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ITEM 4.1 Riverview LandingeF Ot�co MINNESOTA V DEPARTMENT INFORMATION Request for City Council Action ORIGINATING DEPARTMENT REQUESTOR: MEETING DATE: Administration City Administrator/ Finance Director Flaherty July 24, 2017 PRESENTER(s) REVIEWED BY: ITEM #: City Administrator/ Finance Director Flaherty eligible under the City's Conduit Bond Policy. Riverview Landing, Inc. submitted the required application 4.1 AGENDA ITEM DETAILS RECOMMENDATION: City staff is recommending that the City Council approve a resolution giving preliminary approval to issuance of revenue bonds for the Riverview Landing senior housing project. ARE YOU SEEKING APPROVAL OF A CONTRACT? IS A PUBLIC HEARING REQUIRED? No Yes - July 24, 2017 BACKGROUND/JUSTIFICATION: The City received an application for conduit revenue bond project financing from Riverview Landing, Inc., for financing a senior housing project in the Waterfront East development area. The requested financing is eligible under the City's Conduit Bond Policy. Riverview Landing, Inc. submitted the required application fee along with the application and by such has agreed to the terms of the City's Conduit Bond Policy. A public hearing has been noticed for 7:00 p.m. on July 24, 2017, to take input on the Housing Program that must be approved for this project to proceed. The Housing Program addresses the issuance of revenue bonds to finance a senior rental housing development at 9200 Quantrelle Avenue NE. The Housing Program states that this 142 unit will include 126 independent living apartments and 16 memory care units. The Housing Program states that the maximum amount of bonds to be issued for this project is $30,000,000. By adoption the attached resolution, the City gives its preliminary approval for issuance of the revenue bonds for this project. The issuance of such bonds does not constitute a financial obligation of the City and does not affect the City's bond rating and debt limit. All costs for issuance of the bonds are the obligation of Riverview Landing, Inc. Representatives from Northland Securities, who are underwriting the bond for Riverview Landing, Inc., will be at the Council meeting to give a presentation on their request for the issuance of conduit revenue bonds by the City of Otsego. The City's bond counsel at Briggs and Morgan has reviewed all bond documents on the City's behalf. SUPPORTING DOCUMENTS ATTACHED: • Program for a Senior Multifamily Housing Development • Resolution 2017-62 CITY OF OTSEGO, MINNESOTA PROGRAM FOR A SENIOR MULTIFAMILY HOUSING DEVELOPMENT Adopted , 2017 Proposal; Authority. The City of Otsego, Minnesota (the "City") proposes to issue revenue bonds and to take other actions in furtherance of the objective of financing the acquisition, construction and equipping of the senior rental housing development described herein (the "Development"), pursuant to the applicable authority conferred upon the City by the laws of the State of Minnesota, including without limitation Minnesota Statutes, Chapter 462C, as the same may be amended from time to time (the "Act"). Authorization of Program. The Program is undertaken pursuant to the requirements of the Act. Purposes. In creating this Program, the City is acting in furtherance of its findings that the preservation of the quality of life in the City is in part dependent upon the maintenance and provision of adequate, decent, safe, sanitary, and affordable housing stock, including housing for the elderly, within the meaning of the Act; that accomplishing the goals of this Program is a public purpose and will benefit the residents of the City; that the need exists within the City to provide in a timely fashion additional affordable rental housing facilities to and for the benefit of elderly persons; that there exist or are expected to exist elderly persons and families within the City who are and will be able to benefit from and are in need of this Program; that this Program is necessary in view of the limited resources that may be available to such persons relative to the expenses involved in accomplishing the type of objectives outlined in this Program in the absence of one or more of the forms of assistance described herein or otherwise available pursuant to the Act; and that the City hereby finds that such forms of assistance are often necessary for the benefit of such persons, families, and goals and that, furthermore, the successful implementation of the objectives of the kind described in this Program has been found to provide impetus for the development of other housing and health care facilities, as well as the general development of the City, by other persons who are not the beneficiaries of such governmentally sponsored or assisted activities. Rental Housing Purposes. More particularly, the City finds that there exists a need for multifamily rental housing and related facilities for elderly persons, due to a variety of factors, including that the cost of new construction may in many cases prove economically unfeasible, given the high costs of construction and prevailing area rental levels, and that therefore appropriate levels of public assistance may be helpful and necessary in bridging that gap. General Description of the Program. This Program consists of assisting in financing the acquisition, construction and equipping of a new 142 -unit senior rental housing development, with approximately 126 independent and assisted living apartments and 16 memory care units, to be located on a site of approximately five acres in the City (the "Project" or the "Development"). The owner of the Project will be Riverview Landing, Inc., a Minnesota nonprofit corporation, or an affiliate (the "Borrower"). The Development will be designed and is intended to be used for rental occupancy; the Development will be designed for and used primarily by elderly or physically disabled persons. For purposes of federal income taxation, the Borrower is an organization described in 501(c)(3) of the Internal Revenue Code. The Project will be designed primarily for rental to elderly or disabled persons, within the meaning of Minnesota Statutes, Section 462C.05, subd. 4. Consequently, no income limits apply to residents of the Project under federal law or under the Act. Location. This Program is limited to the Project. The Project will be located at 9200 Quantrelle Avenue Northeast in the City. Revenue Bonds. The maximum principal amount of revenue bonds to be issued by the City to finance the Program is $30,000,000 (the "Bonds"). The proceeds of the Bonds will be loaned by the City to the Borrower under a loan agreement. Loan repayments made by the