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Home My WebLink About09-08-09 FPAC PacketChair Scott Bronson 1245 W. Highway 96 Committee Members N HILLS Arden Hills, MN 55112 Maurice Gieske -"�� 651.792.7800 (Vacant Seat) Arden Hills www.ci.arden-hills.mn.us Jeff Johnson James Ostlund Financial Planning and (Vacant Seat) Council Liaison Analysis Committee Stan Harpstead September 8, 2009 City Vision A strong community that values our unique environment, our fiscal soundness, and our tradition as a desirable city in which to live, work, and play. Agenda Regular Committee Meeting Convenes 6:00 PM Call to Order 1. APPROVAL OF THE AGENDA 2. MINUTES A. August 11, 2009 -Regular Meeting 3. UNFINISHED AND NEW BUSINESS A. Presentation by subcommittee on Council presentation B. Private Activity Revenue Bond Guidelines 4. REPORTS A. Report from the City Council B. Financial Planning and Analysis Committee Comments and Requests 5. ADJOURNMENT A quorum of the City Council may be present at this meeting. MINUTES EN HILLS • FINANCIAL PLANNING & ANALYSIS COMMITTEE Wednesday, August 11, 2009 6:00 P.M. Second Level Conference Room, Arden Hills City Hall CALL MEETING TO ORDER AND ROLL CALL The meeting was called to order by Scott Bronson at 6:00 pm. MEMBERS PRESENT: Scott Bronson; Stan Harpstead, Council Liaison; Jeff Johnson; Jim Ostlund MEMBERS NOT PRESENT: Maurice Gieske OTHERS PRESENT: Sue Iverson, City of Arden Hills Finance Director; Arlene Mitchell, Communication Committee Member; Joe Rueb, City of Arden Hills Accounting Analyst Call to Order 1. APPROVAL OF THE AGENDA APPROVAL OF JUNE 9, 2009 MINUTES Motioned: Scott Bronson Seconded: Jeff Johnson 3. UNFINISHED AND NEW BUSINESS A. 2010 Capital Improvement Plan and funding strategies o Finance Direc " r 6o ro ed th` mrm he tIt Uo tprehensive . Annual Financial port, pe ia�iurpos Q it Re ds and anagement Report. Mayor Harpstead reviewe -' s e - tc ections o iihe repOrts The grou . reviewed the CIP projects to get a better idea o w at wit e inc e on Kl � financial anagement Plan. o Jim Ostlund suggested that the committee discuss funding strategies for future projects and bring them to the Council. Mayor Harpstead suggested forming a sub -committee within the committee to bring suggestions and ideas to the City Council. The sub -committee will meet and presentatiati their suggestions at the next FPAC meeting. Those suggestions will then be presente)(Wfiie Council. The sub -committee will hold a special worksession meeting on August 27 h, from 8:30 am — 10:30 an at city hall. The meeting will need to be posted. 4. REPORTS A. Report from the City Council Mayor Harpstead provided an update on previous Council actions and activities. B. Financial Planning and Analysis Committee Comments and Requests Ostlund gave a brief report on the Committee Picnic NEXT MEETING — Tuesday, September 8, 2009 ADJOURNMENT Motioned: Jeff Johnson Seconded: Jim Ostlund • Scott Bronson, Chair Susan K. Iverson, Finance Director City of Arden Hills 1245 West Highway 96 • Arden Hills Minnesota 55112 Phone 651.792.7800 - Fax 651-634.5137 www.ci.arden-hi I Is. mn.us ,-ARPE�N HALLS MEMORANDUM DATE: August 31, 2009 TO: Financial Planning and Analysis Committee FROM: Sue Iverson, Finance Director SUBJECT: Sub -Committee Report At our last committee meeting, some members expressed interest in coming up with suggestions for the •City Council on funding strategies for long range financial planning of capital improvement projects. A sub -committee was formed and met on August 27, 2009 to prepare a presentation. They will present their work at our meeting for discussion and suggestions. 0 Financial Planning and Analysis Committee Presentation: NOTE: THIS IS A FIRST DRAFT. THE OBJECTIVE OF THIS DOCUMENT IS TO ILLUSTRATE FRAMEWORK. ANY EXAMPLES ILLUSTRATED ARE FOR DISCUSSION PURPOSES AND ARE NOT YET THE OPINION OF THE COMMITTEE. Objectives: • Enhance credibility and confidence in the FPAC to provide judgment within financial analysis • Increase `financial education' within the City of Arden Hills • Build trust that financial decisions over time can enhance responsible financial behavior • Identify tools and techniques that can inform debate and decisions at the Council Bench (allow discussion in the abstract without decisions hinging upon the discussion) Background: There are three general types of longer term capital investment that are the responsibility of the City Council. These include: 1. Creation of New Capital Assets / Benefits for the City and Community (examples; new trails, pedestrian bridges, new parks, new streets in neighborhoods, • improvement to signalized intersection, etc). 2. Replacement of existing City and Community Infrastructure (examples; replacement of depreciated city roads, water towers, revitalization of County Road E neighborhood, replacement of park equipment, replacement of fully used equipment, etc). 3. Emergent replacement of broken or lost City and Community Infrastructure (examples; pump failure in lift station, repairs following a City emergency / storm, accident involving city vehicle, equipment failure in active water -tower, etc). Financial Considerations: Within each category there are similar financial considerations. These over time will impact City Capital Fund Balances, Ongoing Tax Policy/Tax Levies, Annual Budget Allocation to Capital Fund Balances, Potential for City Bonding, and Potential for City Grant Applications. In general each investment could be evaluated on the following criteria: 1. Community Need for the Capital Asset 2. Community Benefit or Return on Investment 3. Availability of uncommitted City Cash or Fund Balances 4. Availability of uncommitted borrowing capacity 5. Availability of Grants or other general funding b. Availability of TIF financing or future tax deferrals 0 General Comments: • It is important to remember that funds can be borrowed within the City from one fund to cover a shortage in a second fund. These interfund borrowings can be used to smooth out the collection of funds or to handle unusually large, unanticipated fund requirements. • Part of this process is to inform Capital Fund Balance Rationale. Fund Balances held by the City are accumulated by the process collecting taxes or fees, or by selling community assets (property or community franchise). As such these funds are held in trust for the community to be used in benefit to the community. Ideally all funds held will have a specific, planned purpose/use, but occasionally funds will be held in anticipation of an undefined use. History (and depreciation schedules) can help define the need for fund balances to replace broken or lost city infrastructure. While the specific asset may not be clearly identified an annual value can be planned for and held in a fund balance. Replacement of depreciated assets can be budgeted for and accumulated in annual tax policy or tax levies. Collection of funds to realize the creation of longer term community assets can be collected