HomeMy WebLinkAboutResolution 9779CITY OF MOUNDS VIEW
COUNTY OF RAMSEY
STATE OF MINNESOTA
RESOLUTION NO. 9779
RESOLUTION AUTHORIZING THE ISSUANCE, SALE, AND DELIVERY
OF EDUCATIONAL FACILITIES REVENUE NOTES AND APPROVING
THE FORM OF AND AUTHORIZING THE EXECUTION AND
DELIVERY OF THE NOTES AND RELATED DOCUMENTS (HIGH
SCHOOL FOR RECORDING ARTS PROJECT)
WHEREAS, the City of Mounds View, Minnesota (the "City") is a home rule charter city,
municipal corporation, and political subdivision duly organized and existing under the
Constitution, its Charter and laws of the State of Minnesota. Pursuant to Minnesota Statutes,
Sections 469.152 through 469.1655, as amended (the "Act"), the City is authorized to issue
revenue obligations to finance or refinance, in whole or in part, the cost of the acquisition,
construction, reconstruction, improvement, betterment, or extension of a "project," defined in the
Act, in part, as any properties, real or personal, used or useful in connection with a revenue
producing enterprise;
WHEREAS, HSRA Building Company, a Minnesota nonprofit corporation (the
"Company"), owns the building and related facilities located at 1166 University Avenue in the
City of Saint Paul, Minnesota (the "School Facility") for educational purposes and leases the
School Facility to High School for Recording Arts, a Minnesota nonprofit corporation (the
"School"), pursuant to a Lease Agreement to be entered in between the Company and the School,
for the operation of a public charter facility;
WHEREAS, the Company has requested that the City issue its Educational Facilities
Revenue Notes (High School for Recording Arts Project), Series 2023, in one or more series, in
the original aggregate principal amount not to exceed $6,200,000 (collectively, the "Notes"), and
loan the proceeds derived from the sale of the Notes to the Company pursuant to a Loan
Agreement, to be dated on or after August 1, 2023 (the "Loan Agreement"), between the City and
the Company, to (i) refund the Charter School Lease Revenue Bonds (High School for Recording
Arts Project), Series 2015A (the "2015A Bonds"), previously issued by the Housing and
Redevelopment Authority of the City of Saint Paul, Minnesota (the "HRA") to finance the
acquisition, renovation, improvement and equipping of the School Facility; (ii) fund a debt service
reserve fund, if necessary; (iii) pay a portion of the interest on the Notes, if necessary; and (iv) pay
the costs of issuing the Notes, if necessary (the "Project"). The Notes are proposed to be purchased
by North Star Bank, a Minnesota banking corporation (the "Lender");
WHEREAS, the Company and the School have both represented to the City that they are
exempt from federal income taxation under Section 501(a) of the Internal Revenue Code of 1986,
as amended (the "Code"), as a result of the application of Section 501(c)(3) of the Code;
WHEREAS, Minnesota Statutes, Section 471.656, as amended, authorizes a municipality
to issue obligations to finance the acquisition or improvement of property located outside of the
SA130-288-879898.v2
corporate boundaries of such municipality if the governing body of the city in which the property
is located consents by resolution to the issuance of such obligations;
WHEREAS, on July 26, 2022, the City Council of the City of Saint Paul, Minnesota ("Saint
Paul") will hold a public hearing and consider approval of the issuance of the Notes to refinance
the Project, all in accordance with and Section 147(f) of the Code;
WHEREAS, Minnesota Statutes, Section 469.155, Subd. 12, as amended, authorizes a
municipality to refund obligations issued by another municipality if such municipality consents to
the issuance of such refunding obligations and the HRA's Resolution: RES 15-1521, which
authorized the issuance of the Series 2015A Bonds, delegated to the Executive Director of the
HRA the authority to provide necessary consents on behalf of the HRA and such consent to the
refunding of the HRA's Series 2015A Bonds has been provided in accordance with Section
469.155, Subd. 12 of the Act;
WHEREAS, the loan repayments to be made by the Company under the Loan Agreement