Borrower under the loan agreement will be applied to payments of principal of and interest and premium, if any, owing on the Bonds. The proceeds of the Bonds will finance (i) the acquisition, construction and equipping of the Project; (ii) the funding of one or more reserve funds to secure the timely payment of the Bonds; (iii) the payment of interest on the Bonds during the construction of the Project and prior to rent -up; and (iv) the payment of the costs of issuing the Bonds. The Project will be operated by the Borrower as a facility for rental primarily to elderly or disabled persons. The Bonds may be structured so as to take advantage of whatever means are available or necessary and are permitted by law to enhance the security for and marketability of the Bonds. Substantially all of the net proceeds of the Bonds (the initial principal amount thereof, less any amounts deposited in a reasonably required reserve or paid out as costs of issuance of the Bonds) will be used to pay the costs of the Project, including any functionally related and subordinate facilities. The Borrower will construct the Project in compliance with all applicable development restrictions, and all new construction and rehabilitation of the existing buildings is subject to applicable state and local building codes. The Borrower will be required to operate the Project in accordance with state and local anti -discrimination laws and ordinances. The costs of the Project and the Program undertaken to finance the Project, including specifically all costs to the City, will be paid or reimbursed by the Borrower. 2 Monitoring. The Program will be monitored by the City through agreements and covenants entered into by the Borrower pursuant to the loan agreement to be entered into in connection with the issuance of the Bonds. The City expects to enter into or continue suitable agreements with necessary parties to ensure consistent compliance with the objectives of this Program, as well as with the requirements of applicable law. Meeting Needs; Methods. The City believes that this Program will help meet the needs identified by the City for the development of new rental housing facilities for elderly and disabled persons. The specific methods anticipated to be used include the issuance of revenue bonds under the Act to provide feasible financing for the Development. The City will monitor the implementation of this Program pursuant to its loan agreement with the Borrower. 4822-2520-8131\2 3 CERTIFICATE CITY OF OTSEGO I, the undersigned being a duly qualified and acting officer of the City of Otsego, Minnesota, hereby attest and certify that: 1. As such officer, I have the legal custody of the original record from which the attached resolution was transcribed. 2. I have carefully compared the attached resolution with the original record of the meeting at which the resolution was acted upon. 3. I find the attached resolution to be a true, correct and complete copy of the original: RESOLUTION GIVING PRELIMINARY APPROVAL TO ISSUANCE OF REVENUE BONDS (RIVERVIEW LANDING, INC. PROJECT), SERIES 2017 4. I further certify that the affirmative vote on said resolution was ayes, nays, and absent/abstention. 5. Said meeting was duly held, pursuant to call and notice thereof, as required by law, and a quorum was present. WITNESS my hand officially as such officer this day of , 2017. City Clerk Resolution No. 2017-62 RESOLUTION GIVING PRELIMINARY APPROVAL TO ISSUANCE OF REVENUE BONDS (RIVERVIEW LANDING, INC. PROJECT), SERIES 2017 BE IT RESOLVED by the City Council of the City of Otsego (the "City"), as follows: Section 1. Recitals and Findings. 1.1. Riverview Landing, Inc., a Minnesota nonprofit corporation, has requested that the City issue its Revenue Bonds (Riverview Landing, Inc. Project), pursuant to Minnesota Statutes, Chapter 462C, as amended (the "Act'), in one or more series, and in aggregate principal amount not to exceed $30,000,000 (the "Bonds"). The proceeds of the Bonds shall be loaned to Riverview Landing, Inc., or an affiliate (the "Borrower"), to provide financing for the acquisition, construction and equipping of a new 142 -unit senior rental housing development, including 126 independent and assisted living apartments and 16 memory care units, all to be located at 9200 Quantrelle Avenue Northeast in the City (the "Project' or the "Development'). The issuance of the Bonds and the financing of the Project are more fully described in the Housing Program prepared pursuant to the Act (the "Housing Program"). The Housing Program is currently on file in the offices of the City Administrator/Finance Director. 1.2. On the date hereof, a public hearing (the "Public Hearing") was held by the city council of the City, with respect to the Housing Program and the issuance of the Bonds, as required by the Act and the provisions of section 147(f) of the Internal Revenue Code of 1986, as amended (the "Code") and regulations thereunder. The Public Hearing was held following publication of notice thereof, not fewer than 15 days in advance of the hearing, in a newspaper of general circulation in the area in which the Project is located. Prior to publication of the notice, a copy of the Housing Program was on file with the City and was separately filed by the City with the regional development commission for the area in which the City is located, if any, all to the extent required by and as contemplated by the Act. Section 2. Approvals and Authorizations. 2.1. The Housing Program, as currently on file in the office of the City Administrator/Finance Director, is hereby approved. 2.2. Preliminary approval is hereby given to the issuance of the Bonds, in an aggregate principal amount not to exceed $30,000,000; provided, however, that the details of the Bonds, the provisions for the payment thereof, and the forms of the legal documents to be entered into by the City in connection therewith shall be subject to final approval by the city council prior to their issuance. The Bonds shall not constitute a charge, lien or encumbrance, legal or equitable, upon any property of the City, except the revenues to be received from the Borrower specifically pledged to the payment thereof, and each Bond, when, as and if issued, shall recite in substance that such Bond, including interest thereon, is payable solely from said revenues and funds specifically pledged to the payment thereof, and shall not constitute a debt or pecuniary liability of the City within the meaning of any constitutional or statutory limitation. Adopted by the City Council of the City of Otsego this 24th day of July, 2017. Acting Mayor Attest: City Administrator/Finance Director 4852-1017-6323\2