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HomeMy WebLinkAbout4.F.3. Setting a Public Hearing Regarding a Housing Development and Issuance of Revenue Bonds-Res. No. 7316 Consent Business 4. F. 3. SHAKOPEE TO: Mayor and City Council Mark McNeill, City Administrator FROM: Julie Linnihan, Finance Director /City Clerk DATE: 06/18/2013 SUBJECT: Setting a Public Hearing Regarding a Housing Development and Issuance of Revenue Bonds - Res. No. 7316 (C) Action Sought Council is asked to consider setting a public hearing on August 20th, 2013 for Issuance of the Revenue Bonds, per Resolution No. 7316. Background: The City has been asked to participate in the conduit debt issuance related to St. Gertrude's Health System, Benedictine Health System, for the issuance of Revenue Bonds for Series 2013, in the amount not to exceed $22,000,000. This action is consistent and defined under MN Statute 471.656. Council is asked to establish the Public Hearing, as required by State Statute. Action Requested: Offer Res. No. 7316, A Resolution Calling a Public Hearing Regarding a Housing Development and the Issuance of Revenue Bonds under Minnesota Statutes, Chapter 462C, as amended, and Minnesota Statutes, Section 469.152 through 469.1655, as amended; and Providing Preliminary Approval to the Issuance of the Revenue Bonds, and move it adoption. Attachments: Res. No. 7316 CITY OF SHAKOPEE, MINNESOTA RESOLUTION NO. 7316 RESOLUTION CALLING A PUBLIC HEARING REGARDING HOUSING DEVELOPMENTS AND THE ISSUANCE OF REVENUE BONDS UNDER MINNESOTA STATUTES, CHAPTER 462C, AS AMENDED, AND MINNESOTA STATUTES, SECTIONS 469.152 THROUGH 469.1655, AS AMENDED; AND PROVIDING PRELIMINARY APPROVAL TO THE ISSUANCE OF THE REVENUE BONDS BE IT RESOLVED by the City Council of the City of Shakopee, Minnesota (the "City"), as follows: Section 1. Recitals. 1.01. Minnesota Statutes, Chapter 462C, as amended (the "Housing Act "), authorizes a municipality to carry out the public purposes described in the Housing Act by providing for the issuance of revenue bonds to provide funds to finance or refinance multifamily housing developments (including nursing and assisted living facilities) located within the municipality. Minnesota Statutes, Sections 469.152 through 469.1655, as amended (the "Industrial Development Act "), authorizes a city to issue revenue obligations to finance, in whole or in part, the cost of the acquisition, construction, reconstruction, improvement, betterment, or extension of a "project," defined in the Industrial Development Act, in part, as any properties, real or personal, used or useful in connection with a revenue producing enterprise, whether or not operated for profit, engaged in providing health care services, including hospitals, nursing homes, and related medical facilities. 1.02. Pursuant to Minnesota Statutes, Section 471.656, as amended, a municipality is authorized to issue obligations to finance the acquisition or improvement of property located outside of the corporate boundaries of such municipality if the obligations are issued under a joint powers agreement between the governmental unit issuing the obligations and the governmental unit in which the property to be acquired or improved is located. Pursuant to Minnesota Statutes, Section 471.59, as amended, by the terms of a joint powers agreement entered into through action of their governing bodies, two governmental units may jointly or cooperatively exercise any power common to the contracting parties or any similar powers, including those which are the same except for the territorial limits within which they may be exercised and the joint powers agreement may provide for the exercise of such powers by one or more of the participating governmental units on behalf of the other participating units. 