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HomeMy WebLinkAboutCity Council Resolution 1993-390RESOLUTION NO. 93-390 A RESOLUTION ADOPTING A HOUSING PROGRAM AND GIVING PRELIMINARY APPROVAL TO A PROJECT (HARBOR LANE APARTMENTS PROJECT) AND ITS FINANCING, UNDER MINNESOTA STATUTES, CHAPTER 462C, AS AMENDED AND AUTHORIZING CERTAIN OTHER ACTIONS IN CONNECTION THEREWITH WHEREAS, the City of Plymouth, Minnesota (the "City") is authorized, pursuant to Minnesota Statutes, Chapter 462C (the "Housing Act") to develop and administer multifamily housing programs pursuant to a housing plan, which may be financed by the issuance of revenue bonds of the City; and WHEREAS, the City has adopted its Comprehensive plan, which includes a 462C Housing Plan component, as amended (the "Housing Plan") pursuant to and in conformance with the provisions of the Housing Act and has held a public hearing thereon, after at least 30 days published notice thereof, and after review and comment by the Metropolitan Council thereon; and WHEREAS, Minnesota Statutes 462C.05 requires the adoption of a housing finance program after a public hearing held thereon after publication of notice in a newspaper of general circulation in the City at least fifteen days in advance of the hearing; and WHEREAS, the City Council (the "Council") has determined that it is in the best interests of the City and in furtherance of the City's goals established in the Housing Plan that the City amend the Housing Plan, by approving and adopting a multifamily housing revenue bond program entitled "Program for a Multifamily Housing Development - Harbor Lane Apartments Project (the "Program"); and WHEREAS, under the Program the City will issue its revenue bonds in an amount of up to $10,000,000 (the "Bonds") to finance the acquisition and rehabilitation of approximately 313 units of multifamily rental housing (the "Project") together with related issuance costs. The Project is currently known as the "Harbor Lane Apartments" and is located in 8 interconnected buildings on approximately 16.7 acres of land with street addresses of 3145, 3165, 3215, 3205, 3255, 3333, 3305 and 3325 Harbor Lane, in the City. After acquisition of the Project, it is proposed that it will be owned and operated by M. Mitchell Rotenberg, as a partner or shareholder of a limited or general partnership or corporation to be formed; and WHEREAS, the Project will be reserved for rental in part by persons of low and moderate income, with at least either twenty percent (20X) or forty percent (40X) of the units held open for occupancy by families or individuals with adjusted gross income not in excess of fifty percent (50X) or sixty percent (60X), respectively, 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; and • Page 2 RESOLUTION NO. 93-390 WHEREAS, the Council and the staff of the City have reviewed the Program and believe that the Program is in furtherance of the housing policies of the City; and WHEREAS, the City has been advised by the Developer that conventional financing of the cost of the Project is available only on a limited basis and at such high costs of borrowing that the economic feasibility of operating the Project would be significantly affected; but with the aid of municipal financing the Project can be acquired and rehabilitated as designed and its operation made more economically feasible; and WHEREAS, the Council has been advised by Piper Jaffray Inc., representing the Developer, that on the basis of information available to them, the Project is economically feasible and the Bonds could be successfully issued and sold; and WHEREAS, neither the City nor the State of Minnesota shall be liable on the Bonds, and the Bonds shall not be a debt of the City within the meaning of any state constitutional provision or statutory limitation, and will not constitute or give rise to a charge against the general credit or taxing power of the city or a pecuniary liability of the City, nor shall the Bonds be payable out of any funds or properties other than those provided as security therefore; NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Plymouth, Minnesota: Section 1. The Program, attached hereto as Exhibit A, is hereby approved and adopted by the City. Section 2. The City gives preliminary approval to the Program and the issuance of its Multifamily Housing Revenue Bonds (Harbor Lane Apartments Project) in an aggregate principal amount of up to $10,000,000 to provide financing for the acquisition and rehabilitation of the Project, together with related issuance costs and reserve funding, and thereby declares its present intent to have the City issue its revenue bonds under the Housing Act to finance the Project. Notwithstanding the foregoing, however, the adoption of this resolution shall