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
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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.
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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
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PASSED AND ADOPTED: JULY 12, 1993
Mayor
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Res. 93-390, page 4
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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
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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
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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.
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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
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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.
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