for over a time that precedes the construction of the new asset. • The City's capital fund balance policy may be able to release for use funds (or defer collection of) if a plan exists for how to replace or evaluate the use of capital funds. • Not all City or Community investments lend themselves to traditional business measure of Return on Investment. Some New Creation of Community Assets . may provide gradual improvement to the community `quality of life' whose value will depend on the individual's personal values and interaction with the Community Asset. • Projects that utilize previously collected funds will place the project costs predominantly on the current residents and businesses. Projects that utilize outside grants, borrowed funds or deferral of future taxes will place the project costs predominantly on the future residents and businesses. It is probably appropriate to align the cost and benefits for individual projects so that those who benefit predominantly carry the cost associated with the benefit. Examples: Creation of New Pedestrian Bridge: • Cash Contribution — It would be appropriate to pay for planning and project preparation costs out of existing City funds / budget. The understanding of the community needs, the potential value added and project costs can be covered by the City Departments. Since the benefit for this project will incur to future residents, it is appropriate to consider outside fund sources or commitment of future funds. • Future Fund Sources — In this case there is evidence of a future regional and community benefit. Appropriately placed pedestrian bridges allow for non - motorized movement of people_ These people can be current residents, or future residents / workers within the community. Outside funding sources can include, o Grants o Contributions from Surrounding Residents /Businesses o Assessment for Improvement District o General Obligation Bonds o TIF is not an option (State Exclusion) • Project Valuation Assessment o Criteria: ■ Numbers of residents impacted (residents on either side and possible destinations) ■ Frequency of movements (survey of current pedestrian movements on route) ■ Current Value of Businesses on proposed route benchmarked against similar business on route with existing pedestrian access ■ Projected life of the community asset (depreciable life) ■ Potential for ancillary redevelopment along the proposed route (e.g. percent of property with development greater than 30 years).\ o Cost Pro -Forma ■ Comparison costs to other regional assets ■ Pro -Forma opportunity costs (is there a property value premium for locations near to pedestrian bridges) o Historical Experience ■ Accident report ■ Anecdotal complaints • Community survey (business and residents) ■ Comparable experiences in other communities Repair of a Damaged Park. • Cash Contribution — It would be appropriate to pay for planning and project preparation costs out of existing City funds / budget. The understanding of the community needs, the potential value added and project costs can be covered by the City Department Budgets. Since the benefit for this project is expected by current residents and will also incur to future residents, it is appropriate to consider using existing funds and/or to also seek commitment of future funds. The damage to the existing park is impairment to a current community asset. Delay or deferral of repair further damages the current community and will not meet the community's expectation that taxes have been collected and paid to maintain a park asset in a functional and undamaged state. • Future Fund Sources — The project should not be expected to wait for the collection of future sources of funds. However if fund balances are insufficient it is not unacceptable to utilize General Obligation Bonds to allow the project to proceed with payment made from future tax levies. o TIF is not an option (State Exclusion) • Project Valuation Assessment o Criteria: ■ Numbers of residents impacted (residents on either side and possible destinations) ■ Frequency of uses (survey of current pedestrian activities) ■ Projected life of the community asset (depreciable life) ■ Potential for ancillary redevelopment along the proposed route (e.g. percent of property with development greater than 30 years).\ o Cost Pro -Forma ■ Comparison costs to other regional assets ■ Pro -Forma opportunity costs (is there a property value premium for locations near to parks? is this impaired by the current park?) o Historical Expenence ■ Frequency of damage ■ Anecdotal complaints ■ Community survey (business and residents) ■ Comparable experiences in other communities U 0 ---AklLEN xiLLs MEMORANDUM DATE: August 31, 2009 TO: Financial Planning and Analysis Committee FROM: Sue Iverson, Finance Director SUBJECT: Policy Discussion — Private Activity Revenue Bond Financing The City of Arden Hills has been approached from time to time to issue conduit debt_ We have worked • on a Post -Issuance Policy, but we currently have no policy or procedures for those requesting the City to issue this type of bonds. Last year, Presbyterian Homes approached the City on issuing conduit bonds and the City issued them and charged a `/2 of 1% as an issuance fee. The City Council suggested that we should look into establishing some type of criteria for these requests. Northwestern College is currently contemplating approaching the City for such a request. Attached is a draft policy that is commonly used by many cities. There are some areas that the committee will need to make recommendations on to the City Council. • Part II, Section 8: Do we want to charge a non-refundable application fee? The draft policy contains a $2,500 fee, which is on the high side. • Part 11, Section 9: What do we want to charge as an administrative fee? The draft used .5% of the bond amount, which is what we charged Presbyterian Homes in 2008. This is on the high side in the metropolitan area. A more typical amount is 1/8%. The only reason we may want to temper the amount is that borrowers can go to another city and ask them to issue on their behalf, even if the facility is in Arden Hills. Arden Hills must still consent to the financing, but a fee that is too high can mean that the City will lose financing altogether, do we care? • Part III, Section 1: Do we want to put limitations on the ability to sell non -rated bonds? This draft requires that if the bonds are not rated, they must be in denominations of at least $100,000 (which ensures that the people who buy them will be sophisticated). In the current Northwestern College proposal, this could create a problem as we expect the buyers they have in mind are just local benefactors or alumni. This draft provides for the council to waive the requirement if it finds a merit in public purpose in doing so. This is a policy decision for the Council, but we need to make a recommendation. Please read the draft policy and be prepared to discuss and make recommendations. ,,,--A�N ]HILLS PROCEDURE 1mV APPLICATION TO CITY OF ARDEN HILLS, MINNESOTA FOR PRIVATE ACTIVITY REVENUE BOND FINANCING LJ Effective as of , 2009 Finance Director City of Arden Hills 1245 West Highway 96 is Arden Hills, MN 55112 PROCEDURE FOR APPLICATION is TO THE CITY OF ARDEN HILLS FOR PRIVATE ACTIVITY REVENUE BOND FINANCING • 0 Table of Contents Page PartI General.......................................................................................................................... i Part11 Guidelines..........................................................................................................