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<br />(the “Assignment of Second Mortgage”), from the City in favor of the Lender, and by a Collateral
<br />Assignment of Contract for Private Development, dated on or after June 1, 2011 (the “TIF Assignment”),
<br />between the City, the Borrower, and the Lender.
<br />
<br />In accordance with the terms of an agreement between the Borrower and the Lender, the Borrower
<br />has also requested that: (A) the City approve certain amendments to the outstanding revenue obligations of
<br />the City issued in calendar years 2011 and 2012, including: (i) Senior Housing Revenue Note (Presbyterian
<br />Homes of Arden Hills, Inc. Project), Series 2011A (the “Series 2011A Note”), issued on September 9, 2011,
<br />in the original aggregate principal amount of $10,000,000; and (ii) Senior Housing Revenue Note
<br />(Presbyterian Homes of Arden Hills, Inc. Project), Series 2012A (the “Series 2012A Note”), issued on
<br />January 3, 2012, in the original aggregate principal amount of $10,000,000; and (B) the City of Little Canada
<br />(“Little Canada”) approve certain amendments to the outstanding revenue obligations of Little Canada issued
<br />in calendar years 2011 and 2012, including: (i) Senior Housing Revenue Note (Presbyterian Homes of Arden
<br />Hills, Inc. Project), Series 2011B (the “Series 2011B Note”), issued on September 30, 2011, in the original
<br />aggregate principal amount of $10,000,000; and (ii) Senior Housing Revenue Note (Presbyterian Homes of
<br />Arden Hills, Inc. Project), Series 2012B (the “Series 2012B Note”), issued on January 19, 2012, in the
<br />original aggregate principal amount of $2,000,000.
<br />
<br /> The Series 2011A Note, Series 2011B Note, Series 2012A Note, and Series 2012B Note
<br />(collectively, the “Prior Notes”) were sold to the Lender, the proceeds of which were loaned by the City and
<br />Little Canada to the Borrower, and applied by the Borrower to finance the first phase of the Minimum
<br />Improvements under the Development Contract, which consisted of the demolition of an existing senior
<br />housing facility and the acquisition, construction, and equipping of a multifamily housing development
<br />including a senior rental housing facility comprised of independent living units, assisted living units, and
<br />memory-care units (a combined total of approximately 166 dwelling units) now located at 3120 and 3220
<br />Lake Johanna Boulevard in the City (the “Phase I Project”). Construction of the Phase I Project has been
<br />completed.
<br />
<br />Since the adoption of the Preliminary Resolution, the Borrower has completed its negotiations with
<br />Lender, as proposed purchaser of the Series 2015 Note. The Borrower will return to the City Council at its
<br />meeting on Monday, June 29, 2015 to request consideration of a final resolution (the “Final Resolution”)
<br />authorizing the issuance of the Series 2015 Note, approving a set of final loan documents and security
<br />documents, and authorizing amendments to the Series 2011A Note and the Series 2012A Note.
<br />
<br />The Borrower has requested that the Series 2015 Note be issued as a “qualified tax-exempt
<br />obligation” as defined in Section 265(b)(3) of the Internal Revenue Code of 1986, as amended (the “Code”).
<br />Qualified tax-exempt obligations are sometimes referred to as “bank-qualified bonds.” No issuer of tax-
<br />exempt bonds may designate more than $10,000,000 of tax-exempt bonds as bank-qualified bonds in a
<br />calendar year. The City has not issued any tax-exempt bonds during calendar year 2015 and, except for the
<br />Series 2015 Note, does not expect to issue any other tax-exempt obligation in calendar year 2015. Therefore,
<br />the Borrower has requested that the City issue the Series 2015 Note in calendar year 2015 in the aggregate
<br />principal amount of $10,000,000 and designate the Series 2015 Note as a qualified tax-exempt obligation.
<br />
<br />The proposed amendments to the Prior Notes constitute a significant modification of the Prior Notes
<br />and will cause a reissuance of the Prior Notes under federal income tax law and regulations, and upon the
<br />effective date of such amendments, the Prior Notes will be treated as if they were refunded on such dates. In
<br />order for the amended Series 2011A Note (the “Amended Series 2011A Note”) and the amended Series
<br />2012A Note (the “Amended Series 2012A Note”) to be deemed designated as “qualified tax-exempt
<br />obligations” under the provisions of Section 265(b)(3)(D) of the Code, the Final Resolution authorizes all
<br />actions necessary to ensure that the Series 2015 Note, the Amended Series 2011A Note, the Amended Series
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