will be fixed so as to produce revenue sufficient to pay the principal of, premium, if any, and
interest on the Notes when due. The City will assign its rights to the basic payments and certain
other rights under the Loan Agreement to the Lender (not including certain unassigned rights of
the City, including those related to indemnification and reimbursement for costs and expenses),
pursuant to the terms of an Assignment of Loan Agreement, to be dated on or after August 1, 2023
(the "Assignment of Loan Agreement"), between the City, the Company, and the Lender. The
Company's obligation to make loan repayments under the Loan Agreement will be secured by: (i)
a Combination Mortgage, Security Agreement, Assignment of Rents and Fixture Financing
Statement from the Company to the Lender, to be dated on or after August 1, 2023 (the
"Mortgage"), relating to the Notes; (ii) an Assignment of Lease, to be dated on or after August 1,
2023 (the "Assignment of Lease"), from the Company to the Lender and consented to by the
School; (iii) a Pledge and Covenant Agreement, to be dated on or after August 1, 2023 (the "Pledge
Agreement"), between the School and the Lender, pledging certain revenues of the School,
including money due to the School from the State of Minnesota Lease Aid Payment Program; and
(iv) other security provided or arranged by the Company or the School;
WHEREAS, the proceeds of the Notes will be disbursed by the Lender to the Company
pursuant to the Loan Agreement;
WHEREAS, forms of the following documents have been submitted to the City and are
now on file with the City: (i) the form of the Notes; (ii) the Loan Agreement; (iii) the Assignment
of Loan Agreement; (iv) the Mortgage; (v) the Assignment of Lease; and (vi) the Pledge
Agreement;
WHEREAS, pursuant to Section 147(f) of the Internal Revenue Code of 1986, as amended
(the "Code"), and regulations promulgated thereunder, the Notes may not be issued as tax-exempt
bonds unless the City Council approves the Notes after conducting a public hearing thereon;
WHEREAS, the notice of public hearing (the "Public Notice") was published in the
Pioneer Press, the official newspaper and a newspaper of general circulation in the City, with
respect to (i) the required public hearing under Section 147(f) of the Code; and (ii) the approval of
2
SA130-288-879898.v2
the issuance of the Notes. The Public Notice was published at least 7 days prior to the date of the
public hearing. On the date hereof, the Council conducted a public hearing at which a reasonable
opportunity was provide for interested individuals to express their views, both orally and in
writing, with respect to the proposed issuance of the Notes and the location and nature of the
Project.
NOW THEREFORE BE IT RESOLVED by the City Council (the "Council") of the City
of Mounds View, Minnesota (the "City") as follows:
Section 1. Issuance of the Notes.
1.01. Findings. The Council hereby finds, determines, and declares that:
(a) The issuance and sale of the Notes, the execution and delivery by the City
of the Notes, the Loan Agreement, and the Assignment of Loan Agreement, and the
performance of all covenants and agreements of the City contained in the Loan Agreement
and the Assignment of Loan Agreement are undertaken pursuant to the Act.
(b) The acquisition, construction, renovation and equipping of the School
Facility previously financed by the 2015A Bonds furthers the economic development
purposes stated in Section 469.152 of the Act and constitutes a revenue producing
"project," as defined in Section 469.153, subdivision 2(b) of the Act.
(c) In accordance with Section 469.154, subdivision 7, of the Act, the officers,
employees, and agents of the City are hereby authorized and directed to encourage the
Company and the School to provide employment opportunities to economically
disadvantaged or unemployed individuals. Such individuals may be identified by such
mechanisms as are available to the Company and the School, such as a first source
agreement in which the Company and the School agrees to use a designated State
employment office as a first source for employment recruitment, referral, and placement.