•..........2 Part III Miscellaneous Matters.................................................................................................. 5 Part IV Application for Tax -Exempt Financing (Commercial, Industrial, Health Care or Other Non -Housing Projects) .....................7 Part V Application for Tax -Exempt Financing (Multi -Family Housing).............................................................................................. 10 Part VI Addendum to Application..........................................................................................13 Part VII Indemnification Letter of Agreement.........................................................................14 0 • Under the Minnesota Municipal Industrial Del to 469.1651 (the "Industrial Development A, revenue bonds or notes to attract or promote CAct, Minnesota Statutes, Sectio}r s -469.152 City of Arden Hills has authority to issue ically sound industry and commerge_10-tlr6 City. �---� Under Minnesota Statutes, Chapter 462C (the ` Hous' ct") the City is authorized to issue housing revenue bonds to finance multi -family residential housing projects for low and moderate income persons and elderly persons. Projects must be embodied in a Housing Program as that term is defined in the Housing Act. The Council is aware that such financing for certain private activities may be of benefit to the City and will consider requests for tax exempt financing subject to these Guidelines. The Council considers tax exempt financing to be a privilege, not a right. It is the judgment of the Council that tax exempt financing is to be used on a selective basis to encourage certain development that offers a benefit to the City as a whole, including significant employment and housing opportunities. It is the applicant's responsibility to demonstrate the benefit to the City, both in writing and at the required public hearing. The applicant should understand that although approval may have been granted by the City for the issuance of financing for a similar project or a similar debt structure, that is not a basis upon which approval will be granted. Each application will be jud ed of the project as it relates to -the lic purposes of the Housing Act or twindustnial Development rt and the benefit tg.-the City at t e the request for financing is being co - 01 . PART II GUIDELINES The Council will consider tax exempt financing for commercial, industrial health care, and any other projects authorized to he financed under the Industrial Development Act (referred to as "non -housing projects"), and housing projects under the Housing Act. An applicant for tax exempt financing for non -housing projects pursuant to the Industrial Development Act must submit to the City the application contained in Part IV of these Guidelines. An applicant for tax exempt financing for housing projects pursuant to the Housing Act must submit to the City the application contained in Part V of these Guidelines. 2. Projects must be compatible with the overall development plans and objectives of the City and comply with the zoning and land use regulations of the City. 3. An application will not be considered by the Council until tentative City Code findings and requirements have been made with respect to zoning, building plans, platting, streets, and utility services. The application must be accompanied by the addendum contained in Part VI of these Guidelines and must provide information as to the project's need for municipal services including, but not limited to, street improvements, water and sewer services, and police and fire protection. 4. The project must be a positive benefit to the City. The project must be of a nature that the • City wishes to attract, or an existing business which the City wishes to have expand within the City, considering employment opportunities, incentive for further development, impact on City services, and support for the industrial, commercial or health care or educational facilities currently located in the City. A housing project must provide significant housing opportunities for low and moderate income persons or the elderly. 5. The Council will, if requested, grant an applicant a pre -application review. The purpose of the pre -application review is to inform applicants of the possibility of rejection or the possible bases for such rejection. The fact that the project is not rejected at the pre - application stage is not to be construed as approval of the project or as an indication that the project will be approved upon formal request to the Council. Requests for tax exempt financing may be rejected by the City whether or not the project was submitted to a pre - application review and regardless of the outcome or recommendation of that pre -application review. A request for pre -application review must be in writing, addressed to the City Finance Director, and set forth the name of the project, the type of project intended and the name, address and telephone number of the person who will be representing the applicant at the pre -application review, together with such additional information as the applicant desires to submit. 6. The applicant must select a qualified financial adviser or underwriter to assist the applicant in preparing all necessary application documents and materials. The financial adviser will submit a letter that establishes the financial feasibility of the project. Applications may, in the alternative, include a signed letter from a responsible financial institution indicating that Pa the project is economically feasible and viable and stating that bonds can be successfully sold for the project or that an individual or institution intends to purchase all of the bonds. The applicant must receive approval from the appropriate state agencies, secure financing and commence construction within one year of the date of the resolution giving preliminary approval to the project or the housing program. Upon application, the Council may approve an extension of the preliminary approval. The City will appoint bond counsel for the bond issue, which will normally be the City's regularly retained bond counsel. 7. Pursuant to the Industrial Development Act and the Housing Act, consideration of an application for tax exempt financing must be done at a public hearing held by the Council. Modifications to the project after the public hearing and preliminary approval must be consistent with the scope of the project as proposed at the time of preliminary approval. 