Item Description:
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Preliminary approval to issue one or more tax-exempt multifamily housing revenue bonds for Willow Woods, an affordable housing preservation project at 10850 South Shore Drive in Plymouth; authorization to apply for allocation of issuance authority and to establish a public hearing
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Resolution:
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GRANTING PRELIMINARY APPROVAL TO THE ISSUANCE OF MULTIFAMILY HOUSING REVENUE BONDS (WILLOW WOOD ESTATES PROJECT); AUTHORIZING THE SUBMISSION OF ONE OR MORE APPLICATIONS FOR ALLOCATION OF BONDING AUTHORITY UNDER MINNESOTA STATUTES, CHAPTER 474A; AUTHORIZING THE PREPARATION OF A HOUSING PROGRAM PURSUANT TO MINNESOTA STATUTES, CHAPTER 462C; AND AUTHORIZING A PUBLIC HEARING AND PUBLICATION OF A NOTICE THEREOF
WHEREAS, the Hennepin County Housing and Redevelopment Authority (the “Issuer” or “HRA”) is a housing and redevelopment authority and a public body corporate and politic duly organized and existing under the Constitution and laws of the State of Minnesota; and
WHEREAS, pursuant to Minnesota Statutes, Chapter 462C, as amended (the “Housing Act”), the Issuer is authorized to carry out the public purposes described in the Housing Act by issuing revenue bonds or other obligations to finance or refinance multifamily housing developments, and as a condition to the issuance of such revenue bonds, adopt a housing program providing the information required by Section 462C.03, subdivision 1a of the Housing Act; and
WHEREAS, in the issuance of revenue bonds to finance multifamily housing developments, the Issuer may exercise within its corporate limits any of the powers the Minnesota Housing Finance Agency may exercise under Minnesota Statutes, Chapter 462A, as amended, including without limitation under the provisions of Minnesota Statutes, Chapter 475, as amended; and
WHEREAS, CommonBond Communities (together with its affiliates, the “Borrower”) submitted an application to the Issuer requesting the issuance of one or more series of multifamily housing revenue bonds or other obligations (the “Bonds”), in an aggregate principal amount not to exceed $7,500,000, under the provisions of the Housing Act to assist in financing and refinancing the acquisition, rehabilitation, and equipping of a 40-unit multifamily housing development and facilities functionally related and subordinate thereto known as Willow Wood Estates (the “Project”), located at 10850 South Shore Drive in the City of Plymouth (the “City”), within Hennepin County (the “County”), for occupancy by persons and families of low and moderate income, to be initially owned and operated by the Borrower; and
WHEREAS, under Section 147(f) of the Internal Revenue Code of 1986, as amended (the “Code”), prior to the issuance of the Bonds, a public hearing duly noticed must be held by the Board of Commissioners of the HRA (the “Board”). Under Section 462C.04, subdivision 2 of the Housing Act, a public hearing must be held on a housing program with respect to the Project (the “Housing Program”) after one publication of notice in a newspaper circulating generally in the County, at least ten (10) days before the hearing (or such other notice period as is then in effect under the Housing Act and Treasury regulations applicable to tax-exempt bonds), and on or before the date of publication of such notice, the Housing Program must be submitted to the Metropolitan Council for review and comment; and
WHEREAS, under Section 146 of the Code, the Bonds must receive allocation of the bonding authority of the State of Minnesota, and one or more applications for such an allocation must be made pursuant to the requirements of Minnesota Statutes, Chapter 474A, as amended (the “Allocation Act”); and
WHEREAS, the Board may grant preliminary approval to the issuance of the Bonds to finance the multifamily housing development referred to in the Housing Program, and may authorize the submission of one or more applications to the State of Minnesota Department of Management and Budget (“MMB”) for allocation of bonding authority with respect to the Bonds to finance the Project in accordance with the requirements of Section 146 of the Code and the Allocation Act; and
BE IT RESOLVED, that the Board of the HRA approve the following:
1. The Project and the issuance of the Bonds therefor, in one or more series of tax-exempt or taxable bonds or notes in an amount not to exceed $7,500,000, are hereby given preliminary approval by the Issuer, subject to mutual agreement of the Issuer, the Borrower, and the initial purchaser of the Bonds as to the details of the Bonds and provisions for their payment. In all events, it is understood, however, that the Bonds shall not constitute a charge, lien or encumbrance, legal or equitable, upon any property of the Issuer, except the Issuer’s interest in the loan agreement with the Borrower for the Project and security pledged to the payment thereof. The Bonds, when, as, and if issued, shall recite in substance that the Bonds, including interest thereon, are payable solely from the revenues received from the Project and property and security pledged to the payment thereof, and shall not constitute general or moral obligations of the Issuer or the County.
2. The Bonds will be payable solely from the revenues of the Project and other money and security, if any, provided by the Borrower and its affiliates, and the Bonds will not constitute or give rise to a pecuniary liability of the Issuer or of the County or a charge against the general credit, full faith and credit, or taxing powers of the Issuer or the County.
3. No holder of any such Bonds shall ever have the right to compel any exercise of the taxing power of the Issuer or the County to pay the Bonds, or the interest thereon, nor to enforce payment against any property of the Issuer, except revenues of the Project to be paid to the Issuer and pledged to the Bonds.
4. The Borrower may incur expenditures for the Project prior to the issuance of the Bonds therefor, and such expenditures may be reimbursed from proceeds of the Bonds, when, and if issued. This resolution shall constitute an “official intent” to reimburse such expenditures for purposes of Treasury Regulations, Section 1.150-2.
