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HomeMy WebLinkAbout15.F.5. Authorizing the Issuance and Sale of Revenue Bonds for St. Francis Regional Medical Center-Res. No. 6100 CITY OF SHAKOPEE I~. F. s: Memorandum TO: Mayor and City Council CONSEN1~ FROM: Mark McNeill, City Administrator SUBJECT: St. Francis Bond Sale DATE: August 13,2004 INTRODUCTION: The Council is asked to adopt a resolution relating to the issuance of bonds for the Health Care Revenue Bonds for St. Francis Regional Medical Center. BACKGROUND: The City Council has previously agreed to facilitate the issuance of up to $65 million in Health Care Revenue Bonds for the purpose of constructing improvements at the St. Francis Regional Medical Center, and to provide for the refinancing of existing revenue bonds in the amount of $23 million. The actual sale will take place in September. The Council is asked at the August I ih meeting to approve the resolution authorizing the issuance, sale, and delivery ofthose bonds. The resolution also approves the form and execution of the revenue bonds. A representative ofthe hospital, and their legal staffwill be in attendance at the City Council meeting to answer questions. RECOMMENDATION: If the Council wishes to assist the hospital in the issuance of these bonds, the attached resolution will need to be approved. ACTION REQUIRED: If the Council concurs, it should, by motion, approve the following resolution: RESOLUTION NO. 6100 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SHAKOPEE, MINNESOTA, AUTHORIZING THE ISSUANCE, SALE, AND DELIVERY OF ITS REVENUE BONDS FOR THE BENEFIT OF ST. FRANCIS REGIONAL MEDICAL CENTER; PAYABLE SOLELY FROM REVENUES PLEDGED PURSUANT TO THE INDENTURE; APPROVING THE FORM OF AND AUTHORIZING THE EXECUTION AND DELIVERY OF THE REVENUE BONDS AND RELATED DOCUMENTS; AND PROVIDING FOR THE SECURITY, RIGHTS, AND REMEDIES WITH RESPECT TO THE REVENUE BONDS .~ UuuLt Mark McNeill City Administrator MM:th CITY OF SHAKOPEE, MINNESOTA RESOLUTION NO. 6100 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SHAKOPEE, MINNESOTA, AUTHORIZING THE ISSUANCE, SALE, AND DELIVERY OF ITS REVENUE BONDS FOR THE BENEFIT OF ST. FRANCIS REGIONAL MEDICAL CENTER; PAYABLE SOLELY FROM REVENUES PLEDGED PURSUANT TO THE INDENTURE; APPROVING THE FORM OF AND AUTHORIZING THE EXECUTION AND DELIVERY OF THE REVENUE BONDS AND RELATED DOCUMENTS; AND PROVIDING FOR THE SECURITY, RIGHTS, AND REMEDIES WITH RESPECT TO THE REVENUE BONDS WHEREAS, the City of Shakopee, Minnesota (the "City"), is a statutory city and political subdivision duly organized and existing under the Constitution and laws. of the State of Minnesota; and WHEREAS, pursuant to Minnesota Statutes, Sections 469.152-469.1651, as amended (the "Act"), the City is authorized to issue revenue bonds to finance, in whole or in part, the cost of the acquisition, construction, reconstruction, improvement, betterment or extension of a project, defined in the Act as including 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; and WHEREAS, St. Francis Regional Medical Center, a Minnesota nonprofit corporation ("Borrower"), submitted an application to the City requesting the issuance by the City of revenue bonds pursuant to the Act, in the approximate aggregate principal amount notto exceed $65,000,000, for the following purposes: (i) to apply approximately $42,000,000 of the proceeds of such revenue bonds to finance (A) the construction and equipping of a new inpatient bed tower; (B) the expansion and improvement of its emergency department facilities; (C) the expansion and improvement of its surgery department facilities; CD) expansion and improvement of its Cancer Center; (E) improvement and equipping of the diagnostic and cardiopulmonary services, (F) expansion and improvement of its lab and pharmacy areas; and (G) the expansion and improvement of support areas, including plant services and administrative areas, and other improvements to its acute care hospital facilities located at 1455 St. Francis Avenue (collectively, the "Project"); and (ii) to apply approximately $23,000,000 of the proceeds of such revenue bonds to redeem and prepay all or any portion of the following outstanding obligations of the City previously issued for the benefit ~of the Borrower: (i) the Hospital Facilities Variable Rate Demand Revenue Bonds (Benedictine Health System -St. Francis Regional Medical Center), Series 1987, issued on December 1, 1987 in the original principal amount of $8,000,000 (the "Series 1987 Bonds") and (ii) the Adjustable Demand Revenue Notes, Series 1998 (St. Francis Regional Medical Center), issued on September 1, 1998 in the original principal amount of $12,036,000 (the "Series 1998 Bonds") (collectively, the "Prior Bonds"); and 1 (iii) to fund a reserve fund to secure the payment of the principal of and interest on such revenue bonds, to pay the costs of issuing the revenue bonds, and to pay certain fmancing costs related to the revenue bonds; and WHEREAS, following the publication of a notice (the "Public Notice") of a public hearing (in which a general, functional description of the Project was provided, as well as the maximum aggregate face amount of the obligations to be issued for the purposes referenced above, the identity of the initial owner, operator, or manager of the facilities to be financed and refinanced with the proceeds ofthe bonds, and the location of the facilities to be financed with the proceeds of the bonds by street address) in a newspaper circulating generally in the City at least fourteen (14) days before the regularly-scheduled meeting of the City Council of the City on July 6, 2004, the City Council conducted a public hearing at which a reasonable opportunity was provided for interested individuals to express their views, both orally and in writing, on the Project, the redemption and prepayment of the Prior Bonds, and the proposed issuance of such revenue bonds; and WHEREAS, on July 6, 2004, the City Council of the City adopted a resolution granting preliminary authorization for the issuance of revenue bonds of the City in a principal amount not to exceed $65,000,000 for the foregoing purposes; and WHEREAS, the Borrower has requested that the City issue a series of revenue bonds to be designated the Health Care Facilities Revenue Bonds (St. Francis Regional Medical Center), Series 2004 (the "Series 2004 Bonds" or the "Bonds"), subject to such changes in such designation as elected by the Borrower with the consent of the City, in an original aggregate principal amount not to exceed $65,000,000, to be issued as revenue bonds ofthe City; and WHEREAS, the proceeds of the Series 2004 Bonds are to be applied to the payment of a portion of the costs of the Project, the payment of a portion of the interest on the Series 2004 Bonds during the construction of the Project, under appropriate circumstances, the redemption and prepayment of the Prior Bonds, the payment of the costs of issuing the Series 2004 Bonds, and the payment of financing costs with respect to the Series 2004 Bonds; and WHEREAS, the Series 2004 Bonds are to be issued under an Indenture of Trust, dated on or after September 1,2004 (the "Indenture"), between the City and Wells Fargo Bank, National Association, as trustee (the "Trustee"), and the proceeds derived from the sale of the Series 2004 Bonds are to be loaned to the Borrower pursuant to the terms of a Loan Agreement, dated on or after September 1, 2004 (the "Loan Agreement"), between the City and the Borrower; and WHEREAS, in consideration of the loan by the City of the proceeds of the Series 2004 Bonds to the Borrower and to secure the payment of the principal of, premium, if any, and interest on the Series 2004 Bonds when due, the Borrower, acting in the capacity of the Obligated Group (the "Obligated Group"), will issue a supplemental note (the "Supplemental Note") to the City pursuant to a Supplemental Indenture, dated on or after September 1,2004 (the "Supplemental Indenture"), pursuant to the terms of a Master Trust Indenture, dated on or after September 1, 2004 (the "Master Indenture"), between the Obligated Group and Wells Fargo Bank, National Association, as master trustee (the "Master Trustee"), which will be in the same aggregate principal amount and bear interest at the same rat~ or rates as the Series 2004 Bonds, will have redemption provisions corresponding to those of the Series 2004 Bonds, and will be payable in installments equal to the maturities and mandatory redemptions of the Series 2004 Bonds; and 2 WHEREAS, the loan repayments required to be made by the Borrower under the terms of the Loan Agreement will be assigned to the Trustee under the terms of the Indenture and the Supplemental Note will be assigned by the City to the Trustee under the terms of the Indenture; and WHEREAS, the Series 2004 Bonds and the interest and any premium on the Series 2004 Bonds: (i) shall be payable solely from the revenues pledged therefor; (ii) shall not constitute a debt of the City within the meaning of any constitutional or statutory limitation; (iii) shall not constitute nor give rise to a pecuniary liability of the City or a charge against its general credit or taxing powers; and (iv) shall not constitute a charge, lien, or encumbrance, legal or equitable, upon any property of the City other than the City's interest in the Loan Agreement, the Supplemental Note, and the Project; and WHEREAS, if, at the time of the sale of the Series 2004 Bonds, the market interest rates. do not create sufficient debt service savings to justify the redemption and prepayment of the Prior Bonds, the Borrower will not redeem and prepay the Prior Bonds and will issue the Series 2004 Bonds on a parity basis with the Series 1987 Bonds and the Series 1998 Bonds; and WHEREAS, the Series 1987 Bonds were issued pursuant to an Indenture of Trust dated December 1, 1987 between the Issuer and Wells Fargo Bank, National Association (successor-by-merger to Norwest Bank Duluth, National Association), as trustee and a Loan Agreement between the City and the Borrower, dated December 1, 1987; and (ii) the Series 1998 Bonds were issued pursuant to a Loan and Note Purchase Agreement, among the City, the Borrower, and Wells Fargo Bank, National Association, as purchaser, dated September 1, 1998; and WHEREAS, if one or both of the series of Prior Bonds remain outstanding, and the Series 2004 Bonds are issued on a parity basis with the Prior Bonds,the Borrower has requested the City enter into a First Amendment to Loan Agreement, dated on or after September 1, 2004, relating to the Series 1987 Bonds and a First Amendment to Loan and Note Purchase Agreement, dated on or after September 1, 2004, relating to. the Series 1998 Notes. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SHAKOPEE, MINNESOTA, AS FOLLOWS: 1. The City acknowledges, finds, determines, and declares that: (i) the issuance of the Series 2004 Bonds is authorized by the Act; (ii) the application of the proceeds of the Series 2004 Bonds to redeem and prepay all or any portion of the Prior Bonds, the acquisition, construction, and equipping of the Project, the funding of a reserve fund to secure the Bonds, and the payment of certain expenses incurred in connection with the issuance of the Bonds is consistent with and furthers the purposes of the Act; and (iii) the facilities financed with the proceeds of the Series 2004 Bonds constitute a "project" within the meaning of Section 469.153, subdivision 2(b) and (d), of the Act. 2. For the purposes set forth above, there is hereby authorized the issuance, sale and delivery of the Series 2004 Bonds in one or more series in the approximate aggregate principal amount not to exceed $65,000,000. The Series 2004 Bonds shall bear interest at fixed rates and shall be designated, shall be numbered, shall be dated, shall mature, shall be subject to redemption prior to maturity, shall be in such form, and shall have such other terms, details, and provisions as are prescribed in the Indenture, in the form now on file with the City, with the amendments referenced herein. The City hereby authorizes the Series 2004 Bonds to be issued as "tax-exempt bonds" the interest on which is not includable in gross income for federal and State of Minnesota income tax purposes. All of the provisions of the Series 2004 Bonds, when executed as authorized herein, shall be deemed to be a part of this resolution as fully and to the same extent as if incorporated verbatim herein 3 and shall be in full force and effect from the date of execution and delivery thereof. The Series 2004 Bonds shall be substantially in the form or forms set forth in the Indenture, which form or forms are hereby approved, with such necessary and appropriate variations, omissions and insertions (including changes to the name of the Series 2004 Bonds, the aggregate principal amount of the Series 2004 Bonds, the stated maturities of the Series 2004 Bonds and the maturity dates of the Series 2004 Bonds, the interest rates on the Series 2004 Bonds, and the terms of optional and mandatory redemption of the Series 2004 Bonds) as the Mayor of the City and the City Administrator of the City (the "Mayor" and "City Administrator"), in their discretion, shall determine. The execution of the Series 2004 Bonds with the manual or facsimile signatures of the Mayor and the City Administrator and the delivery of the Series 2004 Bonds by the City shall be conclusive evidence of such determination. 3. The Series 2004 Bonds shall be special limited obligations of the City the proceeds of which shall be disbursed pursuant to the terms of the Indenture and the Loan Agreement, and the plincipal, premium, and interest on the Series 2004 Bonds shall be payable solely from the proceeds of the Series 2004 Bonds, the revenues derived from the Obligated Group pursuant to the terms of the Loan Agreement and the Supplemental Note, and other funds pledged pursuant to the Indenture. The Series 2004 Bonds shall also be secured by the Reserve Fund established by the terms of the Indenture and funded with a portion of the proceeds of the Series 2004 Bonds (the "Reserve Fund"). 4. The City Council of the City hereby authorizes and directs the Mayor and the City Administrator to execute and deliver the Indenture, and hereby authorizes and directs the execution of the Series 2004 Bonds in accordance with the terms of the Indenture, and hereby provides that the Indenture shall provide the terms and conditions, covenants, rights, obligations, duties and agreements of the owners of the Series 2004 Bonds, the City and the Trustee as set forth therein. All of the provisions of the Indenture, when executed as authorized herein, shall be deemed to be a part of this resolution as fully and to the same extent as if incorporated verbatim herein and shall be in full force and effect from the date of execution and delivery thereof. The Indenture shall be substantially in the fonn on file with the City, which is hereby approved, with such necessary and appropriate variations, omissions and insertions as do not materially change the substance thereof, or as the Mayor and the City Administrator, in their discretion, shall determine, and the execution and delivery thereof by the Mayor and the City Administrator shall be conclusive evidence of such determination. 