Item Description:
title
Authorize the issuance and sale of one or more tax-exempt multifamily housing revenue bonds by the HCHRA for an affordable housing project at 2609 Blaisdell Ave in Mpls
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Resolution:
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APPROVING THE ISSUANCE OF THE MULTIFAMILY HOUSING REVENUE NOTE (WHITTIER COMMUNITY HOUSING PROJECT) SERIES 2023, BY THE Hennepin County Housing and Redevelopment Authority UNDER MINNESOTA STATUTES, CHAPTER 462C, AS AMENDED, TO FINANCE A MULTIFAMILY HOUSING DEVELOPMENT TO BE LOCATED within Hennepin County
WHEREAS, under the provisions of Minnesota Statutes, Chapter 462C, as amended (the “Act”), cities are authorized to finance multifamily housing developments through the issuance and sale of revenue obligations payable exclusively from the revenues of the multifamily housing development; and
WHEREAS, among the purposes authorized by the Act, proceeds derived from the sale of revenue obligations issued under the terms of the Act may be applied to make a loan to finance the acquisition and preparation of a site and the construction of a new, or the acquisition and rehabilitation of an existing, multifamily housing development, and in the making of loans to finance multifamily housing developments and the issuance of revenue obligations, the city may exercise any of the powers the Minnesota Housing Finance Agency may exercise under Minnesota Statutes, Chapter 462A, as amended, without limitation, under the provisions of Minnesota Statutes, Chapter 475, as amended; and
WHEREAS, for purposes of the Act, the term “city” is defined to include a county housing and redevelopment authority created by special law or authorized by its county to exercise its powers pursuant to Minnesota Statutes, Section 469.004; and
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, created in Hennepin County (the “County”) pursuant to Minnesota Statutes, Section 383B.77 to exercise all the powers and duties of a housing and redevelopment authority under Minnesota Statutes, Sections 469.001 to 469.047; and
WHEREAS, at the request of CB Whittier Community Housing Limited Partnership, a Minnesota limited partnership (together with its affiliates or assigns, the “Borrower”), the Issuer proposes to issue its Multifamily Housing Revenue Note (Whittier Community Housing) Series 2023 (the “Governmental Note”) in an aggregate principal amount not to exceed $16,885,000; and
WHEREAS, the Issuer will apply the proceeds derived from the sale of the Governmental Note to fund a loan to the Borrower (the “Loan”), pursuant to the terms of a Project Loan Agreement, dated as of June 1, 2023 (the “Project Loan Agreement”), by and among the Issuer, the Borrower, and U.S. Bank Trust Company, National Association, in its capacity as Fiscal Agent (the “Fiscal Agent”); and
WHEREAS, the Borrower will apply the proceeds of the Loan to finance the acquisition, rehabilitation, and equipping of an existing, elevator-served, 3-story building with approximately 45 units of affordable rental housing and the acquisition, construction, and equipping of a new, elevator-served, 3-story building with approximately 40 units of affordable rental housing, and facilities functionally related and subordinate thereto, to be located at or about 2609 Blaisdell Avenue in the City of Minneapolis, Minnesota, and known as Whittier Community Housing Project (the “Project”); and
WHEREAS, a notice of public hearing was published in Finance and Commerce, the official newspaper of the Issuer, on February 16, 2023, and in the Star Tribune, a newspaper of general circulation in the County, on February 16, 2023; and
WHEREAS, the notice stated the time and place of the public hearing, that it would be held in person and via telephone and other electronic means and accessible to the residents of the County by calling a toll-free telephone number, a general description of the Project, the address of the site of the Project, the initial operator of the Project, and the maximum aggregate principal amount of tax-exempt obligations to be issued to finance the Project; and
WHEREAS, in accordance with the Act, a Program for a Multifamily Housing Development (the “Housing Program”) was prepared on behalf of the Issuer with respect to the Project and submitted to Metropolitan Council on or before the day on which notice of the public hearing was published in a newspaper circulating generally in the County; and
WHEREAS, a public hearing was held before the HRA Board with respect to the Housing Program and the issuance of the Governmental Note on March 14, 2023, and a reasonable opportunity was provided at the public hearing for interested individuals to express their views orally or in writing; and
