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97-1562�,; '-. ' .-. - � RESOLUTION CITY OF SAINT PAUL, MINNESOTA Presenied By Referred To Committee: Date 4'1 F1 C! 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 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 TFiE PREPARATION OF NECESSARY DOCUMENTS ANS) MATERIALS IN CONNECTIOI3 WITH THE SAID PROJECT AND PROGRAM (HAMPDEN SQUARE 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 beha3.f of a city the powers conferred by the Act, the power to issue revenue bonds to finance 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 "ARA") 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 "HRA"), has received a proposal from Boisclair Corporation and Robert Boisclair ("BOisclair"), that the HRA undertake a program (the "Housing Program") to finance a Project hereinafter described, through the issuance of revenue bonds or obligations in one or more series (collectively, the "Bonds") pursuant to the Act; and 372009.1 counci� Fi�e # 9� � L1 Green Sheet # �� /� " � /� : ' f i i � . � � � - � -� a�-� s4�- (d) The Project to be financed by the Bonds is the acquisition and rehabilitation of an existing 86 unit multifamily rental housing facility located at 2333 Long Avenue in the City (the "Project"), and will result in the rehabilitation of rental housing £acilities for low and moderate income persons within the community; and (e) The proposal calls for the HRA to loan the proceeds realized upon the sale of the Bonds to a limited liability company or similar legal entity to be formed by Boisclair ("the Company) pursuant to a revenue agreement or agreements wherein the Company 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; and (f) The City desires to facilitate the rehabilitation of multifamily rental housing facilities within the City; encourage the rehabilitation of housing facilities designed for occupancy primarily by low and moderate income persons; and the Project will assist the City in achieving these objectives; and (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 indirectly benefit financially from the Project; (i) The Company has submitted to the HRA a form of Memorandum of Understanding executed by the Company, expressing certain understandings by and between the HRA and the Company pertaining to the Project, and the tinancing therefor. NOW THEREFORE, BE IT RESOLVED by the City Council of the City Of Saint Paul, Minnesota, as follows: 1. The City hereby gives preliminary approval to the proposal of the Company that the City undertake the Project, described above, and the program of financing therefor, pursuant to Minnesota Statutes, Chapter 462C, consisting of the acquisition and rehabilitation of an existing multi-family rental housing facility within the City pursuant to the Company's specifications and to a revenue agreement between the HRA and the Company 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 372009.7 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 �l�-i s G �" on the Bonds in the total principal amount of approximately $2,925,000 to be issued pursuant to the Act to finance the acquisition and rehabilitation o£ the Project; and said agreement may also provide for the entire interest of the Company 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 consti- tutes a multi-family housing development within the meaning of subdivision 5 of Section 462C.02 of the Act; that the ProjeCt will be primarily occupied by persons of low or moderate income, the availability of the financing under the Act and the willingness of the City to furnish such financing will be a substantial inducement to the Company to undertake the Project, and that the effect of the Project, if undertaken, will be to encourage the provision of rehabilitated 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 revenue bonds, is hereby given preliminary approval by the City subject to final approval by the HRA, the Company and the purchasers of the Bonds as to ultimate details of the financing 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 housing revenue bonds to finance the Project and to take all actions necessary or desirable in connection therewith, and no further approval or authorization of the City shall be required; provided that the HRA may, in its discretion, authorize the Board to issue the Bonds and to implement the pragram approved hereby, and the City hereby consents thereto; 5. The Developer has agreed and it is hereby determined that any and all costs incurred by the City or the HRA in connection with the financing of the Project whether or not the Project is carried to completion and whether or not approved by HRA will be paid by the Company; 6. Briggs and Morgan, Professional Association, acting as bond counsel, and such investment bankers as may be selected by Company, with the consent of the HRA, are authorized to assist in the preparation and review of necessary documents relating to the Project and the financing program therefor, to 372009.1 . � . _ . a�-�s��- consult with the City Attorney, Company and purchasers of the Bonds (or trustee for the purchasers oE 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 HRA Por final approval; 7. Nothing in this Resolution or the documents prepared pursuant hereto shall authorize the expendiCure of any municipal funds on the Project other than the revenues derived from the Project or otherwise granted to the City or the HRA. The Bonds sha11 not constitute a charge, lien or encumbrance, legal or equitable, upon any property or funds of the City or the HRA except the revenue and proceeds pledged to the payment thereof, nor shall the City or the HRA be subject to any liability thereon. The holder of the Bonds shall never have the right to compel any exercise of the taxing power of Che 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 ARA. The Bonds shall 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 or HRA within the meaning of any constitutional or statutory limitation. 8. In anticipation of the issuance of the Bonds to finance all or a portion of the Project, and in order that completion of the Project wi11 not be unduly delayed when approved, the Developer 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 Developer considers necessary, including the use of interim, short-term financing, subject to reimbursement from the proceeds of the Bonds if any when delivered but otherwise without liability on the part of the City or the HRA. 372009.1 1 2 3 4 5 6 7 Adoption Certified by Council Secretary By• Approved by Mayor: Date L �93- By - � q �_�s6z- 9. The Executive Director of the HItA is hereby authorized to execute a Memorandum of Understanding with respect to the Project in substantially the fosm on file with the HRA. Adopted by the City Council of the City of Saint Paul, Minnesota this day of December, 1997. Requested by Department of: � • • •�s �L ` / � / ..