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07-531Council File # /J7—s3 I WITHDRAWN JUNE 20, 2007 GreenSheet# 3040771 Presented by RESOLUTION CITY OF SAINT PAUL, MINNESOTA // THE CITY OF SAINT PAUL, MINNESOTA RESOLUTION NO. 1 G G PRELIMINARY APPROVAL TO THE PROPOSED ISSUANCE OF 2 RE NUE BONDS FOR A MiJLTIFAMILY HOUSING DEVELOPMENT 3 FOR HE BENEFIT OF WI1�iNIPEG APARTMENTS LIMITED 4 PART RSHIP UNDER MINNESOTA STATUTES, CHAPTER 462C, AS 5 AMENDE 6 WHEREAS, under the te s of Minnesota Statutes, Chapter 462C, as amended (the "AcY'), the CiTy of Saint 7 Paul (the "City") is authorized to de lop and administer programs to finance multifamily housing developments and 8 is authorized to issue and sell revenue onds or obligations which shall be payable exclusively from the revenues of 9 the programs and the developments; an 10 WHEREAS, a housing and rede� 11 under the Act if the housing and redeveb 12 city, the powers conferred by the Act; and nt authority in and for a city may exercise the powers of a city authority is authorized by ordinance to exercise, on behalf of the 13 WHEREAS, Winnipeg Apartments Limite artnership, a Minnesota limited partnership (the "Company"), 14 has proposed that the Housing and Redevelopment A ority of the City of Saint Paul (the "AuthoriTy") undertake a 15 housing program in accordance with the terms of the Ac the "Housing Program") and issue its revenue bonds under 16 the Act to finance the acquisition, construction and equ� ing of a 56-unit multifamily residential rental housing 17 development and related improvements, including a com rcial space of approximately 6,000 square feet (the 18 "ProjecY'), to be located at 852-886 Rice Street in the City. e Company has proposed that the Authority finance 19 any one or more of the following under the Housing Progam: ( the funding of one or more reserve funds to secure 20 the timely payment of the Bonds; (ii) the payment of interest on he Bonds; and (iii) the payment of the costs of 21 issuing the Bonds; and 22 WHEREAS, for the purposes referenced above, the Company s requested that the Authority issue two 23 series of revenue bonds to be designated (i) Multifamily Housing venue Bonds, Series 2007A (GNMA 24 Collateralized Mortgage Loan - Winnipeg Apartments Project) in the aggre te principal amount of approximately 25 $3,300,000 (the "Series 2007A Bonds"); and (ii) Multifamily Housing Re enue Bond (Winnipeg Apartrnents 26 Project), Series 2007B (the "Series 2007B Bond"), in the original aggregate incipal amount of approximately 27 $3,300,000 (the "Series 2007A Bonds and the Series 2007B Bond aze hereinaft referred to collectively as the 28 "Bonds"); and 29 WI-IEREAS, under the terms of the City Administrative Code, Part IV, Chapter 2, Section 72.04, the City 30 Council of the City has designated the Authority to exercise the powers conferred by the ct on behalf of the City; 07��� 31 rovided, however, that the Authority may not carry out any specific programs under the Act unless directed and 32 a orized to do so by a resolution adopted by the Ciry Council of the City; 33 REAS, the Bonds proposed to be issued by the AuthoriTy to finance the Project will constitute revenue 34 bonds sec ed solely by: (i) the revenues derived from one or more loan agreements or financing ageements 35 (collectively, e"Loan Agreements") between the Authority and the Company; (ii) a pledge and assignment of 36 Project revenue (iii) one or more reserve funds to be held by a trustee for the benefit of the holders of the Series 37 2007A Bonds; (iv) first mortgage lien and secwity interest granted by the Company with respect to the Project; and 38 (v) other security pro 'ded or arranged by the Company; and 39 40 41 42 43 44 45 46 47 48 49 50 WIIEREAS, purs�nt to the terms of the Act, the Au onr of the Act and must hold a p li circulating generally in the City, notice of the public hearing is : Council for review and comment; Section 462C.04, subdivision 2, of the Act, prior to issuing revenue bonds under � must prepare a housing program in accordance with the terms of Section 462C.03 c heazing on the housing program after one publication of notice in a newspaper at least fifteen (15) days before the hearing and on or before the day on which i �ilished, the Authority must submit the housing program to the Metropolitan WIIEREAS, Section 147(fl ofthe ter promulgated thereunder, requires that pnor o income for federal income tax purposes under public