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HomeMy WebLinkAbout9.B. Scott County HRA Multi-Family Housing Revenue Bonds-Res. No. 5909 9.6. CITY OF SHAKOPEE Memorandum TO: Mayor and City Council FROM: Mark McNeill, City Administrator SUBJECT: Public HearinglMulti-Family Housing Revenue Bond Sales DATE: July 10, 2003 INTRODUCTION: The Council is asked to hold a public hearing, and then adopt a resolution in which the City would pledge to reimburse Scott County for up to $6.4 million in bonds, if necessary. This action relates to the construction ofthe Northridge Housing Project. BACKGROUND: The Scott County HRA has made application, and has received a building permit for the construction of a housing project, to be known as Northridge Court. The location is east of the existing Levee Drive building, and is on a site currently owned by the City. Separate action earlier provided for tiles to be traded between the City and HRA, wherein the HRA would obtain ownership of the parking lot (Northridge site), in exchange for the HRA constructing an approximate 50 space parking lot on a redevelopment site southwest ofthe proposed building, and City participation of$36,000 for the construction of an additional parking lot on the site ofthe former Community Rec Building. The project itself would consist of 58 market rate apartment units, which would be rented to individuals age 55 or older. Funding for the project would come from the sale of $7 million in multi-family housing revenue bonds. Repayment ofthe bonds would come from rental income. However, in order to obtain the most favorable interest rate, the City is being asked to pledge its full faith and credit to guarantee repayment ofthe bonds, should rental revenue be inadequate to make full payment. In that case, however, the development agreement with the HRA calls for the City to become involved in the decision making process, which would allow for reexamination ofthe rental structure. However, the cash flow has been established to create a 110% coverage of the bonds. As a condition precedent to the issuance of the Bonds, the City of Shakopee must pledge its full fair and credit to reimburse the County in the event that any debt service is required to be paid by the County from time to time, subject to the statutory limitation on the pledge of the City's general obligation for such purpose. The maximum amount of bonds issued under Section 469.034, Subd. 2 to which the City's full faith and credit may be pledged is equal to one-half of one percent ofthe taxable market value ofthe City. Based on figures prepared by Springsted, the pledge of the City's general obligation is limited to $6,385,945. The City Council is being asked to hold a public hearing, take public input, and make a decision as to whether the it wishes to take action necessary to guarantee the bonds. RECOMMENDATION: I recommend that the public hearing be held, and, assuming that there are no questions which cannot be addressed satisfactorily, that the resolution be adopted providing for the bond sale. ACTION REQUIRED: Following the public hearing, ifthe City Council concurs, it should, by motion, adopt the following resolution: RESOLUTION NO. 5909 APPROVING THE ISSUANCE BY THE SCOTT COUNTY HOUSING AND REDEVELOPMENT AUTHORITY OF ITS MULTIF AMIL Y HOUSING REVENUE BONDS, APPROVING THE PLEDGE OF THE FULL FAITH AND CREDIT OF THE CITY IN CONNECTION WITH A PORTION OF SUCH BONDS, AND AUTHORIZING THE EXECUTION AND DELNERY OF RELATED DOCUMENTS I{At(~~ Mark McNeill City Administrator MM:th CITY OF SHAKOPEE, MINNESOTA Resolution No. 590,", Approving the issuance by The Scott County Housing And Redevelopment Authority of its Multifamily Housing Revenue Bonds, approving the pledge of the full faith and credit of the City in connection with a portion of such Bonds, and authorizing the execution and delivery of related documents WHEREAS, pursuant to Minnesota Statutes, Section 469.017, The Scott County Housing and Redevelopment Authority (the "Authority") is authorized to undertake housing development projects and to issue obligations to finance such projects; and WHEREAS, pursuant to Minnesota Statutes, Section 469.034, the Authority may pledge the full faith and credit of a general jurisdiction governmental unit to bonds issued by the Authority to finance a qualified housing development project if (a) the Authority determines that revenues pledged to the payment of such bonds will equal or exceed 110% of the principal and interest when due, and (b) such governmental unit approves such pledge following public hearings held by both the Authority and the general jurisdiction governmental unit; and WHEREAS, a "qualified housing development project" includes a housing development project intended for occupancy by seniors, with certain limited exceptions described in Minnesota Statutes, Section 469.034, Subdivision lee); and WHEREAS, the Authority has adopted a Housing Finance Program providing for the issuance of its qualified housing development project bonds in an aggregate principal amount not exceeding $7,000,000 (the "Bonds") to be secured primarily by revenues of the Project and secondarily by a pledge of the full faith and credit and general obligation of the Scott County, Minnesota (the "County") to finance an approximately 58-unit multifamily rental housing facility for seniors age 55 or older (the "Project"), to be located in the City of Shako pee (the "City"), and to be owned and operated by the Authority; and WHEREAS, in order to induce the County to pledge its full faith and credit to the Bonds, the Authority proposes to pledge the full faith and credit of the City to reimburse the County for the payment of a debt service on up to $6,385,945 of the Bonds, representing the statutory limitation on the aggregate principal amount of obligations to which the City's general obligation may be pledged for such bonds; and WHEREAS, on the date hereof, the City Council of the City held a public hearing, for which notice was published at least 15 days in advance, regarding the pledge by the Authority of the City's full faith and credit to the Bonds; NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SHAKOPEE, MINNESOTA as follows: 2362989vl 1. That the City hereby approves the issuance by the Authority of the Bonds to finance the Project and the pledge by the Authority ofthe full faith and credit of the City to reimburse the County for debt service on up to $6,385,945 principal amount of the Bonds. Such approval is subject to final determination by the Authority to be made in the Authority's resolution approving the sale of the Bonds that the projected revenues pledged to the payment of the Bonds will equal or exceed 110% of the principal and interest due on the Bonds for each year of their term. 2. The maximum principal amount of the Bonds to which the City's full faith and credit may be pledged pursuant to Minnesota Statutes, Section 469.034, Subd. 2, as of the date hereof is not less than $9,730,945. The sum of the Bonds to which the City's general obligation will be pledged and the outstanding principal amount of other bonds to which the City has previously approved the pledge of its full faith and credit pursuant to such Section does not exceed such limit. 3. The Mayor, City Council Members, officers and staff of the City are authorized and directed to execute and deliver such documents and certificates, including without limitation, a continuing disclosure agreement, as may be necessary or convenient to provide for the issuance of the Bonds Adopted on July 15, 2003. Attest: 2362989vl 2