APPROVING THE ISSUANCE, SALE, AND DELIVERY BY THE HENNEPIN COUNTY HOUSING AND REDEVELOPMENT AUTHORITY OF ITS MULTIFAMILY HOUSING REVENUE OBLIGATIONS IN AN AGGREGATE PRINCIPAL AMOUNT NOT TO EXCEED $28,800,000 TO FINANCE A MULTIFAMILY HOUSING DEVELOPMENT TO BE LOCATED IN THE CITY OF MINNEAPOLIS

WHEREAS, under the provisions of Minnesota Statutes, Chapters 462C, as amended (the “Housing Act”), cities are authorized to finance multifamily housing developments through the issuance and sale of revenue obligations payable from the revenues of the multifamily housing development; and

WHEREAS, among the purposes authorized by the Housing Act, proceeds derived from the sale of revenue obligations issued under the terms of the Housing Act may be applied to make a loan to finance the acquisition and preparation of a site and the construction or rehabilitation of a 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 the Housing Act, without limitation under the provisions of Minnesota Statues, Chapter 475, as amended; and

WHEREAS, for purposes of the Housing 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 “HCHRA”) 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 Statues, Section 469.001 to 469.047 (the “HCHRA Act”); and

WHEREAS, in accordance with the provisions of the Housing Act, the Issuer is authorized to carry out the public purposes described in the Housing Act by issuing revenue obligations to finance or refinance multifamily housing developments located within the County, and as a condition to the issuance of such revenue obligations, adopt a housing program providing the information required by Section 462C.03, subdivision 1a, of the Housing Act; and

WHEREAS, at the request of Parkview Apartment Associates, LP, a Delaware limited partnership (the “Borrower”), the Issuer is proposing to issue its multifamily housing revenue bonds or other obligations (the “Bonds”), in an aggregate amount not to exceed $28,800,000, and apply the proceeds derived from the sale of the Bonds to make a loan (the “Loan”) to the Borrower; and

WHEREAS, the Borrower will apply the proceeds of the Loan to finance the following: (i) the acquisition, rehabilitation, and equipping of an approximately 223-unit multifamily rental housing development and facilities functionally related and subordinate thereto, located at 1125 Fremont Avenue N., and 1121 and 1227 12th Avenue N., in Minneapolis (the “City”), within the County, for occupancy by persons and families of low and moderate income (the “Project”); (ii) the funding of one or more reserve funds to secure the timely payment of the Bonds; (iii) the payment of a portion of the interest on the Bonds; and (iv) the payment of the costs of issuing the Bonds; and

WHEREAS, under Section 146 of the Code of 1986, as amended (the “Code”), the Issuer must receive an allocation of bonding authority of the State of Minnesota in order to issue multifamily housing revenue obligations, the interest of which is excludable from gross income for federal income tax purposes under Section 141(e)(1)(A), 143(a)(7), and 142(d) of the Code, and an application 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 “HCHRA Board”) on February 12, 2019, the Issuer and Dorsey & Whitney LLP, bond counsel to the Issuer (“Bond Counsel”), in cooperation with the Borrower, submitted an application for bonding authority to the Minnesota Department of Management and Budget (“MMB”) in a principal amount not to exceed $28,800,000 pursuant to Section 146 of the Code and the requirements of the Allocation Act; and

WHEREAS, on August 12, 2019, the Issuer received an allocation of the bonding authority of the State of Minnesota to issue tax-exempt multifamily housing revenue obligations, in the maximum amount of $28,800,000; and

WHEREAS, under the provisions of Section 147(f) of the Code and applicable Treasury Regulations, the Bonds will not constitute exempt facility bonds unless the Bonds are approved by the governmental unit that issues the Bonds or on behalf of which the Bonds are issued after a public hearing following reasonable public notice, defined therein to include notice published in a newspaper of general circulation in the County at least fourteen (14) days before the public hearing; and

WHEREAS, under the terms of Section 147(f) of the Code, private activity bonds (such as the Bonds) will not be qualified bonds, the interest of which is excludable from gross income for federal income tax purposes unless the issuance of the bonds has been approved by the elected representative of the governmental unit which issued the bonds or on behalf of which the bonds were issued; and

WHEREAS, the applicable elected representatives of the 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 unity 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 governmental body of the governmental unit; and

WHEREAS, the HCHRA has no applicable elected representative, the County is the next higher governmental unit from which the HCHRA derives its authority, and the Board of Commissioners of the County (the “County Board”) is an applicable elected representative of the County; and

WHEREAS, a notice of public hearing was published in Finance and Commerce, the official newspaper of the County, and in the Star Tribune, a newspaper of general circulation in the County, at least fifteen days before the public hearing held on April 16, 2019; and

WHEREAS, the notice stated the time and place of the public hearing, 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 requirements the Housing Act, a housing program was prepared with respect to the Project (the “Housing Program”) and was submitted to the Metropolitan Council for its review and comment on or before the day on which the notice of public hearing was published; and

WHEREAS, on April 16, 2019, in accordance with the requirements of Section 147(f) of Code, and Section 462C.04, subdivision 2 of the Housing Act, the Board of the Issuer held a public hearing at which a reasonable opportunity was provided for interested individuals to express their views, both orally and in writing, with respect to the Project and the proposed issuance of revenue obligations to provide financing for the Project.

