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HomeMy WebLinkAboutResolution No. 2004-048 Vernon Terrace- Multi-Family Revenue Bonds �1 o� e 0 RESOLUTION NO. 200448 �. •�CbRPOagC�- City of Edina RESOLUTION AUTHORIZING THE ISSUANCE OF VARIABLE RATE DEMAND MULTIFAMILY HOUSING REVENUE REFUNDING BONDS (VERNON TERRACE APARTMENTS PROJECT) SERIES 2004 BE IT RESOLVED by the City Council (the "Council") of the City of Edina, Minnesota (the "City") as follows: 1. The Council has received a request from Bigos-Vernon Terrace, LLC, a Minnesota limited liability company (the "Company"), the controlling member of which is Ted Bigos, a resident of the State of Minnesota (`Bigos"), that the City undertake to refinance a multifamily rental housing development as herein described pursuant to Minnesota Statutes, Chapter 462A and 462C, as amended (the "Act"), through issuance by the City of its Variable Rate Demand Multifamily Housing Revenue Refunding Bonds (Vernon Terrace Apartments Project), Series 2004 in an aggregate principal amount not to exceed $5,705,000 (the `Bonds"). The Bonds would be issued to refund the City's outstanding Variable Rate Demand Multifamily Mortgage Revenue Refunding Bonds (Vernon Terrace Project), Series 1999 (the "1999 Bonds") which were issued to refund Multifamily Mortgage Revenue Refunding Bonds (Vernon Terrace Project) Series 1990 (the "1990 Bonds") which were issued by the City to refund in part Multifamily Mortgage Revenue Bonds (Vernon Terrace Project) issued by the City and originally dated as of December 1, 1986 (the "Prior Bonds"). The Prior Bonds were in turn issued to refund obligations of the City issued to finance the acquisition, construction and installation of a 146-unit multifamily housing rental project, together with related costs, developed on an approximately 3.5 acre parcel of land located at 5420 Vernon Avenue in the City, commonly known as Vernon Terrace Apartments (the "Project"). 2. The Project is required to be reserved for rental in part by persons of low and moderate income, with at least twenty percent(20%) of the units held for occupancy by families or individuals with adjusted income not in excess of eighty percent (80%) of the median family income estimated by the United States Department of Housing and Urban Development for the Minneapolis/St. Paul standard metropolitan statistical area. 3. The fee title to the Project is vested in, and the borrower of the proceeds of the 1999 Bonds is Ohmega Building Corporation, a Minnesota nonprofit corporation ("Ohmega"). The City has been advised that in 1993 Ohmega entered into a contract for deed with Bigos, under which Ohmega sold the Project to Bigos, with Ohmega retaining fee title and remaining as obligor with respect to the 1990 Bonds and subsequently the 1999 Bonds. It is proposed that, in connection with the issuance of the Bonds, Bigos will transfer his interest in the Project to the Company, and the Company will pay and satisfy in full the contract for deed, receive fee title to City Hall 952-927-8861 4801 WEST 50TH STREET I FAX 952-826-0390 EDINA,MINNESOTA, 55424-1394 www.cityofedina.com TTY 952-826-0379 the Project, assume the obligations of Ohmega with respect to the 1999 Bonds, cause the 1999 `- Bonds to be refunded, and pay and discharge the 1999 Bonds from the proceeds of the Bonds and other available funds. 4. It is proposed that, pursuant to a Financing Agreement (the "Financing Agreement") to be dated as of June 1, 2004, among the City, the Company, and U.S. Bank National Association, as trustee with respect to the Bonds (the "Trustee"), the City will loan the proceeds of the Bonds to the Company in order to refund the 1999 Bonds. The payments to be made by the Company under the Financing Agreement are required to be sufficient (together with revenues derived from the investment of funds and accounts relating to the Bonds) to pay the principal of, premium, if any, and interest on the Bonds when due. It is further proposed that the City assign its rights under the Financing Agreement (except for certain Unassigned Rights, as defined therein) to the Trustee as security for payment of the Bonds under a Trust Indenture (the "Indenture")to be dated as of June 1, 2004, between the City and the Trustee. 5. It is further proposed by the Company that credit enhancement for the Bonds be provided by the Federal Home Loan Mortgage Corporation ("Freddie Mac"). In connection with such Freddie Mac credit enhancement the Company and other parties intend to enter into certain agreements and arrangements including but not limited to a Bond Mortgage Note, to be dated as of June 1, 2004, from the Company to the City and assigned by the City to the Trustee (respectively, the "Bond Mortgage Note" and the "Note Assignment"); a Multifamily Mortgage, Assignment of Rents, Security Agreement and Fixture Financing Statement, to be dated as of June 1, 2004, from the Company to the City and assigned by the City to the Trustee (respectively, the "Bond Mortgage" and the "Mortgage Assignment"); a Credit Enhancement Agreement to be dated as of June 1, 2004, between Freddie Mac and the Trustee; and an Intercreditor Agreement, to be dated as of June 1, 2004, among the City, the Trustee and Freddie Mac (the "Intercreditor Agreement"). 