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HomeMy WebLinkAbout08-09-2011 Agenda Chair James Ostlund (2011) 1245 W. Highway 96 Committee Members EN HILLS Arden Hills, MN 55112 Jeff Johnson (2011) 651.792.7800 Arlene Mitchell (2013) www.ci.arden-hills.mn.us John Braun (2012) Arden Hills Katy Peters (2012) (Vacant Seat) (2013) Financial Planning and Council Liaison DavidGrant Analysis Committee August 9, 2011 City Vision A strong community that values its unique environmental setting, strong residential neighborhoods, vital business community, well-maintained infrastructure, fiscal soundness, and our long-standing 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. April 12, 2011 —Regular Meeting 3. UNFINISHED AND NEW BUSINESS A. Discuss Changes to the Conduit Debt Fee Policy 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 ' IWEENjHILLS • FINANCIAL PLANNING&ANALYSIS COMMITTEE Tuesday,April 12,2011 6:00 P.M. Council Chambers, Arden Hills City Hall CALL MEETING TO ORDER AND ROLL CALL The meeting was called to order by Jim Ostlund at 6:00 pm. MEMBERS PRESENT:Jim Ostlund,Arlene Mitchell,John Braun,Katy Peters, David Grant;Council Liaison MEMBERS NOT PRESENT:Jeff Johnson OTHERS PRESENT: Fran Holmes,Nick Tamble,Brenda Holden,Patrick Klaers,Sue Iverson, Kyle Howard Call to Order 1. APPROVAL OF THE AGENDA Motioned: Jeff Johnson Seconded: Arlene Mitchell 2. APPROVAL OF April 12,2011, MINUTES Approved as amended Motioned:Arlene Mitchell Seconded:Jeff Johnson 3. UNFINISHED AND NEW BUSINESS • A. Continue discussion on developing TIF white paper Discussion continued on the development of the TIF white paper with the assistance from the City Council.The Committee and Council held a robust discussion on the progress and direction of the paper,updating it as the discussion progressed throughout the meeting. The group requested that the Economic Development Committee be invited to the May 10,2011 meeting. The meeting time was also changed to 5:30 pm, from the normal time of 6:00 pm. 4. REPORTS A. Reports from the City Council Mayor Grant addressed the committee about the current issues affecting the city. Topics covered included the Pulte Home's development meeting with the Planning Commission,progress on the MNDot reconstruction of 694,and the redesign of the Lexington Ave bridge lanes. 5. ADJOURNMENT Motioned:Jim Ostlund at 7:55 pm. Seconded:Arlene Mitchell Jim Ostlund,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-hills.mn.us EN HILLS MEMORANDUM DATE: August 09, 2011 TO: Financial Planning and Analysis Committee FROM: Sue Iverson, Director of Finance and Administrative Services Kyle Howard, Finance Analyst SUBJECT: Meeting agenda • Discussion on Changing the Conduit Debt Fee In December, 2010 Presbyterian Homes wanted to use Conduit Debt to finance their project. The issue arose where the cities current Conduit Debt Fee was not suited to fully deal with such a large issuance of Conduit Debt, $34,000,000. The city's current policy is that 1/8th of 1% of the outstanding principal balance of the bonds is collected to cover the annual administrative fee. 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 Council has requested that the Financial Planning and Analysis Committee review the current Conduit Debt Fee.They have recommended that it be modeled after the City of Blaine policy. Blaine has a tiered system that allows for different allocation percentages based on the total dollar value of the issuance and different types. Blaine's method of allocation was used by the City to handle the Presbyterian Homes Conduit Debt Fee. The Council would like the current fee calculation method to be reviewed by the committee and a new method recommended for adoption. Supplemental items in packet City of Blaine Conduit Debt Policy Conduit Financing Fee of Surrounding Communities City of Arden Hills Procedure for Private Activity Revenue Bond Financing • Conduit Financing Fees • Community Application Fee Fee Surrounding Communities Roseville $2,500- Non refundable $10,000 or 1%of par amount of bonds,whichever is greater Mounds View $500-Non 1%of par amount refundable St. Anthony None 1%of par amount Vadnais Heights No Policy No Policy Shoreview No Policy Developer covers costs related to legal and fiscal review New Brighton No Policy No Policy,very rare to get request Other Communities Anoka $2,500- Non refundable $10,000 or 1%of par amount of bonds, whichever is greater 1/2 of 1%of par amount plus an