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HomeMy WebLinkAboutCity Council Resolution 2007-352CITY OF PLYMOUTH RESOLUTION NO. 2007-352 REPEALING VARIOUS POLICIES AND ADOPTING NEW POLICY WHEREAS, the Industrial Development Bond Financing Policy, Multi -Family Housing Revenue Bond Financing Policy, and the 501 (c) (3) Revenue Bond Financing Policy (Attachments F -H) have been reviewed; and WHEREAS, it is recommended that these policies be repealed and replaced with a Private Activity Revenue Bond Financing Policy (Attachment I) NOW THEREFORE BE IT RESOLVED BY THE CITY COUNCIL that the attached list of policies ("Attachments F -H") are hereby repealed and a Private Activity Revenue Bond Financing Policy (Attachment 1) is hereby adopted. ADOPTED by the Plymouth City Council on August 28, 2007. Resolution No. 2007-352 Page 2 of 18 ATTACHMENT F POLICY AND PROCEDURES RELATING TO APPLICATIONS FOR INDUSTRIAL DEVELOPMENT BOND FINANCING Resolution No. 811 5 7 Date: March 12, 1984 (Supersedes Res. No. 81-197, March 16, 1981; Res. No. 81-212, March 23,1981; Res. No. 82-150, March 1982) The City Council has been granted authority to issue Municipal Industrial Development Bonds by the terms of the Minnesota Industrial development Act, MSA. Chapter 474, as amended. The Council is aware that such financing may benefit the community and, accordingly has indicated its willingness to consider requests for Industrial Development Bond financing subject to the following guidelines: 1. The project shall be compatible with the overall development plans and objectives of the city. 2. The project shall be of a nature the City wishes to attract, or an existing business the City desires to have expand within the City. Potential for new employment, incentive for further development, impact on City service requirements, and compatibility with other land uses and/or the adjacent neighborhood will be considered in reviewing the application. 3. Projects of a speculative nature will not be considered, and it is the Council's desire that a substantial portion of the project be occupied by the applicant. 4. The City's goals will be to approve the application of (a) well-established companies with good performance records and good future prospects and (b) newer companies whose performance indicates sound future earnings prospects and product acceptance. 5. The City will not normally consider: Resolution No. 2007-352 Page 3 of 18 Projects of essentially a warehousing nature unless the project provides substantial additional employment. Special purpose type strictures not readily adaptable to other uses. Equipment which is not an integral part of the stricture. Inventory of parts of equipment. Professional, service and retail businesses whose location is primarily dictated by market considerations to be near, or convenient to their customers. 6. The City shall normally expect the applicant to demonstrate a reasonable showing of equity in the proposed project. A "reasonable showing of equity" may vary from project to project, however, will normally involve land costs and/or other project "soft costs", such as consulting fees, financing reserves and moving costs. Exceptions to this requirement will be considered by the Council on an individual basis. 7. The City may submit the applicant's fiscal data to financial analysts of its choice. The financial analysts will review the data and make such written comments to the City as to the current and projected financial position of the applicant in order that the Council will be in a position to reasonably evaluate the applicant's ability to service the proposed debt. 8. The applicant shall select qualified financial consultants and/or underwriters, to prepare all necessary documents and materials required for the project. The City may rely on the opinion of such experts. The application shall be accompanied by the financial consultant and/or underwriter regarding the financial strength of the applicant as well as the feasibility of the project, ability to sell the bonds, or in the case of a tax-exempt mortgage, a tentative letter of commitment from the lending institution. All fees and expenses of approving bond counsel shall be paid by the applicant. 9. If the application for financing is reviewed prior to the time the City considers preliminary land use recommendations with respect to zoning, site plan and public utilities, the applicant is advised that such financing reviews are not connected in any way with subsequent requests for land use approvals. The City Council will consider the financial application and the subsequent land use requests independent of one another and the favorable finding in one instance shall not obligate or indicate subsequent findings will be favorable. In any event, applicants shall indicate their intention to apply for industrial development revenue bond financing not later than at the time of application for final site plan approval; failure to do so shall disqualify the application for further consideration. 10. The applicant and its bond underwriters shall hold the City, its officers, consultants and agents harmless from any alleged or actual violations of any securities laws, State or Federal, in connection with the issuance of bonds for their project. Resolution No. 2007-352 Page 4 of 18 11. The City reserves the right to deny any application for Municipal Industrial Development bond financing at any stage of the proceedings prior to adopting the resolution authorizing issuance of Industrial Development Bonds. 