HomeMy WebLinkAbout7E, Presbyterian Homes Conduit Debt - Call for PH and Authorize Publication of Hearing�
EN HII,LS
Request for Council Action
Prepared By: Sue Iverson, Director oiFinance Council Meeting Date: June 27, 2011
and Administrative Services
Presbyterian Homes Conduit Debt — Call for Public Hearing
and Authorize Publication of Hearing
Budgeted Amount: Actual Aznaunt: Funding Source:
NA NA NA
Recommendation:
A motion to adopt Resolution 2011-034, a resolutian calling for a public hearing ax�d authorizing
publication of a notice of public hearing with respect to the proposed issuaz�.ce of revenue bonds
under Mi�esota Statutes, Chapter 9�62C, as amended, far the bene�it of Presbyterian Homes of
Arden Hills, Tnc.
Sn ortin Docnments:
1. Memarandum dated .Tune 27, 2011 from �ue Iverson.
2. MemoraYdurr� dated �une 22, 2011 from John Utley, Kennedy & Graven.
3. Resol�tion 2011-034.
�
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
Attached 'as a letter from the City's bond counsel regarding tk�zs znatter and ihe resolution
calling far the public hearir�g and publicaiion o� said hearing.
Council Action Requested
A�notion �o adopt Resolution 2011-034, a resolution calling for a public hearing and
authorizing publicat�an of a natice of public hearing with respect io the proposed
issuance of revenue bonds uzxder Minnesota Statutes, Chapter 462C, as amended, for the
benefit o� �resbyterian Homes of Arden Hills, Inc.
Ciry Council Meeting
P:1AdminlCounciilAgendas & Packet Informatian1201116-27-I I RegularlPacket InFormationlPres Homes Concluit Debit Call
for Public Hearing.doc
Page 2 of 2
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Wsdnesda.y, June 22, 2011
Patrick Klaers
Admir�i'strator
City of Arden Hi�ls
t245 �iighway 9b West
Ardex� Hi1�s, Minnesata 55112-5743
470 U.S. Bank Plaz1 �
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Minnrapolis, MI3 55402
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�vvvw:kennedy-graven.rom
hfFirm�tivc Auion, Equal bpporcuniry E�nplpyer
Re: Presbyterian Hames of Arilen Hills, Inc. Project
The Czty of Arden Hi11s {the "City") entered into a Contract for Private Developrnent, dated
Decernber 20, 201U (the "Development Gontract"}, with Presb�erian Homes of Arden Hills, Inc., a
Minnesot$ monprofit �orporation (the "Company"), wi#h respect to the proposed de�elopment by the
Company of a se�ior housi�g faeility aomprising independent Iiving units, assisted living units, and
�nemary-care uni#s (a combined total of approxirnat�iy 2n0 dweliing units) to be located at 3].20 and 32Z0
Laice 7ohanna Boulevard in the City (th� "Prnject"}, The Frojeetwill replace an exisiing senior housing
facili#y af the Campany located at the same address. Pursuant tp the terms of Articie "E�II of the
Development Corttract, the �ity agreea to i.ssue hoUsing re�enue bands under the Munieipal Housing Act,
Minneso#a Statutes, Chagter 4f2C, as a�nended (the "Housing Act"), to make a.�oan to the Company to
finance the onnstntciaon and equipping of the Project and reIated costs.
'Phe Company is now prepared ta oommence �the �nancing of the construchan and equigping o�
the Project and has req�ested that the �ity' Coun:cil of the City aciopt a pragram prepared in accordance
with the requirements af the Housing A�t. with respeat to #he Project (#he "Pragram"} and g�rant
preliininary approval to the issuance af znultifgmiiy ho�s�ng developnnent r�ven�e bonds or other
obligations (the `Bonds"). The proceeds deriverl from ihe sale,of the Bands are prapased fn t�.e loaned to
the Company and appli:ed by the Coinpany to the finanoing of thc Pio;ject.
