On July 17, 2015, the City issued its Senior Housing Revenue Note (Presbyterian Homes of Arden Hills,
<br />Inc. Project), Series 2015 (the "Series 2015 Note"), in the original aggregate principal amount of
<br />$10,000,000. The City loaned the proceeds of the Series 2015 Note to the Borrower pursuant to a Loan
<br />Agreement, dated July 17, 2015 (the "2015 Loan Agreement"), between the City and the Borrower, for
<br />the purposes of financing the development of an approximately 40-unit senior housing facility comprised
<br />of independent -living, rental apartments within two buildings, together with necessary common areas and
<br />community space (the "Phase II Project") located at 3200 Lake Johanna Boulevard in Arden Hills and
<br />paying certain financing and issuance costs related thereto. The Series 2015 Note was purchased by the
<br />Lender.
<br />On August 3, 2015, the City amended, restated, and reissued the Original 2011A Note, in the original
<br />aggregate principal amount of $9,503,938.05, re -designated as the Amended and Restated Senior Housing
<br />Revenue Note (Presbyterian Homes of Arden Hills, Inc. Project), Series 2011A (together with the
<br />Original 2011A Note, the "Series 2011A Note").
<br />On September 2, 2015, the City amended, restated, and reissued the Original 2012A Note, in the original
<br />aggregate principal amount of $9,481,981.98, re -designated as the Amended and Restated Senior Housing
<br />Revenue Note (Presbyterian Homes of Arden Hills, Inc. Project), Series 2012A (together with the
<br />Original 2012A Note, the "Series 2012A Note").
<br />Pursuant to the terms of the 2011A Note, the 2012A Note, and the 2015 Note (collectively, the "Notes"),
<br />the interest rate on each of the Notes is adjustable on the fifteenth day of each calendar month (each, a
<br />"Reset Date") at rates determined by the Lender using the one -month London Interbank Offered Rate
<br />("LIBOR"). The use of LIBOR, however, is currently being phased out and will no longer be available
<br />after June 30, 2023. As a result, the Lender has informed the City and the Borrower that for each Reset
<br />Date occurring on or after July 1, 2023, interest on the Notes will be calculated using a waterfall of
<br />fallback rates that initially references the one -month Secured Overnight Financing Rate (SOFR), and such
<br />change (the "Amendment") must be reflected in the Notes.
<br />The Borrower would like the City to consider the enclosed resolution at an upcoming City Council
<br />meeting, which would approve the Amendment to each of the Notes. To memorialize the Amendment,
<br />the City will be asked to execute an Allonge to each of the three Notes.
<br />Kennedy & Graven, Chartered, as bond counsel to the City with respect to the issuance of the Notes, has
<br />determined that such Amendment to the Notes will not be considered a significant modification of the
<br />Notes and will not result in a reissuance of the Notes for tax purposes pursuant to Section 1.1001-3 of the
<br />Treasury Regulations promulgated under the Internal Revenue Code of 1986, as amended, as the rate has
<br />been replaced with a fallback waterfall rate that is a qualified rate described in Section 1.1001-6(h)(3)(ii)
<br />of the Treasury Regulations.
<br />The Notes will continue to constitute special, limited obligations of the City, will continue to be payable
<br />and secured solely by the revenues derived from the 2011A Loan Agreement, 2012A Loan Agreement,
<br />and the 2015 Loan Agreements (collectively, the "Loan Agreements"), respectively, including the Phase I
<br />Project and Phase II Project, and from other security provided by the Borrower. The Notes will not
<br />constitute a general or moral obligation of the City and will not be secured by or payable from any
<br />property or assets of the City (other than the interests of the City in the Loan Agreements) and will not be
<br />secured by any taxing power of the City. The Notes will not be subject to any debt limitation imposed on
<br />the City. The 2015 Note was designated upon issuance, and the Series 2011A and 2012A Notes were
<br />each deemed designated upon reissuance, as "bank -qualified" obligations, and each of the Notes will
<br />continue to be treated as "bank qualified" after the Amendment to the Notes. The Amendment to the
<br />Notes will not impact the City's ability to issue "bank -qualified" bonds in calendar year 2023.
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