12. The Industrial Development Act permits the Council to issue bonds for certain non- profit corporations. While the City may consider such requests, the non-profit corporation shall be reviewed in accordance with the criteria: The applicant's project will (a) directly fulfill strategic development objectives of the City, (b) provide a significant number of new jobs for the City, and (c) the services rendered by the project shall be of direct benefit to a large segment of the City's population. 13. The City may waive some of the foregoing requirements to encourage and foster specific high quality projects of significant scale or scope in the area generally referred to as "Downtown Plymouth." Proposals submitted shall be responsive to the adopted General Development Plan for Downtown Plymouth. 14. The applicant shall submit a non-refundable fee of $1,000 with the application to cover City administrative costs in processing the application. Resolution No. 2007-352 Page 5 of 18 ATTACHMENT G MULTI -FAMILY HOUSING REVENUE BOND FINANCING POLICY Resolution No. 2001-291 July 10, 2001 I. INTRODUCTION The City Council has been granted to issue tax-exempt multi -family housing revenue bonds (herein after referred to as Housing Bond(s) to finance private development within the City in accordance with Minnesota Statutes, Chapters 462C and 474A, as amended. 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. The following are the general guidelines and requirements the City Council will use to evaluate requests for Housing Bond financing and to administer Housing Bonds issued by the City. II. GENERAL REQUIREMENTS The City has complete discretion to issue Housing Bonds and reserves the right to approve only proposals which, in the opinion of the City, meet the needs of the City and have a strong likelihood of success. In evaluating proposals for the issuance of Housing Bonds, the City will give priority to proposals which utilize other non -City fiinding sources to assist in meeting the City's 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 City. All proposals for the issuance of Housing Bonds must meet the following general requirements: A. Be consistent with the City's Comprehensive Plan, and contribute to meeting the housing goals enumerated in the Plan. B. Fulfill all of the applicable federal and state requirements for the issuance of Housing 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 Housing Bond financing issued by the City and the applicant's bond underwriters shall hold the City of Plymouth, its officers, consultants, and agents (the "Parties) harmless from any alleged or actual violations of any securities laws, state or federal, in connection with the issuance of Housing Bonds for the development. In addition, the Parties issuing the bonds or involved in their Resolution No. 2007-352 Page 6 of 18 issuance shall not be held responsible for any debt repayment of the bond issue nor other costs relating to the development, should it fail financially for any reason. E. The applicant shall enter into appropriate agreements with the City for the issuance of the Housing Bonds, including agreements to enforce the City's requirements for the issuance of the Housing Bonds. The term of these agreements shall at a minimum be equal to the term of the Housing Bonds. III. AFFORDABILITY AND OCCUPANCY REQUIREMENTS A. A minimum of 10% of the total units included in the development (hereinafter referred to as the Affordable Units), or such higher percentage as is required by the City, must be occupied by low-income families at Affordable Rents. Low- income is defined as limited to 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 fiinction 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. B. 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 occupancy of 1.5 persons per bedroom and subject to applicable utility allowances as determined under the Section 8 Program or its equivalent. The City Council 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. C. In the event that the City 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 City. D. 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 City or the City's Housing and Redevelopment Authority. E. All reporting relating to the development, including occupancy, rents and tenant incomes, shall be in the form specified by, or acceptable to, the City, subject to applicable requirements of state and federal law. F. 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 Resolution No. 2007-352 Page 7 of 18 participate in the Plymouth Apartment Manager's Association and the Plymouth Crime -free Multi -housing Program or their equivalents. VI. 