PUBLIC HEARINGS - Joe Huss, Finance Director
Title
TO CONSIDER APPROVING A HOUSING PROGRAM; AUTHORIZING THE ISSUANCE, SALE, AND DELIVERY OF HOUSING FACILITY REVENUE BONDS RELATING TO CREST VIEW SENIOR HOUSING PROJECT; AND APPROVING THE FORM OF AND AUTHORIZING THE EXECUTION AND DELIVERY OF CERTAIN DOCUMENTS RELATING TO THE HOUSING FACILITY REVENUE BONDS
Background
The City has received a proposal from Crest View Sr. Housing Community at Blaine, LLC to issue up to $40 million in conduit revenue bonds pursuant to IRS regulations and State of Minnesota statutes, chapter 462C. The bonds would be used to construct a senior facility consisting of 24 memory care units, 51 assisted living units and 66 independent living units in a PBD (Planned Business District) Zoning District at the southwest corner of Ulysses Street and Paul Parkway.
Crest View is requesting to finance the project through the issuance of up to $40 million in Multifamily Housing Revenue Bonds. The bonds, issued by the City are commonly referred to as Conduit Debt Bonds. The bonds would be issued pursuant to IRS regulations and State of Minnesota statutes, chapter 462C.
Per regulations and statutes, the City must conduct a public hearing prior to approving the issuance of the bonds. The bonds are considered conduit debt of the City, and do not require any City funding, and the bonds are not considered an obligation of the City. As such, the bonds affect neither the City's credit rating, nor the City's debt limit.
The bonds would not constitute a charge, lien, or encumbrance upon any property of the City, and would be repaid only with the revenues derived from the project itself. As such, the bonds are not considered an obligation of the City, and would not be a charge against the City's general credit or taxing powers.
Schedule of Actions
Conduct public hearing
Adopt attached resolution
Recommendation
Upon conclusion of the public hearing, adopt the following resolution.
Body
WHEREAS, the City of Blaine, Minnesota (the "City") is a political subdivision duly organized and existing under the Constitution and laws of the State of Minnesota; and
WHEREAS, pursuant to the Constitution and laws of the State of Minnesota, particularly Minnesota Statutes, Chapter 462C, as amended (the "Act"), confers upon cities, the power to issue revenue bonds to finance a program for the purposes of planning, administering, making or purchasing loans with respect to one or more multifamily housing developments within the boundaries of the city; and
WHEREAS, Crest View Senior Community at Blaine LLC, a Colorado limited liability company (the "Borrower"), whose sole member is Crest View Corporation, a Minnesota nonprofit corporation, has requested that the City issue its revenue bonds, notes, or obligations under the Act, in one or more series, in an original aggregate principal amount not to exceed $40,000,000 to (i) finance the acquisition, construction, and equipping of an approximately 152-unit senior multifamily rental housing facility consisting of approximately 66 senior housing units, 51 assisted living units, 11 enhanced assisted living units and 24 memory care units and related parking and public improvements to be located at 12016 Ulysses St. NE in the City (the "Project"); (ii) fund necessary reserve funds; and (iii) and pay a portion of the costs of issuance related to such bonds (collectively, the "Project"); and
WHEREAS, as a condition to the issuance of such revenue bonds, notes, or obligations under the Act, the City must adopt a housing program providing the information required by Section 462C.03, subdivision 1a, of the Act (the "Housing Program"); and
WHEREAS, under Section 147(f) of the Internal Revenue Code of 1986, as amended (the "Code"), prior to the issuance of such revenue bonds or obligations, a public hearing duly noticed must be held by the City and under Section 462C.04, subdivision 2, of the Act, a public hearing must be held on each housing program after one publication of notice in a newspaper circulating generally in the City, at least 15 days before the hearing; and
WHEREAS, at the request of the Borrower, on this same date, the City Council of the City held a public hearing regarding the Housing Program and with respect to the issuance of revenue bonds to finance the Housing Program and the Project, pursuant to and in conformance with the Act and Section 147(f) of the Code, for which notice was duly published as required by the Act; and
WHEREAS, the revenue bonds, notes, or obligations will be issued under the Act in one or more series in an aggregate principal amount not to exceed $40,000,000, and will include a pledge of, among other things, revenues of the Project (the "Bonds"); and
WHEREAS, the Borrower has requested that the City issue the Bonds pursuant to a Trust Indenture between the City and Wells Fargo Bank, National Association (the "Trustee"), dated on or after March 1, 2015 (the "Indenture"); and
WHEREAS, the City, the Borrower, and BB&T Capital Markets (the "Underwriter") have agreed upon sufficient details of the Bonds to enable the City to adopt this final bond resolution (the "Resolution") on this date.