8. The City is to be reimbursed and held harmless for and from any out-of-pocket expenses related to the tax exempt financing including, but not limited to, legal fees, financial analyst fees, bond counsel fees, the City staffs expenses in connection with the application, and any eposits or application fees required under state law in order to secure allocation of bonding authority. The applicant must execute _a letter -to the City undertaking to pay all such expenses. A form of the required fetter is set fort Part VII o se Guidelines. A non- ndable application fee in t amount of 0 must be included ith the submission of �r application. �' �� ,✓� C6119in a the prcjec ipphcant must pay, or commit to pay an act-ims[rative fee in the amoun o 1% {_5%)] of the outstanding principal balance of the bo imstrative fee may be paid in a lump sum at closing bonds, oT may be paid emiannually while the bonds are outstanding at the times specified in the bond document . The administrative fees required by this paragraph will be adjusted at or paid ' o e bonds if necessary to ensure compliance with the Intern�a R enue Code and re ations.�� n is reasonabl If t�tgnn►nes that issuance of e o Y expected to cause governmental bonds issued by the City in that calendar year to be ineligible for designation as "qualified tax exempt obligations" under Section 265(b)(3) of the Internal Revenue Code of 1986, as amended (also known as "bank qualified"), the applicant will be required to reimburse the City, at the time of issuance of the City's bonds, for any interest rate differential between bank qualified and non -bank qualified bonds. 10. Applications for financing must be made on the forms attached to these Guidelines. In addition, the applicant must furnish a description of the project, a plot plan, elevation of proposed buildings, landscape, lighting, and site preparation, together with a brief description of applicant and the proposed financing in such form as required at the time of application. 0 11. The Council may, in its sole discretion, impose conditions exceeding those required under the City building code in respect to exterior building materials, landscaping, signage 3 lct.— U • lighting, and such other aspects as the Council may consider appropriate on a case -by -case basis. 12. The Council may, in its sole discretion, withdraw its preliminary approval of a project any time if in its judgment the purposes of the Act will not be served by going forward with the project and its financing. 51 rPART III MISCELLANEOUS MATTERS 1. Ratings. The City will give its most favorable consideration to proposed tax exempt bond issues that have the same rating as the City's obli ations b Mood ' Service or Standard Poor's CaMadiotL �ue,� 1 r, d j s I t isti do o ves s one rime em6nf b e an usnb n o nati s of east e Council may depart from this guideline when in its judgment the project is of Tell of merit and public purpose to justify the departure; and in case of such a departure the Council must state its reasons therefor in the resolution \ awarding the sale of the bonds. 2. Ref endings. The Council will normally p the refunding of a tax-exempt issue but only upon a showing by the applicant of (1) substantial debt service savings, (ii) the removal of bond covenants significantly impairing the financial feasibility of the project, or (iii) both (1) and (ii). In the case of refandings of bonds for which the administrative fee listed in paragraph 9 of Part II have been paid in full, no new administrative fees are required; but the nnon-refundable application fee must be paid together with all City expenses in excess of that ee. If the administrative fees for the refunded bonds are not paid in full upon closing on the refunding bonds, such fees must continue to be paid for the refunding bonds. • In the case of refundings of bonds where no administrative fee has been paid, the administrative fees listed in paragraph 9 of Part II must be paid. The application form is to be appropriately modified. 3. Subsequent Proceedings. Where changes to the underlying documents or credit facilities of outstanding bond issues are to be made and require Council action (including changes that area "deemed reissuance" under Interna venue Service regulations), no administrative fee is charged but a non-refundable fee f $1,5 �g, st be deposited with the City to cover administrative costs. No formal application orm is zd. 4. Issue by Another Political Subdivision. The City will consider requests for tax exempt financing of projects in the City by other political subdivisions. In these cases the non- r fu dable application fee must be paid and all procedures through the approval of the i r rpinary resolution followed. a ministrative fee is cNirg6A The City reserves the h to reject such any reason, inc u mg wit out lime ation a determination by {' th , such issuance by another political subdivision would impair the City's ability to u overnmental bonds as "bank qualified bonds" (as defined in Part H, paragraph 9) in -- �( t1la alendar year. 5 t City Contact. Initial contacts about tax-exempt financing are made by contacting: Finance Director City of Arden Hills 1245 West Highway 96 Arden Hills, MN 55112 5 �1 6. Deadlines. The Council conducts all tax exempt financing matters at regularly scheduled Council meetings held on the secon Monday of each month. Documents for Council consideration must be at the ffice on the Monday preceding the Council meeting at which the matter is to be co i red. In the case of a publicly offered bond, issue the documents, when submitted, y specify a maximum price and maximum effective interest rate if prices and rates hie not yet been established. L / � /7 t v 1 ! f V 0 PART IV APPLICATION FOR TAX-EXEMPT FINANCING (Commercial, Industrial, Health Care or Other Non -Housing Projects) 1. APPLICANT a. Business Name: b. Business Address: C. Business Form (corporation, partnership, sole proprietorship, etc.): d. Authorized Representative: e. Principal contact person and telephone number: 2. PURPOSE OF REQUESTED FINANCING: a. New Facility (describe): b. Expansion (describe): C. Refunding (attach explanatory letter) 3. GIVE BRIEF DESCRIPTION OF NATURE OF BUSINESS, PRINCIPAL PRODUCTS, ETC.: 4. ESTIMATED PROJECT COSTS: (Not required for refunding) Land $ Building Equipment Architectural, Engineering Costs of Issuance — Capitalized Interest, including discount — Other --- Total Financing Requested $ - 5. AMOUNT OF FINANCING REQUESTED: $ (_ _% of project costs) 7 6. TYPE OF FINANCING PROPOSED: Bonds Tax Exempt Mortgage Expected Term of Financing Years Security: Mortgage Letter of Credit Guaranty (third party) Guaranty (personal) Unsecured Other (specify) 7. BUSINESS PROFILE: (Not required for refunding) a. Is the business located in the City of Arden Hills now? b. Number of employees in City: 1) Before this project: 2) After this project: C. Approximate annual sales: d. Length of time in business: Length of time in business in City: e. Do you have plants in other locations? If so, where? 