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. B. The design and maintenance must be compatible with other neighboring land uses, building architecture, and landscaping. V. FINANCIAL REQUIREMENTS The following requirements must be met for proposals to be considered by the City Council: A. The development must demonstrate equity participation of at least 10% of the total development cost in the form of cash or land or depreciable assets. Total development cost may include "soft costs," such as consulting and legal fees, reasonable development fees, title, recording, and insurance costs, financing reserves, and moving costs. The Council may on an individual basis consider exceptions to this requirement. B. A required reserve equal to the largest year's payment of principal and interest, not to exceed 10% of the principal amount of the bond issue, must be maintained. In addition, an amount agreed upon between the City and the applicant will be set aside and maintained as a replacement reserve for any needed capital improvements and/or maintenance required. With the approval of City, the developer may post a surety bond, letter of credit, or other security mechanism to meet these requirements. C. As required by federal law relating to Housing Bonds, proposals for the acquisition and rehabilitation of existing strictures must allocate an amount not less than 15% of the bond-fiinded acquisition cost within a two-year period to rehabilitate the property. The City may require specific work to be included in the rehabilitation of the stricture as a condition for the issuance of the Bonds. VI. FEES A. A non-refundable application fee of $2,000 is due at the time the application is made. 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 1/8th of 1% of the principal amount of the Housing Bonds is due at the time of closing. C. All fees and expenses in relation to the issuance of the Housing Bonds (in addition to the foregoing application fee and issuance fee), including the fees of the City's bond counsel and financial consultants, shall be the responsibility of the applicant, regardless of whether the Housing Bonds are actual issued. Resolution No. 2007-352 Page 8 of 18 D. For applications requiring an allocation of bonding authority from the Minnesota Department of Finance 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. 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 City prior to its submission to the state. After the Housing Bond closing and appropriate notice of issue is filed with the Department, the application deposit paid by the City at the time of the bond allocation request will be refunded to the City. The City will then refund a corresponding amount of the application fee paid to the Department to the applicant. E. On-going annual fees or payments to support the City's Housing and Redevelopment Authority's Affordable Housing Account to assist other development in meeting the City's affordable housing goals may also be required as determined by the City Council. VII. REFUNDING BONDS AND QUALIFIED 501(c)(3) BONDS It is recognized that developments previously financed by Housing Bonds may not have met the foregoing requirements applicable to new financing requests, particularly the provisions of Section III. Applications that include the refiinding of previously issued Housing Bonds will be evaluated based on such factors as substantial debt service savings, removal of bonding covenants significant rehabilitation or physical improvements of the property, and/or enhancements to the affordability of existing rents. To the extent appropriate, the provisions of this Multi -Family Housing Revenue Bond Financing Policy shall apply to refiinding bonds. Previous issuance of Housing Bonds by the City does not commit the City to the issuance of refunding bonds at a fiiture date. The City also recognizes that Section 145 of the Internal Revenue Code (the Code) and applicable state law provides for the issuance of bonds under certain conditions on behalf of nonprofit corporations exempt from tax under Section 501(c)(3) of the Code. To the extent the developments proposed to be financed constitute "residential rental property" within the meaning of Section 142(d) of the Code, the provisions of this Policy shall generally apply to such financing. However, it is recognized that other developments often financed by nonprofits, such as assisted living facilities, group homes and transitional housing, while having a housing component, may require the applicant and the City to consider differing standards, particularly with respect to occupancy and affordability, than those set forth above in Section III. However, to the extent appropriate, the provisions of this Multi -Family Housing Revenue Bond Financing Policy shall nevertheless apply to these "non-traditional" housing developments. VIII. APPLICATION PROCESS Resolution No. 2007-352 Page 9 of 18 The process for obtaining housing revenue bond financing is delegated by the City Council as follows: A. An application for the issuance of Housing Bonds must be submitted in the form specified by the City staff along with the required application fee. B. City 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 City's bond counsel and financial consultant to verify the development's qualifications for financing and determine project feasibility. D. For proposals requiring a bond allocation from the State of Minnesota Department of Finance prior to issuance, the proposal will be presented to the City Council for a preliminary resolution. The resolution will identify the preliminary intent of the City 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 City's bond counsel shall prepare the application to be submitted by the City for a bond allocation to the Department of Finance. E. After a state bond allocation has been issued or when a proposal does not require a bond allocation from the Department of Finance (such as in the case of an