not be deemed to establish a legal obligation on the part of the City or its Council to issue or cause the issuance of such revenue bonds. The City retains the right in its sole discretion to withdraw from participation and accordingly not to issue the Bonds, or to issue the Bonds in an amount less than the amount referred to in this Section, should the City, at any time prior to issuance thereof, determine that it is in the best interests of the City not to issue the Bonds, or to issue the Bonds in an amount less than the amount referred to in this Section, or should the parties to the transaction be unable to reach agreement as to the terms and conditions of any of the documents required for the transaction. The Bonds, if issued, shall not constitute a charge, lien or encumbrance, legal or equitable, upon any property of the City, except the revenues specifically pledged to the payment thereof, and each Bond, when, as and if issued, shall recite in substance that the Bond, including interest thereon, is payable solely from the revenues and property specifically pledge to the payment thereof and shall not constitute a debt of the City within the meaning of any constitutional or statutory limitation. -2- RESOLUTION NO. 93-390 Page 3 Section 3. The staff of the City is hereby authorized and directed to take all steps necessary and desirable to proceed to develop the program and the financing therefore, and to prepare for implementation of the Program at the earliest possible date. Section 4. The City Manager or his designee, Bond Counsel and the City Attorney are hereby authorized to take all actions necessary to prepare for submission of an application to the Minnesota Department of Finance to obtain an allocation of bonding authority for the issuance of the Bonds in an amount not to exceed $10,000,000 or so much thereof as shall be permissible under the Act and the Internal Revenue Code of 1986, as amended, as agreed upon by the Developer, the City and approved by the City's Bond Counsel. ATTEST: Qt<4" C ty Clerk 3316p PASSED AND ADOPTED: JULY 12, 1993 Mayor —3— • Res. 93-390, page 4 PROGMIL [ FM A KULTIPAILILY HOUBXJW DP=LOPKMT t==R 1Q]DT=BOTA BTATUT=s CZA"= 442C SARHOit LUM APARTUMT8 PROJ=CT CITY OF PLYNOUTB, KINnOMA Bection 1. statutory Authority. Pursuant to Minnesota Statutes, Chapter 462C, as amended (the "Act"), the City of Plymouth, a municipal corporation and political subdivision of the State of Minnesota, organized and existing under the Constitution and laws of the State and its home rule charter (the "City") has been authorized to develop and administer programs of multifamily housing developments under the circumstances and within the limitations set forth in the Act. Minnesota Statutes, Section 462C.07 provides that such programs for multifamily housing developments may be financed by revenue bonds issued by the City. The City Manager's office in and for the City of Plymouth has full responsibility for the administration of the City's housing revenue bond program and may exercise on behalf of the City, the powers conferred by Sections 462C.01 to 462C.08 of the Minnesota Statutes, subject to certain approvals by the City Council. Section 2. The Program. The City has received a proposal from M. Mitchell Rotenberg, as a partner or shareholder of a limited or general partnership or corporation to be formed (the "Developer") that, pursuant to Minnesota Statutes, Section 462C.05, subdivision 2, the City approve a program providing for the acquisition of an existing apartment complex currently known as the "Harbor Lane Apartments" and rehabilitation and renovation thereof (the "Project"). The Project was originally constructed in 1971- 72. It consists of eight interconnected three-story buildings containing a total of 313 rental housing units (the "Housing Units"). The Project currently includes 1 studio apartment (current rent: $300/mo.), 109 one -bedroom units (current rents: $420-$480/mo.), 164 two-bedroom units (current rents: $540- $600/mo.), and 39 three-bedroom units (current rents: $705- $849/mo.). The Developer currently expects that after acquisition and rehabilitation of the Project, rents would be increased by five to ten percent. The Project additionally contains 256 detached garages and 496 surface parking spaces. Tenants of Housing Units will be required to pay their own electricity and telephone charges and an additional charge is expected to be assessed for use of a detached enclosed garage stall. The Project is located on an approximately 16.7 acre site with street addresses of 3145, 3165, 3215, 3205, 3255, 3333, 3305 and 3325 Harbor Lane, within the corporate boundaries of the City. The Project has suffered from ZOOS Res. 93-390, Page S deferred maintenance. Representative items of proposed