HomeMy WebLinkAbout6A, Presbyterian Homes Conduit Debt – Public Hearing and Prelim�
EN HILLS
Request for Council Action
Prepared By: Sue Iverson, Director of Finance
and Administrative Services CQ'�'cil Meeting Date: July 25, 2011
Presbyterian Homes Conduit Debt — Public Hearing
and Prelina.inary Approval to Yssue Bonds
Budget�d Amaunt: Acival Amount: Funding Source:
NA NA NA
Recommendation:
l. Conduct Public Hearing.
2. A motion to adopt Resolution 20I1-039, a resolution approving a housing program
relati�g to a senior rental housing development to be iocated in the City of Arden Hills;
granting preli�ninary appraval to the issuance of revenue obligations by the City to
finance the senior rental housing development; and approving and au�horizing certain
related actions.
Supportin� Documents:
1. Memorandum dated July 25, 2011 from Sue �verson.
2. Memorandum dated July 20, 2011 from John Utley, Kennedy & Graven.
3. Resolution 2011-034.
4. Memorandum dated July 11, 2011 from Guy Peterson, Metropoliian Council.
�
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
Attached is a letter from the City's bond caunsel regarding this matter and the resolution
granting preliminary approval to issue the revenue obligations. A letter from t�e
Metropolitan Council is also included approving the housing project.
Council Action Requested
1. Conduct a puhlic hearing on the rnatter.
2. A motion to adopi Resolution 2011-039, a resolution approving a housing
program relating to a senior r�ntal housing development to be located in the City
of Arden Hills; granti�g preliminary appxoval io the issuance of revenu�
obligations by �he City to finance the senior rental housing development; and
approving and authorizing certain related actions,
City Cour�cil Meeting
P:1AdminlCouncillAgendas & Packet Information120111Pres Homes Conduit Debit Pubiic Hearing & Prelim Approval.doc
Page 2 of 2
Ol�'ices in
� � Nfinneapolis
• � Sainr �aui
r
5t. CIaud
G I-i A}Z F E R � D
�ed�tesday, rufy20, 2Q11
470 U:S. Bank Pla�a
200 5outh Sixrh 5treer
314enneapolis, MN 55402
(G12).337-9300 te[ephonc
(G12j 337-'�310 Eax
wwx:kennedy-graven.cpm
A#iirma�tive ACtion, Equal Oppaimniry Emplayer
'Patrick Klaers
Admuiistrator
City of Arden Hills
I Z45 Highway 96 West
Arden Hills, Minnesots 55112-5743
Re: Presbyterian I�omes of Arden Hills, Inc. Project
At its rneeting on Monday, J'une 27, 2011, the City. CounciI oi t'he Citjr af Arden Hills
(the "Ciiy°') adopted Resoiutian No. 2011-034 (the "Initia.l. Rasaiutiod'), whieh established the
da#e �or a public �iearing (Monday, July 25, 2011) witla respeot to a proposal i'rom Fr�s�yterian
Hozuss of Arden Hills, Inc., a Mir�esota nonprof�t corporation (fh� "Comgan�'}, t]xa� the City
issue r�venue abligations (tlte "Revenue Obligatians"} un.der th,e Muxsieipal Housing Act,
Iv�innesota Statutes, Chapter 462C, as amended (the "Housing Aat"), to fnance the proposed
davelopment by the Company of a senior �ousing facil�.ty camprisin� indepe�dent fiving. iinits,
assisted living uzaits, azid memory-care units (a cambined total of approxiinateIy 200 dvvelling
units} to be located at 3124 and 3220 Lake Jahanna Boulevard in the City (tlje °`Fxaj:eet"}: The
Praject will replace an existing seniar housing facility of the Company located at the same
address.
The Init[al ResoIution .approyed the forrn of a natice af public hearing and authaz�zed its
publica�ion. Ptixsuant to se�ch c�irec�ion, the notice of publ�c hearing was published in the
Shorevieux-Arden Hills Bulletin once on Wednesday, July fi, 2U11.
Tl7e In'itial Resolution direoted and authorized the preparation of a housing program in
aacordance r�th the requirexn�nits of the Housing Act and rlirected and authorize�. ihe: submission
af the hausing program io the 1VIetropolitar� Counci� for its revaew arnd comment. A housing
prograrn with respect to the Praject (the "Ha�ising Frograzn"} was prepared and d�livered to the
1VIe#xopolitan CounciI on or tiefnre the dats of publication af �e nofi�e of public �earing. A
cornm�nt Ietter, dated July I 1, 2011, vvas received from the Metrop.oli#an Co�nail.