A resolu�ion esta:l�lis�iing tlie date far a public hearing u+i�F,h respect to the adoption of fihe Prograrn
and granting preisrr�nar,y approvat ta the issuance of the Bonds has been prepared by Kennedy &{`rraven,
Chartered, as bond eounsel to the City. Ti1e Company has requested that f,he City Council adopt t�is
initial resolution and cnnduct the public hearing at the regularly-scheduled meeting of the City Council on
Monday, 7une 27, 2dI1. FolIowing Yhe public; hsaring, the City Counail wili b� asked to consic�er a
resolu�son granting preliminary approval #v the issuance of the Bonds (the "Preliminary ResoIution"}.
The Company has proposed #o have the Bonds issned as "qualified tax exempt obligations" as
rlefined in Sec�ion 265(b)(3) of the �ternal Revsnue Code of 1986, as amended (tlie "Code"). Qaalified
tax-exemp# abliga�ions are sometimes referred. ta as. "bank-q�alified bar�ds." Siuce no issuer ai tax-
exempt bonds rnay desi�ate more than $10,OOQ,OQU of ta�c-�xempt bonc3s as bank-quaIif�ed bonds zn a
calendaz year, the Company will reques# that ths City issue na more �han $IU,OQO,QO� of the Bonds and
that the City autho�ize other political sutidi�sians of th� 5fate to issue the re�naining $24,00(?,000 of
$onds ta finance the Project. The Company has agreed that the ad�ni�istrative fee payable by t'he
Company pursuant to Section 7.1(b) of the Developrnent Contract will be paid I�y the Cornpany to the
City with respect tn all the Bonds regardless of the actua� issuer of tkie Bands. In exchange far such fes
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payment, #3�e Cannpany will as�t that the City waive the application nf 5ecfaian 7.1(d) r�vhich preclu�es tlie
issuance a�any o�#he Bonds by any unit of govern�ment other than the City.
The initial resolufiion anci the Pi�liminary Resolntion are proposed to be drafted to aut�orize the
issuanee af the entire $34,0f1(i;.O.aU of Bonds by the Ciiy because the Compazry may alfer its plans
regarding the issuance of tt�e Honds as bank qualified bgnds (in which nase tl�e City vs�auld be asked to
issue the entixe $3�,000,000 of Bonds) and because the Prograrn wi11 ref�renee the entire $34,040,OD6 of
Bands to. be issued ta fnance the Pro}ect. '
If the City Conncil adopts the Preliminary Resoluiion, the Company will enter into negntiations
with one or more purchasers of the Bonds and provide for the preparation of the Bonds and of. the
dacuments sacuri�g tt3e Bonds. Once the B�ids and snnh docnmentation are in appropriate forn�, the City
wi�Il request t.�at the Ciiy Cauncil consider and adopt a�na1 resalvtion authorizing the issuance of the
Bonds ta be issued by the City and, if applicalile, approving the issuance by other gavernmental unifs of
any partion af the $vnds to be issued 6y such ather jurisdictions.
PIease contact ihe undersigned at your e.o�venienee wit� any quest�cros with r�gard fo f�e
foregoing.
KENNEDY & GRAVEN, CHARTERED
AR204-p 12 (.TU)
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�
EN HILLS
CITY OF ARDEN HiLLS
COUNTY OF RAMSEY
STATE OF MTNNESOTA
RESOLUTION NO. 201�-034
RESOLUTION CALLING FOR A PUBLIC HEARiNG AND AUTHORIZING
PUBLICATION OF A NOTICE OF PUBLIC AEAItING WITH RESPECT TO
THE PROPOSED ISSUANCE OF REVENUE BONDS UNDER MINNESOTA
STATUTES, CI�APTER 4b2C, AS AMENDED, FOR THE BENEFIT QF
PRESBYTERTAN H4MES OF ARDEN HILLS, INC.
