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WHEREAS, as pursuant to the terms of the Housing Program Act, on June 25, 1998, the Issuer
<br />issued its $26,545,000 Senior Housing Revenue Refunding Bonds (College Properties, Inc. Project)
<br />Series 1998 (the "1998 Bonds") and loaned the proceeds to College Properties, Inc., a Minnesota
<br />nonprofit corporation ("College Properties") to refund and refinance certain tax exempt debt of the
<br />Issuer which had been loaned to College Properties and to finance the acquisition and construction of a
<br />36-unit memory care facility connected to College Properties' existing independent and assisted living
<br />facility in the City pursuant to a loan agreement dated as of June 1, 1998. The assets of College
<br />Properties were acquired by PHS/EagleCrest, Inc., formerly known as PHM/EagleCrest, Inc., a
<br />Minnesota nonprofit corporation ("PHS") on September 24, 1999 and on Apri125, 2007 PHS formed
<br />EagleCrest Senior Housing, LLC, a Minnesota limited liability company, of which PHS is the sole
<br />member (the "Borrower"). On July 1, 2007 the Issuer issued its $23,720,000 Senior Housing Refunding
<br />Revenue Bonds (EagleCrest Proj ect), Series 2007 (the "Prior Bonds") pursuant to an Indenture of Trust,
<br />dated as of July 1, 2007, between the Issuer and U. S. Bank National Association, in St. Paul,
<br />Minnesota, as trustee. The proceeds derived from the sale of the Prior Bonds were loaned to the
<br />Borrower. The proceeds of the Prior Bonds were applied by the Borrower to refinance the acquisition,
<br />construction and equipping of a multifamily rental housing facility known as EagleCrest, consisting of
<br />127 units of independent living apartments, 91 units of assisted living and 36 units for memory care
<br />located at 2925-45 Lincoln Drive North in the City (the "Project"); and
<br />WHEREAS, the Borrower's affiliate, Presbyterian Homes of Arden Hills, Minnesota (the "Affiliate")
<br />currently has an outstanding taxable obligation payable to U. S. Bank National Association consisting of
<br />a construction and term loan in the original principal amount of $4.2 million, of which approximately
<br />$4.1 million remains outstanding (the "Prior Taxable Debt") which was used to finance improvements
<br />to the common areas, hallways and room conversions to the McKnight Care Center, located at 3220
<br />Lake Johanna Boulevard in the City of Arden Hills, Minnesota.
<br />WHEREAS, the Borrower has requested the Issuer to issue senior housing revenue refunding bonds
<br />in the maximum aggregate principal amount of $23,390,000 in accordance with the provisions of the
<br />Act and to loan the proceeds thereof to the Borrower to provide for the (i) refinancing of the Proj ect by
<br />redemption of the Prior Bonds; (ii) financing certain capital improvements to the Project; (iii) payment
<br />in full of the outstanding Prior Taxable Debt; and (iv) payment of certain costs of issuance of the
<br />Bonds; and
<br />WHEREAS, the Bonds will be issued under an Indenture of Trust, to be dated on or after June 1,
<br />2009 (the "Indenture"), between the City and U. S. Bank National Association (the "Trustee"), and the
<br />Bonds and the interest on the Bonds: (i) shall be payable solely from the revenues pledged therefor, (ii)
<br />shall not constitute a debt of the City within the meaning of any constitutional or statutory limitation;
<br />(iii) shall not constitute nor give rise to a pecuniary liability of the City or a charge against its general
<br />credit or taxing powers; and (iv) shall not constitute a charge, lien, or encumbrance, legal or equitable,
<br />upon any property of the City other than the City's interest in the Proj ect and in the Amended and
<br />Restated Financing Agreement dated on or after June 1, 2009 (the "Financing Agreement"), among the
<br />City, the Borrower and the Trustee.
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