�//� .,%�L Form A proved b ity Attorney By . iS.t. �• . � Mayor for Submission to 372009.1 Adopted by Council: Date ��.�_�� q�-�s��.. ��s ��. �� fc�-�� 2 TOTAL # OF SIGNATURE ACTION RE�UE57ED: f � s�i�/f `z�w� s� � DEPAR7MENTDI „Z CRYATTORNEY FOR O gUDGETDIRECI _ n MAYOR (OR ASS (CLIP ALL LOCATIONS FOR SIGNATURE) �Nmnvonre uGfiYCAUNGIL _ � qTY CLERK _ � FIN. & MGT, SERVICES Dlfl. � _ h c+h�G� /'-G- ff r(�� L(JYri �/'�'/ld `a%�t > i'�ir/�- �d�-� ,�,-,,er�.�..�i x� � � ��>��', lJ, �-�1�� ti[- Approve (A) or Re�ec[ (R) _ PLANNING CqMMISSION _ CIVIL SERVICE COMMISSION CIB COMMITfEE � STAFF _ _ 01STqICTCOUFiT _ SUPPORTS WHICH COUNCIL OBJECTIVE? �- �� , �a ,« ��, �o�� PEHSONAL SERVICE CONTRACTS MUST ANSWER THE FOLLOWING QUESTIONS: 7. Hes this perSOnRirm ever worked under a coMract for thfs tlepartment? YES NO 2. Has this personfirm ever been a ciry employee? YES NO 3. Does this personttrtm possess a skill not normally possessetl by any current ciry emplqree? YES NO Explain all yes answers on separete sheet and attech to green sheet � RTU TV�Who,Whet. On.Where,Why): � �""� s � �� -.� �- S, � �� ,�.�� w � � ��-�� a-� � �� i� ��'`�� PP� �.....___.. �.,��/ r� ��-�, `�s � r.� � ��-�� - �f ,l�`��` �� re�� .r � G�/� � nc,�.�e /�� `� � G�� : IFAPPROVED: ,f � yJ � �v�i(o `_ DVANTAGES IF NOTAPPROVED y�e �>�oJ° e� �D / � Gr-ur�-� « tir'. `l .�-��'�i� y�,y,��e C!��e. �� r� , �`i� i°�.tid�.•�l E.�� si DEC i 1 1997 TOTAL AMOUNT OF TRANSACTION $ COST/REVENUE BUDGETED (CIRCLEANE)— "-�—�—NO------ ----"� FUNDIfdG SOURCE �� "��`�"""'L �" °- —� ACTIVITV NUMBEq iINANCIAL INFORHSATION: (EXPLAIN)� � �� `�� Q ^ / / j / // �1�� N��L q�-15��' CITY COUNCIL OF THE CITY OF SAINT PAUL, MINNESOTA REPORT TO THE CITY COUNCIL DATE: December 22, 1997 REGARDING: PUBLIC HEARING - Resolution Reciting a Proposal for Financing a Multi-family Rental Housing Development Project and Authorizing the Aousing and Redevelopment Authority of the City of Saint Paul to Exercise the Powers Granted in Minnesota Statutes, Sections 462C.01 to 462C.08 PURPOSE The Housing and Redevelopment Authority of the City of Saint Paul (HRA) has received an application from the Boisclair Corporation, Mr. Robert Boisclair (Owner), requesting the HRA to issue up to $2,925,000 of Ta�c Exempt Multifamily Revenue Bonds (Bonds) for the purpose of acquiring and rehabilitating the Hampton Squaze Apartments (Project) located on 2333 Long Avenue. 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 Memorandum of Understanding (MOU) with Mr. Robert Boisclair, Boisclair Corporation, to work towards 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 2. Authorize the HRA to issue up to $2,925,000 of ta�c exempt, multifamily rental revenue bonds for the Project; and Approve a Housing Program, a copy of which is attached for financing the project prepared in accordance with the provisions of Minnesota Statutes, Section 462C.03; and 4. Retain Briggs and Morgan as bond counsei and Piper Jaffray, Inc. as investment banker for said Bonds and authorize them to assist in the preparation and review of necessazy documents relating to the Project and Housing Program and consult with the HRA, Ciry Attorney, Owner, and purchasers of the proposed Bonds. Approval of the inducement resolution and execution of the Memorandum of Understanding does not require or obligate the City or HRA to issue bonds or cause any K: SHARED\TMS\ HSAC C2. RPT Q�-\5�1 action against the City or FIRA arising from any failure or refusal by the City or HRA to approve the Project or issuance of the Bonds. With respect to the multifamily rental housing bonds, Section 72.04 of Chapter 72 of the Ciry's Administrative Code provides that the HRA be designated to exercise on behalf of the City the powers conferred by the Minnesota Statutes 462C (housing programs and revenue bonds) but only unless directed and authorized to do so by resolution adopted by the Ciry Council. Thus the reason, this proposal is uutiated before the City Council rather than the HRA. Mr. Boisclair will close on the purchase of the property in mid-3anuary, 1998. In order to accomplish this schedule a resolution of the HRA to carryover revenue bonds from its 1997 allocation will also be presented to the HRA at the December 22, 1997 meeting. PROJECT The Project consists of the acquisition and rehabilitation of an existing five building rental apartment/townhouse project known as Hampton Squue Apartments. The Project contains 86 multifamily rental units, consisting of 44- one bedroom apartments units, 38- two bedroom townhouse units, and 4- three bedroom townhouse units. Amenities include basements for the townhouse units with washer/dryer hook-ups, laundry rooms for the apartments, two playgrounds areas, surface parking for 120 cars, and a recreation center for the complex. The Project was constructed in 1973. Current and future apartment unit configurations and contract rent, affordable to persons at approxunately 55 7 of inedian income, are as follows: IZnit Siz��ss.]uare feetl 1-bedroom 632 2-bedroom 6936 3-bedroom 1,140 ('urrent AVg Rent $448 $632 $683 Et�Ss r�e Avg. Rent $464 $621 $689 Occupancy rates have consistently been at approxnnately 97 %. PROPOSED IMPROVEMENTS The planned rehabilitation of $550,000 for the Project consists of siding replacement, facia/trun repair and painting, boiler repiacement, kitchen cabinets/lighting, roof replacement, landscaping, parking resurfacing, exterior lighting, bathroom plumbing upgrade, replacement of carpet in hallways, sidewalklconcrete repair, recreation upgrade, and playground repiacement. Forty-one garages wili also be built. K: SHARED\TMSIHSACC2. RPT q� -�s ��- �varrcnvG The estunated sources and uses of funds statement is as follows: SOURCES USES HRA Revenue Bonds $2,925,000 LIHTC 9�2 TOTAL $3,840,672 ESTIMATED COST OF ISSUANCE Bond Counsel Underwriter's Counsel Issuer's Counsel Trustee Up-front fee Printing Issuer application/service fee Borrower's Counsel Financing fee-DUS FNMA fees Mazketing fee Partner legal Bond puking costs TOTAL FINANCING COSTS Purchase Price Improvements Organizational/legal/fee expense Project Reserve Fund Development Fee Cost of Issuance TOTAL $ 25,000 15,000 10,000 5,000 6,500 14,000 10,000 19,500 4,000 50,000 10,000 25 $194,000 $2,300,000 550,000 216,89� 161,476 419,639 194 000 $3,840,672 The preliminary term sheet for the Bonds is as follows: Issue Amount $2,225,000 $699,381 Term 25 years 30 yeazs Bond Interest Rate 6.74 % 7.5 % Issue Date January 15, 1998 Maturiry Date 1/15/23 1/15/28 Rating "AAA/A-1" variable rate demand bonds for $2,225,000; unrated bonds of $699,381 secured by excess cashflow. Security for Bonds Credit enhancement shall be provided by FNMA in the amount of $2,225,000 for a 15 year term; the credit enhancement shall be in the form of a substituuon direct pay letter of credit with a securiry policy issued by an insurance company having a claims pay rating of at least AA by Standard and Poor's. Placement Method Public Offering Due Diligence