Title
RESOLUTION DECLARING OFFICIAL INTENT TO ISSUE BONDS, AUTHORIZING PRELIMINARY ACTIONS IN CONNECTION WITH THE PROPOSED FINANCING OF THE DR. WILLIS C. PATTERSON PROJECT, REQUESTING CITY COUNCIL TEFRA APPROVAL, AND AUTHORIZING REIMBURSEMENT OF CERTAIN EXPENDITURES
Memorandum
The Ann Arbor Housing Commission (AAHC) seeks approval to borrow funds via a tax exempt bond conduit through the issuance of Senior A 501(c)(3) tax-exempt Bond debt for the acquisition and purchase of an affordable housing project located at 800 Victors Way (the “Project”), Tax Parcel Number 09-12-09-201-016.
The property will be acquired by a wholly owned subsidiary of the Ann Arbor Housing Development Corporation organized as a disregarded entity known as Dr. Willis C. Patterson, Building LLC and the amount paid for the property will be the lessor of (i) $14,200,000.00 or, (ii) the appraised value, plus all applicable development and closing costs.
This property is a 114-unit acquisition and rehab of a market rate property the AAHDC will acquire primarily with the use of 501(c)(3) tax exempt bonds sold by the Ann Arbor Housing Commission. All of the units will be converted to affordable for households at 80% AMI or less and a minimum of 40% of the units will be affordable to households at 60% AMI, as required by statute. The deed will include a restriction that ensures that at least 40% of the units will be affordable to households whose income is 60% of the Area Median Income or less.
Staff
Prepared by: Banu Basaran, Bond Counsel Dykema
Approved by: Jennifer Hall, Executive Director Ann Arbor Housing Commission
Body
WHEREAS, the Commission is a housing commission created by the City of Ann Arbor, Michigan (the “City”) pursuant to Act 18 of the Public Acts of Michigan of 1933 (Ex. Sess.), as amended (“Act 18”);
WHEREAS, the Commission has been authorized under the City Code to act as a borrower for purposes of issuing bonds or notes under Act 18 and exercising the powers conferred upon a borrower by Act 18;
WHEREAS, Act 18 authorizes a borrower to issue revenue bonds to defray the cost of purchasing, acquiring, constructing, improving, enlarging, extending, or repairing a housing project, and authorizes the proceeds of obligations issued under Act 18 to be used to make loans for defraying such costs;
WHEREAS, Ann Arbor Housing Development Corporation, a Michigan nonprofit corporation and tax-exempt charitable organization described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended, or a related nonprofit affiliate thereof (the “Borrower”), expects to acquire, own, improve, equip, furnish, finance, and operate an approximately 114-unit multifamily residential rental housing facility known as AVIA Lofts, located at 800 Victors Way, Ann Arbor, Michigan (the “Project”);
WHEREAS, the Project is expected to be used as a multifamily residential rental housing facility, including units reserved for occupancy by households meeting applicable federal income restrictions and additional units intended to serve moderate-income households, in each case in accordance with applicable federal tax requirements and related regulatory restrictions;
WHEREAS, the Commission expects to issue one or more series of revenue bonds or other obligations in an aggregate principal amount not to exceed Eighteen Million Dollars ($18,000,000), which may be issued as tax-exempt bonds, taxable bonds, senior bonds, subordinate bonds, bonds supported by credit enhancement, or any combination thereof, (collectively, the “Bonds”);
WHEREAS, the proceeds of the Bonds are expected to be loaned to the Borrower and used to finance, refinance, or reimburse a portion of the costs of acquiring, owning, improving, furnishing, equipping, and operating the Project, and to pay related reserves, escrows, costs of issuance, credit enhancement fees, and other transaction costs with respect to the Project;
WHEREAS, the Commission expects the Bonds to be limited obligations of the Commission payable solely from loan repayments to be made by the Borrower and from such funds, accounts, revenues, collateral, credit enhancement, or other security as may be pledged under the bond documents, and not from any general funds of the City;
WHEREAS, Act 18 provides that notes, bonds, or other obligations or claims against a housing project are not debts or charges against the city or village and do not create individual liability for members of the housing commission for official acts;
WHEREAS, the Commission expects that all or a portion of the Bonds may be issued as qualified 501(c)(3) bonds under Section 145 of the Internal Revenue Code of 1986, as amended (the “Code”);
WHEREAS, Section 147(f) of the Code requires public approval of qualified 501(c)(3) bonds following a noticed public hearing before such bonds may be issued on a tax-exempt basis;
WHEREAS, the Commission desires to request that the City Council of the City hold the required public hearing and consider the public approval required under Section 147(f) of the Code and the Treasury Regulations thereunder, including in the City Council’s capacity as the applicable elected representative of the City, the governmental unit on behalf of which the Commission is treated as issuing the Bonds for federal tax purposes, and as the elected legislative body of the governmental unit in which the Project is located;
WHEREAS, the Commission and/or the Borrower may pay or have paid certain expenditures relating to the Project before the issuance of the Bonds, and the Commission desires that such expenditures be reimbursed from proceeds of the Bonds to the extent permitted by Treasury Regulations Section 1.150-2 and applicable law;
WHEREAS, this resolution is intended to declare the Commission’s present official intent to issue the Bonds and reimburse certain expenditures from proceeds of the Bonds, but is not intended to constitute final approval of the issuance, sale, or delivery of the Bonds or final approval of any bond documents that have not yet been prepared or presented to the Commission;
NOW BE IT RESOLVED BY THE ANN ARBOR HOUSING COMMISSION:
1. The Commission determines that the Project is consistent with the housing purposes authorized under Act 18, including the preservation and provision of low- and moderate-income rental housing within the City.