1.03. Benedictine Health System ("BHS"), a Minnesota nonprofit corporation, St. Gertrude's Health Center, a Minnesota nonprofit corporation, Benedictine Health Center of Minneapolis, a Minnesota nonprofit corporation formerly known as City of Lakes Care Center, and Steeple Pointe Senior Living Community, a Minnesota nonprofit corporation (collectively, the "Obligated Group "), have proposed that the City issue its Healthcare and Housing Facilities Revenue Refunding Bonds (Benedictine Health System Obligated Group), Series 2013 (the "Bonds "), in one or more series, in an aggregate principal amount not to exceed $22,000,000. The proceeds of the Bonds will be applied to (i) the redemption and prepayment of (a) the Tax Exempt Loan Participation Note (St. Gertrude's /Steeple Pointe Project), Series 2003 (the "Series 2003 Osseo Note "), issued in accordance with the Housing Act and the Industrial Development Act by the City of Osseo, Minnesota (the "City of Osseo ") on September 26, 2003, in the original aggregate principal amount of $9,995,000, (b) the Tax Exempt Loan Participation Note (St. Gertrude's Health Center Project), Series 2004 (the "Series 2004 Osseo Note "), issued in 425255v4 JAE SH155 -294 accordance with the Housing Act by the City of Osseo on September 28, 2004, in the original aggregate principal amount of $3,900,000, (c) the Health Care Revenue Bonds, Series 2004A (City of Lakes Care Center Project) (the "Series 2004 Minneapolis Bonds "), issued in accordance with the Industrial Development Act by the City of Minneapolis (the "City of Minneapolis ") on October 27, 2004, in the original aggregate principal amount of $4,735,000, and (d) the Tax Exempt Loan Participation Note (St. Gertrude's Health & Rehabilitation Center Project), Series 2010 (the "Series 2010 Shakopee Note "), issued in accordance with the Industrial Development Act by the City on September 30, 2010, in the original aggregate principal amount of $5,675,000; (ii) the funding of a debt service reserve fund; and (iii) the payment of costs of issuance of the Bonds. The Series 2003 Osseo Note, the Series 2004 Osseo Note, the Series 2004 Minneapolis Bonds, and the Series 2010 Shakopee Note are referred to herein collectively as the "Prior Bonds." 1.04. A portion of the proceeds of the Series 2003 Osseo Note (i) refunded the Multi - Family Housing Revenue Bonds, Series 1997 (Steeple Pointe Project), issued by the City of Osseo in the original aggregate principal amount of $4,850,000, the proceeds of which financed the acquisition of land, site improvements, and construction of multifamily townhomes and other multifamily housing facilities designated as senior rental housing located at 625 Central Avenue in the City of Osseo; and (ii) refunded the Health Care Facilities Refunding Revenue Bonds (St. Gertrude's Health Center Project), Series 2000, issued by the City in the original aggregate principal amount of $6,065,000, the proceeds of which refinanced certain indebtedness relating to a 75 -bed skilled nursing facility located at 1850 Sarazin Street in the City. A portion of the proceeds of the Series 2004 Osseo Note financed the construction and equipping of a 40 -unit assisted living facility, connected entryway, and related meeting and office facilities to be connected to St. Gertrude's Health and Rehabilitation Center located at 1850 Sarazin Street in the City. A portion of the proceeds of the Series 2004 Minneapolis Bonds financed the acquisition, equipping, and renovation of a former 160 -bed skilled nursing facility located at 618 East 17` Street in the City of Minneapolis into a 120 -bed long -term care facility. A portion of the proceeds of the Series 2010 Shakopee Note financed the acquisition, construction, and equipping of an approximately 40,500 square foot three -level building expansion with 30 new licensed skilled nursing facility beds, expanded therapy space, a large educational area, a staff lounge, laundry, housekeeping, central supply areas and storage space, and private patient rooms at St. Gertrude's Health and Rehabilitation Center located at 1850 Sarazin Street in the City. The facilities being refinanced with the proceeds of the Bonds are referred to herein collectively as the "Facilities." 1.05. As a condition to the issuance of revenue bonds under the Housing Act, the City must adopt a housing program providing the information required by Section 462C.03, subdivision la, of the Housing Act (the "Housing Program "). 