Project's financial statements Phase I Environmental audit Structural and mechanical engineer's repoft Borrower Boisclair Corporation to form Bolo L'united Parmership Bond Counsel Briggs and Morgan Underwriter Piper Jaffray, Inc. Tmstee First Trust The Bonds aze suuctured to accommodate a 25 and 30 year, level debt service amortization schedule. The ProjecYs annual income will support a debt service payment ratio of 1.10. Operating expenses appear to be reasonable. K: SHARED\TMS\HSACC2. RPT q'� -1 S (. a- REPAY�NT CAPACTTY The projected Net Operating Income of $240,000 for 1998 appears to be a reasonable projection that will meet a debt service requirements. SUPPORT Mr. Boisclair has communicated the Hampden Square Apartments proposal to District 12, St. Anthony Park Communiry Council. They have asked that Mr. Boisclair meet with the communiry council when the purchase of the project is nearer to completion. FEES The HRA is entitled to a non-refundable appiication fee of $5,000. Should the Bonds be issued, the HRA will receive an administrative fee at closing equal to 0.5% of the principal amount of the Bonds. On the first anniversary date of the Bonds the HRA will receive an additiona10.5% fee. Every year thereafter that the Bonds remain outstanding the HRA will receive an annual administrative fee equal to OA1 % of the outstanding principal balance of the Bonds. BUSINE5S PROFILE The Boisclair Corporation has been in buslness since 1974. They currently manage 918 rental units in the metro area and have approxunately $4.5 million in annual rental income. ADVERSE LENDING Mr. Boisclair does not have an adverse lending relationship with the HRA or the City of Saint Paul. MANDATED REQUIREMENTS AND STANDARDS Pursuant to federal law regarding the issuance of tax-exempt multifamily revenue bonds, at a minunum either 20%o or 40% of the 86 dwelling units of the project must be specifically reserved for tenants whose incomes are not greater than either 50% or 60% of the median family income as adjusted for family size. Because this project will be participating in the federai Low Income Housing Tax Credit Program 100/ of the units will be affordable to persons at or below 60 % of inedian income, therefore the project meets the mandated requirements. LOW INCOME HOUSING TAX CREDITS The Owner has made a request to the HRA for an allocation of low income housing talc credits for the Project. Pursuant to Section 42 of the Internal Revenue Code, tas credits may be awarded outside the City's annual allocation when tax exempt bonds are issued. The Owner has requested tax credits for 100% of the units. In order to obtain the tas credits, the Owner will follow the same application procedures under the City's allocation process which includes final approval by the HRA Board of Commissioners. K SHARED\TMS\HSACC2. RPT q�- ls c �- PUBLIC PURPOSE The following public purposes will be met: 1. The proposed rehabilitation will maintain the value of the project for providing affordable housing in the city. Without bond financing the proposed 'unprovements wouid not be fmancially feasible. 2. The Project will continue to be physically a Class A complex and affordable housing units as part of the federal Low Income Housing Tax Credit Program. 3. The proposed financing and rehabilitation will reasonably assure the long term viability of the Project and be an asset to the sunounding neighborhood. BOND AUTHORITY; ALLOCATION PROCESS The City of Saint Paul received a 1997 entitlement bond allocation from the State of approximately $16,000,000. For the past several years, the entitlement has been used exclusively to issue mortgage revenue bonds or mortgage credit certificates to fmance the City's single family mortgage program. Because the Hampton Square Apartments wiil be owned by a for-profit entity, the proposed bonds will count as part of the City's entitiement bond allocation. However, staff believes that the single family program is amply funded for 1997 and will carry over an allocation of bonds into 1998. Therefore, issuance of rental revenue bonds would not diminish the City's single family program. The Ciry Council will be asked to approve a carry forward of its 1997 entitlement for the Hampden Square Aputments project. Upon adoption of the inducement resolution staff will proceed to finalize the financing of the proposal for preseniation to the HRA and request the HRA to consider adoption of a resolution to issue and sell revenue bonds to finance the project. Questions may be directed to Tom Sanchez, Northwest Quadrant Team of PED at 266-6617. ATTACHMENT City Councii Resolution Sponsored by Counicl member Megard K: SHARED\TMS\HSACC2.RPT �,; '-. ' .-. - � RESOLUTION CITY OF SAINT PAUL, MINNESOTA Presenied By Referred To Committee: Date 4'1 F1 C! 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 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 TFiE PREPARATION OF NECESSARY DOCUMENTS ANS) MATERIALS IN CONNECTIOI3 WITH THE SAID PROJECT AND PROGRAM (HAMPDEN SQUARE 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 beha3.f of a city the powers conferred by the Act, the power to issue revenue bonds to finance 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 "ARA") 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 "HRA"), has received a proposal from Boisclair Corporation and Robert Boisclair ("BOisclair"), that the HRA undertake a program (the "Housing Program") to finance a Project hereinafter described, through the issuance of revenue bonds or obligations in one or more series (collectively, the "Bonds") pursuant to the Act; and 372009.1 counci� Fi�e # 9� � L1 Green Sheet # �� /� " � /� : ' f i i � . � � � - � -� a�-� s4�- (d) The Project to be financed by the Bonds is the acquisition and rehabilitation of an existing 86 unit multifamily rental housing facility located at 2333 Long Avenue in the City (the "Project"), and will result in the rehabilitation of rental housing £acilities for low and moderate income persons within the community; and (e) The proposal calls for the HRA to loan the proceeds realized upon the sale of the Bonds to a limited liability company or similar legal entity to be formed by Boisclair ("the Company) pursuant to a revenue agreement or agreements wherein the Company 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; and (f) The City desires to facilitate the rehabilitation of multifamily rental housing facilities within the City; encourage the rehabilitation of housing facilities designed for occupancy primarily by low and moderate income persons; and the Project will assist the City in achieving these objectives; and (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 indirectly benefit financially from the Project; (i) The Company has submitted to the HRA a form of Memorandum of Understanding executed by the Company, expressing certain understandings by and between the HRA and the Company pertaining to the Project, and the tinancing