6. Prior to the date of issuance of the Prior Bonds, the City approved and submitted to the Minnesota Housing Finance Agency ("MHFA") a financing program for the Project as required by Minnesota Statutes, Chapter 462C, and MHFA approved the financing program, and the City has been advised that no new or amended financing program need be submitted to MHFA in connection with the issuance of the Bonds. 7. Forms of the following documents have been submitted to this Council for approval: (a) the Financing Agreement; (b) the Indenture ; (c) the Bond Mortgage Note and the Note Assignment; �- (d) the Bond Mortgage, the Mortgage Assignment; 2 `- (e) an Amended and Restated Declaration of Restrictive Covenants (the "Declaration") among the City, the Company, and the Trustee, to be dated as of June 1, 2004; (f) the Intercreditor Agreement; (g) a Bond Purchase Agreement (the "Bond Purchase Agreement") among the Company, the City, and Piper Jaffray& Co. (the "Underwriter"); (h) an Official Statement with respect to the Bonds; and (i) an Assumption Agreement (the "Assumption Agreement") to be dated as of the date of issuance of the Bonds, among Ohmega, the Company, the City and the Trustee. 8. It is hereby found, determined and declared that: (a) the Project described in the Financing Agreement and Indenture referred to above constitutes a multifamily rental housing development authorized by the Act; (b) the purpose of the Project is and the effect has been to promote the public welfare by providing additional decent, safe and sanitary rental housing opportunities for low and moderate income persons within the City; (c) the Project is located within the City limits; (d) the refinancing of the Project, the issuance and sale of the Bonds, the execution and delivery by the City of the Assumption Agreement, the Financing Agreement, the Indenture, the Intercreditor Agreement, the Note Assignment, the Mortgage Assignment, the Declaration and the Bond Purchase Agreement, and the performance of all covenants and agreements of the City contained in the Assumption Agreement, the Financing Agreement, the Indenture, the Intercreditor Agreement, the Declaration and the Bond Purchase Agreement, and of all other acts and things required under the constitution and laws of the State of Minnesota to make the Assumption Agreement, the Financing Agreement, the Indenture, the Intercreditor Agreement, the Declaration and the Bond Purchase Agreement, and the Bonds, valid and binding obligations of the City in accordance with their terms, are authorized by the Act; (e) it is desirable that the 1999 Bonds be refunded and that the Bonds be issued by the City upon the terms set forth in the Indenture; 3 (f) the payments to be made by the Company under the Financing Agreement are required to be sufficient to provide for the prompt payment of principal of, premium, if any, and interest on the Bonds issued under the Indenture when due, and the Financing Agreement and Indenture also provide that the Company is required to pay all expenses of the operation and maintenance of the Project, including, but without limitation, adequate insurance thereon and insurance against all liability for injury to persons or property arising from the operation thereof, and all taxes and special assessments levied upon or with respect to the Project premises and payable during the term of the Financing Agreement and Indenture; (g) under the provisions of the Act, and as provided in the Financing Agreement and Indenture, the Bonds are not to be payable from or charged upon any funds other than the revenue pledged to the payment thereof, the City is not subject to any liability thereon; no holder of any Bonds shall ever have the right to compel any exercise by the City of its taxing powers to pay any of the Bonds or the interest or premium thereon, or to enforce payment thereof against any property of the City except the interests of the City in the Financing Agreement which have been assigned to the Trustee under the Indenture; and the Bonds shall not constitute a charge, lien or encumbrance, legal or equitable upon any property of the City except the interests of the City in the Financing Agreement which have been assigned to the Trustee under the Indenture; (h) on the date hereof this Council has held a public hearing on the issuance of the Bonds pursuant to notice duly published in the official newspaper of the City on May 13, 2004, in accordance with the requirements of Section 147(f) of the Internal Revenue Code of 1986. 