NOW THEREFORE BE IT RESOLVED by the City Council of the City of Blaine, Minnesota, as follows:
1. Approval of Housing Program. The City finds that the preservation of the quality of life in the City is dependent upon the maintenance, provision, and preservation of an adequate housing stock, which is affordable to persons of low or moderate income, including seniors, and that accomplishing this is a public purpose. The City further finds that the Housing Program will further this purpose. The City hereby approves the Housing Program, pursuant to the Act.
2. Proposal for Issuance of Bonds. For the purpose of providing funds to finance the Project, together with funds available to or provided by the Borrower, there is hereby authorized the issuance, sale and delivery of the Bonds in an aggregate principal amount not to exceed $40,000,000. The Bonds shall be special, limited obligations of the City payable solely from the funds pledged therein. The Bonds are not to be payable from nor charged upon any funds of the City other than the revenues pledged to their payment, nor is the City subject to any liability thereon; no holders of the Bonds shall ever have the right to compel any exercise of the taxing power of the City to pay any of the principal of, premium, if any, or interest on the Bonds; the Bonds shall not constitute a charge, lien or encumbrance, legal or equitable, upon any property of the City, and each Bond shall recite that the Bonds, including interest thereon, are payable solely from the revenues pledged to the payment thereof and that no Bond shall constitute a debt of the City within the meaning of any constitutional or statutory limitation. The Bonds shall contain a recital that they are issued pursuant to the Act and such recital shall be conclusive evidence of the validity and regularity of the issuance thereof.
3. Bond Structure. Pursuant to a Loan Agreement, to be dated on or after March 1, 2015, the City will loan the proceeds of Bonds to the Borrower to finance the Project (the "Loan Agreement"). The payments to be made by the Borrower under the Loan Agreement are fixed so as to produce revenue sufficient to pay the principal of, premium, if any, and interest on the Bonds when due. When executed, the right, title and interest of the City in, to and under, among other things, the Loan Agreement (except as therein provided) will be assigned to the Trustee pursuant to the Indenture between the City and the Trustee. It is further proposed that the Borrower will execute a Combination Mortgage, Security Agreement and Fixture Financing Statement and Assignment of Leases and Rents in favor of the City as security for payment of the Bonds (the "Mortgage") which will be assigned to the Trustee pursuant to an Assignment of Mortgage (the "Assignment of Mortgage"). The Bonds will be further secured by an assignment of the Amended and Restated Development Agreement, to be dated on or after March 1, 2015, between the Blaine Economic Development Authority and the Borrower (the "Assignment of TIF Agreement"). The proceeds of the Bonds will be disbursed pursuant to a Disbursing Agreement among the Borrower, the Trustee and a disbursing agent (the "Disbursing Agreement"). The Bonds will be purchased by the Underwriter pursuant to a Bond Purchase Agreement among the City, the Underwriter and the Borrower (the "Bond Purchase Agreement"). The Bonds shall be issued in denominations of $5,000 and integral multiples in excess thereof, in such principal amounts, shall bear interest at the rates, shall be numbered, shall be dated, shall mature, shall be subject to redemption prior to maturity, and shall be in such form and have such other details and provisions as may be prescribed in the Indenture and as ultimately executed in accordance with Sections 7 and 9 hereof.