1.06. BHS, on behalf of the Obligated Group has requested that the City Council conduct a public hearing on August 20, 2013, to provide: (i) approval of the issuance of the Bonds pursuant to the requirements of Section 147(0 of the Internal Revenue Code of 1986, as amended (the "Code "), and the regulations promulgated thereunder; and (ii) approval of the Housing Program pursuant to the requirements of the Housing Act. Section 2. Preliminary Findings. Based on representations made by the Obligated Group to the City to date, the City Council hereby makes the following preliminary findings, determinations, and declarations: (a) Certain of the Facilities being refinanced with proceeds of the Bonds consist of multifamily housing developments designed and intended to be used for rental occupancy by seniors. 425255v4 JAE SH155 - 294 2 (b) The proceeds of the Bonds will be loaned to BHS, acting for the Obligated Group, and the proceeds of the loan will be applied to refinance the Facilities, fund a debt service reserve fund, and pay costs of issuance of the Bonds. The City will enter into a loan agreement (or other revenue agreement) with BHS, acting for the Obligated Group requiring loan repayments from the Obligated Group in amounts sufficient to repay the loan of the proceeds of the Bonds when due and requiring the Obligated Group to pay all costs of maintaining and insuring the Facilities, including taxes thereon. (c) In preliminarily authorizing the issuance of the Bonds and the refinancing of the Facilities, the City's purpose, in part, is to further the policies of the Housing Act and the Industrial Development Act. (d) The Bonds will be limited obligations of the City payable solely from the revenues pledged to the payment thereof, and will not be a general or moral obligation of the City and will not be secured by or payable from revenues derived from any exercise of the taxing powers of the City. Section 3. Public Hearing. 3.01. The City Council shall meet at 7:00 p.m. on Tuesday, August 20, 2013, to conduct a public hearing as requested by the Obligated Group, notice of which hearing (the "Public Notice ") will be published as required by Section 462C.04, subdivision 2, of the Housing Act, and Section 147(0 of the Code. 3.02. The City Administrator is hereby authorized and directed to publish the Public Notice, in substantially the form attached hereto as EXHIBIT A, in the Shakopee Valley News, the official newspaper of the City and a newspaper of general circulation in the City. The Public Notice shall be published at least once, at least fifteen (15) days prior to the date of the public hearing. At the public hearing, reasonable opportunity will be provided for interested individuals to express their views, both orally and in writing, on the Housing Program and the proposed issuance of the Bonds. 3.03. Kennedy & Graven, Chartered, as bond counsel, shall prepare and submit to the City the Housing Program to authorize the issuance by the City of the Bonds in a principal amount not to exceed $22,000,000 to, among other things, refinance the Facilities. City staff are authorized and directed to submit the Housing Program to Metropolitan Council for review and comment on or before the date the Public Notice is published, as required by Section 462C.04, subdivision 2, of the Housing Act. Section 4. Preliminary Approval. The City Council hereby states its preliminary intention to issue the Bond in the maximum aggregate principal amount of $22,000,000 to (i) redeem and prepay the Prior Bonds; (ii) fund a debt service reserve fund for the Bonds; and (iii) pay the costs of issuance of the Bonds. Section 5. Costs. The Obligated Group will pay the administrative fees of the City and pay, or, upon demand, reimburse the City for payment of, any and all costs incurred by the City in connection with refinancing the Facilities and issuing the Bonds, whether or not the Bonds are issued. Section 6. Commitment Conditional. The adoption of this resolution does not constitute a guaranty or firm commitment that the City will issue the Bonds as requested by the Obligated Group. The City retains the right in its sole discretion to withdraw from participation and accordingly not to issue the Bonds, or issue the Bonds in an amount less than 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 Bonds, or 425255v4 JAE SH155 -294 3 to issue the Bonds in an amount less than the amount referred to in Section 1.03 hereof, or should the parties to the transaction be unable to reach agreement as to the terms and conditions of any of the documents required for the