Res 1985 - 40 Setting Guidelines for the Issuance of Tax Extempt Housing Mortgage Revenue BondsCITY OF MENDOTA HEIGHTS
DAKOTA COUNTY, MINNESOTA
RESOLUTION NO. 85- 40
RESOLUTION SETTING GUIDELINES FOR THE ISSUANCE OF TAX EXEMPT
HOUSING MORTGAGE REVENUE BONDS
WHEREAS, Minnesota Statutes, Chapter 462C, permits the issuance
by the City of housing bonds to finance, in whole or in part,
multi -family residential rental facilities, in cases where
construction of such facilities will increase a community's tax
base, and provide additional housing opportunities in the
community; and
WHEREAS, the City may incur costs and expenses in staff time and
professional fees for the review of the application and other
information supplied by an applicant requesting the City to issue
such bonds; and
WHEREAS, persons and firms seek a general framework within which
they may be guided in requesting such tax exempt financing.
NOW, THEREFORE BE IT RESOLVED by the City Council of the City of
Mendota Heights:
The following guidelines are established relating to the accept-
ance, consideration and approval of applications for tax exempt
housing revenue bonds to finance, in whole or in part, multi-
family residential rental facilities, or other private purpose
financing provided by the City. However, applicants must
understand that, notwithstanding observance of these guidelines,
the City Council may, in its sole and absolute judgment and
discretion, reject an application or that the City Council may,
in its sole and absolute judgment and discretion, approve an
application notwithstanding that one or more guidelines have not
been complied with.
1. The applicant will furnish evidence acceptable to
the City as to the applicant's ability and resource
capabilities relating to the financial aspects of
the project.
2. The City reserves the right to employ legal, account-
ing, appraisal, financial and other consultants to
review the proposed project and the financing therefor
and the costs thereof shall be paid, together with
administrative expense, by the applicant, whether or
not the City agrees to issue housing mortgage revenue
bonds for the project, whether or not such bonds are
issued, and whether or not the project is built.
3. The applicant shall deposit $2,500.00 with the applica-
tion and the City shall be entitled to use such funds
for preliminary expenses in connection with the project
and the applicant's request for housing mortgage revenue
bonds. Any unexpended balance of such deposit shall be
returned to the applicant if the issuance of such bonds
or the project is aborted for any reason. If such bonds
are issued by the City, the City will allow said expenses
to become part of the cost to be financed by such bonds.
4. Depending on the facts, the City may require the applicant
to establish and maintain a significant equity in the
structure and to establish and maintain a reserve balance
or deposit of securities with or for the benefit of the
City or other credit enhancement (e.g., letter of credit,
bond insurance) to protect against a default on such bonds.
5. The applicant will guarantee payment of the installments
under the revenue agreement to be entered into in connec-
tion with the issuance of such bonds, and such guaranty
shall remain in effect for the term of the bonds.
6. The fair market rental value for general purposes (not
solely for the applicant's purpose) must at least equal
the annual amount of principal and interest due on the
bonds to be issued.
7. The applicant shall require a payment and performance
bond of the building contractors equal to 100% of the
contract price. In the event the bond issue does not
provide for 100% of the estimated construction costs and
other costs to be incurred in connection with the issu-
ance of such bonds, the applicant shall deposit with the
bond trustee or private lender prior to the delivery of
the bonds, a sum sufficient to assume payment of all
costs of construction of the project and other costs
associated with the issuance of such bonds. Any balance
remaining on completion shall apply against future
installments under the revenue agreement or be returned•
to the applicant.
8. It is hereby expressed that the City would prefer the
applicant to use financing under the mortgage -note
provisions of the law (i.e., a private placement). It
shall be understood that in the event such bonds are
issued pursuant to a public offering, the applicant
and its bond underwriters shall hold harmless the City,
its officers, consultants and agents for any alleged or
actual violation of any securities laws, state or federal,
in connection with the issuance of such bonds for the
project. The City may require a surety bond to secure
performance of this "hold harmless" provision.
4
9. In consideration of the City's acting as a financing
conduit in the issuance of bonds, the applicant shall
pay to the City from the bond proceeds a sum equal to
the following schedule:
1% of the aggregate par value of such bonds up to
and including $500,000.00;
1/2 of 1% over $500,000 on the next $2,000,000.00;'
1/4 of 1% for the next amount over $7,500,000.00;
1/8 of 1% for any amount over $10,000,00040.
which shall be used by the City for furtherance of
general community housing goals and policies, or to
defray a portion of the cost of new or expanded City
services created by the new housing. The City will
allow the applicant to pay or be reimbursed for such
sum from the proceeds of such bonds.
10. The City reserves the right to deny, at its discretion,
any application that may appear in conflict or contrary
to the intent of M.S.A. 462C. The City's position is
that no applicant has a right to have the City issue
housing bonds or private purpose bonds, and in submitting
such an application, the applicant recognizes and accepts
that policy decision whether or not these guidelines are
followed in other respects.
Adopted by the City Council of the City of Mendota Heights this
21st day of May, 1985.
ATTEST:
th een M. Swanson
City Clerk
CITY COUNCIL
CITY OF MENDOTA HEIGHTS
By
Robert G. Lockwood
Mayor