hearing thereon preceded by publication of the Code and applicable regulations) in a ne public hearing date; and ial Revenue Code of 1986, as amended (the "Code"), and regulations the issuance of bonds the intent of which is not included in gross e Code, the Ciry Council must approve the bonds after conducting a o a notice of public heazing (in the form required by Section 147( fl vsp er of general circulation at least fourteen (14) days prior to the 51 WIIEREAS, pursuant to the Act and the Code, a no ' e of public heazing in the form required by the Act and 52 Section 147( fl of the Code was published in the Pioneer Press, newspaper of general circulation in the City, and in 53 the Legat Ledger, the official newspaper of the City, each on a ate at least fifteen (15) days prior to the public 54 hearing. 55 NOW, THEREFORE, BE IT RESOLVED BY THE CITY CO IL OF THE CITY OF SAINT PAUL: 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 1. Public Hearin¢. The City Council conducted a public heari on Wednesday, June 20, 2007, with respect to the proposal to undertake and finance the Project and the issuanc of the Bonds, as requested by the Company. A notice of the hearing, in the form required by the Act and Section once in the official newspaper of the Authority and in a newspaper of general ci (15) days prior to the date of the public heazing. of the Code, was published n in the City at least fifteen 2. Preliminarv Approval. The City hereby grants preliminary approval to e issuance of the Series 2007A Bonds for the purposes referenced in this resolution and in an aggregate principal ount of approximately $3,300,000, and hereby grants preliminary approval to the issuance of the Series 2007B ond for the purposes referenced in this resolution and in an aggregate principal amount of approximately $3,30 000, subject to the mutual agreement of the Authority, the Company, and the initial purchaser(s) of the Bonds as the details of the Bonds and provisions for their payment. In all events, it is understood, however, that the Bonds sh 1 not constitute a pecuniary liability or charge, lien, or encumbrance, legal or equitable, upon any funds, assets, taxin o other property of the Authority or of the City except the Authority's interest in the Loan Agreements; d when, as, and if issued, shall recite in substance that the Bonds, including interest thereon, aze payable the revenues received from the Loan Agreements and other properry pledged to the payment thereof, an constitute general or moral obligations of the Authority or of the City. The Bonds shafl not constitute a Authority or the City within the meaning of any constitutional or statutory limitation. The holder(s) of shall never have the right to compel any exercise of the taacing power of the Authority or the City wers, or any the Bonds, olely from shall not de t of the to va� the 47-s�� 74 o tanding principal of the Bonds, or the interest thereon or to enforce payment thereof against any property of the 75 Aut rity or the CiTy. 76 3. Findin¢s. It is hereby found and determined that the Project furthers the purposes set forth in the 77 Act and the P�ect constitutes a"multifamily housing developmenY' within the meaning of the Act. 78 4. Au ori to Undertake the Proiect. The City Councii of the City hereby directs and authorizes the 79 Authority to carry out e Housing Program to finance the Project and to issue the Bonds as revenue bonds under the 80 terms and conditions of Act. 81 5. Other Actions\ 82 and all actions authorized by th 83 be appropriate by the Authority. 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 100 101 102 103 104 105 106 City Council of the CiTy here6y directs and authorizes the Authority to take any t to cazry out the Housing Progam with respect to the Project as determined to 6. Fees and Costs. The Co any and the City in connection with the Bonds o tr is carried to completion, and whether or not : Company shall also comply with the Authority Company shall comply with all requirements Understanding (the "Memorandum of Understa shall pay to the Authority any and all costs incuned by the Authority e financing of the Project, whether or not the financing of the Project e Bonds or operative instruments are executed and delivered. The a inistrative fee policies respecting such revenue bond issues. The imp ed upon the Company by the terms of the Memorandum of �ding" between the Authority and the Company. ' 7. No Commihnent to Issue