Folfowing tha publio hearing an Monday, July 25, it is proposed that the City Council
consider a resolution {the "Pretirninary Rssolution"� VfrI1IC�'1 takes the following actions;
(i) approves the Housing Program; (ii) gran#s preliminary approval to the issuance of �he Revenue
Obligations hy the Ciiy to f-�nance #he Projee�; anri (iii) au�liorizes �ez�tain aotions to he taken by`
the City and �he Company in connection wi,th the. financing af tlie Project.
T1�e Company has gropased to have the Revenue Oblfgations issued as "qualifed tax-
ex�mpt obligatiaz�s" as dafined in Section 2G5(b){3) of the Iritemai Ravenue Code af 1986, as
amended (#�e "Code"). QuaIified tax-exernpt abiigatians are som�etimes re%rred to as "banlc-
qualified 6onds." Since no issuer of ta.x-e�empt bar�ds rnaq designate rnore than $1U,00..0,000 of
ta�c-exempt bon�s as bank quatified bonds in a calenclar year, the Company ha� requested tb.at the
-I-
L�S.ty issue $14,000,00� nf the Revenue Obli�ations `in caIendar year 2Q11 a�d an addit�nnal
�i0,000,U00 of the Re�venue Obiigations in calendar year 2Q1�. �ince ihe $20,oao,000 of
Revenue Obligatians #o l�e issued by the Czty is not sufficienfi to. finance the entire Project, the
e,ompany wiil request that tlie City authorize one or more ather political subdivisions of the Sfat�
to: issue the reznaixiing $14,000,00� ofRevanue Oi�iigatians to. finance t1z.e Project. The Company
has agreed that the adrr�inistrative fee payable by fihe Compan.q pursuan� ta Section 7.1(b) of the
Develogrnent Con�act will he paid by �he .Carnpany to tke City with respeat to all the Revenue
Obligations regardless of the actual issuer of the Revenue Obli�;a�ions. In excha�g� for such fee
payrr�ent, t�e Cornpany wili ask that th� City waive the agpliaatinn of Section 7,1(d) which
preoludes the issuanee of any af t]�e Revenue Obligations lry .any unit of gavernment other than
the City.
The Preliminary Resalution has been drai�ed ta aui-horize t}ie zssuaxtce nf the entire
$34,OOO,U00 of Revenue Oblrgat�ons by the City because the Company rnay alter its plans
regarding the issuauce of the Revenue Qbligatians as bank-c�ua�.�Zed bonds (in r�rhieh case the
City wouid be asked to issue the enizre $34,000,00.0 of Revenue ObIigations} and because the
Hnusing Pragram references the sntire $34;4OU;Q()0 oi Revenue flbligations #a b� issued to
itnance the Froject.
If fihe City �awneil adap#s the Prelirninary Res�lution, the Co�npany wi�l enter into
negotiai;ions with one or rtzore purehasers of the Revenue Ol�liga�ians an.d pravide for the
grepara�ion of the Revenue Obliga�ions and of the docurnents securing the Revenue Obligaiions.
Once the Revenue Obliga.tions anci s.uch documentaiion are in appropriata forni, t�e City wili
request t�at the City Council aonsider and adopt-a finaI resolution authorizin� the issuanee af the
Re�nue pb�igations to bc issued by tha City and, �£ applicable, approvigg ihe �ssuan:ce by other
governmental units of any portion of the Re�renue Obl:igations to be issued by such ather
j�.u7isdic�ians.
Please confact the ttt�dersigned at yawr convenience with any questions with regard to the
foregoing.
