Loading...
HomeMy WebLinkAbout15.F.5. Health Care Facilities Refunding Revenue Bonds-Res. No. 5932 IS: P. 6" . CITY OF SHAKOPEE Memorandum TO: Mayor and City Council CONSENT FROM: Mark McNeill, City Administrator SUBJECT: Health Care Facilities Refunding Revenue Bonds (St. Gertrudes) DATE: August 14, 2003 INTRODUCTION: The Council is asked to agree to the issuance of refunding bonds for the S t. Gertrudes Health Center Project, and also enter into a joint powers agreement to allow the City of Osseo to issue bonds for that refunding. BACKGROUND: Attached is a letter from Trudy Halla, attorney representing St. Gertrudes Health Center. St. Gertrudes operates a 75 bed nursing home on the St. Francis Hospital Campus. St. Gertrudes is wholly owned by Benedictine Health System (BHS), a non-profit organization. BHS also owns a congregate care and assisted-living facility in the City of Osseo (Steeple Pointe Senior Living Community). It is the desire ofBHS to refinance bonds for both St. Gertrudes and Steeple Pointe, as issued by the Cities of Shakopee and Osseo. In order to avoid the duplication of financing costs, BHS has approached the City of Osseo, and has asked it to act as a joint powers issuer on behalf of both cities. As such, the City of Shakopee would have to agree to the issuance of the refunding bonds by Osseo. In order to do that, the City would need to enter into a joint powers agreement (attached). BUDGET IMPACT: Normally, there is a concern that the issuance of bonds for a private entity such as this would count against a $10 million annual limit for the issuance of bonds - if a city issues more then that for any purpose, including its own, it loses its "bank qualified" status, and therefore the tax exempt status for all bonds issued by the city that year is affected. However, because this is a refunding of previously issued bank qualified notes, it does not count against the current $10 million limit for the City of Shakopee for this year. RECOMMENDATION: These documents have been reviewed by the City's bond counsel from Kennedy and Graven, who indicates that there should not an issue with accommodating the BHS request. Therefore, I recommend that the City approve the concept presented. ACTION REQUIRED: If the Council concurs, it should, by motion, approve the following actions: 1] RESOLUTION NO. 5932 - A RESOLUTION GIVING APPROVAL TO THE ISSUANCE OF TAX EXEMPT REVENUE OBLIGATIONS AND AUTHORIZING EXECUTION OF A JOINT POWERS AGREEMENT RELATING TO SUCH REVENUE OBLIGATIONS (ST. GERTRUDES/STEEPLE POINTE PROJECT); and 2] Authorize the appropriate City officials to enter into a joint powers agreement providing for the issuance of tax exempt bonds to refinance a senior housing and nursing facilities (St. Gertrudes/Steeple Pointe Project). Mark McNeill City Administrator MM:th 2200 IDS CENTER 80 SOUTH EIGHTH STREET MINNEAPOLIS, MINNESOTA 55402 BRIGGS TELEPHONE (612) 977-8400 AND MORGAN FACSIMILE (612) 977-8650 PROFESSIONAL ASSOCIATION WRITER'S DIRECT DIAL (612) 977-8513 WRITER'S E-MAIL thalla@ briggs.com August 6, 2003 VIA E-MAIL U.S. MAIL Mr. Mark McNeil Administrator City of Shakopee 129 Homes Street S Shakopee,~ 55379-1328 Re: City of Shakopee, Minnesota $6,065,000 Healthcare Facilities Refunding Revenue Bonds (St. Gertrude's Health Center Project), Series 2000 Dear Mark: In October 2000 the City of Shakopee issued the above-referenced bonds (the "Shakopee Bonds") to refinance certain debt of St. Gertrude's Health Center, a Minnesota nonprofit corporation ("St. Gertrude's"), relating to its 75-bed nursinghome located at 1850 Sarazin Street in the City of Shakopee. In September 1997 the City of Osseo, Minnesota issued its $4,850,000 Multifamily Housing Revenue Bonds, Series 1997 (Steeple Pointe Project) (the "Osseo Bonds") to finance congregate care and assisted-living facilities in the City of Osseo owned by Steeple Pointe Senior Living Community, a Minnesota nonprofit corporation ("Steeple Pointe"). Benedictine Health System, a Minnesota nonprofit corporation, is the sole member of both Steeple Pointe and St. Gertrude's. The Shakopee Bonds contain a provision requiring St. Gertrude's to repurchase the Shakopee Bonds from the holders thereof on October 1, 2003 and Steeple Pointe and St. Gertrude's both wish to refinance their properties at today's lower interest rates. The proposed plan of finance is for St. Gertrude's and Steeple Pointe to jointly and severally borrow on a tax-exempt basis to refund both the Shakopee Bonds and the Osseo Bonds in one bond issue which will be secured by the assets of both corporations and both facilities. Doing a single refunding bond issue in an amount of approximately $9,960,000 will avoid duplication of financing costs, including creation of two sets of documents, two sets of offering documents and duplicate closing costs. The City of Osseo has already agreed to act as a joint powers issuer on behalf of both cities. The City of Shakopee would need to consent to the issuance of the refunding bonds by Osseo and to enter into a Joint Powers Agreement to permit Osseo to issue bonds on its behalf. 