(d) The loan repayments to be made by the Company under the Loan
Agreement are fixed to produce revenues sufficient to provide for the prompt payment of
principal of, premium, if any, and interest on the Notes issued under this resolution when
due, and the Loan Agreement also provides that the Company is required to pay all
expenses of the operation and maintenance of the School Facility, including, but without
limitation, adequate insurance thereon and insurance against all liability for injury to
persons or property arising from the operation thereof, and all lawfully imposed taxes and
special assessments levied upon or with respect to the School Facility and payable during
the term of the Loan Agreement.
(e) As provided in the Loan Agreement, the Notes shall not be payable from
nor charged upon any funds other than the revenues pledged to its payment, nor shall the
City be subject to any liability thereon, except as otherwise provided in this paragraph. No
holder of the Notes shall ever have the right to compel any exercise by the City of its taxing
powers to pay the Notes or the interest or premium thereon, or to enforce payment thereof
against any property of the City except the interests of the City in the Loan Agreement and
3
SA130-288-879898.v2
the revenues and assets thereunder (except for certain unassigned rights of the City,
including those related to indemnification and reimbursement for certain costs and
expenses), which will be assigned to the Lender under the Assignment of Loan Agreement.
The Notes shall not constitute a charge, lien, or encumbrance, legal or equitable, upon any
property of the City, except the interests of the City in the Loan Agreement, and the
revenues and assets thereunder (except for the unassigned rights of the City referenced
above), which will be assigned to the Lender under the Assignment of Loan Agreement.
Each Note shall recite that such Note is issued pursuant to the Act, and that such Note,
including interest and premium, if any, thereon, is payable solely from the revenues and
assets pledged to the payment thereof, and the Notes shall not constitute a debt of the City
within the meaning of any constitutional or statutory limitations.
1.02. Issuance and Sale of the Notes. The City hereby authorizes the issuance of the
Notes in the aggregate principal amount not to exceed $6,200,000, in one or more series, in the
form, and with the terms set forth in the forms of the Notes now on file with the City. The
aggregate principal amount of the Notes, the interest rate of the Notes, the terms for adjustment of
the interest rate on the Notes, the date of the documents referenced in this resolution and the Notes,
and the terms of redemption of the Notes may be established or modified with the approval of the
City. The execution and delivery of the Notes shall be conclusive evidence that the City has
approved such terms as subsequently established or modified. The offer of the Lender to purchase
the Notes at the price of par plus accrued interest, if any, to the date of delivery at the interest rate
or rates specified in the Notes is hereby accepted. Upon approval of the Project by Saint Paul, the
Mayor and the City Administrator of the City (the "City Officials") are authorized and directed to
prepare and execute the Notes as prescribed in the Loan Agreement and the Notes shall be
delivered to the Lender. The City Officials are hereby authorized to execute and deliver any
agreements with any depository institution, including any representation letter or amendment to
any existing representation letter, in the event the City and the Lender elect to register the Notes
in book -entry form.
1.03. Special, Limited Obligations of City. The Notes shall be special, limited
obligations of the City, and the principal of, premium, if any, and interest on the Notes shall be
payable solely from the proceeds of the Notes, the revenues derived from the Company pursuant
to the Loan Agreement, and the security provided by the Company in accordance with the terms
of the Loan Agreement, the Mortgage, the Assignment of Loan Agreement, the Assignment of
Lease, the Pledge Agreement, and any and all other security of any kind or nature provided by the
Company to the Lender. The Notes will be subject to the provisions of a Tax Certificate, to be
dated on or after August 1, 2023 (the "Tax Certificate"), by the Company and the School, and
endorsed by the City.
