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173615857v1 <br /> <br />City of Little Canada <br />June 17, 2025 <br />Page 2 <br /> <br /> <br />The Bonds and the resolutions adopted by the Issuer will recite that the Bonds, if and when issued, <br />will not to be payable from or charged upon any of the Issuer’s funds, other than the revenues received <br />under the Loan Agreement and pledged to the payment of the Bonds, and the Issuer is not subject to any <br />liability on the Bonds. No holder of the Bonds will ever have the right to compel any exercise by the Issuer <br />of its taxing powers to pay any of the principal of the Bonds or the interest or premium thereon, or to enforce <br />payment of the Bonds against any property of the Issuer except the interests of the Issuer in payments to be <br />made by the Borrower under the Loan Agreement. The Bonds will not constitute a charge, lien, or <br />encumbrance, legal or equitable, upon any property of the Issuer, except the interests of the Issuer in <br />payments to be made by the Borrower under the Loan Agreement. The Bonds are not moral obligations on <br />the part of the State or its political subdivisions, including the Issuer, and the Bon ds will not constitute a <br />debt of the Issuer within the meaning of any constitutional or statutory limitation. <br />The issuance of the Bonds will not affect the Issuer’s credit rating on bonds it issues for municipal <br />purposes. <br />Multifamily housing development bonds are not applied against the City’s $10,000,000 calendar <br />year-limit on bank-qualified bonds. Therefore, the City may issue the Bonds, while still maintaining its <br />ability to issue up to $10,000,000 of bank-qualified bonds for itself or 501(c)(3) organizations in 2025. <br />The City’s one-time issuer administration fee of ½ of 1% would be calculated based on the principal <br />amount of the Bonds actually issued. The proposed application amount is $17,000,000. If the Bonds are <br />issued in that full amount, the City would receive a fee of $85,000. Such fee will be paid by the Borrower <br />and the Borrower is responsible for paying all other costs of issuing the Bonds, including Taft’s fees as <br />bond counsel. <br />The Bonds will be issued in accordance with Minnesota Statutes, Chapter 462C. <br />The next step is to adopt a resolution, a draft of which has been provided to the City that <br />preliminarily approves the issuance of the Bonds for the Project, and authorizes staff to work with bond <br />counsel to submit an application to MMB for allocation, which must occur by June 30th in order to meet the <br />next allocation application deadline. Due to this pending deadline, it will be necessary for the City to adopt <br />that resolution no later than June 27th. <br />The availability of receiving an allocation is limited because of the large number of applicants. <br />There is a statutory priority for awarding allocation to housing projects. This type of project is fourth on <br />that priority list. We are aware of at least one project that will be submitting an application that has a higher <br />statutory priority. For those projects that do not receive an allocation, they are placed on a priority list – in <br />an order determined by lottery – and will have a higher priority over new applicants. These projects can <br />remain on the lottery priority list for up to 18 months. There are currently 9 projects on that list. Two will <br />drop off as of June 30th. That would leave at least 8 other projects – the statutory priority project and the 7 <br />lottery priory projects – with a higher priority that this Project. We do not know whether there are any <br />other new applicants. A project can leapfrog over a project higher on the priority list if there is insufficient <br />allocation available for a higher applicant but the lower applicant can receive the full amount of its requested <br />amount. All of this is to say that we can’t predict with certainty whether the Project will be successful in <br />receiving an allocation in this application cycle. It could be close. <br />However, even if the Project does not receive an allocation this application cycle, there are still two <br />advantages to proceeding with an application. The first is that it will go on the lottery priority list described <br />above and, therefore, have a higher priority in the next application cycle. The second is that, with the