on-going fee of 1/10 of 1%of Brooklyn Park $500-Non outstanding principal amount on bonds (looking to change refundable policy to do larger up front fee and do away with annual fee due to issues of getting payment from developers) $1,000- Non Greater of$10,000 or 1/8 of 1%of par amount AND on-going e Dakota County CDA refundable fee of 1/8 of 1%of outstanding principal on bonds Bloomington $2,500-Non Lump sum fee of 0.25%of the 1st$10 million, plus 0.10%of refundable bond proceeds above $10 million 1. For new and refunding issues, lump sum fees of 1%of the 1st$5 million of principal,plus 0.5%of the next$15 million of principal, plus 0.25%of bond amounts greater than $20 million Blaine 2. For projects outside of Blaine, a lump sum payment of 0.5% of bond proceeds 3. For municipal consent to obtain conduit financing elsewhere for Blaine projects, .0125%of bond proceeds for Blaine portion of the project • • CITY OF BLAINE No. x.x ADMINISTRATIVE POLICY Date 6/15/2010 Revised: ADMINISTRATIVE FEES FOR PRIVATE ACTIVITY REVENUE BOND FINANCING 1.0 PURPOSE: To establish the fee charged by the City of Blaine to recover administrative costs for services related to the issuance of private activity revenue bonds (conduit debt.) 2.0 POLICY: For debt issued by the City of Blaine as conduit debt under Minnesota statutes and IRS code for which the proceeds are to be loaned to a Borrower and be repaid through revenue and proceeds from the project for which the proceeds were borrowed, the City shall charge a fee pursuant to the following schedule: 2.1 For new and refunding issues, an upfront fee equal to 1%of the first five-million dollars ($5,000,000) of principal of the bonds, plus %2 of 1%of the next$15 million of principal of the bonds, plus % of 1% for the remainder of funds borrowed that exceeds $20 million of bond principal payable at bond closing. 2.2 For Host City issuance %2 of 1%of the gross bond proceeds, payable upfront at bond closing. 2.3 For Host approval, 1/8 of 1%of the amount of project costs for the Blaine portion • of the project. 3.0 PROCEDURE: Upon request from a borrower for the City to use its statutory authority to issue conduit debt, the city will notify the borrower of the administrative fee for issuing conduit debt. The fee will then be made part of the loan agreement between the City and the borrower. 4.0 ADMINISTRATIVE RESPONSIBILITY: It is the responsibility of the Finance Department to implement this policy. Full Name City Manager • C:\Userskicyle.howard\AppData\Local\Microsoft\Windows\Temporary Internet Files\Content.Outlook\SFOHXS85\Conduit Debt.doc • IL EN L S PROCEDURE FOR APPLICATION TO CITY OF ARDEN HILLS,MINNESOTA FOR PRIVATE ACTIVITY REVENUE BOND FINANCING • Approved by the Arden Hills City Council Effective as of September 14,2009 Finance Director City of Arden Hills 1245 West Highway 96 Arden Hilts,MN 55112 • • PROCEDURE FOR APPLICATION TO THE CITY OF ARDEN HILLS FOR PRIVATE ACTIVITY REVENUE BOND FINANCING Table of Contents Page Part I General Part II 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 • • PART I GENERAL Under the Minnesota Municipal Industrial Development Act, Minnesota Statutes, Sections 469.152 to 469.1651 (the "Industrial Development 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. In no event will the City issue private activity bonds for the primary purpose of financing operation expenses of any borrower; provided that bond proceeds may fund reasonable operating and replacement reserves where the primary use of proceeds is to finance capital expenditures. 1 • PART II GUIDELINES l. 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 fmancial 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 r • 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, fmancial analyst fees, bond counsel fees, the City staffs expenses in connection with the application, and any deposits or application fees required under state Iaw 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$500 must be included with the submission of • the application. 9. Prior to closing and delivery of the bonds for the project, the applicant must pay, or commit to pay an annual administrative fee in the amount of 1/8 of 1% (.125%) of the outstanding 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. 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_ • 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 • • 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. • • • • • 4