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1 Wednesday, May 6, 2015 Patrick Klaers Administrator City of Arden Hills 1245 Highway 96 West Arden Hills, Minnesota 55112-5743 Re: Presbyterian Homes of Arden Hills, Inc. — Phase II of the Minimum Improvements At its meeting on Monday, May 11, 2015, the City Council of the City of Arden Hills (the “City”) will consider a resolution (the “Initial Resolution”), which establishes a date for a public hearing (on Monday, June 8, 2015) with respect to a proposal from Presbyterian Homes of Arden Hills, Inc., a Minnesota nonprofit corporation (the “Company”), that the City issue revenue obligations (the “Revenue Obligations”) under the Municipal Housing Act, Minnesota Statutes, Chapter 462C, as amended (the “Housing Act”), to finance the proposed development by the Company of a senior housing facility comprised of forty (40) independent- living, rental apartments to be located in two buildings (twenty (20) apartments per building), together with necessary common areas and community space, to be located as 3200 Lake Johanna Boulevard in the City (the “Project”). The Project will constitute the second phase of the Minimum Improvements proposed to be developed by the Company under a Contract for Private Development, dated December 20, 2010 (the “Development Contract”), between the City and the Company. The Initial Resolution approves the form of a notice of public hearing and authorizes its publication. If the Initial Resolution is adopted by the City Council of the City, the notice of public hearing will be published in the Shoreview-Arden Hills Bulletin once at least fifteen (15) days prior to the proposed public hearing. The Initial Resolution directs and authorizes the preparation of a housing program in accordance with the requirements of the Housing Act and directs and authorizes the submission of the housing program to the Metropolitan Council for its review and comment. Upon adoption of the Initial Resolution, a housing program with respect to the Project (the “Housing Program”) will be prepared and delivered to the Metropolitan Council on or before the date of publication of the notice of public hearing requesting review of the Housing Program and the submission of any comments to the City. Following the public hearing, it is proposed that the City Council consider a resolution (the “Preliminary Resolution”) which takes the following actions: (i) approves the Housing Program; (ii) grants preliminary approval to the issuance of the Revenue Obligations by the City to finance the Project; and (iii) authorizes certain actions to be taken by the City and the Company in connection with the financing of the Project. The Company may request that the Revenue Obligations be issued as “qualified tax-exempt obligations” as defined in Section 265(b)(3) of the Internal Revenue Code of 1986, as amended (the “Code”). Qualified tax-exempt obligations are sometimes referred to as “bank-qualified bonds.” Since no issuer of tax- exempt bonds may designate more than $10,000,000 of tax-exempt bonds as bank-qualified bonds in a calendar year, the Company may request that the City issue $10,000,000 of the Revenue Obligations in calendar year 2015 and up to an additional $2,000,000 of the Revenue Obligations in calendar year 2016, or