therefor. NOW THEREFORE, BE IT RESOLVED by the City Council of the City Of Saint Paul, Minnesota, as follows: 1. The City hereby gives preliminary approval to the proposal of the Company that the City undertake the Project, described above, and the program of financing therefor, pursuant to Minnesota Statutes, Chapter 462C, consisting of the acquisition and rehabilitation of an existing multi-family rental housing facility within the City pursuant to the Company's specifications and to a revenue agreement between the HRA and the Company 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 372009.7 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 �l�-i s G �" on the Bonds in the total principal amount of approximately $2,925,000 to be issued pursuant to the Act to finance the acquisition and rehabilitation o£ the Project; and said agreement may also provide for the entire interest of the Company 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 consti- tutes a multi-family housing development within the meaning of subdivision 5 of Section 462C.02 of the Act; that the ProjeCt will be primarily occupied by persons of low or moderate income, the availability of the financing under the Act and the willingness of the City to furnish such financing will be a substantial inducement to the Company to undertake the Project, and that the effect of the Project, if undertaken, will be to encourage the provision of rehabilitated 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 revenue bonds, is hereby given preliminary approval by the City subject to final approval by the HRA, the Company and the purchasers of the Bonds as to ultimate details of the financing 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 housing revenue bonds to finance the Project and to take all actions necessary or desirable in connection therewith, and no further approval or authorization of the City shall be required; provided that the HRA may, in its discretion, authorize the Board to issue the Bonds and to implement the pragram approved hereby, and the City hereby consents thereto; 5. The Developer has agreed and it is hereby determined that any and all costs incurred by the City or the HRA in connection with the financing of the Project whether or not the Project is carried to completion and whether or not approved by HRA will be paid by the Company; 6. Briggs and Morgan, Professional Association, acting as bond counsel, and such investment bankers as may be selected by Company, with the consent of the HRA, are authorized to assist in the preparation and review of necessary documents relating to the Project and the financing program therefor, to 372009.1 . � . _ . a�-�s��- consult with the City Attorney, Company and purchasers of the Bonds (or trustee for the purchasers oE 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 HRA Por final approval; 7. Nothing in this Resolution or the documents prepared pursuant hereto shall authorize the expendiCure of any municipal funds on the Project other than the revenues derived from the Project or otherwise granted to the City or the HRA. The Bonds sha11 not constitute a charge, lien or encumbrance, legal or equitable, upon any property or funds of the City or the HRA except the revenue and proceeds pledged to the payment thereof, nor shall the City or the HRA be subject to any liability thereon. The holder of the Bonds shall never have the right to compel any exercise of the taxing power of Che 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 ARA. The Bonds shall 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 or HRA within the meaning of any constitutional or statutory limitation. 8. In anticipation of the issuance of the Bonds to finance all or a portion of the Project, and in order that completion of the Project wi11 not be unduly delayed when approved, the Developer 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 Developer considers necessary, including the use of interim, short-term financing, subject to reimbursement from the proceeds of the Bonds if any when delivered but otherwise without liability on the part of the City or the HRA. 372009.1 1 2 3 4 5 6 7 Adoption Certified by Council Secretary By• Approved by Mayor: Date L �93- By - � q �_�s6z- 9. The Executive Director of the HItA is hereby authorized to execute a Memorandum of Understanding with respect to the Project in substantially the fosm on file with the HRA. Adopted by the City Council of the City of Saint Paul, Minnesota this day of December, 1997. Requested by Department of: � • • •�s �L ` / � / ..�//� .,%�L Form A proved b ity Attorney By . iS.t. �• . � Mayor for Submission to 372009.1 Adopted by Council: Date ��.�_�� q�-�s��.. ��s ��. �� fc�-�� 2 TOTAL # OF SIGNATURE ACTION RE�UE57ED: f � s�i�/f `z�w� s� � DEPAR7MENTDI „Z CRYATTORNEY FOR O gUDGETDIRECI _ n MAYOR (OR ASS (CLIP ALL LOCATIONS FOR SIGNATURE) �Nmnvonre uGfiYCAUNGIL _ � qTY CLERK _ � FIN. & MGT, SERVICES Dlfl. � _ h c+h�G� /'-G- ff r(�� L(JYri �/'�'/ld `a%�t > i'�ir/�- �d�-� ,�,-,,er�.�..�i x� � � ��>��', lJ, �-�1�� ti[- Approve (A) or Re�ec[ (R) _ PLANNING CqMMISSION _ CIVIL SERVICE COMMISSION CIB COMMITfEE � STAFF _ _ 01STqICTCOUFiT _ SUPPORTS WHICH COUNCIL OBJECTIVE? �- �� , �a ,« ��, �o�� PEHSONAL SERVICE CONTRACTS MUST ANSWER THE FOLLOWING QUESTIONS: 7. Hes this perSOnRirm ever worked under a coMract for thfs tlepartment? YES NO 2. Has this personfirm ever been a ciry employee? YES NO 3. Does this personttrtm possess a skill not normally possessetl by any current ciry emplqree? YES NO Explain all yes answers on separete sheet and attech to green sheet � RTU TV�Who,Whet. On.Where,Why): � �""� s � �� -.� �- S, � �� ,�.�� w � � ��-�� a-� � �� i� ��'`�� PP� �.....___.. �.,��/ r� ��-�, `�s � r.� � ��-�� - �f ,l�`��` �� re�� .r � G�/� � nc,�.�e /�� `� � G�� : IFAPPROVED: ,f � yJ � �v�i(o `_ DVANTAGES IF NOTAPPROVED y�e �>�oJ° e� �D / � Gr-ur�-� « tir'. `l .�-��'�i� y�,y,��e C!��e. �� r� , �`i� i°�.tid�.•�l E.�� si DEC i 1 1997 TOTAL AMOUNT OF TRANSACTION $ COST/REVENUE BUDGETED (CIRCLEANE)— "-�—�—NO------ ----"� FUNDIfdG SOURCE �� "��`�"""'L �" °- —� ACTIVITV NUMBEq iINANCIAL INFORHSATION: (EXPLAIN)� � �� `�� Q ^ / / j / // �1�� N��L q�-15��' CITY COUNCIL OF THE CITY OF SAINT PAUL, MINNESOTA REPORT TO THE CITY COUNCIL DATE: December 22, 1997 REGARDING: PUBLIC HEARING - Resolution Reciting a Proposal for Financing a Multi-family Rental Housing Development Project and Authorizing the Aousing and Redevelopment Authority of the City of Saint Paul to Exercise the Powers Granted in Minnesota Statutes, Sections 462C.01 to 462C.08 PURPOSE The Housing and Redevelopment Authority of the City of Saint Paul (HRA) has received an application from the Boisclair Corporation, Mr. Robert Boisclair (Owner), requesting the HRA to issue up to $2,925,000 of Ta�c Exempt Multifamily Revenue Bonds (Bonds) for the purpose of acquiring and rehabilitating the Hampton Squaze Apartments (Project) located on 2333 Long Avenue. 