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HomeMy WebLinkAboutCity Council Resolution 2019-133 C ITY OF P LYMOUTH R ESOLUTION N O. 2019-133 R ESOLUTION A DOPTING AN A MENDED AND R ESTATED P RIVATE A CTIVITY R EVENUE B OND F INANCING P OLICY FOR THE C ITY AND THE H OUSING AND R EDEVELOPMENT A UTHORITY WHEREAS, the City of Plymouth (the “City”) and the Housing and Redevelopment Authority of the City (the “Authority”) have heretofore adopted a Private Activity Revenue Bond Financing Policy for the City and the Housing and Redevelopment Authority (the “Policy”); and WHEREAS, the City and the Authority desire to amend and restate the Policy. NOW, THEREFORE, BE IT HEREBY RESOLVED BY THE CITY COUNCIL OF THE CITY OF PLYMOUTH, MINNESOTA: Section 1. Amended and Restated Policy. 1.01. The City adopts the Amended and Restated Private Activity Revenue Bond Financing Policy for the City and the Housing Redevelopment Authority, in the form attached hereto as Exhibit A. APPROVED by the City Council on this 14th day of May, 2019. STATE OF MINNESOTA ) COUNTY OF HENNEPIN ) SS. The undersigned, being the duly qualified and appointed City Clerk of the City of Plymouth, Minnesota, certifies that I compared the foregoing resolution adopted at a meeting of the Plymouth City Council on May 14, 2019 with the original thereof on file in my office, and the same is a correct transcription thereof. WITNESS my hand officially as such City Clerk and the Corporate seal of the City this ___________day of __________________, _____. _____________________________________ City Clerk 11729556v1 EXHIBIT A AMENDED AND RESTATED PRIVATE ACTIVITY REVENUE BOND FINANCING POLICY FOR THE CITY AND THE HOUSING AND REDEVELOPMENT AUTHORITY Resolution No. 2019-133 May 14, 2019 I. INTRODUCTION Each of the City of Plymouth, Minnesota (the “City”) and the Housing and Redevelopment Authority in and for the City of Plymouth, Minnesota (the “Authority”; together with the City, the “Issuers”) has been granted authority to issue tax-exempt private activity bonds to finance the following types of projects: (1) Manufacturing / industrial facilities; (2) Multifamily housing; (3) Health care facilities and (4) Other projects on behalf of 501(c)(3) organizations. The City should be the issuer of first resort. If the City is the issuer, the Authority need not be involved. If the Authority is the issuer, both the Authority and the City must meet to approve the issuance. In certain instances, however, bank qualification or other considerations may lead to the Authority acting as issuer. With the exception of housing projects, financings for all of the above undertakings are authorized under Minnesota Statutes, Sections 469.152 through 469.165, as amended (the “Act”). Bonds for housing projects are authorized under Minnesota Statutes, Chapter 462C. II. GENERAL REQUIREMENTS The following are the general guidelines and requirements the Issuers will use to evaluate requests for private activity bond financing and to administer private activity bonds. The Issuers have complete discretion to issue private activity bonds and reserve the right to approve only proposals which, in the opinion of the Issuer, meet the needs of the Issuer and have a strong likelihood of success. All proposals for the issuance of private activity bonds must meet the following general requirements: A. Be consistent with the City's Comprehensive Plan (the “Plan”). B. Fulfill all of the applicable federal and state requirements for the issuance of private activity bonds. C. Comply with all applicable federal, state, regional, and City laws, including zoning and land use regulations and ordinances applicable to the development. D. The applicant for private activity bond financing and the applicant's bond underwriters shall hold the Issuers and their respective officers, consultants, and agents harmless from any alleged or actual violations of any securities laws, state or federal, in connection with the issuance of private activity bonds for the development. In addition, the Issuers shall not be held responsible 11729556v1 for any debt repayment of the bond issue or other costs relating to the development, should it fail financially for any reason. E. The applicant shall enter into appropriate agreements with the Issuer for the issuance of the private activity bonds, including agreements to enforce the Issuer's requirements for the issuance of the private activity bonds. The term of these agreements shall at a minimum be equal to the term of the private activity bonds. III. TYPES OF PROJECTS 1. Manufacturing / Industrial Facilities Bonds for manufacturing facilities are issued under the Act and either Section 144(a) or Section 141 of the Internal Revenue Code, as amended (the “Code”). In addition, the bonds are generally subject to the volume cap allocation requirements of Minnesota Statutes, Chapter 474A, as amended. The purpose of issuing bonds for such facilities is to encourage the development of appropriate industrial projects that will benefit the community by providing jobs and economic development, eliminating blight, and increasing property values. Manufacturing bonds are available only for “core” manufacturing projects, and only for relatively small manufacturers (cannot expect to have more than $20M of capital expenditures in the City in the six-year period surrounding issuance of the bonds). 2. Multifamily Housing Housing bonds to finance privately-owned multi-family housing facilities within the City are authorized under Minnesota Statutes, Chapter 462C and either (a) in the case of facilities owned by 501(c)(3) entities, Section 145 of the Code or (b) in the case of facilities owned by non-501(c)(3) entities, Section 142(d) of the Code. The purpose of issuing housing bonds is to benefit the community by encouraging the production of affordable housing for low- and moderate-income households within the City. In evaluating proposals for the issuance of housing bonds, the Issuer will give priority to proposals which utilize other non-City, non-Authority funding sources to assist in meeting the Issuers’ housing goals, have connections to transit, include parks and open space, contribute to housing diversity, and utilize innovative design and other criteria which may be important to meeting the goals of the Issuers. In addition, the Issuers will consider the following:  Contribution to meeting the housing goals enumerated in the Plan.  