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HomeMy WebLinkAbout15.F.5. Health Care Facilities Refunding Revenue Bonds-St Gertude's-Res. No. 6015 IS.F.S . 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 ofOsseo. 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 attorney'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 RESOLULTION 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 (a) WHEREAS, Minnesota Statutes, Chapter 462C confers upon cities the power to issue revenue bonds to finance a program for the purposes of planning, administering, making or purchasing loans with respect to one or more multifamily housing developments within the boundaries of the city or, pursuant to a joint powers agreement under Milmesota Statutes, 471.59, in a cooperating city; and (b) WHEREAS, the City Council of the City of Shakopee, Milmesota (the "City"), has received from St. Gertrude's Health Center, a nonprofit corporation organized under the laws of the State of Milmesota (the "Company"), a proposal that the City assist in financing a project hereinafter described, tlu'ough the issuance of housing revenue bonds (the "Bonds") by the City of Osseo, Minnesota pursuant to the Act; and (c) WHEREAS, before proceeding with consideration of the request of the Company, it is necessary for the City to hold a public hearing on the proposal pursuant to the Act and Section 142(d) of the Internal Revenue Code of 1986, as amended; NOW THEREFORE, BE IT RESOLVED by the City Council of the City of Shakopee, Minnesota, as follows: 1. A public hearing on the proposal of the Company will be held at the time and place set forth in the Notice of Public Hearing hereto attached. 2. The general nature of the proposal and an estimate of the principal amount of Bonds to be issued to finance the proposal are described in the attached fonn of Notice of Public Hearing. 3. Drafts of documents related to the Bonds are on file in the office of the City Administrator. 4. The City staff is hereby authorized and directed to cause notice of the hearing to be given one publication in the official newspaper of the City and also in a newspaper of general circulation available in the City, not less than 14 days nor more than 30 days prior to the date fixed for the hearing, substantially in the fom1 of the attached Notice of Public Hearing. 16177511'1 Adopted by the City Council of the City of Shakopee, Minnesota, this 1 ih day of Febmary, 2004. Mayor ATTEST: Clerk . 1617751vl 2 ...,,,,,,,,..',...,,,...,,,."..,,,,,...... . .. "";:' ...... J " ....,.;;.......1.1.\, " , , ". , , ." " , ...,. . , ., , , , '" " , , ". . , , '.'.' ,..;' "~'. ~ ' ...,' , . , , , , , ".' '." ,., ;, " co.', , .,.., . , . .' . , , , ,"-".., , , , . , . '. . . .,,, (, : "'. .... ".<" '.'." "...' '.': , "'" ........'." .....; '.....' ,." ,. , . ,.....<:, ..".' . . .... ........."",. ,.........."..",...".,......,,,.....,.... :,......"...... NOTICE OF PUBLIC HEARING ON A PROPOSAL FOR ISSUANCE OF SENIOR HOUSING REVENUE BONDS (ST. GERTRUDE'S HEALTH CENTER PROJECT) Notice is hereby given that a public hearing shall be conducted by the City Council of the City of Shakopee, Minnesota (the "City") on Tuesday, March 16,2004, at _ p.m. at City Hall located at 129 Holmes Street South, Shakopee, Minnesota, to consider the proposal of St. Gertrude's Health Center, a Minnesota nonprofit corporation ("Company") that the City assist in financing the construction and equipping of a 40-unit assisted living facility. COlmected entry and offices to be attached to the existing St. Gertrude's Health Center located at 1850 Sarazin Street in the City (the "Project"). The Project will be financed in part through the issuance by the City of Osseo, Minnesota ("Osseo") of approximately $4,500,000 of revenue bonds pursuant to Mimlesota Statutes Chapter 462C, as amended, and pursuant to a joint powers agreement between the City and Osseo. The Project be owned by the Company. The bonds or other obligations if and when issued will not constitute a charge, lien or encumbrance upon any property of the City or Osseo, and such bonds or obligations will not be a charge against the City's or Osseo's general credit or taxing powers, but will be payable from sums to be paid by the Company, pursuant to a