Bonds. The ad tio firm commitment that the Authority will issue the Bonds as the right in its sole discretion to withdraw from participation Bonds in an amount less that the amount referred to herein, sho� determine not to issue the Bonds, or to issue the Bonds in an paragraph 2 hereof, or should the parties to the transaction conditions of any of the documents required for the transaction. n of this resolution does not constitute a guaranty or �uested by the Company. The Authority shall retain d accordingly not to issue the Bonds, or issue the al he Autharity at any time prior to issuance thereof amo t more or less than the amount referred to in be un le to reach agreement as to the terms and 8. Reimbursement. The United States Department of the Tre ury has promulgated final regulations governing the use of the proceeds of tax-exempt bonds, all or a portion of ich aze to be used to reimburse the Authority or a borrower from the Authority for project expenditures paid prior to e date of issuance of such bonds. Those regulations, Treasury Regulations, Section 1.150-2 (the "Regulations"), re uire that the Authority adopt a statement of official intent to reimburse an original expenditure not later than sixty 0) days afrer payment of the original expenditure. The Regulations also generally require that the bonds be is ed and the reimbursement allocation made from the proceeds of the bonds occur within eighteen (18) months after e later of: (i) the date the expenditure is paid; or (ii) the date the project is placed in service or abandoned, but in no ent more than three (3) years after the date the expenditure is paid. The Regulations generally permit reimbursement f capital expenditures and costs of issuance of the bonds. 107 The City reasonably expects the Authority to reimburse the Company for the expenditures de for costs of ] 08 the Project from the proceeds of the Bonds after the date of payment of a portion of the costs of th Project. All 109 reimbursed expenditures shall be capital expenditures, a cost of issuance of the Bonds, or other expendi res eligible 110 for reimbursement under Section 1.150-2(d)(3) of the Regulations and also qualifying expenditures under e Act. I 11 Based on representations by the Company, no expenditures for the Project have been made by the Co pany I 12 more than sixty (60) days before the date of adoption of this resolution other than: (i) expenditures to be pa� or 113 reimbursed from sources other than the Bonds; (ii) expenditures permitted to be reimbursed under prior regulah s I 14 pursuant to the transitional provision contained in Section 1.150-2(j)(2)(i)(B) of the Regulations; (iii) expenditur 115 constituting preliminary expenditures within the meaning of SecYion 1.150-2(fj(2) of the Regulations; or (iv) ll6 expenditures in a"de minimus" amount (as defined in Secrion 1.150-2(fl(1) ofthe Regulations). �� s3i 117 118 119 120 121 122 Based on representations by the Company, as of the date hereof, there are no funds of the Company reserve allocated on a long term-basis, or otherwise set aside (or reasonably expected to be reserved, allocated on a long-te basis, or otherwise set aside) to provide permanent financing for the expenditures related to the Project to be finance om proceeds of the Bonds, other than pursuant to the issuance of the Bonds. This resolution, therefore, is determined be consistent with the budgetary and financial circumstances of the Company as they exist or aze reasonably fores able on the date hereof. 123 9. Men 124 with the Authority is 125 10. Housins 126 "Housing Program") and 127 ratified and approved The Memorandum of Understanding in the executed form on file The housing program prepared in accordance with the terms of the Act (the to the Metropolitan Council for its review prior to the date hereof, is hereby 128 11. Bond Counsei. Kenn y& Graven, Chartered is hereby designated as bond counsel with respect to 129 the Bonds and is hereby authorized to ke all actions necessary to prepare necessary documents to permit the 130 issuance of the Bonds and to submit such cuments to the Board of the Authority for its final approval. Adopted by the City Council of the City o�Saint Paul, Minnesota on this 20th day of June, 2007. 131 Adoption Certified by Council Secretary By: Approved by Mayor: Date ratified and approved. By: Form By: Form By: for Office of Financial Services _�� � Adopted by Council: Date D�-s�i � Green Sheet Green Sheet Green Sheet Green Sheet Green Sheet Green Sheet � PE �P�� —.