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Department Approval � �� Item Description BACKGROUND l�'�, Jy REQUEST FOR COUNCIL ACTION Date: 06/08/09 Item No.: 12.c City Manager Approval � / Consider a Resolution for the Imposition and Collection of Fees in the Housing Improvement Area for Westwood Village I(HF0052) On January 23, 2009, the City Council held a public hearing regarding the setting of assessment amounts for the property owners within the Westwood Village I(WWVI) Housing Improvement Area. The assessments were to fund exterior improvements of the WWVI buildings. After the public hearing, the City Council adopted a fee resolution setting assessment amount for each property owner. After the fee resolution for Westwood Village I(WWVI) was passed on January 23rd 2009, staff started working on putting the financing in place for the improvements. Staff had a previous understanding that the City of Roseville could directly place the loan for the HIA with Sremer Sank. Steve Subul the HRA attorney was consulted regarding the HIA process that Roseville was undertaking for WWV I as he has extensive experience with HIAs. Mr. Subul informed staff that the loan from Sremer is a "bond" within the meaning of Section 428A.16. That is, the City would essentially issue a bond when placing the loan with Sremer Sank, and used the proceeds to finance the housing improvements described in the ordinance. The bond can be either secured solely by the housing improvement fees, or also secured by the City's full faith and credit. Assuming the loan/bond is a general obligation, the City must reasonably expect that the housing improvements fees will be sufficient to pay debt service-- the city's t�ing power is pledged only as a back-up. If the City wants to continue with financial assistance to WWVI without compromising cash reserves earmarked for City programs, then the City will need to issue open-market bonds. The bonds must meet all of the requirements of Minnesota statute, Chapter 475 (except no election is required and the bonds do not count against the city's net debt limits). That just means that this transaction is not handled like a commercial loan. Sond counsel would typically draft the documents, some of which need to be filed with the county auditor. Mr. Subul advised that the City must enter into a development agreement for the construction improvements at WWVI. This development agreement requires that the WWVI be responsible for any short falls that may occur from paybacks to the assessments after the bond has been issued. The fee resolution that was passed on January 23rd, 2009 allowed for pay off of the assessments anytime after issuances of the bonds. Staff did have Springsted look at what the financial probability of a shortfall Page 1 of 3