WHEREAS, the City of Arden Hills, Minnesota {the "City") is a statutory city duly organized
and existing under the Constitutior� and laws of the State of Minnesota; and
WHEREAS, under #he Minnesota Housing Act, Minnesota Statutes, Chapter 4b2C, as amended
(the "Housing Act"), any statutory or home rule charter city may issue r�venue bonds or obligations to
make a loan to finance a rnultifamily housing development, including the preparation and construction of
a new development and the impravement af an �xisting building and sita by a nonprofit corporation
which will operate the building as a multifamily housing develapmen� for rental primarily ta eIderly or
disabled persons; and
WIIEREAS, the Housing Act aIso provides that a multifatnily housing develapment may consist
of a combination af a muItifa�ni(y housing development and a new or existing heaIth care facility if:
(i} the multafamily housing development is designed and intended to be used for rental accupancy; (ii) the
multifamily �ousing development is designed and intanded ta be used prirnarily by elderly or physically
disabled persons; and (iii) nursing, medical, personal care, and other health-related assisted living
services are available on a 24-hour basis in the multifamiiy housing development to the residents; and
WIIEREAS, in the making of a multifamily hausing develapment loan and the issuance of
x'evenue bonds or other obligations und�r the Housing Act, a city may exercise within its corporate limi�s
any of the powers the Minnesata Housing Fina�ce Agency may exercise under the tercns of the Housing
Finance Agency Act, Minnesota Statutes, Chapter 462A, as amended; and
WHEREAS, Presbyterian Homes of Arden Hills, Ine., a Minneso�a nonprofit corporation {fhe
"Company"), and the Ci�ty en#ered into a Contract for Private Devefopment, dated December 20, 2d1Q
{the "DeveIopment Con#ract"), purs�ant to which the City has agreed to issue revenue bonds ta finance a
senior housi�g �aciIity coxnprising independent living units, assisted living units, and memory-care units
(a comhined total of approximately 2Q0 dwelling units} to be located at 3120 and 3220 Lake Johanna
Boulevard in the City (th� "Project"); and
WHEREAS, the Company has requested that the City authorize the issuance of revenue bonds or
o#her revenue abligatians (the "Bonds"), in a principal amount of approximately $34,Q00,000, under the
terms of the Housing Act to finance a partion of the following: (i) the construction and equipping of the
388141v2 JCU AR240-i2
Project; (ii) the funding of one ar more reserve fiinds to secure the tim�Iy payment of the Bonds proposed
to be issued to finance the Project; {iii} the payment af a partion of the interest on �he Bonds; and (iv} the
payment oi a portion oithe costs oi issuing the Bonds; and
WHEREAS, Section 147(� of the Internal Revenue Code of 1986, as amended, and regulations
promulgated thereunder, require that prior to the issuance of the Bonds, the Czty CounciI (the "Council")
of the City �r►ust approve the financing of the 1'roject and issuance of the Bonds after conduc�ing a public
hearing thereon and notice of such public hearing shaIl be pubtished at least once, not less than fourteen
days �rior ta the data fixed far the hearing in a newspaper of general circulation within the City; and
W�IEREAS, pursuant to Section 462C.05 of the Housing Act, prior to issuance of the Bonds by
the City, a housing program with respect to #he Project (the "Program") must be prepared and must be
adopted by the City Councii of the City after a public hearing on the Program following one publication
of a notice in a newspaper circulating generally in the City a# least fifteen (15) days before the pubrtic
hearing; and
WIIEREAS, on or befare the day the notice af public hearing is pubIished, the City must submit
the Program to the Metropolitan Council for its review and c�mrnents as to whether the Program furthers
local and regional housing poIicies; and
NOW, THEREFORE, BE IT RESOLVED THAT:
1. At the request of the Company, the Council shall meet at 7:00 p.m. on Monday,
July 25, 2Q11, to conduct a public hearing with regard to the adoption of the Program and with regard to
granting preliminary authorization to the issuance oi the Bonds as requested by the Compar�y.
2. Th� City hereby approves publica�ion of a notice of the pub�ic hearing in the Shoreview-
Arden Hills Bulletin, a newspaper of general circulation in the City at least once not less than fifteen (1 S}
days prior to #he date of the public hearfng. The form of the natice is attached hereto as EXHIBIT A and
is hereby approved, with such necessary and appropriate variations, omissions, and insertions as the
Mayor and Administrator of the City in their discretion shall deter�nine.
3. The administrative staff of the City is hereby authorized, with the assistance of Kennedy
& Graven, Claariered, as bond counsel to Y1ie City, io prepare the Program and submit tha Program to the
Metropolitan Council on ar before the date of publicatian of the notice af p�zblic hearing.
