Loading...
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