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HomeMy WebLinkAbout10.B.2. Refinancing of CDA Bonds for Northridge Apartments Project-Res. No. 7169 la•�.� CITY OF SHAKOPEE Memorandum TO: Mayor and City Council FROM: Mark McNeill, City Administrator SUB.TECT: Scott County CDA Bond Refunding Resolution DATE: Februazy 21, 2012 Comment: Introduction: The Council is asked to adopt a resolution which authorizes the Scott Counry Community Development Agency (CDA) to refinance appxoximately $6.5 million oCgeneral obligation bonds for the Northridge Apartments Project. The intent of this refunding is to provide a cost savings to the Scott County CDA, as a result of lower interest rates to be paid. Background: The City has been contacted by representatives of the Scott County CDA xegarding an opportunity refund at housing development revenue bonds which were used to construct the Northridge Apartments Project. Those bonds were originally issued in 2003, and funded the construction of a 58 unit multi-family senior rental housing community, which is located on Levee Drive, in the downtown. Because of market conditions, the CDA has been advised that it will realize a project savings by refinancing those bonds at a lower interest rate. At the time that the bonds were originally sold, in order to facilitate the project, the City Council agreed to pledge the City's full faith and credit to back those bonds. In other words, should revenues from the building's rents ever be insufficient to make payment on the bonds` interest and principal requirements, the City's general obligation credit would be used to make up the difference. Nothing is proposed to be changed in the existing agreements concerning this refinancing. However, because the interest rates to be paid will be reduced, less overall revenue from the project will be needed to repay the remaining bonds. Therefore, the City's financial exposure is also going to be reduced as a result of this funding. For that reason, it is a positive pxoposal for the City. Note that the actual amount of the bonds to be refinanced is $6,38�,945. Representatives from the CDA will be in attendance and available for questions at the February 21 meeting. Recommendation: I recommend that the City Council adopt a resolution allowing for the refunding of the bonds, and which further renews the pledge by the CDA of the full faith and credit of the City regazding payments for debt service. Relationship to Visioning: This supports Goal D Maintain, improve, and create strong partnerships with other public and private sectox entities. Action Required: If the Council concurs, it should, by motion, adopt Resolution No. 7169: A Resolution approving the issuance by the Scott County Community Development Agency of its Governmental Refunding Bonds (Scott County, Minnesota-Unlimited Tax General Obligation-Northridge Project) Series 2102A; the pledge by the CDA of the full faith and credit of the City to xeimburse the County for payments of debt services, subject to the statutory limitation on amount; and the execution and delivery of related documents. �� � �,, ., �! . �rc.(��- !�i_,.'�i��l�( Mark McNeill MM:cn City Administrator CITY OF 5HAKOPEE, MINNESOTA Resolution No. 7169 Approving the issuance by the Scott County Community Development Agency of its Governmental Refunding Bonds (Scott County, Minnesota - Unlimited Tax General Obligation - Northridge Project) Series 2012A; the pledge by the CDA of the full faith and crcdit of the City to reimhurse the County for payments of debt service, subject to the statutory limitation on amount; and the execution and delivery of related documents. WHEREAS, pursnant to Nlinnesota Statutes, Section 469.034, Subd. 2(the "Act"), the Scott County Community Dcvelopment Agency (the "CDA") has previously issued its $6,640,0�0 Housing Development Revenue Ronds (Scott County, Minnesota — Unlimited Tax General Obligation — Northridge Apartinents Project) Series 2003 (the "Yrior Bonds") to construct a 58-unit multifainily rental housing facilify for seniors (the "YrojecY') known as Northridge Apartments in the City of Shakopee (the "City"); and WIIEREAS, pursuant to Resolution No. 5909, the City approved the pledge by the CDA of the City's full faith and crcdit and taxing powers to the payment of debt service on up to $6,385,94� of thc Prior Bonds; and WHERLAS, the CDA proposes to refund the Prior 13onds by issuing its Governmental Refunding 13onds (Scott County, Minnesota - Unlimited "1'ax General Obligation - Northridge Court) Scries 2012A (the `Bonds"), in an aggregate principal amount not exceeding $6,500,000, pursuant to Minnesota 9lalutes, Sectioi� 469.034, Subd. 2; WHEREAS, the CDA further proposes to pledge the full faith and credit of Scott County (the "County") to the Bonds; and ��II�REAS, the CDA further proposes to pledge the fiill faith and credit of the City to reiinburse the County for debt service, if any, paid by Yhe County pursuant to such pledge, subject to the statutory limit on the principal amount of such general obligations �vhich the City is authorized to issue; and WHEI�AS, in connection with the issuance of the Prior Bonds, the CDA, ihe County and the City entcred into a Joint Powers Agreeinent, dated as of September 1, 2003 (the "Joint Powers AgreemenY'); and NOW, THEREFORE, BE IT RESOLVED, by the City Council of the City of Shakopee, Minnesota, as follows: 1. That the City hereby approves the issuance by the CDA of the Bonds and the pledgc by the CDA of the full faith and credit of the City thereto to reimburse the County for debt service paid by the County pursuant to the pledge of its full laith and credit. Sueh pledge shall be limited to �56,385,945J principal amount of the Bonds in accordanec with Minnesota Statutes, Scetion 469.034, Subd. 2. sasssse�3 2. That the Mayor and Cify Administrator aze authorized to execute and deliver on behalf of the City such documents as may be necessary or convenient in connection with the CDA's issuance of the Bonds, including, without limitation, an amendment to the Joint Powers AgreemcnY and an indenfure of trust in forms acecptable to Uzem. Passed and adopted on this 21 st day of February, 2012. Mayor Altest: City Clerk ftd55586v3 