4. Th� adoption of �his Resolution does not constitute a guaranty or firm commitment that
the City will issue the Bonds as requested by the Company. The City retains the right in its sale
discret[on to withdraw from participation and accordingly not io issue the Bonds, ar to issue the Bonds in
an amount less that the amount referred to herein, should the City at any time prior to issuance thereof
determine that it is in the best interesi of th� City not to issue the Sands, ar to issue the Bonds in an
amount less than the amount referred to above, ar should the parkies ta the transaction be unable to reach
agreement as to the terms and canditions of any of the documents required for t1�e transaction.
Adopted by the Council of the City of Arden Hills, Minr�esota an t�is June 27, 2011.
388[4Ev2 JCU AR200-12
ATTEST:
Patrick Klaers, City Administrator
David Grant, Mayor
388141v2 JCU AI2200-12
EXiiIBIT A
�ORM OF NOTYCE OF PUBLIC I�EA1tING
CITY OF ARDEN HILLS, MINNESOTA
NOTICE �F A PUBLIC HEARING WITH RESPECT TO A PROGRAM FOR A
MULTIFAMILY HOUSING DEVELOPMENT AND THE ISSUANCE OF REVENUE
BONDS TO FINANCE THE MULTIFAMILY HOUSING DEVELOPMENT IN
ACCORDANCE WITH THE PROVISIONS OF MINNESOTA STATUTES,
CHAPTER �62C, AS AMENDED
NOTICE IS HEREBY GIVEN that the City Council of the City of Arden HilIs, Minnesota {the
"City"} will hoid a public hearing on Monday, July 25, 20E 1, on or after 7:00 p.m. at City Hall,
i245 Highway 96 West, Arden Hills, Minnesota 55112-5743, #o consider t�e adoption of a housing
program for a multifatnily housing develap:ment (the "Progrann") and to grant preliminary approval for
the issuance of revenue bonds of the City {the `Bonds"} under Minneso#a Statutes, Chapter 462C, as
amended {the "Housi�g Act"), to �nance a loan to Presbyteriar� Honaes of Arden Hills, Jx�c., a Minnesota
nonproiit corporation (the "Company"), with respect to the following: (i} the constrt�ction and equipping
of a senior housing facility comprising i�adeper�de�t living units, assisted living units, and memory-care
units {a combined totaI of approximately 20Q dwelling units) to be Iocated at 3120 and 3220 Lake
Johanna Boulevard in the City (the "Project"); {ii) the funding of one or more reserve funds to secure the
timely payment of the Bonds; (iii} the pay�nnent of a portion of tk�e interest on the Bonds; ax�d (iv} the
payment of a portion of the costs of issuing the Bonds. The Project will be owned and operated by the
Coz�npany.
At the public hearing, the City Cauncil will consid�r tha adoption of a resolution approving the
Program wi#h respect to the Project and giving preliminary approval to the issuance of the Bonds to
finance the costs of the Program and the Project. The aggregate face amount of the Bonds proposed to be
issued to �nance the Prograrn aaad the Project is presently estimated not to exceed $34,000,000. The
Bonds w�ll be issued by the City and will constitute limited obligations of the City payable soleIy from
the reverzues expressIy pledged to the payment thereof, and will not constituta genera� obligations of the
City and will not be secured by any taxing powers of the City nor any assets or property of the City
except the interests of the City in the Project that may be granted ta th� City in conjunction with this
fina�tcing. The City may authorize certain other political subdivisions of the State of Minnesota to issue
bonds to finance a portion of the Project.
A copy of the Program has been submitted to the Metropolitan Council as required by the terms
of the Housing Act and is on file in the offices of the City Administrator at 1245 Highway 96 West,
Arden HilIs, Minnesota, on and after the date of publication of t�is notice.
Anyone desiring to be heard during this public hearing will be afforded an oppor[unity to cio so.
Written comments will be considered if submitted to the attention of the Administrator on ar before the
date of the public hearing.
Dated: [Date of Publication]
BY ORDER OF THE CITY O� ARDEN HILLS,
MiNNESOTA
388141v2 JCU AR200-[2