5. The Executive Director and other officials, employees, and agents of the Issuer, with the assistance of the Borrower and Taft Stettinius & Hollister LLP, as bond counsel to the Issuer (“Bond Counsel”), are authorized and directed to prepare and submit one or more applications to MMB for allocation of bonding authority for the Project and the Bonds to be issued therefor in an amount not to exceed $7,500,000, pursuant to the Allocation Act.
6. The officials, employees, and agents of the Issuer are hereby authorized to receive money from the Borrower for the payment of the deposit and fee required to be paid to MMB under the Allocation Act in connection with the application for an allocation of bonding authority. The officials, employees, and agents of the Issuer are further authorized to disburse to the Borrower any money returned to the Issuer by MMB in connection with such application.
7. The Executive Director and other officers, employees and agents of the Issuer are hereby authorized to: (i) prepare the Housing Program in accordance with the requirements of the Act; (ii) submit the Housing Program to the Metropolitan Council for its review and comments in accordance with Section 462C.04, subdivision 2 of the Housing Act; and (iii) participate in the preparation and review of necessary documents relating to the Project and the Bonds issued in connection therewith.
8. The Borrower will be responsible for paying any and all costs incurred by the Issuer or County in connection with the Bonds and the Project, including reasonable costs that the Issuer may incur for legal counsel and any reasonable fees the Issuer or County may charge, whether or not the Project is carried to completion, and whether or not the Bonds or operative instruments are executed.
9. The adoption of this resolution does not constitute a guaranty or firm commitment that the Issuer will issue the Bonds as requested by the Borrower. The Issuer retains the right, in its sole discretion, to withdraw from participation and accordingly not to issue the Bonds, or issue the Bonds in an amount less than the amount referred to herein should the Issuer at any time prior to issuance thereof determine that it is in the best interest of the Issuer not to issue the Bonds, or to issue the Bonds in an amount less than the amount referred to herein, or should the parties to the transaction be unable to reach agreement as to the terms and conditions of any of the documents required for this transaction, including substantial changes to the affordability level, unit mix, scale, scope, or cost of the Project.
10. A public hearing on the Housing Program relating to the Project and the issuance of the Bonds shall be held before the Board of the HRA on a date, and at a time and place, as is deemed appropriate by the Clerk of the Board. The Clerk of the Board shall publish notice of the public hearing, in substantially the form attached hereto as EXHIBIT A in Finance and Commerce, the official newspaper of the County. Bond Counsel is hereby directed to publish notice of the public hearing in the Star Tribune, a newspaper of general circulation in the County. The notice shall be published at least once, in each newspaper, at least 10 days prior to the date of the public hearing (or such other notice period as is then in effect under the Housing Act and applicable Treasury regulations applicable to tax-exempt bonds), but not more than 30 days prior to the date of the public hearing, and a copy of the Housing Program shall be submitted to the Metropolitan Council for review and comment on or before the date of publication of the notice.
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Background: The Hennepin County Housing and Redevelopment Authority (HCHRA) is authorized to issue conduit financing, including housing revenue bonds pursuant to the provision of Minnesota Statutes, Chapters 462C and 469. The bonds are repayable solely from revenue and assets pledged in their support by the developer and are not a debt or property tax obligation of Hennepin County or the HCHRA. Projects that receive housing revenue bonds may also access 4% low-income housing tax credits, an important federal funding source for preserving and creating affordable housing within Hennepin County.
On March 30, CommonBond Communities applied to the HCHRA for housing revenue bond financing to assist in the rehabilitation and modernization of 40 affordable multifamily housing units at 10850 South Shore Drive in Plymouth, known as Willow Woods.
Once completed, the project will preserve a total of 40 townhome units, all of which are three- and four-bedroom units. Twelve units will be reserved for households at or below 50 percent of Area Median Income (AMI), with the remainder of units reserved for households at or below 60 percent AMI. All 40 units will continue to benefit from project-based Section 8 rental assistance, which further enhances affordability for all residents. The project will remain affordable for a minimum 30-year period.
The project’s total development cost is expected to be approximately $19 million dollars. The developer is requesting HCHRA preliminary approval to apply to the State of Minnesota for an allocation of bonding authority and to issue housing revenue bonds not to exceed $7,500,000. The bonds will be special limited obligations of the HCHRA, payable solely from the revenues specifically pledged by the developer. In addition to the housing revenue bonds, proposed sources of funding include a first mortgage, 4% Low-Income Housing Tax Credit equity, a state housing tax credit loan, and significant developer contributions.
Conduit financing requests typically follow a series of formal actions by the HCHRA Board: 1) consideration of preliminary approval; 2) establishment and holding of a public hearing; and 3) consideration of final approval. During the final approval phase, the Hennepin County Board of Commissioners will also consider a companion resolution approving the HCHRA action.
Current Request: This request is for preliminary approval to issue tax-exempt multifamily housing revenue bonds for Willow Woods, a housing project at and around 10850 South Shore Drive in Plymouth, authorization to apply for allocation of issuance authority, and authorization to establish a public hearing.
Impact/Outcomes: Issuance of multifamily housing revenue bonds will facilitate the rehabilitation of 40 affordable, large family, rental housing units in a high-opportunity suburban location; of the 40 units total, 12 will be affordable to and reserved for households at or below 50 percent AMI, and all 40 units will continue to benefit from project based Section 8 rental assistance.
Housing Disparity Domain: Households of color are disproportionally housing cost burdened and face housing instability at disproportionate rates. This request will preserve affordable housing opportunities in an important suburban location.
recommendation
Recommendation from County Administrator: Recommend Approval