KENNEDY & GRAVEN, CHARTERED
�a Utiey
�uzzoo-o12 [.r[r}
3893b5v.1
-2-
CITY OF ARllEN HYLLS
COUNTY OF RAMSEY
STATE OF MINNESQTA
RESOLIITIQN N�. 20XI-039
APPROVING A HOUSING PROGRAM RELATING TO A SENIOR RENTAL
HQiTSING DEVELOPMENT TO BE LOCATED IN THE CITY OF
ARDEN HILLS; GRANTING PRELIMINARY APPROVAL TO THE ISSUANCE
OF REVENUE OBLIGATIONS SY THE CITY TO FINANCE THE SEN�OR
RENTAL HOUSING DEVELQPMENT; AND APPROVING AND
AUTH�R.IZING CERTAIN RELATED ACTIONS
WIIEREAS, pursuant to the Co�astitutian and laws of the State ot' Minnesota, particularly
Minnesota Statutes, Chapter 4C2C, as amended (the "Housing Act"}, stat�ziory and hozne rule cities and
other political subdivisions of the State of Min �esota are authorized to carry out the public purposes
described therein and contemplated thereby in the financing of multifamily housing c�evelopzx�e�ats by
issuing revenue obligatians to defray, in who�e or in part, ih� development costs of multifamily housing
developments, and by entering into any agreements made in connection t�erewith and by pledging any
such agreements as security forr the payrraent af the principal of and in�erest on any such revenue
obligatians; and
WIIEREAS, a multifamily �aouszng developmeni financed under the Housing Act may consist of
a multifatniIy housing development combined with a new or existing heaIth care facility if: (i) the
muItifamily housing development is designed and intended to be used for rental occupancy; (ii) the
taaultifamily housing development is designed and intended to be used primarily by elderly or physically
handicapped persons; anc� (iii} nursing, znedical, personal care, and ather heaIth-related, assisted-living
services are available on a 24-hour basis irz the multifamily hausing development to the residents; and
Vi1IIEREA�, Presbyterian Homes of Arden Hills, Inc., a Minnesota nonprofit carporation {the
"Company"), has requested the participation of the City of Arden Hills (t�e "City") in the financing oi the
acquisition, construction, and equippzng af a multifamily housing development consisting of a senior
rental housing facility comprising independen# living units, assisted living ur�its, and memory-care units
(a combined total of approximately 200 dwelli�g units) to be lacated at 3I20 and 3220 Lake Johanna
Boulevard in the City (the "Project"}; an.d
WI�AEAS, a Housing Program for a MultifarniIy Housing Development (the "Housing
Pzogra�m"} with r�spect to the Project and the issuance o�revenue obligations ("Revenue Obligations"} to
fnance the Housing Program and the Project �as been prepared pursuant to the requirements of Section
4S2C.03, subdivision Ia, of the Housing Act, and is on iile with the City; and
WIIEREAS, Section 147{� of tk�e Internal Revenue Code of 1956, as amended (the "Code"}, and
regulations pror�riulgatad thereunder, require that prior to the issuance of the Revenue Obligations to
�'inance the Project and the Housing Program, the City Council af ihe City must approve the financing of
the Project and issuanca of the Revenue Obligations after conducting a public hearing thereon and notice
of such pubIic hearing must be published at least once, not less than fourte�n (14) days prior to the date
fixed �or t�e pubIic hearing in a newspaper of general circulation within the City; and
-1-
WHEREAS, Section 462C.04, subdivision 2, of the Housing Act provides that a public hearing
must be held on the Housing Program after one pub�icatian of notice in a newspaper circulating gen�rally
in the City at least fifteen (15} days before t�e publzc hearing and on or before the date of publication o�
the notice af public hearing the Housing Program must be submitted to Ehe Metropolita:n Council for its
review and comment; and
WHEREAS, pursuant to Resolution No. 20I 1-034, adapted by the City Council of the City on.
June 27, 2011, the City Council: (i) determined to co�duct a public heaxing with respect to �he Housing
Prograz� and the Project at a regular meeting of the City Coezncil to be held on Monday, July 25, 2011;
(ii) autharized pubIication of a notice of public hearing in #he ShoYeview Arden Hzlls Bulletin; and
{iii) authorized submission oi the Housing Program to the Metropolitan Council on or before the date of
publication of the notice of public hearing; and
WHEREAS, the notice of pubIic hearing provided a general, iunctiona� description of tlie Project,
as well as the rr�aximum aggregate face amount of the obligatzons to be issued to finar�ce the Project, the
identity of the initial awner, operator, or manager of the Project, and the location of the Project and such
public notice was submitted to the Shoreview Arden Hills Bulletin for publication anc� was published on
Wednesday, July 6, 201 I; and
WHEREAS, a copy of the Housing Program was delivered io the Metropolitan Council an or
before the date of pubIication of the noiice of public hearing and a camment letter, dated July 11, 2U11,
was received from Guy Peterson, the Directar of the Cozx�nr�uni�y Development Division of the
Metropoliian CounciI, on behalf of the Metropolitan Council, whic� stated that the Project and the
Housing Program "will fuitlier Iife cycle housing opportunities in Arden HiIls"; and
WI�REAS, on July 25, 201 l, the City Council o�' the City conducted a public hearing an the
Housing Program, the Project, and the issuance of the Revenue Obligations by the City to finance the
Project and at such pubiic heariz�g a reasonabI� opportunity was provided for interested individuals to
express t�eir views at the public hearing, both orally and in writing, on the Proj�et and the proposed
issuance of such Revenue Obligations.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY THAT:
Sectio� 1. A�proval of Housin� Pro _�ram. The Housing Program is hereby approved.