eligible non-profit), the applicant, bond counsel, underwriter, and financial consultant will complete the necessary bond documents. Prior to the adoption of the final bond resolution approving the documentation to be executed by the City and authorizing the execution of said documents and the issuance of the Housing Bonds, City staff will schedule and publicize a public hearing to obtain public input on the issuance of the Housing Bonds in accordance with applicable state and federal statutory requirements. F. Until the Housing Bonds are issued, the City reserves the right to: • Reject applicant's choice of underwriter, trustee, paying agent, placement agent, or legal counsel. • Require corrections or amendments to any legal document. • Reject the proposal and the issuance of the Housing Bonds if the City determines, in its sole discretion that the financing is not in furtherance of the City's housing 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. G Within 5 days of closing of the bond issue, or as otherwise determined by statute or appropriate regulations, the City must file a report with the Department of Finance that the bonds have been issued. Resolution No. 2007-352 Page 10 of 18 ATTACHMENT H 501(c)(3) REVENUE BOND FINANCING POLICY Resolution 2006-429 November 14, 2006 The City of Plymouth has been granted authority under Minnesota Statues, Sections 469.152 through 469.165, and Chapter 462C, as amended, to issue tax exempt 501 (c)(3) revenue bonds under Section 145 of the Internal Revenue Code to provide financing on behalf of certain entities described in Section 501 (c)(3) of the Internal Revenue code. 1. The attached policy is in accordance with all federal, state and local laws. 2. The City has created a policy that is in accordance with the City's Comprehensive Plan. 3. The City desires to have a policy in place that will provide guidance to applicants when determining whether to submit an application. 4. The City wishes to further support affordable housing by generating revenue to support housing efforts of the HRA Resolution No. 2007-352 Page 11 of 18 ATTACHMENT I CITY OF PLYMOUTH, MINNESOTA AND HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF PLYMOUTH, MINNESOTA PRIVATE ACTIVITY REVENUE BOND FINANCING POLICY ADOPTED , 2007, RESOLUTION 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. IL 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") Resolution No. 2007-352 Page 12 of 18 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 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 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. Resolution No. 2007-352 Page 13 of 18 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 fiinction 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 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 Resolution No. 2007-352 Page 14 of 18 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: • The development must demonstrate equity participation of at least 10% of the total development cost in the form of cash or land or depreciable assets. Total development cost may include "soft costs," such as consulting and legal fees, reasonable development fees, title, recording, and insurance costs, financing reserves, and moving costs. The Issuer may on an individual basis consider exceptions to this requirement. • A required reserve equal to the largest year's payment of principal and interest, not to exceed 10% of the principal amount of the bond issue, must be maintained. In addition, an amount agreed upon between the Issuer and the applicant will be set aside and maintained as a replacement reserve for any needed capital improvements and/or maintenance required. With the approval of the Issuer, the developer may post a surety bond, letter of credit, or other security mechanism to meet these requirements. • As required by federal law relating to housing bonds, proposals for the acquisition and rehabilitation of existing strictures 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 stricture as a condition for the issuance of the bonds. 3. Health Care Facilities Resolution No. 2007-352 Page 15 of 18 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 5010(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. 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 1/8 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. Resolution No. 2007-352 Page 16 of 18 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. E. The Issuer may require that an annual payment be made to the Issuer during the term the bonds are outstanding. At present, the annual payment will not exceed an amount equal to 1/8th of 1% of the outstanding principal amount of the bonds, and, in any event, will not exceed the amount permitted under applicable arbitrage regulations of the United States Treasury. In the case of housing bonds, if the fee is collected, it 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. 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 Resolution No. 2007-352 Page 17 of 18 the financial feasibility of the development, significant rehabilitation or physical improvements of the property, or enhancements to the affordability of existing rents. 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. Resolution No. 2007-352 Page 18 of 18 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. 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.