1.04. Approval of Documents. The City Officials are hereby authorized and directed to
execute and deliver the Loan Agreement, the Notes, the Assignment of Loan Agreement, and such
other documents as bond counsel considers appropriate in connection with the issuance of the
Notes (collectively, the "City Documents"). The forms of the City Documents and all other
documents listed in the recitals hereof and exhibits thereto, and any consents and such other
documents as are necessary or appropriate in connection with the issuance, sale, and delivery of
the Notes, including without limitation various certificates of the City, the Information Return for
4
SA130-288-879898.v2
Tax -Exempt Private Activity Bond Issues, Form 8038, a certificate as to arbitrage and rebate, and
similar documents (collectively, the "Financing Documents") are approved substantially in the
forms on file with the City Administrator. The City Documents, in substantially the forms
submitted, are directed to be executed in the name and on behalf of the City by the City Officials.
The Notes are to be executed in the name of and on behalf of the City by the City Officials and
delivered to the Lender. Any other Financing Documents and certificates necessary to the
transaction described above may be executed by one or more appropriate officers of the City. All
of the provisions of the Financing Documents, when executed as authorized herein, shall be
deemed to be a part of this resolution as fully and to the same extent as if incorporated verbatim
herein and shall be in full force and effect from the date of execution and delivery thereof.
The approval hereby given to the various Financing Documents referred to above includes
approval of such additional details therein as may be necessary and appropriate and such
modifications thereof, deletions therefrom and additions thereto as may be necessary and
appropriate and approved by bond counsel to the City, the appropriate City staff person, or by the
officers authorized herein to execute or accept, as the case may be, said documents prior to their
execution; and said officers or staff members are hereby authorized to approve said changes on
behalf of the City. The execution of any instrument by the appropriate officer or officers of the
City herein authorized shall be conclusive evidence of the approval of such document in
accordance with the terms hereof.
1.05. Certifications of the City. The Mayor, City Administrator, and Finance Director of
the City and other officers, employees, and agents of the City are hereby authorized and directed
to prepare and furnish to bond counsel and the Lender certified copies of all proceedings and
records of the City relating to the issuance of the Notes, including a certification of this resolution.
Such officers, employees, and agents are hereby authorized to execute and deliver, on behalf of
the City, all other certificates, instruments, and other written documents that may be requested by
bond counsel, the Lender, or other persons or entities in conjunction with the issuance of the Notes.
Without imposing any limitation on the scope of the preceding sentence, such officers, employees,
and agents are specifically authorized to execute and deliver one or more certificates of the City,
an endorsement of the City to the Tax Certificate, an Information Return for Tax -Exempt Private
Activity Bond Issues, Form 8038, and all other documents and certificates as shall be necessary
and appropriate in connection with the issuance, sale, and delivery of the Notes. The City hereby
authorizes Kennedy & Graven, Chartered, acting as bond counsel, to prepare, execute, and deliver
its approving legal opinion with respect to the Notes.
1.06. Security for the Notes. The City hereby authorizes the Company to provide such
security for payment of the Company's obligations under the Loan Agreement and for payment of
the Notes, including the Mortgage, the Assignment of Lease, and the Pledge Agreement, as is
agreed upon by the Company and the Lender, and the City hereby approves the execution and
delivery of such security.
1.07. Bank Qualification Designation. The City hereby designates the Notes as
"qualified tax-exempt obligations" pursuant to Section 265(b)(3) of the Code.
5
SA130-288-879898.v2
1.08 Registration of Transfer. The City will cause to be kept at the office of the City
Administrator a Note Register for each Note in which, subject to such reasonable regulations as it
may prescribe, the City shall provide for the registration of transfers of ownership of such Note.
Each Note shall be initially registered in the name of the Lender and, subject to Section 1.11, shall
be transferable upon the applicable Note Register for such Note by the Lender in person or by its
agent duly authorized in writing, upon surrender of such Note together with a written instrument
of transfer satisfactory to the City Administrator, duly executed by the Lender or its duly
authorized agent. The following form of assignment shall be sufficient for said purpose.