rehabilitation include repair of decks, addition of exterior lighting and controlled entries, replacement of a substantial number of appliances, cabinetry, plumbing fixtures and carpeting, reroofing where necessary and replacement of certain waterheaters and furnaces. To qualify for tax-exempt financing, not less than 15% of the tax basis of the Project's buildings must be expended on rehabilitation efforts within 24 -months of the date of the proposed bond issuance. It is contemplated that all Housing Units will be in compliance with all applicable zoning ordinances and other applicable land use regulations, including any urban renewal plan or development district plan, and including the state building code as set forth under Minnesota Statutes, Section 16.83, ILt. sea. Section 3. Inoome Limits. To the extent necessary to further the policy of economic integration, the Housing Units will be designed to be affordable by persons and families with adjusted gross income not in excess of the limits set forth in Minnesota Statutes Section 462C.03, subdivision 2. Either twenty percent (20%) or forty percent (40%) of the 313 Housing Units will be specifically reserved for tenants whose incomes are not greater than either fifty percent (50%) or sixty percent (60%) of the median family income (as adjusted for family size) estimated by the United States Department of Housing and Urban Development for the Minneapolis -St. Paul standard metropolitan statistical area. The current applicable median income amount is $49,600. Needs of Low and Noderate Income Families. In establishing this multifamily housing program (the "Program") the City has considered the goals and information contained in the City's Housing Plan, which is an element of the City's Comprehensive Plan originally adopted February 7, 1972, as amended (the "Housing Plan"). The City has housing needs in terms of affordable, safe and sanitary housing as reflected in data available to the City and contained in part in the Plan. Consistent with the local housing needs in this Program, the proposed Project will enable the City to meet its housing goals by (i) providing additional affordable housing with rents, amenities, construction and location not otherwise available to the same extent and land use; (ii) encouraging low income housing throughout the City (iii) providing affordable housing to complement expanding employment opportunities and (iv) complementing local efforts to enhance the efficient and effective use of the City's existing housing stock. The City has further considered other factors such as (i) the availability and affordability of other government housing programs; (ii) the availability and affordability of private market financing for the construction and rehabilitation of multifamily housing units; (iii) the recent housing trends and future housing needs of the City; and (iv) population and unemployment trends and projections of future population trends and future employment needs. Based on a review of the foregoing, the City has concluded that there is a need for 21318 Res. 93-390, Page 6 the Program to continue the diversification of housing options in the City, to maintain the City's existing housing stock and to provide affordable housing to persons desiring to live in the City. The City additionally concludes that the Program is needed to further, and will further, the statewide housing policy of encouraging private industry to assist in providing decent, safe and sanitary rental housing at affordable rentals to (i) minorities, (ii) households headed by women and (iii) households with low and moderate income. The Program meets the needs of low and moderate income families by providing a variety of Housing Unit types and designs, and by increasing the percentage of low and moderate income families who will be able to afford rental housing in the Plymouth area. The Program is also subject to the requirements of Section 3 hereof. Section S. Method of Financing. The City expects to issue up to $10,000,000 of its multifamily housing revenue bonds (the "Bonds") in one or more series for the purpose of providing financing for the acquisition and rehabilitation of the Project and related reserve funding and administrative and bond issuance costs. The Bonds will be issued upon such terms and conditions as set forth herein and as may be further agreed upon in writing between the City, the original purchaser(s) of the Bonds and the Developer. The Bonds are expected to be issued within six (6) months after adoption of this Program. A private sale of the Bonds is currently contemplated, however, if market conditions should so warrant, a public sale would be considered. A rating from a nationally recognized bond rating agency will be sought for the Bonds. The