BE IT RESOLVED, by the Board of Commissioners of Hennepin County, Minnesota the following:

1. County Board Approval of Issuance of the Bonds. As an applicable elected representative of the County and, therefore, the applicable elected representative of the HCHRA, the County Board hereby approves the issuance of the Bonds by the HCHRA in the principal amount up to the allocation amount to finance the Project.
   
   
2. Special, Limited Obligation of the Issuer. The Bonds shall be special, limited obligations of the Issuer payable solely from the revenues provided by the Borrower pursuant to the Project Loan Agreement proposed to be entered into between the Issuer, U.S. Bank National Association, as Fiscal Agent (the “Fiscal Agent”), and the Borrower and other funds and property pledged to the payment of the Bonds pursuant to the Funding Loan Agreement proposed to be entered into between the Issuer, JLL Capital Markets, as the initial funding lender and the Fiscal Agent, and other funds and property derived from the Borrower and pledged to the payment of the Bonds. The Bonds shall not be payable from, nor charged upon any funds other than the revenue pledged to their payment, nor shall the County or the Issuer be subject to any liability thereon, except as otherwise provided in this paragraph. No owner of the Bonds shall ever have the right to compel any exercise by the County or the Issuer of any taxing powers of the County or the Issuer to pay the Bonds or the interest or premium thereon, or to enforce payment thereof against any property of the County or the Issuer. The Bonds shall recite that the Bonds are issued pursuant to the Housing Act, and that the Bonds, including interest and premium, if any, thereon, are payable solely from the revenues and assets pledged to the payment thereof, and the Bonds shall not constitute a debt of the County or the Issuer 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 the County Board on or prior to the date hereof.
   
   
4. Documents Furnished to Bond Counsel. The Chair, the County Administrator, and other officers of the County are authorized and directed to furnish to Bond Counsel, certified copies of all proceedings and records of the County relating to the HCHRA, the Project, the Bonds, 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 Bonds 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 (the “Resolution”) in reliance upon 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 Bonds, the Project, and the Housing Program.
   
   
6. Effective Date. This Resolution shall be in full force and effect from and after its passage this 27th day of August, 2019.

History: Housing revenue bonds are a financing mechanism available to the Hennepin County Housing and Redevelopment Authority (HCHRA) to fund eligible projects that are determined to be in the public interest, including the development and/or rehabilitation of affordable housing. The bonds are a special limited obligation of HCHRA, repayable solely from revenue and assets pledged in their support and are not a debt or property tax obligation of Hennepin County or the HCHRA. Section 147(f) of the Internal Revenue Code requires that the issuance of revenue bonds be approved by the applicable elected representative of the HCHRA, which is the Hennepin County Board of Commissioners.

DeSola Capital, on behalf of Parkview Apartment Associates, LP, (Developer), submitted an application to the HCHRA for housing revenue bond financing to assist in acquisition and rehabilitation of an existing housing development with 223 affordable rental units (Project) in Minneapolis. The project contains a mix of one-bedroom and two-bedroom apartments. Two hundred and twenty-two (222) of the units will be affordable to households at or below 50 percent of area median income (AMI), as determined by the U.S. Department of Housing and Urban Development, and one unit will be affordable to households at or below 60 percent of AMI. The project has an existing Section 8 contract for 222 of the 223 units. The developer has committed to retaining the Section 8 contract and extending the affordability period for an additional 30 years.

The HCHRA granted preliminary authorization to issue up to $28.8 million in tax-exempt multifamily housing revenue bonds for the Project in February 2019 (Resolution 19-HCHRA-0007), conducted a public hearing on the issuance on April 16, 2019, and granted final approval on the issuance on August 20, 2019.

Since 2000, the HCHRA has issued approximately $158.6 million in conduit financing for seven projects supporting 1,066 affordable housing units. Another five projects - including Parkview Apartments, totaling approximately $170.8 million in revenue bonds and 752 affordable housing units, currently have obtained HCHRA’s preliminary and/or final approval for future issuance.

Current Request: Approve HCHRA issuance of multifamily housing revenue bonds to finance an affordable housing project at 1125 Fremont Ave N, and 1121 and 1227 12th Avenue North in the City of Minneapolis.

Impact/Outcomes: Issuance of multifamily housing revenue bonds will rehabilitate and preserve the affordability of 223 housing units, with 222 units serving households at or below 50 percent of AMI and one unit serving households at or below 60 percent of AMI.