4. Forms of Documents Submitted. Pursuant to the preliminary approval of this Board, forms of the following documents have been submitted to the Board for approval:
(a) the Bond Purchase Agreement;
(b) the Loan Agreement;
(c) the Disbursing Agreement;
(d) the Mortgage;
(e) the Assignment of Mortgage;
(f) the Assignment of TIF Agreement; and
(g) the Indenture.
5. Findings. It is hereby found, determined and declared that:
(a) the Project furthers the policies of the Act;
(b) the Project promotes the public welfare by providing necessary multifamily rental housing facilities, so that adequate multifamily rental housing are available to residents of the City at a reasonable cost;
(c) the Act authorizes the acquisition, construction and installation of the facilities and equipment to be financed by the Bonds, the issuance and sale of the Bonds, the execution and delivery by the City of the Indenture, the Bond Purchase Agreement, the Assignment of Mortgage, and the Loan Agreement (collectively, the "Financing Documents"), the performance of all covenants and agreements of the City contained in the Financing Documents, and the performance of all other acts and things required under the constitution and laws of the State of Minnesota to make the Financing Documents and Bonds valid and binding obligations of the City in accordance with their terms;
(d) it is desirable that the Bonds be issued by the City upon the terms set forth in the Indenture;
(e) the payments under the Loan Agreement are fixed to produce revenue sufficient to provide for the prompt payment of principal of, premium, if any, and interest on the Bonds issued under the Indenture when due, and the Loan Agreement and Indenture also provide that the Borrower is required to pay all expenses of the operation and maintenance of the facilities to be financed by the Bonds, including, but without limitation, adequate insurance thereon and insurance against all liability for injury to persons or property arising from the operation thereof, and any taxes and special assessments levied upon or with respect to the premises of said facilities and payable during the term of the Loan Agreement and Indenture;
(f) as provided therein and in the Loan Agreement and Indenture, the Bonds are not to be payable from or charged upon any funds other than the revenue pledged to the payment thereof; the City is not subject to any liability thereon; no holder of any Bond shall ever have the right to compel any exercise by the City of any taxing powers to pay any of the Bonds or the interest or premium thereon, or to enforce payment thereof against any property of the City, except the interests of the City in the Loan Agreement which has been assigned to the Trustee under the Indenture; the Bonds shall not constitute a charge, lien or encumbrance, legal or equitable, upon any property of the City except the interests of the City in the Loan Agreement which has been assigned to the Trustee under the Indenture; the Bonds shall recite that the Bonds do not constitute or give rise to a pecuniary liability or moral obligation of the City, the State of Minnesota or any political subdivision, and that the Bonds, including interest thereon, are payable solely from the revenues pledged to the payment thereof; and the Bonds shall not constitute a debt of the City or the City within the meaning of any constitutional or statutory limitation.
6. Approval of Forms; Execution. The forms of the Financing Documents and exhibits thereto and all other documents listed in Section 3 hereof are approved substantially in the form submitted. Subject to the provisions of Section 12 hereof, the Financing Documents, in substantially the forms submitted, are directed to be executed in the name and on behalf of the City by the Mayor and the City Clerk. Subject to the provisions of Section 12 hereof, the Bonds are to be in executed the name of and on behalf of the City by the Mayor and the City Clerk, and are to be delivered to the Trustee for authentication and delivery to or at the direction of the Underwriter. Any other City documents and certificates necessary to the transaction described above may be executed by one or more appropriate officers of the City. Copies of all of the documents necessary to the transaction herein described shall be delivered, filed and recorded as provided herein and in the Loan Agreement and Indenture.
7. Official Statement. The City hereby consents to the preparation and distribution of the Official Statement for the Bonds; provided that it is understood that the City has relied upon the Borrower and the Underwriter and legal counsel retained by them to assure the accuracy and completeness of the information set forth in the Official Statement and that therefore the City has not made, and will not make, any representations or warranties with respect to the information contained therein, except under the headings "The Issuer" and "Litigation" but only with respect to the City. The drafts of the Official Statement on file with the City are hereby designated as "near final" offering memoranda for purposes of Rule 15-c2-12 of the Securities Exchange Commission.