8. NAMES OF: a. Underwriter (name and contact person): b. Corporate Counsel: • C. Underwriter's Counsel: 0 9. WHAT IS YOUR TARGET DATE FOR: a. Construction start: b. Construction completion: 10. Attachments: a. Project description: b. Draft application to Department of Trade and Economic Development — together with necessary attachments C. Initial application fee d. Indemnification Letter of Agreement I certify that the information provided above contains no misrepresentations, omissions or concealments of material facts and that the information given is true and complete to the best of my knowledge. I have been furnished a copy of the Procedure for Application to the City of Arden Hills for Private Activity Revenue Bond Financing and is aware of its content and agree to be bound by its terms and the terms of the indemnification letter. Signature Date Title • J PART V APPLICATION FOR TAX-EXEMPT FINANCING (Multi -Family Housing) DATE OF APPLICATION: APPLICANT: CONTACT PERSON: TITLE: ADDRESS: TELEPHONE L_ . PROJECT NAME: PROJECT LOCATION: PROJECT INFORMATION Efficiency One Bedroom Two Bedroom Three Bedroom Parking (included in rent/ not included in rent) 0 Laundry RENT UNITS $ 10 • Utilities included in monthly rent: OPERATING EXPENSES % of Gross (Annual) TOTAL PROJECT COST: $ DEVELOPER EQUITY: $ DEBT SERVICE: $ *HARD COSTS: $ LAND VALUE: $ SOFT COSTS: $ *(Hard Costs are all project costs the IRS has determined to be eligible items for depreciation.) ANTICIPATED INTEREST RATES: AMORTIZATION SCHEDULE: -Year Amortization Schedule If the project were convention- ally financed, what interest rate would you expect to pay? SALES ASSUMPTION: DEPRECIATION METHOD: How many years do you plan to Years: hold the property before you sell? Type: years. At what percent do you feel the value of the project Amount of Total Basis: $ will appreciate? EQUIPMENT: $ of project cost is for equipment (e.g., washers/dryers) ANTICIPATED INCREASES: ANTICIPATED VACANCY RATE: Revenue: % per year First Year: % Expenses: % per year After First Year: CONSTRUCTION SCHEDULE • Anticipated construction commencement date: 11 • 0 Anticipated construction completion date: ADDITIONAL INFORMATION: I certify that the information provided above contains no misrepresentations, omissions or concealments of material facts and that the information given is true and complete to the best of my knowledge. I have been furnished a copy of the Procedure for Application to the City of Arden Hills for Private Activity Revenue Bond Financing and is aware of its content and agree to be bound by its terms and the terms of the indemnification letter. Signature Title Date 12 PART VI ADDENDUM TO APPLICATIONS The following items must be attached to each application: APPENDIX A A brief description of the organizational structure of Applicant, including parent subsidiary and affiliate organizations (if applicant is other than an individual). APPENDIX B Statement of Applicant's business history, including any multi -family rental projects. APPENDIX C The name, address, and telephone number of: 1. The Applicant's legal counsel 2. The Applicant's accountant 3. The architect of the proposed Project 40 4. The engineer of the proposed Project 5. The general contractor of the proposed Project APPENDIX D 1. Present ownership of the proposed Project site and Applicant's interest therein. 2. Present zoning of the Project site and a description of what city land use approvals are needed for this project. 3. The projected number of new employees to be added to the Applicant's permanent work force because of the Project (for Commercial, Industrial or Health Care only). 4. Other financing attempted or available to the Project including any interim financing. 5. Statement regarding whether or not this project has all required city approvals. If the project does not have all of the required approvals, list the approvals still needed and a tentative time schedule. APPENDIX E Indemmficatio etter of Agreement. APPENDIX F Proforma An sis o the Project 13 • • PART VU INDEMNIFICATION LETTER OF AGREEMENT The Mayor of the City of Arden Hills and Members of the City Council City of Arden Hills 1245 Highway 96 Arden Hills, MN 55112 RE: Application of Arden Hills for Tax Exempt Revenue Bond Financing by the City of Dear Mayor and Members of the City Council: This letter of agreement is given by a under the laws of Minnesota ("Applicant") as required by the City of Arden Hills, Minnesota in connection with its consideration of an application for tax exempt revenue bond financing for the project described in the application. Applicant agrees as follows: pplicant agrees to p y or reimburse the City for any and all costs and expenses which the City,.nay incur in c nnection with its consideration of the project and the granting of tax exet pt revenue bo d financing therefor, whether or not the project is preliminarily approved by the City, whe er or not the project is approved by the State of Minnesota, whether or not revenue bond ancing is finally approved by the City, whether or not the bonds are issued and soldytheirefense, a whether or not the project is carried to completion. 2. Applicemnify and hold the City, its officers, employees and agents harmless againstan,sses, claims, damages, expenses or liabilities, including attorneys fees incurrese, to which the City, its officers, employees and agents may become subject "with the City's consideration, issuance or sale of the bonds for Applcd the carrying out of the transactions contemplated by this agreement and any resolutions adopted, or agreements executed by the City in connection with the issuance of its bonds for this project. 3. Applicant hereby releases the City, its officers, agents and employees from any claims, causes of action, losses, damages, or liabilities which it may have against the City, its officers, agents, and employees or which it may incur in connection with: the City's consideration of the application for industrial development revenue bond financing for Applicant's project; the failure of the City, in its discretion, to issue tax-exempt revenue bonds for Applicant's project; the issuance and sale of the bonds; the construction of the project; or any other matter or thing of any type or nature whatsoever which may arise in connection with the foregoing. 