A minimum of 10% of the total units included in the development (the “Affordable Units”), or such higher percentage as is required by the Issuer, must be occupied by low-income families at affordable rents. Low-income is defined as no more than 50% of the HUD Adjusted Median Family Income (HAMFI), adjusted for family size, for the Minneapolis-St. Paul Metropolitan Statistical Area (Minneapolis-St. Paul MSA) as determined under the federal Section 8 Housing Assistance Program. If such program is terminated, an equivalent program designated to function in its place, based on the median family income of the Minneapolis-St. Paul MSA, adjusted for family size, shall be used to determine the applicable income limits. If the bonds are to be issued for a non-501(c)(3) entity under Section 142(d) of the Code, the project must also meet the Code’s income restrictions (a choice of 20% of the units occupied by individuals with 50% or less of area median income or 40% of the units occupied by individuals with 60% or less of area median income).  Affordable rents shall be specifically calculated for the number of bedrooms available per unit and shall not exceed 30% of the defined low-income limit indicated above based on an average 11729556v1 occupancy of 1.5 persons per bedroom and subject to applicable utility allowances as determined under the Section 8 Program or its equivalent. The Issuer may establish a lower average occupancy if warranted by the actual or intended occupancy of the property, such as for senior or special needs housing.  In the event that the Issuer determines that its occupancy and rent requirements specified above may imperil the development’s long-term financial feasibility, alternative proposals, compatible with state and federal requirements for the issuance of housing bonds and consistent with the intent of promoting the development, expansion, and preservation of affordable housing in the community may be considered by the Issuer.  Persons approved for the Section 8 Housing Assistance Program who meet the development’s reasonable tenant selection criteria will not be excluded from consideration for occupancy. Exceptions may be permitted for units that do not meet Section 8 requirements or other criteria in accordance with any requirements or restrictions acceptable to the Issuer.  All reporting relating to the development, including occupancy, rents and tenant incomes, shall be in the form specified by, or acceptable to, the Issuer, subject to applicable requirements of state and federal law.  The applicant must demonstrate a long-term commitment to actively develop and maintain a cooperative working relationship with community services available to tenants. In addition, the owner or designated managing agent will actively participate in the Plymouth Apartment Manager’s Association and the Plymouth Crime-free Multi-housing Program or their equivalents. The following requirements must also be met for proposals to be considered by the Issuer:  As required by federal law relating to housing bonds, proposals for the acquisition and rehabilitation of existing structures must allocate an amount not less than 15% of the bond- funded acquisition cost within a two-year period to rehabilitate the property. The Issuer may require specific work to be included in the rehabilitation of the structure as a condition for the issuance of the bonds. 3. Health Care Facilities Health care facility revenue bonds are issued to finance hospital, nursing home or assisted living facilities within the City owned and operated by 501(c)(3) entities. Such bonds are issued in accordance with the Act and Section 145 of the Code. The purpose of issuing health care bonds is to benefit the community by encouraging the availability of affordable health care services for residents of the City. 4. Facilities for other 501(c)(3) Organizations Bonds may be issued to finance facilities within the City providing services that benefit the City and its residents (including, without limitation, educational services) owned and operated by 501(c)(3) entities. Such bonds are issued in accordance with the Act and Section 145 of the Code. The purpose of issuing such bonds is to benefit the community by encouraging the availability of beneficial services for residents of the City. IV. DESIGN AND MAINTENANCE STANDARDS A. The development shall use building and design materials that are in compliance with applicable state and local building and licensing codes and designated maintenance standards. 11729556v1 B. The design and maintenance must be compatible with other neighboring land uses, building architecture, and landscaping. V. FINANCIAL REQUIREMENTS The Issuers strongly prefer that private activity bonds be issued with an investment grade rating from one or more of the national rating agencies, or be secured, in whole or in part, by a letter of credit or similar security from a major financial institution. VI. FEES A. A non-refundable application fee of $2,500 is due at the time the application is made. This fee shall be due in the case of an application for either a new money or a refunding issue. This Application Fee is in addition to the other fees set forth below and is not a credit against any of said fees. B. An initial issuance fee of 1/2 of 1% of the principal amount of the private activity bonds is due at the time of closing. This fee shall be due in the case of an application for either a refunding issue or a new money issue. In the case of housing bonds, the fee shall be deposited in the Affordable Housing Account. In the case of all other private activity bonds, the fee shall be deposited in