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Q OORSEY DORSEY & WHITNEY LLP MEMORANDUM TO: Mayor and Members of the City Council Michael Mornson, City Manager FROM: Jerome P. Gilligan DATE: December 6, 2006 RE: Proposed Multifamily Housing Revenue Refunding Bonds The City has received a request from St. Anthony Leased Housing Associates I Limited Partnership (the "Borrower") that the City issue refunding revenue bonds (the "Refunding Bonds") under Minnesota Statutes, Chapter 462C, the proceeds of which will be loaned by the City to the Borrower and used to refund the City's outstanding Subordinate Variable Rate Demand Multifamily Housing Revenue Bonds (The Landings at Silver Lake Village Project), Series 2004C (the "Subordinate Bonds"). The Subordinate Bonds were. issued, together with the City's Variable Rate Demand Multifamily Housing Revenue Bonds (The Landings at Silver Lake Village Project), Series 2004A (the "Series 2004A Bonds") and its Taxable Variable Rate Demand Multifamily Housing Revenue Bonds (The Landings at Silver Lake Village Project), Series 2004B (the "Series 2004B Bonds"; together with the Series 2004A Bonds, the "Senior Bonds") for the purpose of financing a rental housing development containing approximately 261 rental units constructed as part of the Silver Lake development (the "Project"). The purpose of the proposed refunding is to consolidate the Borrower's debt with respect to the Project by issuing the Refunding Bonds on a parity with the Senior Bonds (the Refunding Bonds and Senior Bonds together, the "Bonds"). As described in the resolution proposed to be adopted December 11, 2006, certain agreements entered into in connection with the issuance of the Senior Bonds are proposed to be amended in connection with the issuance of the Refunding Bonds in order to allow for the parity issuance. LaSalle Bank National Association has agreed, subject to the satisfaction of certain conditions, to facilitate the refinancing of the Project by providing credit enhancement and liquidity support for the Bonds pursuant to a credit facility. The debt service on the Bonds will be payable solely from payments to be made by the Borrower. The City will not have any liability with respect to the Bonds. The Borrower will pay all City expenses with respect to the bonds. Representatives of the Borrower will attend the December 11th City Council meeting to respond to any questions concerning the proposed Refunding Bonds. To proceed with the proposed bond issue, the Council should adopt the resolution approving the issuance of the bonds and related documentation described therein. DORSEY & WHITNEY LLP 45