proposed financing will include the establishment of a debt service reserve fund. The Developer will be required to maintain a repair and replacement reserve fund for the Project. Insofar as the City will or may be contracting with underwriters, legal counsel, bond counsel, a trustee, and others, all of whom will be reimbursed from Bond proceeds (to the extent permitted by federal law), Developer funds or revenues generated by the Program, no administrative costs will be paid from the City's budget with respect to this Program. The Bonds will not be general obligation bonds of the City, but are expected to be paid from the properties or credit pledged to the payment thereof. The Developer has represented to the City that it is currently not contemplated that any additional financing or contributions on the part of the City will be needed for the rehabilitation of the Project or for the operation of the Program. An amount not to exceed $10,000,000 of the state ceiling for private activity bonds pursuant to Section 146 of the Internal Revenue Code of 1986, as amended, and Chapter 474A of Minnesota Statutes will be applied for with respect to the Bonds. M318 Res. 93-390, Page 7 with the pct. The following standards and requirements shall apply with respect to the operation of the Project by the Developer pursuant to this Program: (1) Substantially all of the proceeds of the sale of the Bonds will be used to finance the Project, which will provide approximately three hundred thirteen (313) rehabilitated residential Housing Units. The funds will be made available to the Developer pursuant to the terms of the Bond offering, which may include certain covenants to be entered into between the City and the Developer. (2) The Developer will not reject an application from a proposed tenant because of race, color, creed, religion, national origin, sex, marital status, affectional preference or status with regard to public assistance or disability. (3) No Housing Unit may be in violation of applicable zoning ordinances or other applicable land use regulations, including any urban renewal plan or development district plan, and including the state building code as set forth under Minnesota Statutes, Section 16.83, et. seq. (4) The Project is to be developed in accordance with Minnesota Statutes, Section 462C.05, subdivision 2 of the Act. Pursuant to Section 462C.05, subdivision 2 and the Internal Revenue Code of 1986, as amended, at least either twenty percent (20%) or forty percent (40%) of the Housing Units will be held for occupancy by families or individuals with Adjusted Gross Income (as defined in the Act) not in excess of either fifty percent (50%) or sixty percent (60%), respectively, of the median family income as estimated by the United States Department of Housing and Urban Development for the Minneapolis -St. Paul metropolitan area. (5) The Developer will enter into a Regulatory Agreement or other restrictive covenants with the City to ensure compliance with the Program and to ensure that the level of low and moderate income occupancy requirements of the Act, herein specified, will be maintained for the period of time specified by the Act and the Internal Revenue Code of 1986, as amended (the "Code"), in order to retain the tax-exempt status of the Bonds. section 7. Evidence of Compliance: Method o! MonitolinQ Zmolementation. The City may require from the Developer, or such other person deemed necessary at or before the issuance of the Bonds, evidence satisfactory to the City of the ability and intention of the Developer to complete the Project, and evidence satisfactory to the City of compliance with the standards and requirements for the making of the financing established by the 22318 4 0 Res. 93-390, Page 8 City, and in connection therewith, the City or its representatives may inspect the relevant books 'and records of the Developer in order to confirm such ability, intention and compliance. In addition, the City may periodically require certification from either the Developer or such other person deemed necessary concerning compliance with various aspects of this Program and the Code. seation a. severability. The provisions of this Program are severable and if any of its provisions, sentences, clauses or paragraphs shall be held unconstitutional, contrary to statute, exceeding the authority of the City or otherwise illegal or inoperative by any court of competent jurisdiction, the decision of such court shall not affect or impair any of the remaining provisions. section 9. ]Amendment. This Program shall be a component of and amendment to the Plan as recognized by the Act. The City shall not amend this Program while Bonds are outstanding to the detriment of the holders of such Bonds. Adopted: July 12, 1993. 22718 5 0