—� Contac[ Pe� Dan Ba 6-6685 Must ee on Doc.Type: Economic Development & Phone: '13-JUN-07 y Assign Number Fof Routing Order E-DOCUment Required: N Document ConWCt: ConWCt Phone: ToWI # of Signature Pages W/$ TRANSAC Signature for the City Councii Resoli the Winnipeg Project located on Rice Locafions for Signature) Green Sheet NO: 3040771 0 lannio & Economic Develo me 1 lanuin & Economic Develo me De artment Director � 2 'ty Attomey CYLV A�_ ttoruev �/ � 3 mancialServices Director i 4 a or's Offim Ma or/Assis[ant authorizing approval for the Multi Family Revenue Bonds in the amount of $6,600,Op0.for Planning Commission 1. Has ihis persoNfirm ever worked under a coMract for tfiis depaAment? CIB Committee Yes No Civil SeNice Commission . Has this person/firm ever been a city employee? Yes No 3. es this personlfirm possess a skill not nortnally possessed by any Yes Explain answers on separate sheet and attach to green sheet Initiating Probiem, Issues, Opportunity (Who, What, When, Where, Why): Winnipeg Apartment LP has applied for multifamily Revenue Bond to constnzct a 56 unit apartment complex on Rice S Veet. Advantages If Approved: ' Conshuct of an affordable 56 unit aparhnent complex in the North End of Saint Paul. Disadvantages If Approved: None Disadvantages If Not AppYOVed: The projec[ wi] not be completed. ivcaiiamwrnvi_ —��� �@��""—!� Transaction: Funding source: Multi-Family Revenue Bonds Financial I nformation: (EZplain) - CosVRevenue Budgeted: rJ Activity Number: June 13, 2007 1:07 PM Page 1 �{�,':� ��. . � �.rR��i JU4� 13 20� O�-s�i CITY COUNCIL OF THE CITY OF SAINT PAUL, MINNESOTA REPORT TO THE COiJNCILMEMBERS DATE June 20, 2007 �G��� NOTICE OF A PUBLIC HEARING WITH RESPECT TO THE FINANCING OF A MULTIFAMILY HOUSING DEVELOPMENT FOR THE BENEFIT OF WINNIPEG APARTMENTS LIMITED PARTNERSHIP UNDER M{NNESOTA STATUTES, CHAPTER 462C, AS AMENDED, DISTRICT 6 PURPOSE The City of Saint Paul has received a request from Winnipeg Apartments Limited Partnership, a Minnesota limited partnership (the `Borrower") comprised of Legacy Management and Development Corporation, to assist in the financing of the Winnipeg Apartments, a 56 unit affordable rental housing project with 6,000 square foot of commercial space on the first floor (the "Project"), located in District 6 COUNCIL ACTION A resolution was submitted for the City Councilmembers consideration: 1. Final approval of a resolution authorizing the issuance of Multifamily Housing Revenue Bonds in the amount of approximately $6,600,000 for the Winnipeg Apartments project. 2. 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 Authorize the Executive Director of the HRA to enter into a Memorandum of Understanding (MOU) with Winnipeg Aparhnents Limited Partnership and to wark towazds 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 Retain John C. Utley of Kennedy & Graven 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 HR4, City Attorney, Owner, and purchasers of the proposed Bonds; and A�proval of the inducement resolution and execution of the Memorandum of Understandin� does not require or obligate the Citv or HRA to issue bonds or cause anV action aEainst the Citv or HRA arisin� from any failure or refusal bV the City or HRA to a�prove the uroiect or issuance of the Bonds. D� 53i With respect to multifamily housing bonds, Section 72.04 of Chapter 72 of the City's Administrauve Code provides that the I-IRA be designated to exercise on behalf of the City the powers conferred by Minnesota Statutes 462C (housing progams 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. HOUSING PROJECT The Project consists of a two - three story apartment building containing 56 affordable rental housing units built above two 3,000 sq. ft. commercial spaces. Amenities include: covered parking, elevator, laundry facility and common gathering space. The Project will comply with the City's rental affordability requirement of 10% of the units affordabie at 30% of inedian income and 10% of the units affordable at 50% of inedian income. The project will also comply with the City's "Green Policy". FINANCING The Project will be funded by a combination of multifamily t� exempt bonds, federal Low Income Housing Tas Credit Program (4%), Minnesota Housing Finance Agency, Family Housing Fund and Metropolitan Council, and Community Development Block Grant program. The tax credits are not from the City's annual allocation but