For value received hereby sells, assigns and transfers unto
the within Note of the City of Mounds View, Minnesota, and does hereby
irrevocably constitute and appoint attorney to transfer said Note on the
books of said City with full power of substitution in the premises. The undersigned certifies that
the transfer is made in accordance with the provisions of Sections 1.08 through 1.11 of the
Resolution authorizing the issuance of the Note.
Dated:
By:
Registered Owner
Upon such transfer the City Administrator shall note the date of registration and the name
and address of the new Lender in the applicable Note Register and in the registration blank
appearing on such Note; subject to receipt of a purchaser letter or certification as required by
Section 1.11 hereof.
1.9 Mutilated, Lost or Destroyed Note. In case a Note issued hereunder shall become
mutilated or be destroyed or lost, the City shall, if not then prohibited by law, cause to be executed
and delivered, a new Note of like outstanding principal amount, number, series and tenor in
exchange and substitution for and upon cancellation of such mutilated Note, or in lieu of and in
substitution for such Note destroyed or lost, upon the payment by the Lender of the reasonable
expenses and charges of the City in connection therewith, and in the case of a Note destroyed or
lost, the filing with the City of evidence satisfactory to the City with indemnity satisfactory to it.
If the mutilated, destroyed or lost Note has already matured or been called for redemption in
accordance with its terms it shall not be necessary to issue a new Note prior to payment.
1.10 Ownership of Notes. The City may deem and treat the person in whose name the
Notes are last registered in the applicable Note Register for such Note and by notation on such
Note whether or not such Note shall be overdue, as the absolute owner of such Note for the purpose
of receiving payment of or on account of the principal balance, redemption price or interest and
for all other purposes whatsoever, and the City shall not be affected by any notice to the contrary.
1.11 Limitation on Note Transfers. The Notes shall be issued to a "qualified institutional
buyer" or an "accredited investor" (i.e. the Lender) and without registration under state or other
securities laws, pursuant to an exemption for such issuance; and accordingly the Notes may not be
assigned or transferred in whole or part, nor may a participation interest in the Notes be given
pursuant to any participation agreement, except to another "qualified institutional buyer" or
"accredited investor" in accordance with an applicable exemption from such registration
6
SA130-288-879898.v2
requirements and with full and accurate disclosure of all material facts to the prospective
purchaser(s) or transferee(s). The City will require, as a precondition to any transfer, that the
transferee provide to the City a written letter or certificate in a form satisfactory to the City and
other evidence satisfactory to the City that the transferee is a qualified institutional buyer or other
accredited investor under the securities laws.
1.12 Issuance of New Notes. Subject to the provisions of Section 1.11, the City shall, at
the request and expense of the Lender, issue a new note, in aggregate outstanding principal amount
equal to that of the Note surrendered, and of like tenor except as to number, principal amount, and
the amount of the periodic installments payable thereunder, and registered in the name of the
Lender or such transferee as may be designated by the Lender.
Section 2. Miscellaneous.
2.01. Agreements Binding. All agreements, covenants, and obligations of the City
contained in this resolution and in the above -referenced documents shall be deemed to be the
agreements, covenants, and obligations of the City to the full extent authorized or permitted by
law, and all such agreements, covenants, and obligations shall be binding on the City and
enforceable in accordance with their terms. No agreement, covenant, or obligation contained in
this resolution or in the above -referenced documents shall be deemed to be an agreement,
covenant, or obligation of any member of the Council, or of any officer, employee, or agent of the
City in that person's individual capacity. Neither the members of the Council nor any officer
executing the Notes shall be liable personally on the Notes or be subject to any personal liability
or accountability by reason of the issuance of the Notes.
2.02. Rights Conferred. Except as herein otherwise expressly provided, nothing in this
resolution or in the Loan Agreement, expressed or implied, is intended or shall be construed to
confer upon any person, firm, or corporation other than the City and the registered and beneficial
owners of the Notes, any right, remedy, or claim, legal or equitable, under and by reason of this
resolution or any provision hereof or of the Loan Agreement or any provision thereof; this
resolution, the Loan Agreement and all of their provisions being intended to be, and being for the
sole and exclusive benefit of the City and the registered and beneficial owners of the Notes issued
under the provisions of this resolution and the Loan Agreement, and the Company to the extent
expressly provided in the Loan Agreement.