5. The Mayor and City Administrator are hereby authorized and directed to execute and deliver the Loan Agreement, the Purchase Contract, dated on or after August 17, 2004 (the "Purchase Contract"), between Goldman, Sachs & Co. (the "Underwriter") and the City, and the Letter of Representations and Indenmification, dated on or after August 17,2004 (the "Letter of Representations"), between the Issuer, the Underwriter, and the Obligated Group. All of the provisions of the Loan Agreement, the Purchase Contract, and the Letter of Representations, when executed and delivered as authorized herein, shall be deemed to be a part of this resolution as fully and to the same extent as if incorporated verbatim herein and shall be in full force and effect from the date of execution and delivery thereof. The Loan Agreement, the Purchase Contract, and the Letter of Representations shall be substantially in the forms on file with the City which are hereby approved, with such omissions and insertions as do not materially change the substance thereof, or as the Mayor and the City Administrator, in their discretion, shall determine, and the execution thereof by the Mayor and the City Administrator shall be conclusive evidence of such determination. 6. The Trustee is hereby appointed as the initial Bond Registrar with respect to the Series 2004 Bonds. 4 7. The proceeds of the Series 2004 Bonds shall be disbursed for the payment of the costs of the Project and related costs in accordance with the terms of the Indenture and the Loan Agreement. 8. The Mayor and City Administrator of the City are hereby authorized to execute and deliver, on behalf of the City, such other documents as are necessary or appropriate in connection with the issuance, sale, and delivery of the Series 2004 Bonds, including a Tax Certificate, a Tax Exemption Agreement, an Information Return for Tax-Exempt Private Activity Bond Issues, Form 8038, and all other documents, instruments, and certificates as shall be necessary and appropriate in connection with the issuance, sale, and delivery of the Series 2004 Bonds. The City hereby approves the execution and delivery by the Trustee of the Indenture and all other instruments, certificates, and documents prepared in conjunction with the issuance of the Series 2004 Bonds that require execution by the Trustee. The City hereby authorizes Kennedy & Graven, Chartered, as bond counsel of the City, to prepare, execute, and deliver its approving legal opinion with respect to the Series 2004 Bonds. 9. If, at the time of the sale of the Series 2004 Bonds, the market interest rates do not create sufficient debt service savings to justify the redemption and prepayment of the Prior Bonds, and therefore, the Series 2004 Bonds are issued on a parity basis with one or more of the series of the Prior Bonds, the City Council of the City hereby authorizes and directs the Mayor and the City Administrator to execute and deliver the First Amendment to Loan Agreement between the City and the Borrower, dated on or after September 1, 2004 relating to the Series 1987 Bonds (the "First Amendment to 1987 Loan Agreement") and the First Amendment to Loan and Note Purchase Agreement, dated on or after September 1, 2004 relating to the Series 1998 Note (the "First Amendment to 1998 Loan Agreement). All of the provisions of the First Amendment to 1987 Loan Agreement and the First Amendment to 1998 Loan Agreement, when executed and delivered as authorized herein, shall be deemed to be a part of this resolution as fully and to the same extent as if incorporated verbatim herein and shall be infull force and effect from the date of execution and delivery thereof. The First Amendment to 1987 Loan Agreement and the First Amendment to 1998 Loan Agreement shall be substantially in the forms on file with the City which are hereby approved, with such omissions and insertions as do not materially change the substance thereof, or as the Mayor and the City Administrator, in their discretion, shall determine, and the execution thereof by the Mayor and the City Administrator shall be conclusive evidence of such determination. The Mayor and City Administrator of the City are hereby authorized to execute and deliver, on behalf of the City, such other documents, instruments, and certificates as shall be necessary and appropriate in connection with the execution of the First Amendment to 1987 Loan Agreement and the First Amendment to 1998 Loan Agreement. 