WHEREAS, such public hearing was conducted in person and via telephone and other electronic means as allowed under Minnesota Statutes, Section 13D.021, as amended, and Revenue Procedure 2022-20, issued by the Internal Revenue Service on March 18, 2022; and
WHEREAS, the Governmental Note is proposed to be issued as an “exempt facility bond” the interest on which is not includable in gross income for federal income tax purposes under Sections 103 and 141(e)(1)(A) of the Internal Revenue Code of 1986, as amended (the “Code”); and
WHEREAS, under Section 146 of the Code, the Issuer must receive an allocation of the bonding authority of the State of Minnesota in order to issue multifamily housing revenue obligations the interest on which is excludable from gross income for federal income tax purposes under Sections 141(e)(1)(A), 142(a)(7), and 142(d) of the Code, and an application for such an allocation must be made pursuant to the requirements of Minnesota Statutes, Chapter 474A (the “Allocation Act”); and
WHEREAS, in accordance with the authority granted under a resolution adopted by the Board of Commissioners of the Issuer (the “HRA Board”) on November 9, 2021, the Issuer, in cooperation with the Borrower, submitted an application to MMB for an allocation of bonding authority pursuant to Section 146 of the Code and the requirements of the Allocation Act; and
WHEREAS, the Issuer received an allocation of the bonding authority of the State of Minnesota to issue tax-exempt multifamily housing revenue obligations for the Project, in the amount of $16,885,000 pursuant to Certificate of Allocation Number 437, dated January 10, 2023; and
WHEREAS, under the terms of Section 147(f) of the Code, private activity bonds (such as the Governmental Note) will not be qualified bonds the interest on which is excludable from gross income for federal income tax purposes unless the issuance of the bonds has been approved by the applicable elected representative of the governmental unit which issued the bonds or on behalf of which the bonds were issued after a public hearing following reasonable public notice; and
WHEREAS, the applicable elected representative of a governmental unit means its elected legislative body or its chief elected executive office; if a governmental unit has no applicable elected representative then the applicable elected representative of such governmental unit is deemed to be the applicable elected representative of the next higher governmental unit from which the governmental unit derives its authority by: (i) the enactment of a specific law by or under which the governmental unit is created; (ii) otherwise empowering or approving the creation of the governmental unit; or (iii) appointing members to the governing body of the governmental unit; and
WHEREAS, the HRA has no applicable elected representative; the County is the next higher governmental unit from which the HRA derives its authority, and the Board of Commissioners of the County (the “County Board”) is an applicable elected representative of the County.
BE IT RESOLVED, by the Board of Commissioners of Hennepin County, Minnesota the following:
1. County Board Approval of Issuance of the Governmental Note. As an applicable elected representative of the County and, therefore, the applicable elected representative of the HRA, the County Board hereby approves the issuance of the Governmental Note by the HRA in an aggregate principal amount not to exceed $16,885,000, or in such greater amount as may hereafter be additionally allocated by MMB to the Issuer for this Project, provided that the aggregate principal amount shall not exceed $18,000,000.
2. Special, Limited Obligation of the Issuer. The Governmental Note when, as, and if issued, shall be a special, limited obligation of the Issuer, payable solely from the revenues received from the Project and the Project Loan Agreement between the Issuer and the Borrower, and other property pledged to the payment thereof, and shall not constitute a general or moral obligation of the County or the Issuer. The owners of the Governmental Note shall never have the right to compel any exercise of the taxing power of the County or the Issuer to pay the outstanding principal of the Governmental Note, or the interest thereon or to enforce payment thereof against any property of the County or the Issuer. The Governmental Note shall recite that the Governmental Note is issued pursuant to the Act, and that the Governmental Note, including interest and premium, if any, thereon, is payable solely from the revenues and assets pledged to the payment thereof, and the Governmental Note shall not constitute a debt of the Issuer or the County within the meaning of any constitutional or statutory limitation.