1557105vl SAINT PAUL OFFICE · FIRST NATIONAL BANK BUILDING · WWW,BR1GGS.COM MEMBER - LEX MUNDI. A GLOBAL ASSOCIATION OF INDEPENDENT LAW FIRMS BRIGGS AND MORGAN Mr. Mark McNeil August 6, 2003 Page 2 Both the Osseo Bonds and the Shakopee Bonds were originally designated as "bank qualified." Because the new bond issue will be a current refunding of the prior bonds, the new bonds will also be "bank qualified" and will not count against the $10,000,000 limit for either of the cities during 2003. I have attached a proposed 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. If possible, the parties would like the City of Shakopee to consider this proposal at its next meeting on August 19,2003. Please let me know any questions or comments you may have and whether I should forward these documents to anyone else for review. The borrowers do expect to pay any administrative costs of both cities, including any attorneys fees, for review of documentation. Very truly yours, ~~ TJH/ed Enclosure 1557105vl Extract of Minutes of a Meeting of the City Council of the City of Shakopee, Minnesota Pursuant to due call and notice thereof, a regular meeting of the City Council of the City of Shakopee, Minnesota, was duly held at the City Hall in said City on Tuesday, the 19th day of August, 2003 at_ P.M. The following members were present: and the following were absent: Member introduced the following resolution and moved its adoption: RESOLUTION GIVING APPROVAL TO THE ISSUANCE OF TAX EXEMPT REVENUE OBLIGATIONS AND AUTHORIZING EXECUTION OF A JOINT POWERS AGREEMENT RELATING TO SUCH REVENUE OBLIGATIONS (ST. GERTRUDE'S/STEEPLE POINTE PROJECT) The motion for the adoption of the foregoing resolution was duly seconded by member , and after full discussion thereof and upon vote being taken thereon, the following voted in favor thereof: and the following voted against the same: whereupon said resolution was declared duly passed and adopted. 1557307vl RSOLUTION NO. 5.932 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/STEEPLE POINTEPROJECT) WHEREAS, in October 2000, the City of Shakopee, Minnesota, (the "City") issued its $6,065,000 HealthCare Facilities Refunding Revenue Bonds (St. Gertrude's Health Center Project), Series 2000 (the "Shakopee Bonds") at the request of S1. Gertrude's Health Center, a Minnesota nonprofit corporation ("S1. Gertrude's"); and WHEREAS, in September 1997, the City of Osseo, Minnesota ("Osseo") issued its $4,850,000 Multifamily Housing Revenue Bonds, Series 1997 (Steeple Pointe Project) (the "Osseo Bonds") at the request of Steeple Pointe Senior Living Center, a Minnesota nonprofit corporation ("Steeple Pointe") to finance a senior housing and assisted living facility in Osseo; and WHEREAS, S1. Gertrude's and Steeple Pointe (collectively, the "Obligor") have proposed that City and Osseo enter into a j oint powers agreement under Minnesota Statutes S 471.59, to jointly issue "bank qualified" tax exempt revenue obligations in the aggregate principal amount of not more than $9,960,000 (the "Bonds") to redeem and refund the Shakopee Bonds and the Osseo Bonds and to refinance the Obligor's facilities pursuant to Minnesota Statutes, Chapter 462C and Section 469.152 to .1651 (collectively, the "Act"); and WHEREAS, the Bonds 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 connection with the issuance of the Bonds. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Shakopee, Minnesota, as follows: 1. This Council has received a copy and hereby approves of the Joint Powers Agreement between the City and Osseo (the "Joint Powers Agreement") relating to the Bonds. 2. In no event shall the Bonds 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 Bonds shall ever have the right to compel the exercise of the taxing power of the City to pay any of the Bonds or the interest thereon, nor to enforce payment thereof against any property of the City; the Bonds shall not constitute a charge, lien or encumbrance, legal or equitable, upon any property of the City; and the Bonds do not constitute an indebtedness of the City within the meaning of any constitutional, statutory, or charter limitation. 