7D, Presbyterian Homes Conduit Debt Waiver Letter

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For purposes of �1ie fee calcuiation, �lie principal amount of all Housing Revenue Bonds are aggregated, as if alI were issued or� the same date, bui the admi.nistrative �ees is payable upon closing of each separate series. Section 7.1(d) of the Cantract alsa provided that the Developer may not seek issuance of an.y series o�' Housi�g Revenue Bonds by any unit of government other than the City. The purpose of this provision was to ensure tka.at the Developer not avoid paying the City's administrative fee by having ano�her goverr�ment be the conduit issuer of revenue bonds for the Arden Hills facility. Developer has now determiz�ed �o issue its f rst series af Hausing Revenue Bonc�s through placement with a bank, which requires ihe bonds to be "qualified tax-exempt obligations" wiihin the meaning of Section 265{b}(3) of the Internal Revenue Code of 198b, as amended (such bonds are also known as "banic qualified bonds"). �n arder for an issuer fio designate bonds as bank-qualif ed bands, ihe issuer �nust reasonably expect at the time of issuance thai it wiil not issue more tkian $I0,000,000 in ta� e�empt governmental and 501(c}(3) bonds in thai calendar year. Developer seeks approximately $34,OOO,aoa million in pri�czpal amount of Housing Revenue bonds in 2011, which means ihat the only way all such bonds arzxay be issued as bazlk qualifed bonds is £ar the bonds to be issued by more than one jurisdiction (each one issuing no more than $1U,000,000 znillion �n prir�cipal amount, and �ach also expecting to issue no more than that amount for all tax exerz�pt governmentai and 501(c){3} bonds combined in 2011). T�erefore, Developer has requested that the City issue $10,000,000 in Housing Revenue Bonds, and has also requested that it be permitted to seek issuance of the balance of 2011 Housing Revenue Bonds by other jurisdictions. However, Developer has praposed to pay the City's administrative fee (as described above) as i� tk�e City issued the entire princi�al amount of bonds. To that end, Developer has asked the City io waive the literal reading of Section 7.1(d} af the Cantract, on the condition that Developer pay the full fee as if ihe City issued all the bonds. A form of the waive letter is attached. When other issuers move farward with approval of bonds, the Ci#y will be asked to conser�t to that issuarxce, az�d the conditions described in the wa'rver letters would be incorporated in such consent resolutions. If the City of Arden Hills c�ver� to issue any of its own governmental bonds in 2011, tl�e Cantract already provides that Developer wo�.ld be required to reimburse the City for any higher cosi created by the fact that the City's bonds would not be bank qualified. (Bank qualified bonds typically carry a slightly lower interest raie}. That proviszoz� is not being waived. If you ar councilmember have any questions, please contact me. 38&i88vI S3B AR200-IO 2