2. The Commission declares its present intent to issue the Bonds in one or more series, in an aggregate principal amount not to exceed Eighteen Million Dollars ($18,000,000), for the purpose of financing, refinancing, or reimbursing a portion of the costs of the Project, including related reserves, escrows, costs of issuance, credit enhancement fees, and other transaction costs.
3. The Bonds may be issued as tax-exempt bonds, qualified 501(c)(3) bonds, taxable bonds, senior bonds, subordinate bonds, bonds supported by credit enhancement, or any combination thereof, as determined to be necessary or advisable by the Authorized Officers, subject to final approval of the Commission before issuance.
4. The maximum principal amount of Bonds expected to be issued for the Project is Eighteen Million Dollars ($18,000,000).
5. The Commission authorizes and directs the Authorized Officers to take such preliminary actions as they determine to be necessary or advisable in connection with the proposed financing, including working with bond counsel, borrower counsel, the Borrower, the City, trustee, underwriter, placement agent, lender, credit enhancer, financial advisor, and other transaction parties; causing the preparation of bond documents; negotiating financing terms; submitting materials for City Council consideration; and taking related actions necessary to advance the proposed financing.
6. The Commission requests that the City Council hold the public hearing and consider the public approval required under Section 147(f) of the Code and the Treasury Regulations thereunder in connection with the proposed issuance of the Bonds.
7. The Commission authorizes and ratifies the preparation and delivery to the City of draft TEFRA public hearing notices, TEFRA hearing resolutions, TEFRA approval resolutions, and related materials for consideration by the City Council and City staff.
8. The Commission makes the following declarations for the purpose of complying with the reimbursement rules of Treas. Reg. §1.150-2 pursuant to the Code:
(a) The Commission reasonably expects to reimburse itself, the Borrower, or any affiliate or related entity eligible for reimbursement under applicable federal tax law, for the expenditures described in (b) below with proceeds of the Bonds.
(b) The expenditures described in this paragraph (b) are for the purpose of defraying the costs of the Project and paying related bond issuance costs, all as described in this resolution.
(c) The Bonds will be issued no later than eighteen (18) months after the later of (i) the date the first expenditure to be reimbursed was made; or (ii) the date the Project was placed in service or abandoned, but in no case later than three (3) years after the date the first expenditure was made.
(d) The expenditures described in (b) above are “capital expenditures” as defined in Treas. Reg. §1.150-1, which are any costs of a type which are properly chargeable to a capital account (or would be so chargeable with a proper election) under general federal income tax principles (as determined at the time the expenditures are paid).
9. The Commission intends that the adoption of this resolution confirms its “official intent” within the meaning of Treasury Regulations Section 1.150-2 promulgated under the Code, as amended.
10. The Bonds shall not be issued, sold, or delivered unless and until the Commission adopts one or more subsequent resolutions approving the final terms of the Bonds and the execution and delivery of the applicable bond documents.
11. The Bonds shall be limited obligations of the Commission, payable solely from loan repayments to be made by the Borrower and from such funds, accounts, revenues, collateral, credit enhancement, or other security as may be pledged under the bond documents. The Bonds shall not constitute general obligations of the Commission or the City and shall not constitute a debt, liability, pledge of faith and credit, pledge of taxing power, guaranty, or payment obligation of the City.
12. For purposes of this resolution, the “Authorized Officers” are the President, Vice President, Executive Director, and any other officer or representative of the Commission designated by the Commission or the Executive Director to act in connection with the Project or the Bonds.
13. All actions previously taken by the Authorized Officers, staff, counsel, and other representatives of the Commission in connection with the Project, the proposed issuance of the Bonds, the TEFRA process, and the proposed financing are ratified, confirmed, and approved.
14. All resolutions and parts of resolutions insofar as they conflict with this resolution are rescinded.
15. This resolution shall take effect immediately upon adoption.
CERTIFICATE
The undersigned hereby certifies that the foregoing is a true, complete, and correct copy of a resolution adopted by the Ann Arbor Housing Commission at a meeting duly called and held on June 25, 2026, and that the resolution has not been amended, modified, rescinded, or repealed and remains in full force and effect as of the date hereof.
Dated ________, 2026
By: Dr. Lee Meadows
Its: Board President
Signature: _______________________________