aze 4% credits eligible for use with tax exempt bonds (the maaiimuxn rents must be affordable at no more than 60 percent of area median income.) The Department of Housing and Urban Development is processing an application for HUD insurance to enhance the bonds. The Housing and Redevelopment Authority of the City of Saint Paul (HRA) is asked to provide gap financing of approximately $2,700,000 from the sale of taxable bonds from the Scattered Site Tax Increment Financing District No.lA, Invest Saint Paul STAR Bopnd funds and Community Development Block Grant fixnds. The estimated Total Development Cost is $12,257,617. Tax Exemnt Bonds The bonds will be issued in Series A and Series B. The Series A bond (H[JD insured) wiil be the first position secured long term debt and will be repaid from project cash. The Series B bond will be short term and will be repaid from equity payments to be made by the limited partners (4% low income housing tax credit investors). It is necessary to issue two bonds in order to meet the 50 °/u test which requires the use of tax exempt bonds to pay a minimum of 50% of pro}ect costs. (See attached Preliminary Bond Term Sheet). 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 Winnipeg Apartments will be owned by a for-profit entity, the proposed bonds will count as part of the City's entitlement bond allocation from Year 2007. D�- S.�/ FEES The non-refundable application fee of $5,000 has been paid. Should the Bonds be issued, the HRA wiil receive an administrative fee at closing equal to one percent of the principal balance of the Bonds. Every year thereafter that the Bonds remain outstanding the IIRA will receive an annual administrative fee equal to one-tenth of one percent of the outstanding principal balance of the Bonds. BUSINESS PROFILE Legacy Management & Development Corporation was founded in 1970 to develop quality housing for specific segxnents of the community, i.e., seniors, families and handicapped individuals. Currently, they have developed or manage more than 1,500 housing units in Minnesota. Housing units consist of subsidized, tax credit and mazket rate, ranging from scattered site, to small and lazge apartment and townhome communities. SUPPORT The project received support from the District 6 Planning Council. PUBLIC PURPOSE The foliowing public purposes will be met: Project will provide affordable housing opportunities for persons at 60%, 50% and 30% of inedian 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. PUBLIC HEARING NOTICE The public hearing notice has been published in the Pioneer Press on May 31, 2007. A public hearing notice was also published in the Legal Ledger on May 31, 2007. RECOMMENDATION The staff recommends the City Council consider the attached resolutions which approve the following actions: 1. Final approval of a resolution authorizing the issuance of Multifamily Housing Revenue Bonds in the amount of approximately $6,800,000 for the Winnipeg Apartments project. Authorize City staff to prepaze a Housing Program for financing the Project prepared in accordance with the provisions of Minnesota Statutes, section 462C.03; and D� �.�� 3. Authorize the Executive Director of the IIRA to enter into a Memorandum of Understanding (MOU) with Winnipeg Apartments Limited Parinership and to work towazds possible issuance of the Bonds. The MOU also stipulates the terms and condirions for issuance of the Bonds should the IIRA decide to issue the Bonds; and 4. Retain John C. Utley of Kennedy & Crraven as bond counsel for said Bonds and authorize them to assist in the prepazation and review of necessary documents relating to the Project and Housing Program and consult with the City Staff; HRA Staff, City Attorney, Owner, and purchasers of the proposed Bonds. Sponsored By: Councilmember Helgen Attachments: City Council Resolutions Multi-Family Rental Housing Program Elevation Drawing and Site Plan Report prepazed by: Daniel Bayers, (266-6685) /�7-�3/ HOi3SING AND REDEVELOPMENT AUTHORITY OF'THE CITY OF SAINT PAUL, NIINNESOTA HOUSING PROGRAM FOR A MUL1'IFAMILY HOUSING DEVELOPMENT Pursuant to Minnesota Statutes, Chapter 462C (the "AcY'), the Housing and Redevelopment Authority of the City of Saint Paul, Minnesota (the "Authority") is authorized to develop and administer programs to finance the acquisition of multifamily housing developments under the circumstances and within the ]imitations set forth in the Act. Minnesota Statutes, Section 462C.07 