agenda by (Date): Number Z • Att me
-�+4�� For �
��— b Ro �.� 9 � vor's Office Mavor/ASSistant
I Order 5 A' ou cil i
(p� i Qerk Ci Clerk
� Qi�-z- ��^,`.-'� 3-k-� �tc� aQ s ervr� � ive�
Total # of Signature Pages _(Clip All Locations for Signature)
Action Requested:
�S �(Y�-%�
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a
Recommendations: Approve (A) or Reject (R): Personal Service Contraets Must Answer the Following questions:
Pia�ning Commission 1. Has this personffirm ever worked under a contract for this departmenY?
CIB Committee Yes No
Civil Service Commission 2. Has this personffirm ever been a city employee?
Yes No
3. Does this person/firm passess a skill not normally possessed by any
curzent city employee?
Yes No
Ezplain all yes answers on separate sheet and attach to green sheet
Initiating Problem, Issues, Opportunity (Who, What, When, Where, Why):
Sfiepazd Davem (Gateway) Project -(121 Unit Senior Rental Apaztments) - Resolurion Reciting a Proposal for a Financing Prograzn for a
Multi-Family Senior Rental Housing Development, Giving Prelinvnary Approval to the Project and Frogram Pursuant to Minnesota
Statutes, 462C, Authorizing the Housing and Redevelopment Authority of the City of Saint Paul, Minnesota to Issue Housing Revenue
Bonds and Authorizing the Prepazarion of Necessary Documents and Materials in Connecrion with the said Project
AdvanWges If Approved:
The application for the issuance of Housing Revenue Bonds can be submitted to the HRA for consideration.
DisadvanWqeslfApproved: �d3�J!1C# F' ^ �;��
None
���i52�
Disadvantapes If Not Approved:
Other gap funds will need to be found for the project.
Total Amount of � i f � ��� Cost/Revenue Budgeted:
Trensaction: . � D
FundinSlSoyrce: � `'-'-F- i.�rlBni�ActivityNumber. �" �� �i �b'�
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Financialinformation: $��"'�-'
(F�cplain) � r-td'c�°Fe �c%-,cu�a`�w� — /tjaP. �t��t1 R� �^ .
DEPARTMENT OF PLANNING
& ECONOMIC DEVELOPMENT �
Martha G. FuQer, Director .,, m
D3 - �1� ��
CITY OF SAINT PAUL
Raredy C. Ke[ly, Mayor
September 3, 2003
Memo to:
From:
City Council Members
25 WutFOUnh Street Telephone: 657-266-6565
SaintPau[,MN55102 Facsimile:6.i1-218-3261
Martha Fuller, Department of Planning and Economic Development Director
REPORT TO THE CITY COUNCIL REGARDING:
Gateway Senior Rental Housing Project (Shepard-Davern) - Public Hearing
Resolution Reciting a Proposal for a Financing Program for a Multi-Family Senior
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. District 15
PURPOSE
The Housing and Redevelopment Authority of the City of Saint Paul, Minnesota has received a
proposal from Gateway Senior Limited Partnership, a Minnesota limited partnership that the
HRA undertake a program (the "Housing Program") to finance the Gateway Senior Rental
Housing Project through the issuance of revenue bonds in the approximate amount of
$11,000,000.
The portion of the project to be financed by the Bonds is the acquisition, construction and
equipping of a multifamily senior rental housing project consisting of approximately 121 units tc
be located south of West Seventh Street between Munster and Graham Avenues in the City of
Saint Paul.
The proposal calls for the HRA to loan the proceeds realized upon the sale of the Bonds to the
Borrower pursuant to a revenue agreement or agreements wherein the Borrower wiil 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;
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°fo credits eligib{e for use with tax exempt bonds. (Under federal 1aw, 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
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persons or families whose family incomes do not exceed 60 percent of area median gross
income).
The developer has pledged that 28% of the units in the Senior Project wili be affordable to
persons with incomes at 50% or less of the area median income. And that the remaining units
wiil be affordable to persons at 60% or less of area median income.
The estimated sources and uses of funds statement is as follows:
Sources:
Series A- Tax Exempt (Bank LOC)
Series B - TIF Mortgage
Tax Credit Equity - 1 installment
Tax Credit Equity - 2n insfallment
HOME funds
Accrued Expenses
Cash
Total Sources of Funds
$9,567,000
1,469,000
2,537,361
1,691,574
800,000
159,854
1.148,813
17,373,602
Uses:
Acquisition
Construction Costs
Accrued Expenses
Cash Accounts (reseroes)
Soft Costs
Developer Fee
Total Uses of Funds
$1,000,000
12,546,000
159,854
1,680,420
988,578
998,750
17,373,602
The preliminary term sheet for the Bonds is as follows:
Issue Amount up to $11,400,000
Term 30 years
Bond Interest Rate 4.96%
Issue Date September 30, 2003
Maturity Date September 30, 2033
Placement Method Direct Purchase by U.S. Bank
Due Diligence ProjecYs financial statements
Appraisal
Phase f Environmental audit
Borrower Gateway Senior Apartments, LLC
Bond Counsel Briggs & Morgan
Trustee US Trust
Security First Mortgage on Project site and Improvements
The Bonds are structured to accommodate level debt service amortization schedule. The
Project's operations support the annuai debt service payments by a 1.15 debt service coverage
ratio. The Bank provides a Tax Exempt Note for a 17 year term. Interest-only for 2 years, then
a 360-month amortization schedule commences on the Bond financing (balloon at end of 17
years).
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FEES
The non-refundable application fee of $5,000 has been received. Should the Bonds be issued,
the HRA will be paid a service fee equal to one percent (1.0%) of the initiai principal amount of
the Bonds issued, payable on the date of closing the bonds, and on the first anniversary date of
the New Money Bonds and each anniversary date thereafter, the HRA shall be paid a
continuing service fee equal to one-tenth of one percent (0.1%) of the average balance of ail
outstanding portion of the Bonds during the preceding annual period.
REPAYMENT CAPACITY
The Project's 15 year Income Projections-Cash Flow appears to be a reasonable projection and
will attain a minium 1.2 debt coverage ratio. Operating expenses appear to be reasonabfe.
SUPPORT
The project has received support from District 15 and the Shepard Davern Task Force.
PUBLIC PURPOSE
The following public purposes will be met:
Project will provide housing opportunities for low income seniors, age 55 or older.
2. Project meets objectives of The HousingPlan, adopted as part of the City's
Comprehensive Plan, Section 6.0, Strategy 3: Ensure Availability of Affordable Housing.
BOND AUTHORITY; ALLOCATION PROCESS
The proposed bonds will count as part of the City's entitlement bond allocation. There appears
to be sufficient allocation to fund this priority project along with other multifamily projects.
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.
Aoproval of the inducement resolution and execution of the Memorandum of Understandinq
does not reauire or obliqate the City or HRA to issue bonds or cause any action against the City
or HRA arisinq from any failure or refusal by the Citv or HRA to aoarove the oroiect or issuance
of the Bonds.
With respect to multifamily 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 proposal is initiated before the City Council rather than the HRA.
ATTACHMENTS
City Council Resolution
Prepared by: Joan Trulsen, PED Project Manager- Southwest Team, 266-6694
M:\SfIEPDAV�Sonds\preLminary approval CiryCouncil.Rpt wpd AA-ADA-E�O Employer