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 Memorandum of Understanding (MOU) with Mr. Robert Boisclair, Boisclair Corporation, to work towards 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 2. Authorize the HRA to issue up to $2,925,000 of ta�c exempt, multifamily rental revenue bonds for the Project; and Approve a Housing Program, a copy of which is attached for financing the project prepared in accordance with the provisions of Minnesota Statutes, Section 462C.03; and 4. Retain Briggs and Morgan as bond counsei and Piper Jaffray, Inc. as investment banker for said Bonds and authorize them to assist in the preparation and review of necessazy documents relating to the Project and Housing Program and consult with the HRA, Ciry Attorney, Owner, and purchasers of the proposed Bonds. Approval of the inducement resolution and execution of the Memorandum of Understanding does not require or obligate the City or HRA to issue bonds or cause any K: SHARED\TMS\ HSAC C2. RPT Q�-\5�1 action against the City or FIRA arising from any failure or refusal by the City or HRA to approve the Project or issuance of the Bonds. With respect to the multifamily rental housing bonds, Section 72.04 of Chapter 72 of the Ciry's Administrative Code provides that the HRA be designated to exercise on behalf of the City the powers conferred by the Minnesota Statutes 462C (housing programs and revenue bonds) but only unless directed and authorized to do so by resolution adopted by the Ciry Council. Thus the reason, this proposal is uutiated before the City Council rather than the HRA. Mr. Boisclair will close on the purchase of the property in mid-3anuary, 1998. In order to accomplish this schedule a resolution of the HRA to carryover revenue bonds from its 1997 allocation will also be presented to the HRA at the December 22, 1997 meeting. PROJECT The Project consists of the acquisition and rehabilitation of an existing five building rental apartment/townhouse project known as Hampton Squue Apartments. The Project contains 86 multifamily rental units, consisting of 44- one bedroom apartments units, 38- two bedroom townhouse units, and 4- three bedroom townhouse units. Amenities include basements for the townhouse units with washer/dryer hook-ups, laundry rooms for the apartments, two playgrounds areas, surface parking for 120 cars, and a recreation center for the complex. The Project was constructed in 1973. Current and future apartment unit configurations and contract rent, affordable to persons at approxunately 55 7 of inedian income, are as follows: IZnit Siz��ss.]uare feetl 1-bedroom 632 2-bedroom 6936 3-bedroom 1,140 ('urrent AVg Rent $448 $632 $683 Et�Ss r�e Avg. Rent $464 $621 $689 Occupancy rates have consistently been at approxnnately 97 %. PROPOSED IMPROVEMENTS The planned rehabilitation of $550,000 for the Project consists of siding replacement, facia/trun repair and painting, boiler repiacement, kitchen cabinets/lighting, roof replacement, landscaping, parking resurfacing, exterior lighting, bathroom plumbing upgrade, replacement of carpet in hallways, sidewalklconcrete repair, recreation upgrade, and playground repiacement. Forty-one garages wili also be built. K: SHARED\TMSIHSACC2. RPT q� -�s ��- �varrcnvG The estunated sources and uses of funds statement is as follows: SOURCES USES HRA Revenue Bonds $2,925,000 LIHTC 9�2 TOTAL $3,840,672 ESTIMATED COST OF ISSUANCE Bond Counsel Underwriter's Counsel Issuer's Counsel Trustee Up-front fee Printing Issuer application/service fee Borrower's Counsel Financing fee-DUS FNMA fees Mazketing fee Partner legal Bond puking costs TOTAL FINANCING COSTS Purchase Price Improvements Organizational/legal/fee expense Project Reserve Fund Development Fee Cost of Issuance TOTAL $ 25,000 15,000 10,000 5,000 6,500 14,000 10,000 19,500 4,000 50,000 10,000 25 $194,000 $2,300,000 550,000 216,89� 161,476 419,639 194 000 $3,840,672 The preliminary term sheet for the Bonds is as follows: Issue Amount $2,225,000 $699,381 Term 25 years 30 yeazs Bond Interest Rate 6.74 % 7.5 % Issue Date January 15, 1998 Maturiry Date 1/15/23 1/15/28 Rating "AAA/A-1" variable rate demand bonds for $2,225,000; unrated bonds of $699,381 secured by excess cashflow. Security for Bonds Credit enhancement shall be provided by FNMA in the amount of $2,225,000 for a 15 year term; the credit enhancement shall be in the form of a substituuon direct pay letter of credit with a securiry policy issued by an insurance company having a claims pay rating of at least AA by Standard and Poor's. Placement Method Public Offering Due Diligence Project's financial statements Phase I Environmental audit Structural and mechanical engineer's repoft Borrower Boisclair Corporation to form Bolo L'united Parmership Bond Counsel Briggs and Morgan Underwriter Piper Jaffray, Inc. Tmstee First Trust The Bonds aze suuctured to accommodate a 25 and 30 year, level debt service amortization schedule. The ProjecYs annual income will support a debt service payment ratio of 1.10. Operating expenses appear to be reasonable. K: SHARED\TMS\HSACC2. RPT q'� -1 S (. a- REPAY�NT CAPACTTY The projected Net Operating Income of $240,000 for 1998 appears to be a reasonable projection that will meet a debt service requirements. SUPPORT Mr. Boisclair has communicated the Hampden Square Apartments proposal to District 12, St. Anthony Park Communiry Council. They have asked that Mr. Boisclair meet with the communiry council when the purchase of the project is nearer to completion. FEES The HRA is entitled to a non-refundable appiication fee of $5,000. Should the Bonds be issued, the HRA will receive an administrative fee at closing equal to 0.5% of the principal amount of the Bonds. On the first anniversary date of the Bonds the HRA will receive an additiona10.5% fee. Every year thereafter that the Bonds remain outstanding the HRA will receive an annual administrative fee equal to OA1 % of the outstanding principal balance of the Bonds. BUSINE5S PROFILE The Boisclair Corporation has been in buslness since 1974. They currently manage 918 rental units in the metro area and have approxunately $4.5 million in annual rental income. ADVERSE LENDING Mr. Boisclair does not have an adverse lending relationship with the HRA or the City of Saint Paul. MANDATED REQUIREMENTS AND STANDARDS Pursuant to federal law regarding the issuance of tax-exempt multifamily revenue bonds, at a minunum either 20%o or 40% of the 86 dwelling units of the project must be specifically reserved for tenants whose incomes are not greater than either 50% or 60% of the median family income as adjusted for family size. Because this project will be participating in the federai Low Income Housing Tax Credit Program 100/ of the units will be affordable to persons at or below 60 % of inedian income, therefore the project meets the mandated requirements. LOW INCOME HOUSING TAX CREDITS The Owner has made a request to the HRA for an allocation of low income housing talc credits for the Project. Pursuant to Section 42 of the Internal Revenue Code, tas credits may be awarded outside the City's annual allocation when tax exempt bonds are issued. The Owner has requested tax credits for 100% of the units. In order to obtain the tas credits, the Owner will follow the same application procedures under the City's allocation process which includes final approval by the HRA Board of Commissioners. K SHARED\TMS\HSACC2. RPT q�- ls c �- PUBLIC PURPOSE The following public purposes will be met: 1. The proposed rehabilitation will maintain the value of the project for providing affordable housing in the city. Without bond financing the proposed 'unprovements wouid not be fmancially feasible. 