9. Subject to the approval of the City Attorney and the provisions of paragraph 13 hereof, the forms of the Assumption Agreement, the Financing Agreement, the Indenture, the Note Assignment, the Mortgage Assignment, the Declaration, the Intercreditor Agreement, and the Bond Purchase Agreement, and exhibits thereto are approved in substantially the form submitted. The Assumption Agreement, the Financing Agreement, the Indenture, the Note Assignment, the Mortgage Assignment, the Intercreditor Agreement and the Bond Purchase Agreement, in substantially the forms submitted, are directed to be executed in the name and on behalf of the City by the Mayor and City Manager. Copies of all of the documents necessary to the transaction herein described shall be delivered, filed and recorded as provided herein and in the Financing Agreement, the Indenture and the Bond Purchase Agreement. 10. The distribution of the Official Statement is hereby authorized and the City hereby authorizes the use of a final Official Statement reflecting the terms of the Bonds approved hereby for the offer and sale of the Bonds. The City has not participated and will not participate in the 4 preparation of the Official Statement and makes no representations either express or implied as to the content or adequacy thereof. 11. The City shall proceed forthwith to issue its Bonds, in the form and upon the terms and conditions set forth in the Indenture. The City Manager, with the approval of the City Attorney, is authorized to establish the final aggregate principal amount of the Bonds, the maturity date or dates and principal amount of each maturity of the Bonds, and the initial interest rate or rates to be borne thereby; provided that the aggregate principal amount of the Bonds shall not exceed $5,705,000; the final maturity shall be not later than July 1, 2034; the average weighted maturity of the Bonds shall not exceed 120% of the remaining average reasonably expected economic life of the Project as determined by appraisal dated May 17, 2004; and the initial annual interest rate shall not exceed five percent (5.0%) subject to adjustment as provided for in the Indenture. The Mayor and the City Manager are authorized and directed to prepare and execute the Bonds as prescribed in the Indenture and to deliver them to the Trustee for authentication and delivery to the Underwriter. 12. The Mayor and the City Manager and other officers of the City are authorized and directed to prepare and furnish to the Underwriter and bond counsel certified copies of all proceedings and records of the City relating to the Bonds, and such other affidavits and certificates as may be required to show the facts relating to the legality of the Bonds as such facts appear from the books and records in the officers' custody and control or as otherwise known to them; and all such certified copies, certificates and affidavits, including any heretofore furnished, shall constitute �. representations of the City as to the truth of all statements contained herein. 13. The approval hereby given to the various documents referred to above includes approval of such additional details therein as may be necessary and appropriate and such modifications thereof, deletions therefrom and additions thereto by the City Attorney and the City officials authorized herein to execute said documents prior to their execution; said City officials are hereby authorized to approve said changes on behalf of the City. The execution of any instrument by the appropriate officer or officers of the City herein authorized shall be conclusive evidence of the approval of such documents in accordance with the terms hereof. In the absence of the officers specifically named herein, any of the documents authorized by this resolution to be executed may be executed by a person authorized to act in their absence. 14. This Resolution shall be in full force and effect from and after its passage. Adopted: June —/—, 2004 ATTEST: �` ='l—'(.A, � CLti 6= City Clerk Mayor 5 STATE OF MINNESOTA ) COUNTY OF HENNEPIN )ss CITY OF EDINA ) CERTIFICATE OF CITY CLERK I, the undersigned, being the duly qualified and acting City Clerk of the City of Edina, Minnesota, DO HEREBY CERTIFY that I have compared the attached and foregoing extract of minutes with the original thereof on file in my office, and that the same is a full, true and complete transcript of the minutes of a meeting of the City Council of the City of Edina duly called and held on the date therein indicated, insofar as such minutes relate to the authorization of the issuance of the Variable Rate Demand Multifamily Housing Revenue Refunding Bonds (Vernon Terrace Apartments Project) Series 2004. WITNESS my hand and seal of said City of Edina this first day of June, 2004. ------------------------------------ City Clerk City of Edina, Minnesota 6