14 4. Applicant is aware of the City's application and administrative fee structure for tax exempt • financing and agrees and covenants that all such fees will be paid in the amount and at the times required. Dated: (Applicant) to Its 15 • ltm'- 311� DEN ]HILLS PROCEDURE FOR APPLICATION TO CITY OF ARDEN HILLS, MINNESOTA FOR PRIVATE ACTIVITY REVENUE BOND FINANCING Finance Director City of Arden Hills 1245 West Highway 96 Arden Hills, MN 55112 Effective as of 12009 PROCEDURE FOR APPLICATION TO THE CITY OF ARDEN HILLS FOR PRIVATE ACTIVITY REVENUE BOND FINANCING Table of Contents Page PartI General.......................................................................................................................... i Part1I Guidelines.....................................................................................................................2 Part III Miscellaneous Matters.................................................................................................. 5 Part IV Application for Tax -Exempt Financing (Commercial, Industrial, Health Care or Other Non -Housing Projects) .....................7 Part V Application for Tax -Exempt Financing (Multi -Family Housing)..............................................................................................10 Part VI Addendum to Application.........................................................................................13 • Part VH Indemnification Letter of Agreement ................................................. 0 PART I M1 GENERAL r Under the Minne 4dustrial a Municipal Industrial Development Act, Minnesota Statutes, Sections 469.152 to 469.1651 (the nDevelopment Act"), the City of Arden Hills has authority to issue revenue bonds or notes to attract or promote economically sound industry and commerce to the City. Under Minnesota Statutes, Chapter 462C (the "Housing Act") the City is authorized to issue housing revenue bonds to finance multi -family residential housing projects for low and moderate income persons and elderly persons. Projects must be embodied in a Housing Program as that term is defined in the Housing Act. The Council is aware that such financing for certain private activities may be of benefit to the City and will consider requests for tax exempt financing subject to these Guidelines. The Council considers tax exempt financing to be a privilege, not a right. It is the judgment of the Council that tax exempt financing is to be used on a selective basis to encourage certain development that offers a benefit to the City as a whole, including significant employment and housing opportunities. It is the applicant's responsibility to demonstrate the benefit to the City, both in writing and at the required public hearing. The applicant should understand that • although approval may have been granted by the City for the issuance of financing for a similar project or a similar debt structure, that is not a basis upon which approval will be granted. Each application will be judged on the merits of the project as it relates to the public purposes of the Housing Act or the Industrial Development Act and the benefit to the City at the time the request for financing is being considered. 1 PART U GUIDELINES 1. The Council will consider tax exempt financing for commercial, industrial health care, and any other projects authorized to be financed under the Industrial Development Act (referred to as "non -housing projects"), and housing projects under the Housing Act. An applicant for tax exempt financing for non -housing projects pursuant to the Industrial Development Act must submit to the City the application contained in Part IV of these Guidelines. An applicant for tax exempt financing for housing projects pursuant to the Housing Act must submit to the City the application contained in Part V of these Guidelines. 2. Projects must be compatible with the overall development plans and objectives of the City and comply with the zoning and land use regulations of the City. 3. An application will not be considered by the Council until tentative City Code findings and requirements have been made with respect to zoning, building plans, platting, streets, and utility services. The application must be accompanied by the addendum contained in Part VI of these Guidelines and must provide information as to the project's need for municipal services including, but not limited to, street improvements, water and sewer services, and police and fire protection. 4. The project must be a positive benefit to the City. The project must be of a nature that the City wishes to attract, or an existing business which the City wishes to have expand within the City, considering employment opportunities, incentive for further development, impact on City services, and support for the industrial, commercial or health care or educational facilities currently located in the City. A housing project must provide significant housing opportunities for low and moderate income persons or the elderly. 5. The Council will, if requested, grant an applicant a pre -application review. The purpose of the pre -application review is to inform applicants of the possibility of rejection or the possible bases for such rejection. The fact that the project is not rejected at the pre - application stage is not to be construed as approval of the project or as an indication that the project will be approved upon formal request to the Council. Requests for tax exempt financing may be rejected by the City whether or not the project was submitted to a pre - application review and regardless of the outcome or recommendation of that pre -application review. A request for pre -application review must be in writing, addressed to the City Finance Director, and set forth the name of the project, the type of project intended and the name, address and telephone number of the person who will be representing the applicant at the pre -application review, together with such additional information as the applicant desires to submit. 6. The applicant must select a qualified financial adviser or underwriter to assist the applicant in preparing all necessary application documents and materials. The financial adviser will submit a letter that establishes the financial feasibility of the project. Applications may, in the alternative, include a signed letter from a responsible financial institution indicating that 2 the project is economically feasible and viable and stating that bonds can be successfully ofsold for the project or that an individual or institution intends to purchase all of the bonds. The applicant must receive approval from the appropriate state agencies, secure financing and commence construction within one year of the date of the resolution giving preliminary approval to the project or the housing program. Upon application, the Council may approve an extension of the preliminary approval. The City will appoint bond counsel for the bond issue, which will normally be the City's regularly retained bond counsel. 7. Pursuant to the Industrial Development Act and the Housing Act, consideration of an application for tax exempt financing must be done at a public hearing held by the Council. Modifications to the project after the public hearing and preliminary approval must be consistent with the scope of the project as proposed at the time of preliminary approval. 