provides that such programs for multifamily housing developments may be financed by revenue bonds issued by the Authority. The Authority has received a proposal that it approve a program providing for the acquisition, construction and equipping of a 56-unit multifamily residential rental housing development and related improvements, including a commercial space of approximately 6,000 squaze feet (the "ProjecP'), to be located at 852-886 Rice Street in the City of Saint Paul (the "City"). The acquisition of the Project is to be funded in part through the issuance of a series of revenue bonds in an aggregate principal amount not expected to exceed $3,400,000 to be issued by the Authority (the `Bonds"), the proceeds of which will be loaned to Winnipeg Apartrnents Limited Partnership, a Minnesota limited parinership (the "Company"). In addition, the acquisition, construction and equipping of the Project is to be funded in part through the issuance of a revenue note in an aggregate principal amount not expected to exceed $3,400,000 to be issued by the Authority (the "Note"), the proceeds of which will be loaned to the Company. The Company will operate the Project or will retain a manager to operate the Project. It is expected that dwelling units of the Project will be subject to occupancy limits imposed by federal income tax law and regulations such that only persons and families within designated income limits will be permitted to occupy such units. The Authority, in establishing this multifamily housing program (the "Housing Program"), has considered the information contained in the Authority's comprehensive plaa The Project will be acquired, constructed, and equipped in accordance with the requirements of Subdivisions 1 and 2 of Section 462C,05 of the Act. Standards and Requirements Relatingto the Financine of the Project Pursuant to this Housing Pro� Section A. Definitions. The following terms used in this Housing Program shall have the following meanings, respectively: "AcY' shaD mean Minnesota Statutes, Chapter 462C, as currently in effect and as the same may be amended from time to time. . "Authority" shall mean the Housing and Redevelopment Authority of the City of Saint Paul, Minnesota "Bonds" shall mean the revenue bonds, designated as the Multifamily Housing Revenue Bonds, Series 2007 (GNMA Collateralized Mortgage Loan — Winnipeg Apartments Project), to be issued by the Authority to finance the Project, fixnd one or more reserves, and pay the costs of issuing the Bonds and the Note. "City" shall mean the City of Saint Paul, Minnesota. ��-s�i "Company" shall mean Winnipeg Apartments Limited Partnership, a Minnesota limited partnership. "Housing Program" shall mean this housing program for the financing of the Project pursuant to the Act. "Housing UniY' shall mean any one of the dwelling units, each located in the Project, occupied by one person or family, and containing complete living facilities. "Land" shall mean the real property upon which the Project is situated. "Note" shall mean the revenue obligation to be designated as the Multifamily Housing Revenue Bond (Winnipeg Apartments Project), Series 2007B, to be issued by the Authority to finance the Project and pay the cots of issuing the Bonds and the Note. "ProjecY' shall mean the 56-unit multifamily residential rental housing development and related improvements, including a cammercial space of approximately 6,��0 square feet, to be acquired, constructed, and equipped by the Company. Section B. Program For Financing the Project. It is proposed that the Aut}iority establish this Housing Program to provide financing for the acquisition, construction and equipping of the Project at a cost and upon such other terms and conditions as are set forth herein and as may be agreed upon in writing between the Authority, the initial purchaser of the Bonds, and the Company. The Authority expects to issue the Bonds and the Note as soon as the terms of the Bonds and the Note have been agreed upon by the Authority, the Company, the initial purchaser of the Bonds, and the initial purchaser of the Note. The proceeds of the Bonds and the Note will be loaned to the Company to finance the acquisition, construction, and equipping of the Project, to fund required reserves and to pay the costs of issuing the Bonds and the Note. It is expected that a trustee will be appointed by the Authoriry to provide for the payment of principal and interest on the Bonds. It