6A, Presbyterian Homes Conduit Debt – Public Hearing and Prelim

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� EN HiLLS MEMORANDUM DATE: July 25, 2011 TO: Honorable Mayor and City Councilmembers Patrick Klaers, City Administrator FROM: Sue �verson, Director of Finance and Administrative Servic�s SUBJECT: Presbyt�rian Hom.es Conduit Debt -- Public Hearing anc� Preliminary Approval to Issue Bonds Back�rou�d As part of the development ag:ree��nt with Presbyter�an Homes, fiznding for the project is to come from the issuance of conduit debt or ta�-exempt obligaiions. In order for the bonds to be considered tax-exempt, tney need to be issued as bank-qualified bonds. No issuer of ta�-exempt bonds may designate more than $14,000,000 of tax-exempt bonds as banlc-qualified bonds in a calendar year. In 2Q09 and 2010, the Federal government raised this limzt to $30,000,000, but effective January 1, 2011 the limit was reset to $1 p,000,000. As previously stated in discussions with the City Council, Presbyterian Homes has agr�ed ta pay the City of Arden Hills the full amount of the conduit debt €ees regardless of who issues the bonds. To mave forwa�rd with the issuance of the bonc�s, a public hearing needs to be held and preliminaz�y approval to issue revenue obligations needs to be granted. The City of Arden Hills zs listed in the resolution as issuing the entire $34,000,000 because Presbyterian Homes may alter its plans regardiz�g the issuance of the bonds as bank-quali�'ied. If t1�ey choose noi to issue the bonds as bank�-qualified, the Ciry of Arden Hills would then issue the entire $34,OOO,d00 of the bonds. Once the publzc hear�ng has been held, the Couz�cil will be asked to approve pre�zminary approval to the issuance of the bonds. At this poini, Pre�byterian Homes wiil enter inta negotiations with one or more jurisdictions to issue bonds and the Council will be asked to approve �he issuance of tho�e bonds by other jurisdictzons. Again, as previously stated, the City o�'Arden Hills will rec�ive the co�duit debt fee as if the City issued the entire amount o�'the bonds, regardless of what other jurisdictions may charge Presbyterian Homes. City Council Meeting P:lAdnninlCouncillAgendas & Packet Info�atior�120111Pres Homes Conduit Debit Public Hearing & Prelim Approval.doc Page 1 of 2