1l Multifamily Housing Bonds CITYOF
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MEMORANDUM
TO:
FROM:
DATE:
SUB J:
Mayor
City Council
Bruce M. DeJong, Finance Director~)
August 21, 2002
Multifamily Housing Revenue Bonds
The City of Chanhassen is being asked by VOP I, LLC to approve a resolution
to initiate the process of issuing revenue bonds. The development group was
organized for the purpose of building a 54-unit apartment in Villages on the
Ponds. This resolution does not obligate the City to any tax levy or repayment,
but merely allows the developer access to favorable rates through a state
program which relies on tax-free interest rates to reduce the overall cost of
financing the project.
This resolution was prepared by Stefanie Galey from Faegre & Benson, who
represents the VOP I Corporation.
Recommendation
Staff recommends that the City Council adopt the resolution as presented.
The City of Cflaflflassen · .A orc',','ina communit)' witr,, c,~an .ak~s. q:~a!i¥ schools, a charming downtown, thriving businesses, winding frails, and beautiful parks. A gear place to live, ;vo.rk. and play.
CITY OF CHANHASSEN, MINNESOTA
RESOLUTION NO.
RESOLUTION GIVING PRELIMINARY APPROVAL TO A
PROJECT AND TO THE ISSUANCE OF MULTIFAMILY
HOUSING REVENUE BONDS AND AUTHORIZING
APPLICATION FOR ALLOCATION OF ISSUANCE AUTHORITY
WHEREAS, VOP I, LLC (including all successors and assigns, the
"Company"), has requested the City of Chanhassen, Minnesota (the "City") to
provide revenue bond financing for a project to be located on the northeast quadrant
of the intersection of Lake Drive and Main Street in the City of Chanhassen, generally
described as the acquisition of land and construction and equipping thereon of an
approximately 54-unit multifamily residential rental project for occupancy by persons
and families of low and moderate income (the "Project"); and
WHEREAS, pursuant to Minnesota Statutes, Chapter 462C, as amended (the
"Act"), the City is authorized to issue its revenue bonds to finance all or part of the
cost of the Project;
NOW, THEREFORE, BE IT RESOLVED by the City of Chanhassen,
Minnesota that:
1. The Project and the issuance of revenue bonds therefor in an amount up
to approximately $8,000,000 are hereby given preliminary approval by the City,
subject to the mutual agreement of the City, the Company 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 City except the City's
interest in the loan agreement with the Company and in the Project, and the bonds,
when, as, and if issued, shall recite in substance that the bonds, including the interest
thereon, are payable solely from the revenues received from the Project and'property
pledged to the payment thereof, and shall not constitute a debt of the City.
The bonds will be payable solely from the revenues of the Project and other
moneys, if any, provided by the Company, and the bonds will not constitute or give
rise to a pecuniary liability of the City or a charge against the general credit or taxing
powers of the City.
No holder of any such bonds shall ever have the right to compel any exercise
of the taxing power of the City to pay the bonds, or the interest thereon, nor to enforce
payment against any property of the City, except revenues of the Project pledged to
the payment thereof.
2. The Company may incur expenditures on 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,
Sections 1.103-8T(a)(5) and 1.150-2.
3. The City Manager is authorized and directed to prepare and submit an
application to the Minnesota Department of Finance for an allocation of issuance
authority for the Project and the bonds to be issued therefor in an amount up to
$8,000,000, pursuant to Minnesota Statutes, Chapter 474A, as amended.
4. The City Manager and other officers, employees and agents of the City
are hereby authorized to participate in the preparation and review of necessary
documents relating to the Project and bonds issued in connection therewith.
5. The Company will be responsible for paying directly or through the
City any and all costs incurred by the City in connection with the Project, including
any reasonable costs that the City may incur for legal counsel and any reasonable fees
the City may charge, whether or not the Project is carried to completion, and whether
or not the bonds or operative instruments are executed.
6. The adoption of the Resolution does not constitute a guaranty or firm
commitment that the City will issue the bonds as requested by the Company. The City
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 if the City at any time prior to issuance thereof determines that it is in its best
interest not to issue the bonds, or if the parties to the transaction are unable to reach
agreement as to the terms and conditions of any of the documents required for the
transaction.
Adopted this__ day of August, 2002.
ATTEST:
Mayor
City Manager
M1:908019.0!