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1 City of Mounds View Staff R Item No: 08E Meeting Date: June 14, 2021 Type of Business: Council Business City Administrator Review: To: Honorable Mayor and City Council From: Brian Beeman, Assistant City Administrator Item Title/Subject: Consideration of resolution 9432, a resolution relating to the issuance of conduit revenue bonds to finance the costs of a multifamily housing development under Minnesota statutes, chapter 462c; granting preliminary approval thereto; establishing compliance with certain reimbursement regulations under the internal revenue code of 1986, as amended; and taking certain other actions with respect thereto (skyline apartments project) Introduction: Skyline Apartments, Limited Partnership, a Minnesota limited partnership (or another entity to be formed by or affiliated with MWF Properties, LLC, the "Borrower") has requested that the City of Mounds View, Minnesota ("Mounds View") issue up to $14,500,000 of tax-exempt, conduit Housing Revenue Bonds in one or more series in 2021 (the "Bonds") to finance the acquisition, construction, and equipping of an approximately 112-unit rental housing facility to be located at the property currently identified as 4849 and 3943 Old Hwy 8 in the City (the "Project Facilities"). Conduit revenue bonds give the borrower access to tax exempt financing so the borrower realizes lower interest costs and the City achieves a public purpose, in this case the construction of new affordable housing units. If authorized by the City Council, the Bonds will be issued as conduit revenue bonds secured solely by the revenues derived from a loan agreement (the "Loan Agreement") to be executed by Mounds View and the Borrower and from other security provided by the Borrower. The lender or bondholders provide the funds for the loan, either directly or through a trustee, and Mounds View assigns its rights and obligations under the Loan Agreement to the lender or the trustee. No money actually flows through Mounds View. No money or assets of Mounds View would ever be pledged or available to pay the Bonds. The Bonds will not constitute general or moral obligations of Mounds View and will not be secured by or payable from any property or assets of Mounds View and will not be secured by any taxing power of Mounds View. The Bonds will not affect any debt limitation imposed on Mounds View and the issuance of the Bonds will not have any adverse impact on the credit rating of Mounds View, even in the event that Borrower encounters financial difficulties with respect to the Project Facilities to be financed with the proceeds of the Bonds. The Bonds are proposed to be issued as tax-exempt obligations, the interest on which is excluded from gross income for federal income tax purposes. However, because the Project Facilities will be owned by a for -profit owner, the Bonds cannot be designated as "qualified tax- exempt obligations" for purposes of Section 265(b)(3) of the Internal Revenue Code of 1986, MU210-289-724362.v3 1