3. Housing Program. The Housing Program was submitted to the Metropolitan Council for its review and comment. All comments received from the Metropolitan Council were presented to this County Board on or prior to the date of the public hearing.
4. Documents Furnished to Bond Counsel. The Chair, County Administrator, and other officers of the County are authorized and directed to furnish to Dorsey & Whitney LLP (“Bond Counsel”), certified copies of all proceedings and records of the County relating to the HRA, the Project, the Governmental Note, and the Housing Program, and such other affidavits, certificates, and other documents as may be required by Bond Counsel to show the facts relating to the validity of the Governmental Note and related documents, as such facts appear from the books and records in the custody and control of such officers or as otherwise known to them; and all such certified copies, certificates, affidavits, and other documents, including any heretofore furnished, shall constitute representations of the County as to the truth of all statements contained therein.
5. Costs. The County Board has adopted this resolution (“Resolution”) in reliance upon the assurances from the Borrower that the Borrower will, upon demand, reimburse the County and the Issuer for costs paid or incurred by the County or the Issuer in connection with this Resolution, the Governmental Note, the Project, and the Housing Program, including any costs for reasonable attorneys’ fees.
6. Effective Date. This Resolution shall be in full force and effect from and after its passage this 16th day of May 2023.
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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.
CommonBond Communities, on behalf of CB Whittier Community Housing Limited Partnership (Developer), submitted an application for housing revenue bond financing to assist in the rehabilitation and development of 85 affordable rental housing units at 2609 Blaisdell Avenue and an adjacent parcel in Minneapolis (Project). The Project is known as “Whittier Community Housing” and will include the rehabilitation of an existing 45-unit building and the new construction of a 40-unit building on an underutilized portion of the site.
The Project will contain a total of 85 units ranging in size from studios to three bedrooms. Over half (44) of the units will be set aside for households at or below 30 percent of area median income (AMI), and the remaining units (41) will be set aside for households at or below 50 percent of AMI. All 85 units have affordability further enhanced by commitments of project-based Section 8 rental assistance, which allows households to pay no more than 30 percent of their income toward rent. The project will remain affordable for a minimum 30-year period.
The current annual income limits established by HUD for Hennepin County range from $24,650 for a one-person household to $35,200 for a four-person household at 30 percent of AMI and range from $41,100 for a one-person household to $58,650 for a four-person household at 50 percent of AMI. Project rents for Whittier Community Housing are determined by the Project-Based Section 8 program. Households will pay 30 percent of their income toward rent, with the Section 8 program contributing the remainder of the rent after the tenant-paid portion.
The Project meets the guidelines for conduit financing, as established by Resolution 23-HCHRA-0008. The HCHRA Board of Commissioners authorized preliminary approval for the issuance of bonds on November 9, 2021 (Resolution 21-HCHRA-0036); held a public hearing on the project on March 14, 2023; and authorized final approval of the issuance of bonds on May 9, 2023 (pending as of this writing).
Current Request: Approve issuance of multifamily housing revenue bonds by the HCHRA to finance a combination preservation and new construction affordable housing project at 2609 Blaisdell Avenue in Minneapolis.
Impact/Outcomes: Issuance of multifamily housing revenue bonds will facilitate the rehabilitation of 45 rental housing units and creation of 40 additional new rental units, all 85 of which will be affordable to and reserved for households at or below 50 percent of AMI.
Housing Disparity: Black, Latino/x, and Native American Households of color are disproportionately housing cost burdened. This request creates housing opportunities for individuals with incomes at or below 30 percent and 50 percent of the area median income.
recommendation
Recommendation from County Administrator: Recommend Approval