Authorize Sale of Bonds for The Residence at the COR - Flaherty and Collins and Debt Subordination Agreement for PNC Bank Financing

On September 27th, 2011 the HRA and City Council approved a Purchase Agreement and Development Agreement with Flaherty and Collins for the construction of a 230-unit market rate apartment project in the COR at Ramsey. The project will wrap the existing and newly expanded parking facility and complete a significant component of the 'transit village' in The COR.

The development and purchase agreements included project financing by the HRA in the amount of a $1.3 million note and a $6.85 million dollar note. As the HRA will recall, the private financing in this project being provided by PNC Bank for $20.45 million, included contingencies with regard to the construction of the Ramsey Station on the Northstar Commuter Rail. Those contingencies have now been satisfied with the contracts for the construction of the Ramsey Station being let in late January. Ground breaking for the Ramsey Station is scheduled for March 27, 2012.

Additionally, at the September 27, 2011 meetings of the HRA, the public hearing for the sale of the bonds associated with the financing being provided by the HRA was held. Stacie Kvilvang of Ehlers, the HRA's financial advisor for this project, will be present at the HRA meeting this evening to review the action requested  to call for the sale of the bonds on April 24th and begin the required process for that sale.

At the time of the approval of the Development and Purchase Agreements, it was noted that an agreement may be necessary between PNC bank and the HRA with regard to the financing being provided by each entity. Over the past several months, the Development Management Team and the HRA's legal counsel, Mr. Tom Bray, have been in negotiations with PNC Bank and Flaherty and Collins regarding the Debt Subordination Agreement. The Development Team and legal counsel have worked to ensure that the HRA's rights under its loan terms and development and purchase agreements were not substantially altered under the Debt Subordination Agreement. A memo has been prepared by HRA legal counsel that outlines the HRA's rights and remedies under the subordination agreement, it is attached, along with the Debt Subordination Agreeement, for HRA review. Mr. Tom Bray will be present for the HRA meeting to review the terms of the subordination agreement.
 
Flaherty and Collins will proceed to close on their private financing for the project in early March and the closing on the land with the HRA would occur on March 23, 2012. The land sale proceeds from this transaction are $750,000. On Thursday, February 23rd, plans were received by the Ramsey Building Division for review which begins the process to satisfy a requirement prior to closing under the development agreement with regard to our review and acceptance of plans for the project. Ground breaking for The Residence at the COR project has been tentatively scheduled for Tuesday, April 10, 2012 at 3:00 p.m.

Public Hearing for the sale of the bonds was completed on September 27, 2011. 

Attached documents:

Sale of Bond docuemnts

Memo from HRA legal counsel Tom Bray regarding the Debt Subordination Agreement.  

Debt Subordination Agreement

Staff recommends that the HRA:

Approve resolution for sale of bonds for The Residence at the COR - Flaherty and Collins project  - and -

Approve Debt Subordination Agreement with PNC bank for private financing. 

TIF 14 bond proceeds. 

Approve resolution for sale of bonds for The Residence at the COR - Flaherty and Collins project - and -

Approve Debt Subordination Agreement with PNC bank for private financing.