8. The City is to be reimbursed and held harmless for and from any out-of-pocket expenses related to the tax exempt financing including, but not limited to, legal fees, financial analyst fees, bond counsel fees, the City staffs expenses in connection with the application, and any deposits or application fees required under state law in order to secure allocation of bonding authority. The applicant must execute a letter to the City undertaking to pay all such expenses. A form of the required letter is set forth as Part VII of these Guidelines. A non- refundable application fee in the amount of must be included with the submission of the application. ^-t 9. Prior to closing and delivery of the bonds for the project, the pplicant must pay, or commit to pay an nnu dministrative fee in the amount of j112`of 1°l0 _� of the outstanding r� principal balance of the bonds. The administrative fee may be paid in a lump sum at closing on the bonds, or may be paid semiannually while the bonds are outstanding at the times specified in the bond documents. The administrative fees required by this paragraph will be adjusted at or paid prior to delivery of the bonds if necessary to ensure compliance with the / Internal Revenue Code and regulations. \:S Cep Zd �, ,✓'' ,c., a, OtA K 6.04 �.- t Y / x APT' ;��If the City determines that issuance of the bonds requested by the applicant is reasonably expected to cause governmental bonds issued by the City in that calendar year to be ineligible for designation as "qualified tax exempt obligations" under Section 265(b)(3) of the Internal Revenue Code of 1986, as amended (also known as "bank qualified"), the applicant will be required to reimburse the City, at the time of issuance of the City's bonds, for any interest rate differential between bank qualified and non -bank qualified bonds. 10. Applications for financing must be made on the forms attached to these Guidelines. In addition, the applicant must furnish a description of the project, a plot plan, elevation of proposed buildings, landscape, lighting, and site preparation, together with a brief description of applicant and the proposed financing in such form as required at the time of application. 011. The Council may, in its sole discretion, impose conditions exceeding those required under the City building code in respect to exterior building materials, landscaping, signage 3 Iighting, and such other aspects as the Council may consider appropriate on a case -by -case • basis. C. • 12. The Council may, in its sole discretion, withdraw its preliminary approval of a project any time if in its judgment the purposes of the Act will not be served by going forward with the project and its financing. 4 0 PART III MISCELLANEOUS MATTERS 1. Ratings. The City will give its most favorable consideration to proposed tax exempt bond issues that have the same rating as the City's obligations by Moody's Investment Service or ,- Standard & Poor's Corporation. ssues carrying lower ratings or non -rated issues may be sold only to institutional or other investors on a private placement basis and must be in denominations of at least Council may depart from this guideline when in its �judgment the project is of a level o merit and public purpose to justify the departure; and in case of such a departure the Council must state its reasons therefor in the resolution awarding the sale of the bonds. 2. Refundings. The Council will normally approve the refunding of a tax-exempt issue but only upon a showing by the applicant of (1) substantial debt service savings, (ii) the removal of bond covenants significantly impairing the financial feasibility of the project, or (iii) both (i) and (ii). In the case of refundings of bonds for which the administrative fee listed in paragraph 9 of Part II have been paid in full, no new administrative fees are required; but the non-refundable application fee must be paid together with all City expenses in excess of that fee. If the administrative fees for the refunded bonds are not paid in full upon closing on the refunding bonds, such fees must continue to be paid for the refunding bonds. iIn the case of ref endings of bonds where no administrative fee has been paid, the administrative fees listed in paragraph 9 of Part II must be paid. The application form is to be appropriately modified. 3. Subsequent Proceedings. Where changes to the underlying documents or credit facilities of outstanding bond issues are to be made and require Council action (including changes that are a "deemed reissuance" under Internal Revenue Service regulations), no administrative fee is charged but a non-refundable fee of NO R , must be deposited with the City to cover administrative costs. No formal application form is required. mod' -7 4. Issue by Another Political Subdivision. The City will consider requests for tax exempt financing of projects in the City by other political subdivisions. In these cases the non- refundable application fee must be paid and all procedures through the approval of the preliminary resolution followed. No administrative fee is charged, The City reserves the right to reject such requests for any reason, including without limitatio a determination by the City that such issuance by another political subdivision would impair City's ability to issue governmental bonds as "bank qualified bonds" (as defined in Part 11, aragraph 9) in that calendar year. 5. City Contact. Initial contacts about tax-exempt financing are made by contacting:""} Finance Director City of Arden Hills 1245 West Highway 96 Arden Hills, MN 55112 5 e.� ly'— • • 6. Deadlines. The Council conducts all tax exempt financing matters at regularly scheduled Council meetings held on the second and last Monday of each month. Documents for Council consideration must be at the City office on the Monday preceding the Council meeting at which the matter is to be considered. In the case of a publicly offered bond, issue the documents, when submitted, may specify a maximum price and maximum effective interest rate if prices and rates have not yet been established. 6 F 'UP APPLICATION FOR TAX-EXEMPT FINANCING (Commercial, Industrial, Health Care or Other Non -Housing Projects) 1. APPLICANT a. Business Name: b. Business Address: C. Business Form (corporation, partnership, sole proprietorship, etc.): d. Authorized Representative: e. Principal contact person and telephone number: 2. PURPOSE OF REQUESTED FINANCING: a. New Facility (describe): • b. Expansion (describe): C. Refunding (attach explanatory letter) 3. GIVE BRIEF DESCRIPTION OF NATURE OF BUSINESS, PRINCIPAL PRODUCTS, ETC.: 4. ESTIMATED PROJECT COSTS: (Not required for refunding) Land $ Building Equipment Architectural, Engineering Costs of Issuance Capitalized Interest, including discount Other __— • Total Financing Requested $- 5. AMOUNT OF FINANCING REQUESTED: $ _ (% of project costs) 7 6. TYPE OF FINANCING PROPOSED: Bonds Tax Exempt Mortgage Expected Term of Financing Years Security: Mortgage Letter of Credit Guaranty (third party) Guaranty (personal) Unsecured Other (specify) 7. BUSINESS PROFILE: (Not required for refunding) a. Is the business located in the City of Arden Hills now? b. Number of employees in City: 1) Before this project: 2) After this project: C. Approximate annual sales: d. Length of time in business: Length of time in business in City: e. Do you have plants in other locations? If so, where? 