2. The Project will continue to be physically a Class A complex and affordable housing units as part of the federal Low Income Housing Tax Credit Program. 3. The proposed financing and rehabilitation will reasonably assure the long term viability of the Project and be an asset to the sunounding neighborhood. BOND AUTHORITY; ALLOCATION PROCESS The City of Saint Paul received a 1997 entitlement bond allocation from the State of approximately $16,000,000. For the past several years, the entitlement has been used exclusively to issue mortgage revenue bonds or mortgage credit certificates to fmance the City's single family mortgage program. Because the Hampton Square Apartments wiil be owned by a for-profit entity, the proposed bonds will count as part of the City's entitiement bond allocation. However, staff believes that the single family program is amply funded for 1997 and will carry over an allocation of bonds into 1998. Therefore, issuance of rental revenue bonds would not diminish the City's single family program. The Ciry Council will be asked to approve a carry forward of its 1997 entitlement for the Hampden Square Aputments project. Upon adoption of the inducement resolution staff will proceed to finalize the financing of the proposal for preseniation to the HRA and request the HRA to consider adoption of a resolution to issue and sell revenue bonds to finance the project. Questions may be directed to Tom Sanchez, Northwest Quadrant Team of PED at 266-6617. ATTACHMENT City Councii Resolution Sponsored by Counicl member Megard K: SHARED\TMS\HSACC2.RPT �,; '-. ' .-. - � RESOLUTION CITY OF SAINT PAUL, MINNESOTA Presenied By Referred To Committee: Date 4'1 F1 C! 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 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 TFiE PREPARATION OF NECESSARY DOCUMENTS ANS) MATERIALS IN CONNECTIOI3 WITH THE SAID PROJECT AND PROGRAM (HAMPDEN SQUARE 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 beha3.f of a city the powers conferred by the Act, the power to issue revenue bonds to finance 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 "ARA") 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 "HRA"), has received a proposal from Boisclair Corporation and Robert Boisclair ("BOisclair"), that the HRA undertake a program (the "Housing Program") to finance a Project hereinafter described, through the issuance of revenue bonds or obligations in one or more series (collectively, the "Bonds") pursuant to the Act; and 372009.1 counci� Fi�e # 9� � L1 Green Sheet # �� /� " � /� : ' f i i � . � � � - � -� a�-� s4�- (d) The Project to be financed by the Bonds is the acquisition and rehabilitation of an existing 86 unit multifamily rental housing facility located at 2333 Long Avenue in the City (the "Project"), and will result in the rehabilitation of rental housing £acilities for low and moderate income persons within the community; and (e) The proposal calls for the HRA to loan the proceeds realized upon the sale of the Bonds to a limited liability company or similar legal entity to be formed by Boisclair ("the Company) pursuant to a revenue agreement or agreements wherein the Company 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; and (f) The City desires to facilitate the rehabilitation of multifamily rental housing facilities within the City; encourage the rehabilitation of housing facilities designed for occupancy primarily by low and moderate income persons; and the Project will assist the City in achieving these objectives; and (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 indirectly benefit financially from the Project; (i) The Company has submitted to the HRA a form of Memorandum of Understanding executed by the Company, expressing certain understandings by and between the HRA and the Company pertaining to the Project, and the tinancing therefor. NOW THEREFORE, BE IT RESOLVED by the City Council of the City Of Saint Paul, Minnesota, as follows: 1. The City hereby gives preliminary approval to the proposal of the Company that the City undertake the Project, described above, and the program of financing therefor, pursuant to Minnesota Statutes, Chapter 462C, consisting of the acquisition and rehabilitation of an existing multi-family rental housing facility within the City pursuant to the Company's specifications and to a revenue agreement between the HRA and the Company 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 372009.7 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 �l�-i s G �" on the Bonds in the total principal amount of approximately $2,925,000 to be issued pursuant to the Act to finance the acquisition and rehabilitation o£ the Project; and said agreement may also provide for the entire interest of the Company 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 consti- tutes a multi-family housing development within the meaning of subdivision 5 of Section 462C.02 of the Act; that the ProjeCt will be primarily occupied by persons of low or moderate income, the availability of the financing under the Act and the willingness of the City to furnish such financing will be a substantial inducement to the Company to undertake the Project, and that the effect of the Project, if undertaken, will be to encourage the provision of rehabilitated 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 revenue bonds, is hereby given preliminary approval by the City subject to final approval by the HRA, the Company and the purchasers of the Bonds as to ultimate details of the financing 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 housing revenue bonds to finance the Project and to take all actions necessary or desirable in connection therewith, and no further approval or authorization of the City shall be required; provided that the HRA may, in its discretion, authorize the Board to issue the Bonds and to implement the pragram approved hereby, and the City hereby consents thereto; 5. The Developer has agreed and it is hereby determined that any and all costs incurred by the City or the HRA in connection with the financing of the Project whether or not the Project is carried to completion and whether or not approved by