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HomeMy WebLinkAbout9. Public Hearing-St. Gertrude's Health Center Bond Issuance-Res. No. 6021 9. CITY OF SHAKO PEE Memorandum TO: Mayor and City Council FROM: Mark McNeill, City Administrator SUBJECT: Public Hearing - St. Gertrude's Health Center Bond Issuance DATE: March 11, 2004 INTRODUCTION: At its meeting of March 16th, the City Council will hold a public hearing to consider comments regarding the issuance of $4.5 million in Health Care Facilities Revenue Bonds for St. Gertrude's Health Center expansion. BACKGROUND: See attached memo of February lih. Council called for the public hearing at its meeting of February 17th. The bonds would be issued by the City of Osseo, but technically the financing is to be a joint venture of the Cities ofOsseo and Shakopee. Ifthe Council chooses to approve this, in addition to adopting a resolution for the issuance, a Joint Powers Agreement with the City of Osseo will also be required. St. Gertrude's CEO Lee Larson will make a presentation at the Public Hearing, and will be available to answer questions. RECOMMENDATION: There is no impact financially on the City of Shakopee caused by the issuance of these bonds. Therefore, assuming that the Council is in agreement with the concept of Health Care Facilities Revenue Bonds being issued by another agency for St. Gertrude's, I recommend approval. In addition to a resolution authorizing issuance, there is also a Joint Powers Agreement between the City of Osseo and the City of Shakopee, authorizing Osseo to issue the bonds on behalf ofthe City of Shakopee. The cities are jointly financing the project through these bonds. ACTION REQUIRED: If the Council concurs, it should, by motion, adopt the following resolution: RESOLUTION 6021 RESOLUTION GIVING APPROVAL TO THE ISSUANCE OF TAX EXEMPT LOAN REVENUE OBLIGATIONS AND AUTHORIZING EXECUTION OF A JOINT POWERS AGREEMENT RELATING TO SUCH REVENUE OBLIGATIONS (ST. GERTRUDE'S HEALTH CENTER PROJECT) In addition, the Council should, by motion, authorize the appropriate City officials to enter into a Joint Powers Agreement with the City ofOsseo to provide for the issuance of tax-exempt bonds to refinance a senior housing and nursing facility (the St. Gertrude's/Health Care Center Project). '~~ Mark McNeill City Administrator MM:th RESOLUTION NO. 6021 RESOLUTION GIVING APPROVAL TO THE ISSUANCE OF TAX EXEMPT LOAN REVENUE OBLIGATIONS AND AUTHORIZING EXECUTION OF A JOINT POWERS AGREEMENT RELATING TO SUCH REVENUE OBLIGATIONS (ST. GERTRUDE'S HEALTH CENTER PROJECT) WHEREAS, pursuant to a Joint Powers Agreement between the City of Shakopee, Minnesota (the "City") and the City of Osseo, Milmesota ("Osseo") in September 2003, Osseo issued its $9,995,000 Tax Exempt Loan Participations (St. Gelirude's/Steeple Pointe Project), Selies 2003 (the "2003 Notes") at the request of St. Gertrude's Health Center, a Mimlesota nonprofit corporation ("St. Gertrude's") and Steeple Pointe Senior Living Community, a nonprofit corporation ("Steeple Pointell) to refinance certain tax exempt bonds relating to a 75-bed skilled nursing facility located at 1850 Sarazin Street in the City of Shakopee (the "St. Gelirude's Project") and a 58-unit multifamily senior housing facility in Osseo known as Steeple Point; and WHEREAS, the 2003 Notes were issued by Osseo pursuant to a Servicing and Intercreditor Agreement among Osseo, American Bank of St. Paul (the "Servicer") and the several financial institutions named therein dated as of September 1, 2003 (the "Servicing Agreementll) and are to be repaid by St. Gertrude's and Steeple Pointe pursuant to a Loan Agreement dated as of September 1,2003 among Osseo, St. Gertrude's and Steeple Pointe (the "Loan Agreement"); and WHEREAS, the Servicing Agreement and Loan Agreement provide for the issuance of Additional Notes to be issued on a parity of lien with the 2003 Notes to finance additional facilities for St. Gertrude's or Steeple Pointe; and WHEREAS, St. Gertrude's and Steeple Pointe (collectively, the "Obligor") have proposed that City and Osseo enter into a joint powers agreement under Minnesota Statutes ~ 471.59, to jointly issue tax exempt revenue obligations in the aggregate principal amount of not more than $4,500,000 (the "2004 Notes") to finance the construction and equipping of a 40-unit assisted living facility, cOlmected entry and offices to be adjacent and comlected to the St. Gertrude's Project (the "Project") pursuant to Minnesota Statutes, Chapter 462C (the "Act"); and WHEREAS, Osseo will designate the 2004 Notes as "qualified tax exempt obligations" ("bank qualified") within the meaning of Section 265(b )(3)(B) of the Internal Revenue Code of 1986; and WHEREAS, the 2004 Notes will be payable solely from revenues of the Obligor, will not be a general or moral obligation of the City or Osseo, or any other political subdivision of the State of Minnesota, but will be payable solely from revenues of the Obligor, to the extent and in the manner provided in the documents executed in cOilllection with the issuance of the 2004 Notes. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Shakopee, Minnesota, as follows: 1616997vl 1. This Council has received a copy and hereby approves of the Joint Powers Agreement between the City and Osseo dated as of April 1, 2004 (the "Joint Powers Agreement") relating to the 2004 Notes. 2. In no event shall the 2004 Notes ever be payable from or charged upon any funds of the City; the City is not subject to any liability thereon; no owners of the 2004 Notes shall ever have the right to compel the exercise of the taxing power of the City to pay any of the 2004 Notes or the interest thereon, nor to enforce payment thereof against any property of the City; the 2004 Notes shall not constitute a charge, lien or encumbrance, legal or equitable, upon any property of the City; the 2004 Notes do not constitute an indebtedness of the City within the meaning of any constitutional, statutory, or charter limitation; and the 2004 Notes will not count against the City's 2004 "bank qualification." 3. The City hereby gives the host approval of the Project for purposes of Section 147(f) of the Internal Revenue Code and to the issuance of the 2004 Notes for the Project by Osseo. 4. The Joint Powers Agreement is hereby approved in substantially the form now on file in the office of the City; and the Mayor and Clerk of the City are authorized to execute the same in the name of and on behalf of the City. In the event of the disability or the resignation or other absence of the Mayor or Clerk of the City, such other officers of the City who may act in their behalf shall without further act or 'authorization of the City do all things and execute all instruments and documents required to be.done or to be executed by such absent or disabled officials. The approval hereby given to the Joint Powers Agreement includes approval of such additional details therein as may be necessary and appropriate and such modifications thereof, deletions therefrom and additions thereto as may be necessary and appropriate and approved by the City Attorney and by the City officials authorized herein to execute the Joint Powers Agreement prior to their execution; and such City officials are hereby authorized to approve said changes on behalf of the City. Adopted by the City Council of the City of Shakopee, Minnesota, this 16th day of March, 2004. Mayor Attest: City Clerk 1616997vl 2 JOINT POWERS AGREEMENT PROVIDING FOR THE ISSUANCE OF TAX EXEMPT BONDS TO REFINANCE A SENIOR HOUSING AND NURSING FACILITIES (ST. GERTRUDE'SIHEALTH CARE CENTER PROJECT) THIS AGREEMENT is entered into as of the 1st day of April, 2004, between the City of Osseo, MilUlesota ("Osseo") and the City of Shakopee, MilUlesota, ("Shakopee") (collectively, the "Cities," or individually, a "City"). Each of the municipalities named above is a municipal corporation duly organized tmder the laws ofthe State ofMimlesota. RECITALS A. Minnesota Statutes, Section 471.59 (the "Joint Powers Act") provides that two or more govemmental units, by agreement entered into through action of their goveming bodies, may jointly or cooperatively exercise any power common to the contracting parties, and. may provide for the exercise of such power by one of the participating govermnental units. B. St. Gelirude's Health Center, a MilUlesota nonprofit corporation ("St. Gertrude's"), owns and operates a nursing facility in Shakopee and intends to construct and equip a 40-unit assisted living facility adjacent to the nursing facility and construct a joint entry and related meeting and administrative space (the "Project"). C. In September 2003, Osseo issued its $9,995,000 Tax Exempt Loan Participations (St. Gertrude's/SteeplePointe Project), Series 2003 (the "2003 Notes") pursuant to a Servicing Agreement dated as of September 1, 2003 amongOsseo, American Bank of St. Paul and the other Lenders named therein (the "Servicing Agreement"). The Servicing Agreement provides for the issuance of additional Notes to finance additional projects for St. Gertrude's or for Steeple Pointe Senior Living Community, a Milmesota nonprofit corporation ("Steeple Pointe"). D. Benedictine Health System, a Mimlesota nonprofit corporation, is the sole member in both St. Gertrude's and Steeple Pointe (collectively, the "Obligor"). The Obligor has proposed that the Cities enter into this agreement pursuant to the Joint Powers Act, pursuant to which Osseo, on behalf of itself and Shakopeewill issue its $4,500,000 tax-exempt revenue notes or participation in revenue notes (the "Bonds") under Minnesota Statutes, Chapter 462C and Section 469.152 to .1651 (collectively, the "Act") and loan the proceeds thereof to the Obligor finance the Project. E. In COlUlection with issuance of theBonds,Osseo will designate the Bonds as "qualified tax-exempt obligations" within the meaning of Section 265(b)(3)(B) of the Intemal Revenue Code of 1986, as amended (the "Code"). NOW THEREFORE, in consideration of the mutual undertakings and covenants set forth below and other good and valuable consideration, the Cities hereby represent and agree as follows: 1. The Cities hereby agree to jointly finance the Project through the issuance of the Bonds. Osseo is hereby design(ited, a~ the issuer of the Bonds to be issued pursuant to this Agreement. 