8. NAMES OF: a. Underwriter (name and contact person): b. Corporate Counsel: C. Underwriter's Counsel: E:] 9. WHAT IS YOUR TARGET DATE FOR: 0 a. Construction start: b. Construction completion: 10. Attachments: a. Project description: b. Draft application to Department of Trade and Economic Development — together with necessary attachments C. Initial application fee d. Indemnification Letter of Agreement I certify that the information provided above contains no misrepresentations, omissions or concealments of material facts and that the information given is true and complete to the best of my knowledge. I have been furnished a copy of the Procedure for Application to the City of Arden Hills for Private Activity Revenue Bond Financing and is aware of its content and agree to be bound by its terms and the terms of the indemnification letter. Signature Date Title 9 . PART V APPLICATION FOR TAX-EXEMPT FINANCING (Multi -Family Housing) DATE OF APPLICATION: APPLICANT: CONTACT PERSON: TITLE: ADDRESS: TELEPHONE (� • PROJECT NAME: PROJECT LOCATION: PROJECT INFORMATION RENT Efficiency $ One Bedroom $ Two Bedroom $ Three Bedroom $ Parking (included in rent/ not included in rent) $ Laundry $ 10 UNITS • Utilities included in monthly rent: OPERATING EXPENSES % of Gross (Annual) TOTAL PROJECT COST: $ DEVELOPER EQUITY: $ DEBT SERVICE: $ *HARD COSTS: $ LAND VALUE: $ SOFT COSTS: $ *(Hard Costs are all project costs the IRS has determined to be eligible items for depreciation.) ANTICIPATED INTEREST RATES: AMORTIZATION SCHEDULE: % -Year Amortization Schedule If the project were convention- ally financed, what interest • rate would you expect to pay? SALES ASSUMPTION: How many years do you plan to hold the property before you sell? years. At what percent do you feel the value of the project will appreciate? EQUIPMENT: DEPRECIATION METHOD: Years: Type: Amount of Total Basis: $ $ of project cost is for equipment (e.g., washers/dryers) ANTICIPATED INCREASES: ANTICIPATED VACANCY RATE: Revenue: % per year First Year: % Expenses: % per year After First Year: CONSTRUCTION SCHEDULE Anticipated construction commencement date: 11 • Anticipated construction completion date: ADDITIONAL INFORMATION: I certify that the information provided above contains no misrepresentations, omissions or concealments of material facts and that the information given is true and complete to the best of my knowledge. I have been furnished a copy of the Procedure for Application to the City of Arden Hills for Private Activity Revenue Bond Financing and is aware of its content and agree to be bound by its terms and the terms of the indemnification letter. Signature • Title 0 Date 12 • PART VI ADDENDUM TO APPLICATIONS The following items must be attached to each application: APPENDIX A A brief description of the organizational structure of Applicant, including parent subsidiary and affiliate organizations (if applicant is other than an individual). APPENDIX B Statement of Applicant's business history, including any multi -family rental projects. APPENDIX C The name, address, and telephone number of: 1. The Applicant's legal counsel 2. The Applicant's accountant •3. The architect of the proposed Project 4. The engineer of the proposed Project 5. The general contractor of the proposed Project APPENDIX D 1. Present ownership of the proposed Project site and Applicant's interest therein. 2. Present zoning of the Project site and a description of what city land use approvals are needed for this project. 3. The projected number of new employees to be added to the Applicant's permanent work force because of the Project (for Commercial, Industrial or Health Care only). 4. Other financing attempted or available to the Project including any interim financing. 5. Statement regarding whether or not this project has all required city approvals. If the project does not have all of the required approvals, list the approvals still needed and a tentative time schedule. APPENDIX E Indemnification Letter of Agreement. APPENDIX F Proforma Analysis of the Project 13 . PART VU INDEMNIFICATION LETTER OF AGREEMENT The Mayor of the City of Arden Hills and Members of the City Council City of Arden Hills 1245 Highway 96 Arden Hills, MN 55112 RE: Application of for Tax Exempt Revenue Bond Financing by the City of Arden Hills Dear Mayor and Members of the City Council: This letter of agreement is given by , a under the laws of Minnesota ("Applicant") as required by the City of Arden Hills, Minnesota in connection with its consideration of an application for tax exempt revenue bond financing for the project described in the application. • Applicant agrees as follows: 1. Applicant agrees to pay or reimburse the City for any and all costs and expenses which the City may incur in connection with its consideration of the project and the granting of tax exempt revenue bond financing therefor, whether or not the project is preliminarily approved by the City, whether or not the project is approved by the State of Minnesota, whether or not revenue bond financing is finally approved by the City, whether or not the bonds are issued and sold, and whether or not the project is carried to completion. 2. Applicant agrees to indemnify and hold the City, its officers, employees and agents harmless against any and all losses, claims, damages, expenses or liabilities, including attorneys fees incurred in their defense, to which the City, its officers, employees and agents may become subject in connection with the City's consideration, issuance or sale of the bonds for Applicant's project and the carrying out of the transactions contemplated by this agreement and any resolutions adopted, or agreements executed by the City in connection with the issuance of its bonds for this project. 3. Applicant hereby releases the City, its officers, agents and employees from any claims, causes of action, losses, damages, or liabilities which it may have against the City, its officers, agents, and employees or which it may incur in connection with: the City's consideration of the application for industrial development revenue bond financing for Applicant's project; the failure of the City, in its discretion, to issue tax-exempt revenue bonds for Applicant's project; the issuance and sale of the bonds; the construction of the project; or any other matter or thing of any type or nature whatsoever which may arise in connection with the foregoing. 14 • 4. Applicant is aware of the City's application and administrative fee structure for tax exempt financing and agrees and covenants that all such fees will be paid in the amount and at the times required. Dated: • Ll (Applicant) i M. Its