HRA will be paid by the Company; 6. Briggs and Morgan, Professional Association, acting as bond counsel, and such investment bankers as may be selected by Company, with the consent of the HRA, are authorized to assist in the preparation and review of necessary documents relating to the Project and the financing program therefor, to 372009.1 . � . _ . a�-�s��- consult with the City Attorney, Company and purchasers of the Bonds (or trustee for the purchasers oE 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 HRA Por final approval; 7. Nothing in this Resolution or the documents prepared pursuant hereto shall authorize the expendiCure of any municipal funds on the Project other than the revenues derived from the Project or otherwise granted to the City or the HRA. The Bonds sha11 not constitute a charge, lien or encumbrance, legal or equitable, upon any property or funds of the City or the HRA except the revenue and proceeds pledged to the payment thereof, nor shall the City or the HRA be subject to any liability thereon. The holder of the Bonds shall never have the right to compel any exercise of the taxing power of Che 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 ARA. The Bonds shall 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 or HRA within the meaning of any constitutional or statutory limitation. 8. In anticipation of the issuance of the Bonds to finance all or a portion of the Project, and in order that completion of the Project wi11 not be unduly delayed when approved, the Developer 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 Developer considers necessary, including the use of interim, short-term financing, subject to reimbursement from the proceeds of the Bonds if any when delivered but otherwise without liability on the part of the City or the HRA. 372009.1 1 2 3 4 5 6 7 Adoption Certified by Council Secretary By• Approved by Mayor: Date L �93- By - � q �_�s6z- 9. The Executive Director of the HItA is hereby authorized to execute a Memorandum of Understanding with respect to the Project in substantially the fosm on file with the HRA. Adopted by the City Council of the City of Saint Paul, Minnesota this day of December, 1997. Requested by Department of: � • • •�s �L ` / � / ..�//� .,%�L Form A proved b ity Attorney By . iS.t. �• . � Mayor for Submission to 372009.1 Adopted by Council: Date ��.�_�� q�-�s��.. ��s ��. �� fc�-�� 2 TOTAL # OF SIGNATURE ACTION RE�UE57ED: f � s�i�/f `z�w� s� � DEPAR7MENTDI „Z CRYATTORNEY FOR O gUDGETDIRECI _ n MAYOR (OR ASS (CLIP ALL LOCATIONS FOR SIGNATURE) �Nmnvonre uGfiYCAUNGIL _ � qTY CLERK _ � FIN. & MGT, SERVICES Dlfl. � _ h c+h�G� /'-G- ff r(�� L(JYri �/'�'/ld `a%�t > i'�ir/�- �d�-� ,�,-,,er�.�..�i x� � � ��>��', lJ, �-�1�� ti[- Approve (A) or Re�ec[ (R) _ PLANNING CqMMISSION _ CIVIL SERVICE COMMISSION CIB COMMITfEE � STAFF _ _ 01STqICTCOUFiT _ SUPPORTS WHICH COUNCIL OBJECTIVE? �- �� , �a ,« ��, �o�� PEHSONAL SERVICE CONTRACTS MUST ANSWER THE FOLLOWING QUESTIONS: 7. Hes this perSOnRirm ever worked under a coMract for thfs tlepartment? YES NO 2. Has this personfirm ever been a ciry employee? YES NO 3. Does this personttrtm possess a skill not normally possessetl by any current ciry emplqree? YES NO Explain all yes answers on separete sheet and attech to green sheet � RTU TV�Who,Whet. On.Where,Why): � �""� s � �� -.� �- S, � �� ,�.�� w � � ��-�� a-� � �� i� ��'`�� PP� �.....___.. �.,��/ r� ��-�, `�s � r.� � ��-�� - �f ,l�`��` �� re�� .r � G�/� � nc,�.�e /�� `� � G�� : IFAPPROVED: ,f � yJ � �v�i(o `_ DVANTAGES IF NOTAPPROVED y�e �>�oJ° e� �D / � Gr-ur�-� « tir'. `l .�-��'�i� y�,y,��e C!��e. �� r� , �`i� i°�.tid�.•�l E.�� si DEC i 1 1997 TOTAL AMOUNT OF TRANSACTION $ COST/REVENUE BUDGETED (CIRCLEANE)— "-�—�—NO------ ----"� FUNDIfdG SOURCE �� "��`�"""'L �" °- —� ACTIVITV NUMBEq iINANCIAL INFORHSATION: (EXPLAIN)� � �� `�� Q ^ / / j / // �1�� N��L q�-15��' CITY COUNCIL OF THE CITY OF SAINT PAUL, MINNESOTA REPORT TO THE CITY COUNCIL DATE: December 22, 1997 REGARDING: PUBLIC HEARING - Resolution Reciting a Proposal for Financing a Multi-family Rental Housing Development Project and Authorizing the Aousing and Redevelopment Authority of the City of Saint Paul to Exercise the Powers Granted in Minnesota Statutes, Sections 462C.01 to 462C.08 PURPOSE The Housing and Redevelopment Authority of the City of Saint Paul (HRA) has received an application from the Boisclair Corporation, Mr. Robert Boisclair (Owner), requesting the HRA to issue up to $2,925,000 of Ta�c Exempt Multifamily Revenue Bonds (Bonds) for the purpose of acquiring and rehabilitating the Hampton Squaze Apartments (Project) located on 2333 Long Avenue. 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 Memorandum of Understanding (MOU) with Mr. Robert Boisclair, Boisclair Corporation, to work towards 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 2. Authorize the HRA to issue up to $2,925,000 of ta�c exempt, multifamily rental revenue bonds for the Project; and Approve a Housing Program, a copy of which is attached for financing the project prepared in accordance with the provisions of Minnesota Statutes, Section 462C.03; and 4. Retain Briggs and Morgan as bond counsei and Piper Jaffray, Inc. as investment banker for said Bonds and authorize them to assist in the preparation and review of necessazy documents relating to the Project and Housing Program and consult with the HRA, Ciry Attorney, Owner, and purchasers of the proposed Bonds. Approval of the inducement resolution and execution of the Memorandum of Understanding does not require or obligate the City or HRA to issue bonds or cause any K: SHARED\TMS\ HSAC C2. RPT Q�-\5�1 action against the City or FIRA arising from any failure or refusal by the City or HRA to approve the Project or issuance of the Bonds. With respect to the multifamily rental housing bonds, Section 72.04 of Chapter 72 of the Ciry's Administrative Code provides that the HRA be designated to exercise on behalf of the City the powers conferred by the Minnesota Statutes 462C (housing programs and revenue bonds) but only unless directed and authorized to do so by resolution adopted by the Ciry Council. Thus the reason, this proposal is uutiated before the City Council rather than the HRA. Mr. Boisclair will close on the purchase of the property in mid-3anuary, 1998. In order to accomplish this schedule a resolution of the HRA to carryover revenue bonds from its 1997 allocation will also be presented to the HRA at the December 22, 1997 meeting. PROJECT The Project consists of the acquisition and rehabilitation of an existing five building rental apartment/townhouse project known as Hampton Squue Apartments. The Project contains 86 multifamily rental units, consisting of 44- one bedroom apartments units, 38- two bedroom townhouse units, and 4- three bedroom townhouse units. Amenities include basements for the townhouse units with washer/dryer hook-ups, laundry rooms for the apartments, two playgrounds