03-13-95 agendaCITY OF RICHFIELD, MINNESOTA
MONDAY, MARCH 13, 1995
CONCURRENT CITY COUNCIL/HOUSING AND
REDEVELOPMENT AUTHORITY MEETING
7:00 P.M.
COUNCIL CHAMBERS
CALL TO ORDER
CONCURRENT MEETING WITH CITY COUNCIL TO REVIEW REQUEST FOR
ISSUANCE OF TAX EXEMPT REVENUE BONDS TO PURCHASE AND
RENOVATE CENTURY COURT APARTMENTS
HRA LETTER NO. 18
II. PUBLIC HEARING AND CONSIDERATION OF HOUSING PROGRAM AND
ISSUANCE OF REVENUE BONDS TO FINANCE PURCHASE AND RENOVATION
OF CENTURY COURT APARTMENTS
COUNCIL LETTER NO. 68
ADJOURNMENT OF HRA
REGULAR CITY COUNCIL MEETING
:~
CONTINUES AFTER CONCURRENT MEETING
COUNCIL CHAMBERS
AGENDA
INTRODUCTORY PROCEEDINGS
CALL TO ORDER
PLEDGE OF ALLEGIANCE
APPROVAL OF MINUTES OF THE (1) REGULAR CITY COUNCIL MEETING OF
FEBRUARY 27, 1995; (2) CITY COUNCIL STUDY SESSION OF MARCH 6, 1995;
AND (3) SPECIAL CITY COUNCIL MEETING OF MARCH 8, 1995
PRESENTATIONS
OPPORTUNITY FOR PERSONS TO ADDRESS THE COUNCIL ON ITEMS NOT
LISTED ON THE AGENDA
2. PRESENTATION OF TWO AWARDS, GRAND AWARD PRESENTED BY
CONSULTING ENGINEERS COUNCIL OF MINNESOTA AND SEVEN
WONDERS OF ENGINEERING AWARD PRESENTED BY MINNESOTA
.SOCIETY OF PROFESSIONAL ENGINEERS, AND ACCEPTANCE OF
DEDICATION PLAQUE FOR RENOVATION OF WATER PLANT
COUNCIL LETTER NO. 69
HOUSING AND REDEVELOPMENT AUTHORITY
HRA Letter No. 18
Agenda March 13, 1995
Issue Statement:
Concurrent meeting with the City Council to review a request for the issuance of tax
exempt revenue bonds to purchase and renovate the Century Court apartments.
Background:
The City Council gave preliminary approval to the issuance of tax exempt bonds on
December 29, 1994 and authorized application for the allocation of bonding authority.
This action was taken at the request of Dominium Management Services, Inc.
(Dominium). The State subsequently awarded $19,679,000 in bonding authority for the
Century Court apartments in Richfield.
When. preliminary approval was granted, it was given subject to review of the financial
and rehabilitation packages. Discussions have been held between staff and Dominium.
There are unresolved issues under discussion including the following:
The extent of the rehabilitation plan as compared to the savings from the issuance
of tax exempt mortgage revenue bonds. The net savings attributable to the tax
exempt status is about $3,500,000; whereas the proposed rehabilitation plan
expends only $2,284,000 over two years in renovation. The staff position is that
there should be an expenditure of $3,500,000 in renovation during this two year
window.
• Whether or in what amount tax credits may be issued. The current structure of the
proposed limited partnership does not allow the use of tax credits. If restructured,
some 40% of the units would become eligible for tax credits for low-moderate
income housing. To obtain additional funding for renovation, Dominium has
.suggested some 60% of the units, which approximates the current tenant
population, be designated for low-moderate income. Staff's position is 40%.
Type of assurance that bonds will be unparked. Staff has suggested that the
$200,000 currently being held to ensure the issuance of the bonds be transferred to
the City after issuance to ensure that the bonds are not allowed to stay parked, thus
preventing the allocation from being used and incurring the negative ramifications
thereof.
Other issues include:
• Amount and- interrelationship between issuer's fee and compensation to the City and
School District for loss of tax revenues from change in tax classification.
• Documentation of basic agreements.
• Agreement on management conditions.
• Amount of contribution to maintenance reserve.
Recommended Motion:
Provide input to the City Council as appropriate.
Basis of Recommendation:
1. The City Council approved the preliminary resolution on December 29, 1994.
2. All parties recognize that some degree of renovation will be required for these
apartment complexes.
3. This type of tax exempt revenue bond financing does not become a debt of the City
nor is the City responsible in any way for the payment of the bonds.
4. Staff has had an evaluation made of the buildings by an outside consultant as well
as by relevant staff.
5. Unless the underlying documents are restructured, the current owners (Wolfenson
and Ratner) would become the limited half interest partners and Dominium would
become the general partner and half interest owner.
6. The City Council must take action on the proposal and the HRA is available for
discussion and input as appropriate.
7. Dominium has deposited $25,000 with the City to cover the excess cost of review of
the proposal.
Alternative Recommendation:
1. Delay action until a further date certain.
Discussion/Decision Mode:
Final action must be taken at the March 27, 1995 meeting by the City Council in order
to sell the bonds by the April deadline or the right to issue is lost.
Respect ly submitted,
Jam .Prosser
Exec a Director
JDP:cak