Section 2. Preliminar��roval of Revenue Obligations. Prelimxnary approval is hereby
granted to the issuance of Revenue Obtigations by the City in the aggregata principaI amount of
approximately $34,000,000 to finance the Project, subject to final approval following the preparation of
documents, and subject to a fnal determination by the City Council that the �na�ncing of the Project and
the issuance of the Revenue Ob�igations are in the best interests of the City. In order to assist in the
issuance of t�e Revenu� Obligations as"qualified taX-exempt abligaiions," within the meaning of
Section 2b5{b)(3) of the Code, preIi�x�inary approval is hereby granted to the issuance of revenue
obligations by oiher political subdivisions af the State of Min�esota to assist in the iinanci�g of the
Project.
Section 3. Specia� Obli atg ions. The Revenue Obligations to be issued by tt�e City to �inance the
Project shall not constitute a pecuniary IiabiIity or charge, li�n, or encumbrance, legal or equitable, upon
any funds, assets, ta�ing powers, or any ather property of the City except the Ciiy's interest in the loan
agreement or revenue agreement and any security specifically pledged to the Aevenue Obtigations; atzd
the Revenue Obligations, when, as, and if issued shall recite in substance that the Rev�nue Obligations,
inclucEing interest thereon, are payable solely from the reven�es received frozx� the Company and the
-2-
Projec# and other property pledged to the payment thereof, and shalI no� consiitute general or �nnoral
obligations of the City. The Revenue ObIigations shalI not constitute a debt af the City within the
meaning of any co;�stztutional or statutory limitation. Th� holder or holders of the Revenue Obligations
shall never have the right to compel any exercise of the taxing power of the City to pay the autstanding
principal o� the Revenue Obligations, or the mterest ther�on, or to enforce payment �hereof against any
property of #he City.
Section �F. Compliance wi�th tha Housing Act. Based on :representations of the Company set forth
in a Contract for Private Development, daied December 20, 2010 (the "Development Contract"), beiween
the City and the Company, it is hereby found and determined that the Project furthers the purpases set
forth in the Housing Act and the Project constitutes a"rr�ultifazx�.ily laousing development" within the
meaning of the Housing Act.
Section 5. Bond Counsel. The law firm of Kennedy & Graven, Chartered is authorized to act as
bond caunseI and to assist in the preparation and review of necessa.�y documents relating to the Revenue
Obligations. The Mayor, the Administrator, and ather officers, employees, azzd agents of the City are
hareby authorized to assist bond counsel in the preparation of such documents.
Saction 6. D�cuments Furnished to Bond CounseL The Mayor, the Administrator, and ot.her
officers af the City are autiaorized and directed to furnish to Kennedy & Graven, Chartered, as bond
counsel, cer�ified copies of all proceedings and records of the City relating to the Housing Frogram, the
Project, and the Revenue Obligations, and such other affidavits, certi�icates, and other dacuments as may
be reyuired by bond counsel to show the facts relating to the legality of the Housing Progam, the Project,
and the Revenue Obligations and related documents, as such facts appear from the books and records in
the custody and control of such afficers ar as otherwise k�nown to t�aezrz; ar�d all such certified copies,
certificates, �davits, and other documents, including any heretofore furnished, shall constitute
representations af the City as ta the truth of all stateaaents contazned therein.
Section 7. Costs. The Campany shalI pay or reizx�.burse any and all costs incurred by the City ir�
connection the issuance o#'the Revenue Obligations, whether or not th� Revenue Obligations are iss�ed
and the operative insti-urr�ents are executed and delivered. The Company shall pay the administrative fees
of the City in the event the Revenue Obligations are issued in accordance with the �erms of the
DeveIopment Contract.