No provision, covenant, or agreement contained in the Financing Documents, the Notes or
in any other document relating to the Notes, and no obligation therein or herein imposed upon the
City or the breach thereof, shall constitute or give rise to any pecuniary liability of the City or any
charge upon its general credit or taxing powers. In making the agreements, provisions, covenants,
and representations set forth in such documents, the City has not obligated itself to pay or remit
any funds or revenues, other than funds and revenues derived from the Loan Agreement which are
to be applied to the payment of the Notes, as provided therein and in the Financing Documents.
2.03. Validity. In case any one or more of the provisions of this resolution, or of the
documents mentioned herein, or of the Notes issued hereunder shall for any reason be held to be
illegal or invalid, such illegality or invalidity shall not affect any other provision of this resolution,
7
SA130-288-879898.v2
or of the aforementioned documents, or of the Notes, but this resolution, the aforementioned
documents, and the Notes shall be construed and endorsed as if such illegal or invalid provisions
had not been contained therein. If for any reason the Mayor or the City Administrator, or any other
officers, employees, or agents of the City authorized to execute certificates, instruments, or other
written documents on behalf of the City, shall for any reason cease to be an officer, employee, or
agent of the City after the execution by such person of any certificate, instrument, or other written
document, such fact shall not affect the validity or enforceability of such certificate, instrument,
or other written document. If for any reason the Mayor or the City Administrator is unable to
execute and deliver the documents referred to in this resolution, such documents may be executed
by any member of the City Council or any officer of the City delegated the duties of the Mayor or
the City Administrator with the same force and effect as if such documents were executed and
delivered by the Mayor or the City Administrator.
2.04. Costs. The Company will pay the administrative fees of the City and pay, or, upon
demand, reimburse the City for payment of, any and all costs incurred by the City in connection
with financing the Project and issuing the Notes, whether or not the Notes are issued. The
Company shall indemnify the City against all liabilities, losses, damages, costs, and expenses
(including attorney's fees and expenses incurred by the City) arising with respect to the Project or
the Notes, as further provided for in the Loan Agreement.
2.05. Governmental Program. The City has established a governmental program of
acquiring purpose investments for qualified 501(c)(3) organizations' projects. The governmental
program is one in which the following requirements of § 1.148-1(b) of the federal regulations
relating to tax-exempt obligations shall be met:
(a) the program involves the origination or acquisition of purpose investments;
(b) at least 95% of the cost of the purpose investments acquired under the program
represents one or more loans to a substantial number of persons representing the general public,
states or political subdivisions, 501(c)(3) organizations, persons who provide housing and related
facilities, or any combination of the foregoing;
(c) at least 95% of the receipts from the purpose investments are used to pay principal,
interest, or redemption prices on issues that financed the program, to pay or reimburse
administrative costs of those issues or of the program, to pay or reimburse anticipated future losses
directly related to the program, to finance additional purpose investments for the same general
purposes of the program, or to redeem and retire governmental obligations at the next earliest
possible date of redemption;
(d) the program documents prohibit any obligor on a purpose investment financed by
the program or any related party to that obligor from purchasing bonds of an issue that finances
the program in an amount related to the amount of the purpose investment acquired from that
obligor; and.
2.06. Effective Date. This resolution shall be in full force and effect from and after its
approval. The approvals contained in the resolution are effective for one year after the date hereof.
8
SA130-288-879898.v2
Adopted by the City Council of the City of Mounds View, Minnesota this 24th day of July,
2023.
Gary eeeilhause, Acting Mayor
ATTEST:
A"� 1� , //
Ny Zikm d, City Administrator
9
SA130-288-879898.v2