revenue agreement. A draft copy of the proposal and associated materials is available for public inspection from 8:00 a.m. to 4:30p.m., Monday through Friday, at City Hall. At the time and place fixed for the public hearing, the City will give all persons who appear at the hearing an opportunity to express their views with respect to the proposal. In addition, interested persons may file written comments respecting the proposal with the City Administrator at or prior to the public hearing. By Isl Mark McNeill City Clerk-Administrator 1617751vl 2200 IDS CENTER 80 SOUTH EIGHTH STREET MINNEAPOLIS, MINNESOTA 55402 BRIGGS lVlORGAN TELEPHONE (612) 977-8400 AND FACSIMILE (612) 977-8650 PROFESSIONAL ASSOCIATION WRITER'S DIRECT DIAL (612) 977-8513 WRITER'S E-MAIL thalla@btiggs.com February 12, 2004 VIA E-MAIL Mark McNeill City Administrator City of Shakopee 129 Holmes Street South Shakopee,1fN 55379-1328 Re: Proposed City of Osseo, Minnesota $4,500,000 Tax Exempt Loan Participations (St. Gertrude's Health Center Project) Series 2004 Dear Mark: In September 2003, pursuant to a Joint Powers Agreement between the City of Shakopee (the "City") and the City of Osseo ("Osseo"), Osseo issued its $9,995,000 Tax Exempt Loan Participations (St. Gertrude's/Steep1e Point Project), Series 2003 (the "2003 Notes") at the request of St. Gertrude's Health Center, a Minnesota nonprofit corporation ("St Gertrude's) and Steeple Pointe Senior Living Community, a Minnesota nonprofit corporation ("Steeple Pointe") to refinance certain tax exempt bonds relating to a 75-bed skilled nursing facility located at 1850 Sarazin Street in the City ("St. Gertrude's Project") and a 58-unit multi-family senior housing facility in Osseo known as Steeple Pointe. The 2003 Notes were issued by Osseo pursuant to a Servicing and Intercreditor Agreement among Osseo, American Bank of St. Paul and several financial institutions named therein ("the Servicing Agreement"). The Servicing Agreement provides 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. St. Gertrude's intends to construct and equip a 40-unit assisted living facility adjacent to the St. Gertrude's Project which will also include a connecting entryway with the nursing home and additional office and administrative space (the "Project"). St. Gertrude's and Steeple Pointe (collectively, the "Obligor") have proposed that the City and Osseo enter into a joint powers agreement under Minnesota Statutes, Section 471.59 to jointly issue tax exempt revenue obligations in the aggregate amount of approximately $4,500,000 (the "2004 Notes") to finance the Project and cost of issuance of the 2004 Notes. Osseo has agreed to act as the issuer and to 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. 1617794vl SAINT PAUL OFFICE' FIRST NATIONAL BANK BUILDING' WWW.BRIGGS.COM MEMBER - LEX MUNDI, A GLOBAL ASSOCIATION OF INDEPENDENT LAW FIRMS BRIGGS AND MORGAN Mark McNeill February 12, 2004 Page 2 In order to proceed with the financing, the City would need to consent to the issuance of the 2004 Notes by Osseo, hold a public hearing with respect to the Project, and enter into a joint powers agreement to permit Osseo to issue the 2004 Notes for a project in its City. Because Osseo will designate the 2004 Notes as "bank qualified," the 2004 Notes will not count against the City's 2004 "bank qualification" for the City's other obligations issued during calendar year 2004. I have attached a Resolution Calling for a Public Hearing and a notice of public hearing, a form of Joint Powers Agreement and a Resolution giving consent by the City of Shakopee to this financing and execution and delivery of the Joint Powers Agreement. Ifpossible, the parties would like the City to consider adoption of the Resolution Calling for a Public Hearing at its next meeting on February 17, 2004 and schedule the public hearing and adoption of the Resolution approving the joint powers agreement at its meeting on March 16, 2004. Please let me know any questions or comments you may have and whether I should forward these documents to anyone else for review. The Obligor does expect to pay any administrative costs of both cities including attorneys' fees for review of documentation. Very truly yours, Trudy J. Halla TJH/cas Attachments 1617794vl