7E, Presbyterian Homes Conduit Debt - Call for PH and Authorize Publication of Hearing

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� EN HILL5 MEMORANDUM DATE: June 27, 2011. TO: Honorable Mayor and City Councilmembers Patrick Klaers, City Administrator FROM: Sue Iverson, Directox o�Finance and Administrative Services SUBJ'ECT: Presbyterian Homes Conduit Debt — CaII for Public Hearing and Anthorize Publication of Hearing Back�round As part of the development agreement with Presbyterian Homes, iunding �or the project is to cozx�e from the issuance of conduit debt ar t�-exempt obligations. In order far the bonds to be considered tax-e�ezx�pt, they z�eed to be issued as bank-qualified bonds. No issuer of tax-exempt bonds may designate more th.an $10,000,000 of t�-exempti bonds as bank-qualified bands in a calendar year. In 2009 an.d 20I 0, the Federai government raised tl�is limit to $30,000,000, but effective January 1, 2011 the limit was reset to $10,000,000. As previously stated in another agenda iter�, Presbyterian Homes has agreed to pay the City of Arden Hills the full arnount of the conduit debt fees regardless of who issues the bon.ds. To move forward with the issuance of the bonds, a public heaz�ing needs to be set and notice of such hearing published. The pubiic hearing is scheduled for 7uly 25, 2011. The City of Arden Hills is lisied in the resolution as issuing the entire $34,000,004 because Presbyterian Homes may alter its pians regarding the issuance of the bonds as bank-qualified. If they choose nat to issue the bonds as bank-qualzfied, the City of Arden Hills would then issue the eniire $34,000,000 of ihe bonds. Once the puhlic hearing has been held, the Council wili be asked to approve prel�minary appra�al to ihe issuance of the bonds. At this point, Presbyterian Homes will enter into negotiations with one or more jurisdictions ta issue bonds and the Council will be asked to approve t�e issuance of tho�e bonds by other jurisdictions. Again, as previausly stated in a previous agenda item, the City of Arden Hills will received the conduit debi fee as if the City issued the entire amount of the bonds, regardless of what other jurisdictions may charge Presbyterian Homes. City Council Meeting P:IAdminlCouncillAgendas & Packet Information1201 I16-27-11 Regularll'acket InfornnationlPres Homes Conduit Debit Call for Public Hearing.doc Page 1 of 2