1617772vl 2. Each City represents that it has adopted a resolution authorizing execution, delivery and perfonnance of this Agreement, and Osseo represents that it has designated the Bonds as a "qualified tax-exempt obligation" within the meaning of Section 265(b)(3)(B) ofthe Code. 3. Osseo shall exercise. the powers of the Act and Section 265(b) of the Code by adopting, approving and executing such resolutions; documents, and agreements as shall. be necessary or convenient to authorize, issue, and sell the Bonds and such other resolutions, documents, and agreements as shall be necessary or required in connection with the issuance of the Bonds and giving effect to or carrying out the provisions of this Agreement and documents under which the Bonds are issued and/or secured. 4. Any Bonds to be issued pursuant to this Agreement shall be special, limited obligations of Osseo, payable solely from proceeds, revenues and other amounts specifically pledged thereto. In no event shall the Bonds ever be payable from or charged upon the general credit, taxing powers or any funds of either of the Cities; the Cities are not subject to any liability thereon; no owners of the Bonds shall ever have the right to compel the exercise of the taxing I power of either of the Cities to pay the Bonds or the interest thereon, nor to enforce payment thereof against any property of either of the Cities; the Bonds shall not constitute a charge, lien or encumbrance, legal or equitable, upon any property of either of the Cities; and the Bonds do not constitute an indebtedness of either of the Cities within the meaning of any constitutional, statutory, or charter limitation. 5. Tins Agi"eement shalltelminate upon the retirement or defeasance of the outstanding principal amoUllt of the Bonds and this Agreement may riot be tenninated in advance of such retirement or defeasance. 6. This Agreement may be executed in. counterparts, each of which shall be an original, but such counterparts shall together constitute but one and the same instnllnent. 1617772vl 2 IN WITNESS WHEREOF, each of the Cities has caused this Agreement to be executed on its behalf by its duly authorized officers, all as of the day and year first above written. CITY OF OSSEO, MINNESOTA, as Issuer By: Its: Mayor By: Its: Clerk-Administrator [Signature page to Joint Powers Agreement] 1617772vl 8-1 CITY OF SHAKOPEE, MINNESOTA By: Its: Mayor By: Its: City Administrator By: Its: City Clerk i [Signature page to Joint Powers Agreement] 1617772vl S-2 CITY OF SHAKOPEE Memorandum TO: Mayor and City Council FROM: Mark McNeill, City Administrator SUBJECT: Health Care Facilities Refunding Revenue Bonds - St. Gertrude's Health Center DATE: February 12, 2004 INTRODUCTION: The Council is asked to agree to the issuance of $4.5 million in Health Care Facilities Revenue Bonds for St. Gertrude's Health Center Project. The bonds would be issued by the City of Osseo. BACKGROUND: The St. Gertrude's Health Center operates a 75 bed nursing facility on the St. Francis Hospital Campus. St. Gertrude's is wholly owned by Benedictine Health Systems (BHS), a non-profit organization. BHS also owns a congregate care and assisted-living facility in the City of Osseo. St. Gertrude's has approached the City regarding a new bond issue of $4.5 million, which would be used to finance an expansion. (Information relating to the specific expansion plans is currently proceeding through the City's Community Development Department). St. Gertrude's is again going to be considering Healthcare Facilities Revenue Bonds, but has asked that the bonds be issued by the City of Osseo, rather than the City of Shakopee. Actually, there is a slight advantage to the City, in that these will not count against the $10 million "bank qualified" limit on that that can be issued annually by a City without it becoming a tax impact. In accordance with law, a public hearing must be held before Shakopee can agree to these bonds being issued, even by another city. The attomey's representing St. Gertrude's requested that the City call for a public hearing on March 16th. St. Gertrude's would make a presentation at that time. RECOMMENDATION: I recommend that the City Council call for public hearing on March 16th as described. ACTION REQUIRED: If the City Council concurs, it should, by motion, adopt the following resolution: RESOLUTION NO. 6015 RESOLUTION CALLING FOR A PUBLIC HEARING ON A PROPOSAL FOR FINANCING SENIOR HOUSING FACILITIES PROJECT PURSUANT TO A JOINT POWERS AGREEMENT AND MINNESOTA STATUTES, CHAPTER 462C, AND AUTHORIZING THE PUBLICATION OF A NOTICE OF THE HEARING Mark McNeill City Administrator MM:th