is expected that the Note will be sold to a single institutional purchaser and all principal and interest payments on the Note will be paid directly to the owner of the Note. It is anticipated that the Bonds will have a maturity not expected to exceed forty-five (45) years or less and will bear interest at a vaziable rate or at fixed rates consistent with the market at the time of issuance. It is anticipated that the Note will have a maturity not expected to exceed ten (10) years or less and will bear interest at a variable rate or at fixed rates consistent with the market at the time of issuance. The Authority will hire no additional staff for the administration of the Housing Program. Insofar as the Authority will be contracting with underwriters, legal counset, bond counsel, the trustee, and others, all of whom will be reimbursed from bond proceeds and revenues generated by the Housing Program, no administrative costs will be paid from the Authority's budget or the City's budget with respect to this Housing Program. Neither the Bonds nor the Note will be general or moral obligations of the Authority, but are to be paid only from properties pledged to the payment thereof, which may include additional security such as additional collateral, insurance, a letter of credit, or other credit enhancement. Section C. Standazds and Re uirements Relating to the Financine of the Project Pursuant to the Housine Program. The following standards and requirements shall apply with respect to the operation of the Project by the Company pursuant to this Housing Program: (1) Substantially all of the proceeds of the sale of the Bonds and the Note will be applied to the acquisition, construction, and equipping of the Project, the payment of the costs of D7-531 issuing the Bonds, and the funding of appropriate reserves. The proceeds of the Bonds will be made available to the Company pursuant to the teans of a loan agreement (or other revenue agreement) which will include certain covenants to be ma8e by the Company to the Authority regarding the use of proceeds and the character and use of the Project. The proceeds of the Note will be made available to the Company. pursuant to the terms of a loan agreement (or other revenue agreement) which will include certain covenants to be made by the Company to the Authority regazding the use of proceeds and the chazacter and use of the Project. (2) The Project qualifies as a"multifamily housing development," within the meaning of the Act, since it is comprised of an apartment facility, the units of which are rented to persons or families for use as residences. (3) The Company, and any subsequent owner of the Project, will not arbitrarily reject an application from a proposed tenant because of race, color, creed, religion, national origin, se� mazital status, or status with regard to public assistance or disability. (4) It is expected that: (i) twenty percent (20%) of the Housing Units will be held for occupancy by families or individuals with gross income not in excess of fifiy percent (50%) of median family income, adjusted for family size; or (ii) forty percent (40%) of the Housing Units will be held for occupancy by families or individuals with gross income not in excess of sixty percent (60%) of inedian family income, adjusted for family size. This set aside will satisfy the low-income occupancy requirements of Section 462C.05, subdivision 2, of the Act. (5) The unit mix, size of units, and proposed monthly rents per unit are shown on the following table: Unit Type IBR 1BR 1BR 2BR 2BR 2BR 3BR 3BR Number of Units 21 3 22 Squaze Footage of Units Proposed Monthly Rent Per Unit Total � 655 655 655 892 892 892 1,409 1,409 $190 $705 $705 $222 $840 $840 $252 $967 Subsection D. Evidence of Compliance. The Authority may require from the Company, at or before the issuance of the Bonds and the Note, evidence satisfactory to the Authority of compliance with the standazds and requirements for financing established by the Authority, as set forth herein; and in connection therewith, the Authority or its representatives may inspect the relevant books and rewrds of the Company in order to confirm such ability, intention and compliance. In addition, the Authority may periodically require certification from the Company concerning continuing compliance with various aspects of this Housing Program. Subsection E. lssuance of Bonds. To finance the Housing Program authorized by this Section, the