areas, surface parking for 120 cars, and a recreation center for the complex. The Project was constructed in 1973. Current and future apartment unit configurations and contract rent, affordable to persons at approxunately 55 7 of inedian income, are as follows: IZnit Siz��ss.]uare feetl 1-bedroom 632 2-bedroom 6936 3-bedroom 1,140 ('urrent AVg Rent $448 $632 $683 Et�Ss r�e Avg. Rent $464 $621 $689 Occupancy rates have consistently been at approxnnately 97 %. PROPOSED IMPROVEMENTS The planned rehabilitation of $550,000 for the Project consists of siding replacement, facia/trun repair and painting, boiler repiacement, kitchen cabinets/lighting, roof replacement, landscaping, parking resurfacing, exterior lighting, bathroom plumbing upgrade, replacement of carpet in hallways, sidewalklconcrete repair, recreation upgrade, and playground repiacement. Forty-one garages wili also be built. K: SHARED\TMSIHSACC2. RPT q� -�s ��- �varrcnvG The estunated sources and uses of funds statement is as follows: SOURCES USES HRA Revenue Bonds $2,925,000 LIHTC 9�2 TOTAL $3,840,672 ESTIMATED COST OF ISSUANCE Bond Counsel Underwriter's Counsel Issuer's Counsel Trustee Up-front fee Printing Issuer application/service fee Borrower's Counsel Financing fee-DUS FNMA fees Mazketing fee Partner legal Bond puking costs TOTAL FINANCING COSTS Purchase Price Improvements Organizational/legal/fee expense Project Reserve Fund Development Fee Cost of Issuance TOTAL $ 25,000 15,000 10,000 5,000 6,500 14,000 10,000 19,500 4,000 50,000 10,000 25 $194,000 $2,300,000 550,000 216,89� 161,476 419,639 194 000 $3,840,672 The preliminary term sheet for the Bonds is as follows: Issue Amount $2,225,000 $699,381 Term 25 years 30 yeazs Bond Interest Rate 6.74 % 7.5 % Issue Date January 15, 1998 Maturiry Date 1/15/23 1/15/28 Rating "AAA/A-1" variable rate demand bonds for $2,225,000; unrated bonds of $699,381 secured by excess cashflow. Security for Bonds Credit enhancement shall be provided by FNMA in the amount of $2,225,000 for a 15 year term; the credit enhancement shall be in the form of a substituuon direct pay letter of credit with a securiry policy issued by an insurance company having a claims pay rating of at least AA by Standard and Poor's. Placement Method Public Offering Due Diligence Project's financial statements Phase I Environmental audit Structural and mechanical engineer's repoft Borrower Boisclair Corporation to form Bolo L'united Parmership Bond Counsel Briggs and Morgan Underwriter Piper Jaffray, Inc. Tmstee First Trust The Bonds aze suuctured to accommodate a 25 and 30 year, level debt service amortization schedule. The ProjecYs annual income will support a debt service payment ratio of 1.10. Operating expenses appear to be reasonable. K: SHARED\TMS\HSACC2. RPT q'� -1 S (. a- REPAY�NT CAPACTTY The projected Net Operating Income of $240,000 for 1998 appears to be a reasonable projection that will meet a debt service requirements. SUPPORT Mr. Boisclair has communicated the Hampden Square Apartments proposal to District 12, St. Anthony Park Communiry Council. They have asked that Mr. Boisclair meet with the communiry council when the purchase of the project is nearer to completion. FEES The HRA is entitled to a non-refundable appiication fee of $5,000. Should the Bonds be issued, the HRA will receive an administrative fee at closing equal to 0.5% of the principal amount of the Bonds. On the first anniversary date of the Bonds the HRA will receive an additiona10.5% fee. Every year thereafter that the Bonds remain outstanding the HRA will receive an annual administrative fee equal to OA1 % of the outstanding principal balance of the Bonds. BUSINE5S PROFILE The Boisclair Corporation has been in buslness since 1974. They currently manage 918 rental units in the metro area and have approxunately $4.5 million in annual rental income. ADVERSE LENDING Mr. Boisclair does not have an adverse lending relationship with the HRA or the City of Saint Paul. MANDATED REQUIREMENTS AND STANDARDS Pursuant to federal law regarding the issuance of tax-exempt multifamily revenue bonds, at a minunum either 20%o or 40% of the 86 dwelling units of the project must be specifically reserved for tenants whose incomes are not greater than either 50% or 60% of the median family income as adjusted for family size. Because this project will be participating in the federai Low Income Housing Tax Credit Program 100/ of the units will be affordable to persons at or below 60 % of inedian income, therefore the project meets the mandated requirements. LOW INCOME HOUSING TAX CREDITS The Owner has made a request to the HRA for an allocation of low income housing talc credits for the Project. Pursuant to Section 42 of the Internal Revenue Code, tas credits may be awarded outside the City's annual allocation when tax exempt bonds are issued. The Owner has requested tax credits for 100% of the units. In order to obtain the tas credits, the Owner will follow the same application procedures under the City's allocation process which includes final approval by the HRA Board of Commissioners. K SHARED\TMS\HSACC2. RPT q�- ls c �- PUBLIC PURPOSE The following public purposes will be met: 1. The proposed rehabilitation will maintain the value of the project for providing affordable housing in the city. Without bond financing the proposed 'unprovements wouid not be fmancially feasible. 2. The Project will continue to be physically a Class A complex and affordable housing units as part of the federal Low Income Housing Tax Credit Program. 3. The proposed financing and rehabilitation will reasonably assure the long term viability of the Project and be an asset to the sunounding neighborhood. BOND AUTHORITY; ALLOCATION PROCESS The City of Saint Paul received a 1997 entitlement bond allocation from the State of approximately $16,000,000. For the past several years, the entitlement has been used exclusively to issue mortgage revenue bonds or mortgage credit certificates to fmance the City's single family mortgage program. Because the Hampton Square Apartments wiil be owned by a for-profit entity, the proposed bonds will count as part of the City's entitiement bond allocation. However, staff believes that the single family program is amply funded for 1997 and will carry over an allocation of bonds into 1998. Therefore, issuance of rental revenue bonds would not diminish the City's single family program. The Ciry Council will be asked to approve a carry forward of its 1997 entitlement for the Hampden Square Aputments project. Upon adoption of the inducement resolution staff will proceed to finalize the financing of the proposal for preseniation to the HRA and request the HRA to consider adoption of a resolution to issue and sell revenue bonds to finance the project. Questions may be directed to Tom Sanchez, Northwest Quadrant Team of PED at 266-6617. ATTACHMENT City Councii Resolution Sponsored by Counicl member Megard K: SHARED\TMS\HSACC2.RPT