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 obligations for the Project by Osseo. 1557307vl 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 19th day of August, 2003. Mayor Attest: City Clerk 1557307vl 2 STATE OF MINNESOTA ) COUNTY OF SCOTT ) ss. CITY OF SHAKOPEE ) I, the undersigned, being the duly qualified and acting Clerk of the City of Shakopee, Minnesota, DO HEREBY CERTIFY that I have compared the attached and foregoing extract of minutes with the original thereof on file in my office, and that the same is a full, true and complete transcript of the minutes of a meeting of the City Council of said City duly called and held on the date therein indicated, insofar as such minutes relate to a resolution giving host approval to the issuance of revenue bonds and authorizing execution of a Joint Powers Agreement. WITNESS my hand this _ day of August, 2003. City Clerk 1557307vl JOINT POWERS AGREEMENT PROVIDING FOR THE ISSUANCE OF TAX EXEMPT BONDS TO REFINANCE A SENIOR HOUSING AND NURSING FACILITIES (ST. GERTRUDE'S/STEEPLE POINTE PROJECT) THIS AGREEMENT is entered into as of the 1st day of September, 2003, between the City of Osseo, Minnesota ("Osseo") and the City of Shakopee, Minnesota, ("Shakopee") (collectively, the "Cities," or individually, a "City"). Each of the municipalities named above is a municipal corporation duly organized under the laws ofthe State of Minnesota. RECITALS A. Minnesota Statutes, Section 471.59 (the "Joint Powers Act") provides that two or more governmental 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 governmental units. B. 8t. Gertrude's Health Center, a Mhmesota nonprofit corporation ("St. Gertrude's"), owns and operates a nursing facility in Shakopee for which Shakopee has issued its $6,065,000 Health Care Refunding Bonds (St. Gertrude's Health Center Project) Series 2000 (the "Shakopee Bonds"). C. Steeple Pointe Senior Living Community, a Minnesota nonprofit corporation ("Steeple Pointe"), owns and operates a senior multifamily housing and assisted living facility in Osseo for which Osseo has issued its $4,850,000 Multifamily Housing Revenue Bonds, Series 1997 (Steeple Pointe Project) (the "Osseo Bonds"). D. Benedictine Health System, a Minnesota 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 Shakopee will issue its $9,960,000 tax-exempt revenue bonds or participation in revenue bonds (the "Bonds") under Minnesota Statutes, Chapter 462C and Section 469.152 to .1651 (collectively, the "Act") in an aggregate amount not to exceed $9,960,000 and loan the proceeds thereof to the Obligor to redeem and refund the Shakopee Bonds and Osseo Bonds and refinance the Obligor's facilities. E. In connection with issuance of the Shakopee Bonds, Shakopee designated the Shakopee Bonds as "qualified tax-exempt obligations" within the meaning of Section 265(b)(3)(B) of the Internal Revenue Code of 1986, as amended (the "Code"). In connection with issuance of the Osseo Bonds, Osseo also designated the Osseo Bonds as "qualified tax- exempt obligations" within the meaning of8ection 265(b)(3)(B) of the Code. F. The Bonds proposed to be issued by Osseo will be issued within ninety (90) days of the date the Shakopee Bonds and the Osseo Bonds will be redeemed and are, therefore, current refunding Bonds, also entitled to be "qualified tax-exempt obligations." 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: 1557263vl 1. The Cities hereby agree to jointly refinance the Obligor's facilities through the issuance of the Bonds. Osseo is hereby designated as the issuer of the Bonds to be issued pursuant to this Agreement. 2. Each City represents that it has adopted a resolution authorizing execution, delivery and performance of this Agreement, and that its respective Shakopee Bonds and Osseo Bonds have been designated 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 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. This Agreement shall terminate upon the retirement or defeasance of the outstanding principal amount of the Bonds and this Agreement may not be terminated 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 instrument. 1557263vl 2 IN WITNESS WHEREOF, each of the Cities has caused this Agreement to be executed on its behalfby 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] 1557263v I S-1 CITY OF SHAKOPEE, MINNESOTA By: Its: Mayor By: Its: City Clerk [Signature page to Joint Powers Agreement] 1557263vI S-2