Section S. R�imbursement. The United States Department of the Treasury has pramulgated final
regulations governing the use af the proceeds of tax-exempt abligations, all or a portion of which are to
be used to reimburse a conduit borrower for project expenditures paid prior to the date of issuanca of such
taa�-exennpt obligations. Thase regulations, Treasury Regulations, �ectian I.150-2 {the "Treasury
Regulations"), require tha� the City or a conduit borrower adapt a statement of official intent to reimburs�
an original expenditure not later than sixty (60} days after payment of the original expenditure. The
Treasury Regulations also generally require that the tax-exez�pt obligations ba issued and the
reimbursement allocation made from the proceeds of the tax-exempt obligations occur within
eighteen {18} months after the later of: {i) the date the expenditure is paid; or (ii) th� date the project is
placed in service or abandoned, but in no event more than three {3} years after the date the expenditure is
pazd. The Treasury Regulations general�y permit reimbursement of capital expenditures and costs of
issuance of the tax-exempt obligations. The Company has adopted a reiznbu;rsenr�ent resaiution with
zespect to the Project that satisfies the requirements of the Treas�zry Regulations.
Section 9. Expiration. All commitments of the City expressed herein are sub�ect to the condition
that by June 30, 2012, the City, the Company, and the initial purchaser of tlae Revenue Obligatio�s shall
have agreed to mutually acceptable terms and conditions o�the loan or revenue agreement, the Revenue
-3-
Obligatiorzs, a�:d the other i;�stc�iments and proceedings relatir�g to the Revenue Obligations, and that an
or befare such date the Revenue Obligations shall ha�e been sold and issued. If the events set forth herein
do not take place prior to such date, or any extension thereo�', and the Rev�nue Obtigatians are not sold
within such time, this resalution wi1l expire and be of no further effec#.
Section 10. Ri�hts of the City. The adoptian of this rasolut�on does not constitute a guaranty or
tirm commit�nent that the City will issue the Revenue Obligations as requested by the Company. The
City retains the right in its sole discretion to withdraw fram participation and accordingly not to issue the
Reven�e Obligatzo�s, or issue the Revenue Obligations in an amaunt less that the amount referred to
herein, should the City at any time prior to issuance thereof determine that it is in the best interest of the
City not to issue the Revenue Obligations, or to issue the Revenue ObIigations in an aggregate amount
less than the amount referred to in Section 2 hereof, or shouId the parties to the �ransaction be unable to
reach agreement as io the tern�s aaad conditions of any of the docu�ents required �or the transaction.
Section 11. Effective Date. This Resolution shall be in full force and effect frozrn and after its
passage this 25th day of July, 2411.
-4-
Adapted by t�ae City Council of the City of Arden HiIls, Minnesota, this .Tuly 25, 2011.
:
Attest:
:
Patrick Klaers, City Administrator
AR200-012 (JU}
388638v.1
CITY OF ARDEN HILLS, MiNNESOTA
David Grant, Mayor
-5-
� R�etropc�litan Council
Jufy �.lr �t)11
Ms. Mary Tingerthal
Comrnissiener, Minnesota HQusing
400 Sibley S�reet, Suite 3Q0
St. Paul, MN 55�.�1
RE: G��y of Arden Hills
houstng Revenue Bond Prcgram -#�resbyterfan Homes af Arder� Hifls, Inc,
M�trapol+tan Counc�! Referraf Flle xn880-1
Dear Commissioner Tingerthal,
On luiy 7, 2�1�, the Metropafitan Cauncil r�ceived natice of a proposed haus�ng revenue bond
program for the Cfty of Arden �fi�ls for our re�iew pur�uant to Minnesata Statutes Chapte.r
�62C. The hQ��ing program involves the financir�g of.a portlan af the casts of remo�ing an
existing muiti-family de�elopment and the acquisition and consCr�ttion af a senior li�ing facflity
with a �ariety of components; including independent livir�g, and assisted ti�ing/memory care
units, In all� about 200 dweping units. The deveEopment w�ll be lo�ated at 3i20 and 3220 Lake
J�haRna Bfvd in Arden Hills. The pragram proposes to issue up ko $34 miliian in bonds.
As a LCA p�r-tici�ating comrr�unity and con5ist�nt with I�s LCA AcCion Plan and the ci�y's
camprehensive p1an, the use of th�s �ir�ancing too.l wlll furth�r lif� cycle houstng opportunities fn
ATd�n Hilis.
If yau have any q[�estions, pR�ase call me at (65f) 6o2,1418.
�
GGy Retersfln
Direetor, Cammunity Develapment Di�ision
cc: Theresa Berg, K�nn�dy and Craven
n:lcomm8ev11ivcorrrmVca4petersan1Z01117-1 �-20i # kingerthel-Ar�en Hit[s 2�e�tl-1.dac
www.metcncaancll. o3-g
390 RohertBtreet North � 5t, Paul. MIIT {5101-1805 +(65116Q2�1000 • Fas {65i) 602-1550 • TCY(651) 281-090h
Rn Equa! OppoAuntty EYnptcyer