the Project Administration Fee Account. C. All fees and expenses in relation to the issuance of the private activity bonds (in addition to the foregoing application fee and issuance fee), including the fees of the Issuer's bond counsel and financial consultants, shall be the responsibility of the applicant, regardless of whether the private activity bonds are actually issued. D. For applications requiring an allocation of bonding authority from the Minnesota Department of Finance (the “Department”) pursuant to the provisions of Chapter 474A, an application, in the form prescribed by the Department, must be submitted to the Department along with the appropriate application deposit and nonrefundable application fee due to the Department. The applicant must pay the cost of completion of the application materials, if any, and the amount of the state application deposit and nonrefundable fee must be remitted to the Issuer prior to its submission to the state. After the private activity bond closing and appropriate notice of issue is filed with the Department, the application deposit paid by the Issuer at the time of the bond allocation request will be refunded to the Issuer. The Issuer will then refund a corresponding amount of the application fee paid to the Department to the applicant. VII. REFUNDING BONDS Previous issuance of private activity bonds by the Issuer does not commit the Issuer to the issuance of refunding bonds at a future date. Applications for the refunding of previously issued private activity bonds will be evaluated in terms of general benefit to the Issuer based on such factors as financial benefit to the applicant, the project's past operating history, including property maintenance and employment, and the applicant's future plans for operations in the City. To the extent appropriate, the provisions of this private activity bond financing policy shall apply to refunding bonds. It is recognized that developments previously financed may not have met the foregoing requirements applicable to new financing requests. Applications that include the refunding of previously issued bonds will be evaluated based on such factors as substantial debt service savings, removal of bonding covenants significantly impairing the financial feasibility of the development, significant rehabilitation or physical improvements of the property, or enhancements to the affordability of existing rents. 11729556v1 VIII. PROCESS The process for obtaining private activity bond financing is as follows: A. An application for the issuance of private activity bonds must be submitted in the form specified by Issuer staff along with the required application fee. B. Issuer staff will complete an initial review to evaluate the proposal and determine whether it qualifies for consideration for financing. C. Staff will consult with the Issuers’ bond counsel and financial consultant as necessary to verify the development’s qualifications for financing and determine project feasibility. Because of the complexity of qualifying project activities under the Internal Revenue Code, it is essential that bond counsel be consulted early in the application process. D. For proposals requiring a bond allocation from the Department prior to issuance (in general, projects described in (1) and some projects described in (2) above), the proposal will be presented to the Issuer for a preliminary resolution. The resolution will identify the preliminary intent of the Issuer to issue bonds, a description of the proposed development, and the amount of bonds to be issued. Upon adoption of the preliminary resolution, the applicant, working with the Issuers’ bond counsel, shall prepare the application to be submitted by the Issuer for a bond allocation to the Department. E. After a state bond allocation has been issued or when a proposal does not require a bond allocation from the Department, the applicant, bond counsel, and underwriter will complete the necessary bond documents. All of the projects described in this policy require a public hearing held by the Issuer and approval by the City at some time after the public hearing. Housing bonds under Chapter 462C require, prior to publication of notice of the public hearing, submission of a Housing Program to the Metropolitan Council. The Program must be approved by the Metropolitan Council. Following such public hearing, the Issuer will adopt a final bond resolution approving the documentation to be executed by the Issuer and authorizing the execution of said documents and the issuance of the bonds. F. Prior to the issuance of private activity bonds (other than housing bonds issued under Minnesota Statutes, Chapter 462C), and following the public hearing, the Issuer must file an application for approval of the bond issue with the Minnesota Department of Employment and Economic Development. The application is considered routine if the proper documentation is filed including the completed application form, the Issuer's bond resolution, a preliminary bond counsel opinion, evidence of the public hearing, and a letter of preliminary intent from the bond underwriter to underwrite the bond issue. G. Until the private activity bonds are issued, the Issuer reserves the right to: (1) Reject applicant’s choice of underwriter, trustee, paying agent, placement agent, or legal counsel. (2) Require corrections or amendments to any legal document. (3) Reject the proposal and the issuance of the private activity bonds if the Issuer determines, in its sole discretion, that the financing is not in furtherance of the Issuer’s goals or is otherwise unacceptable, even if preliminary approval for the proposal or any part of the proposal being separately considered has previously been given. 11729556v1 H. Within 5 days of closing of the bond issue, or as otherwise determined by statute or appropriate regulations, the Issuer must file a report with the Department that the bonds have been issued. This filing will trigger the fee refund referenced above in Section VI, paragraph D. 11729556v1