8. Issuance. The City shall proceed forthwith to issue the Bonds, in the forms and upon the terms set forth in the Indenture and this Resolution, if and to the extent the City officers determine to proceed with the Project which determination shall be deemed made upon execution of the Financing Documents by the City officers. The Bonds shall be payable or prepayable at such time or times, shall bear interest at such rates and shall be subject to such other terms and conditions as set forth therein which the Underwriter, the Borrower and the City shall agree to, which agreement shall be deemed to have been made upon execution and delivery of the Bonds by the City officers. The City officers are authorized and directed to execute and deliver the Bonds as prescribed in the Indenture and this Resolution.
9. Records and Certificates. The Mayor, City Clerk and other officers of the City are authorized and directed to prepare and furnish to the Underwriter certified copies of all proceedings and records of the City relating to the Bonds, and such other affidavits and certificates as may be required to show the facts relating to the legality of the Bonds as such facts appear from the books and records in the officers' custody and control or as otherwise known to them; and all such certified copies, certificates and affidavits, including any heretofore furnished, shall constitute representations of the City as to the truth of all statements contained therein.
10. Changes in Forms Approved; Absent and Disabled Officers. The approval hereby given to the various documents referred to above includes approval of such additional details therein as may be necessary and appropriate and such modifications thereof, deletions therefrom and additions thereto as may be necessary and appropriate and approved by the City Attorney, the appropriate City staff person or by the officers authorized herein to execute or accept, as the case may be, said documents prior to their execution; and said officers or staff members are hereby authorized to approve said changes on behalf of the City. The execution of any instrument by the appropriate officer or officers of the City herein authorized shall be conclusive evidence of the approval of such document in accordance with the terms hereof. In the event of absence or disability of the officers, any of the documents authorized by this Resolution to be executed may be executed without further act or authorization of the City Council by any member of the City Council or any duly designated acting official, or by such other officer or officers of the City Council as, in the opinion of the City Attorney, may act in their behalf.
11. Future Amendments. The authority to approve, execute and deliver future amendments to Financing Documents entered into by the City in connection with the issuance of the Bonds and consents required under the financing documents is hereby delegated to the City Clerk, subject to the following conditions:
(a) such amendments or consents do not require the consent of the respective holders of the Bonds or such consent has been obtained;
(b) such amendments or consents to not materially adversely affect the interests of the City;
(c) such amendments or consents do not contravene or violate any policy of the City, and
(d) such amendments or consents are acceptable in form and substance to the counsel retained by the City to review such amendments. The authorization hereby given shall be further construed as authorization for the execution and delivery of such certificates and related items as may be required to demonstrate compliance with the agreements being amended and the terms of this Resolution. The execution of any instrument by the City Clerk shall be conclusive evidence of the approval of such instruments in accordance with the terms hereof. In the absence of the City Clerk, any instrument authorized by this paragraph to be executed and delivered may be executed by the officer of the City is authorized to act in their place and stead.
12. Indemnification by Borrower. It is understood and agreed that the Borrower shall indemnify the City against all liabilities, losses, damages, costs and expenses (including attorney's fees and expenses incurred by the City) arising with respect to the Project or the Bonds, as provided for and agreed to by and between the Borrower and the City in the Indenture or the Loan Agreement.
13. Headings; Terms. Paragraph headings in this Resolution are for convenience of reference only and are not a part hereof, and shall not limit or define the meaning of any provision hereof. Capitalized terms used but not defined herein shall have the meanings given them in the Indenture and Loan Agreement.
14. Bond Counsel Opinion. The City hereby authorizes Kennedy & Graven, Chartered, as bond counsel for the City, to prepare, execute, and deliver its approving legal opinions with respect to the Bonds.
15. Effective Date. This resolution shall be in full force and effect from and after its passage.
PASSED by the Blaine City Council on January 8, 2015.