transaction. Section 7. Effective Date. This resolution shall be in full force and effect from and after its passage. Approved by the City Council of the City of Shakopee, Minnesota, this 18 day of June, 2013. Mayor Attest: Finance Director /City Clerk 425255v4 JAE SH155 -294 4 EXHIBIT A NOTICE OF PUBLIC HEARING CITY OF SHAKOPEE, MINNESOTA NOTICE OF PUBLIC HEARING ON THE APPROVAL OF A HOUSING PROGRAM FOR A MULTIFAMILY HOUSING DEVELOPMENT AND THE ISSUANCE OF REVENUE BONDS UNDER MINNESOTA STATUTES, CHAPTER 462C, AS AMENDED, AND MINNESOTA STATUTES, SECTIONS 469.152 THROUGH 469.1655, AS AMENDED NOTICE IS HEREBY GIVEN that the City Council of the City of Shakopee, Minnesota (the "City") will hold a public hearing on Tuesday, August 20, 2013, at or after 7:00 p.m., at City Hall, 129 Holmes Street South, in the City, to consider a proposal for the issuance of revenue obligations of the City under Minnesota Statutes, Chapter 462C, as amended (the "Housing Act "), and Minnesota Statutes, Sections 469.152 through 469.1655, as amended (the "Industrial Development Act "), on behalf of Benedictine Health System, a Minnesota nonprofit corporation, St. Gertrude's Health Center, a Minnesota nonprofit corporation, Benedictine Health Center of Minneapolis, a Minnesota nonprofit corporation formerly known as City of Lakes Care Center, and Steeple Pointe Senior Living Community, a Minnesota nonprofit corporation (collectively, the "Obligated Group "). The proceeds of the revenue obligations proposed to be issued by the City for the benefit of the Obligated Group (the "Bonds ") will be applied to (i) the refinancing of certain senior housing facilities, assisted living facilities, and long -term care facilities through the redemption and prepayment of the various outstanding tax- exempt bonds; (ii) the funding of a debt service reserve fund for the Bonds; and (iii) the payment of the costs of issuance of the Bonds. The facilities to be refinanced with the proceeds of the Bonds (the "Facilities ") are owned and operated by individual members of the Obligated Group. The Facilities proposed to be refinanced with the proceeds of tax- exempt bonds issued by the City include: (i) a 58 -unit multifamily townhomes and other multifamily housing facilities designated as senior rental housing located at 625 Central Avenue in the City of Osseo, Minnesota known as Benedictine Senior Living at Steeple Pointe; (ii) a 75 -bed skilled nursing facility located at 1850 Sarazin Street in the City of Shakopee known as St. Gertrude's Health & Rehabilitation; (iii) a 40 -unit assisted living facility, connected entryway, and related meeting and office facilities connected to St. Gertrude's Health and Rehabilitation Center located at 1850 Sarazin Street in the City; (iv) a 120 -bed skilled nursing facility located at 618 East 17` Street in Minneapolis, Minnesota known as City of Lakes Center; and (v) an approximately 40,500 square foot three -level building expansion with 30 new licensed skilled nursing facility beds, expanded therapy space, a large educational area, a staff lounge, laundry, housekeeping, central supply areas and storage space, and private patient rooms at St. Gertrude's Health and Rehabilitation Center located at 1850 Sarazin Street in the City. Following the public hearing, the City Council will consider adoption of a resolution approving a housing program prepared in accordance with the requirements of the Housing Act and approving the issuance of the Bonds. The aggregate face amount of the Bonds proposed to be issued to refinance the Facilities is presently estimated not to exceed $22,000,000 and may be issued in one or more series. The Bonds to be issued by the City will constitute limited obligations of the City payable solely from the revenues expressly pledged to the payment thereof, and will not be general or moral obligations of the City and will not be secured by the taxing power of the City or any assets or property of the City A -1 425255v4 JAE SH155 -294 except any interests of the City in the Facilities that may be granted to the City in conjunction with this refinancing. All interested persons may appear and be heard at the time and place set forth above. Dated: [Date of Publication] CITY OF SHAKOPEE, MINNESOTA A -2 425255v4 JAE SH155 -294