Authority will by resolution authorize, issue and sell (i) the Bonds in an aggregate principal amount not to exceed $3,40Q000; and (ii) the Note in an aggregate principal amount not to exceed $3,400,000. O�-s� � The Bonds and the Note will be issued pursuant to Section 462CA7, subdivision 1, of the Act, and will be payable primarily from the revenues of the Housing Program authorized by this Section. The costs of the Project, including costs of issuance of the Bonds and the Note and required reserve funds, are presentiy expected to be in excess of the principal amount of the Bonds and the Note. It is expected that the Company will contribute to the Project the difFerence between the total cosu of the Project and the principal amount of the Bonds and the Note available to finance the Project. The costs of the Project may change between the date of prepazation of this Housing Program and the date of issuance of the Bonds and the Note. The Bonds and the Note are expected to be issued in the third calendaz quarter of 2007. Subsection F. Severabilitu. The provisions of this Housing Program ate severable and if any of its provisions, sentences, clauses or paragraphs shall be held unconstitutional, contrary to statute, exceeding the authority of the Authority or otherwise illegal or inoperative by any court of competent jurisdiction, the decision of such court shall not affect or impair any of the remaining provisions. Subsection G. Amendment. The Authority shall not amend this Housing Program, while Bonds authorized hereby are outstanding, to the detriment of the holders of such Bonds. Subsection H. State Ceiling. The Authority and the City will allocate a portion of fhe "entitlement issuer allocation" made to the City pursuant to Minnesota Statutes, Section 474A.03, subdivision 2a, of the annual volume cap for private activity bonds pursuant to Section 146 of the Internal Revenue Code of 1986, as amended, and Minnesota Statutes, Chapter 474A, as amended (the "Allocation AcY"). Pursuant to the terms and requirements of the Allocation Act (i) the Project will meet the requirements of Section 142(d) of the Internal Revenue Code of 1986, as amended (the "Code"), regarding the incomes of the occupants of the Project; (ii) the masimum rent for at least twenty percent (20%) of the units in the Project will not exceed the area fair mazket rent or exception fair market rents for existing housing, if applicable, as estabiished by the United States Department of Housing and Urban Development (iii) the Company wiil enter into a binding agreement with the Minnesota Housing Finance Agency under which the Company is obligated to extend any existing low-income affordability restrictions and any contract or agreement for rental assistance payments for the masimum term permitted, including any renewals thereof; and (iv) the Minnesota Housing Finance Agency will certify that the Project reserves will be maintained on the date of issuance of the Bonds and budgeted in future years at the lesser of: (A) the level described in Minnesota Rules, part A900.0010, subpart 7, item A, subitem (2), effective May 1, 1997; or (B) the level of project reserves available priar to the issuance o£ the Bonds and the Note, provided that additional money is available to accomplish repairs and replacements needed at the time of the issuance of the Bonds and the Note. Prior to the issuance of the Bonds and the Note, the Company will enter into a fifteen-year agreement with the Authority that specifies the maximum rental rates of the rent-restricted units in the Project and the income levels of the residents of the Project occupying the income-restricted units. Such rental rates and income levels must be within the limitations established in accordance with the preceding paragraph. The Company will be required to annually certify to the Authority over the term of the agreement that the rental rates for the rent-restricted units are within the limitations under the preceding paragraph. The Authority may request individual certification of the income of residents of the income- restricted units of the Project. The Minnesota Department of Finance may request from the Authority a copy of the annual certification prepared by the Company. The Minnesota Department of Finance may require the Authority to request individual certification of all residents of the income-restricted units of the Project. 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