10. The City has not participated in the preparation of the Preliminary Official Statement or the Official Statement relating to the offer and sale of the Series 2004 Bonds (collectively, the "Official Statement"), and has made no independent investigation with respect to the information contained therein, including the appendices thereto (except for the provisions specifically related to the City and litigation to which the City is a party), and the City assumes no responsibility for the sufficiency, accuracy, or completeness of such information. Subject to the foregoing, the City hereby consents to the distribution and the use by the Underwriter in connection with the sale of the Series 2004 Bonds of the Official Statement. The Official Statement is the sole material consented to by the City for use in connection with the offer and sale of the Series 2004 Bonds. The City hereby approves the Continuing Disclosure Agreement, dated on or after September l, 2004 (the "Continuing Disclosure Agreement"), to be executed and delivered by the Obligated Group and the Trustee, in the form now on file with the City. 11. Except as otherwise provided in this resolution, all rights, powers and privileges conferred and duties and liabilities imposed upon the City or the City Council by the provisions of this resolution or of the aforementioned documents shall be exercised or performed by the City or by such 5 members of the City Council, or such officers, board, body or agency thereof as may be required or authorized by law to exercise such powers and to perform such duties. No covenant, stipulation, obligation or agreement herein contained or contained in the aforementioned documents shall be deemed to be a covenant, stipulation, obligation or agreement of any member of the City Council of the City, or any officer, agent or employee of the City in that person's individual capacity, and neither the City Council of the City nor any officer or employee executing the Series 2004 Bonds shall be liable personally on the Series 2004 Bonds or be subject to any personal liability or accountability by reason of the issuance thereof. No provision, covenant or agreement contained in the aforementioned documents, the Series 2004 Bonds or in any other document relating to the Series 2004 Bonds, and no obligation therein or herein imposed upon the City or the breach thereof, shall constitute or give rise to any pecuniary liability of the City or any charge upon its general credit or taxing powers. In making the agreements, provisions, covenants and representations set forth in such documents, the City has not obligated itself to payor remit any funds or revenues, other than funds and revenues derived from the Loan Agreement and the Supplemental Note which are to be applied to the payment of the Series 2004 Bonds, as provided therein and in the Indenture. 12. Except as herein otherwise expressly provided, nothing in this resolution or in the aforementioned documents expressed or implied, is intended or shall be construed to confer upon any person or firm or corporation, other than the City or any holder of the Series 2004 Bonds issued under the provisions of this resolution, any right, remedy or claim, legal or equitable, under and by reason of this resolution or any provisions hereof, this resolution, the aforementioned documents and all of their provisions being intended to be and being for the sole and exclusive benefit of the City and any holder from time to time of the Series 2004 Bonds issued under the provisions of this resolution. 13. In case anyone or more of the provisions of this resolution, other than the provisions contained in the first sentence of Section 3 hereof, or of the aforementioned documents, or. of the Series 2004 Bonds issued hereunder shall for any reason be held to be illegal or invalid, such illegality or invalidity shall not affect any other provision of this resolution, or of the aforementioned documents, or of the Series 2004 Bonds, but this resolution, the aforementioned documents, and the Series 2004 Bonds shall be construed and endorsed as if such illegal or invalid provisions had not been contained therein. 14. The Series 2004 Bonds, when executed and delivered, shall contain a recital that they are issued pursuant to the Act, and such recital shall be conclusive evidence of the validity of the Series 2004 Bonds and the regularity of the issuance thereof, and that all acts, conditions, and things required by the laws of the State of Minnesota relating to the adoption of this resolution, to the issuance of the Series 2004 Bonds, and to the execution of the aforementioned documents to happen, exist and be performed precedent to the execution of the aforementioned documents have happened, exist and have been performed as so required bylaw. 15. The officers of the City, bond counsel, other attorneys, engineers, and other agents or employees ofthe City are hereby authorized to do all acts and things required of them by or in connection with this resolution, the aforementioned documents, and the Series 2004 Bonds for the full, punctual and complete performance of all the terms, covenants and agreements contained in the Series 2004 Bonds, the aforementioned documents and this resolution. In the event that for any reason the Mayor of the City is unable to carry out the execution of any of the documents or other acts provided herein, any persons delegated the duties of the Mayor shall be authorized to act in the capacity of the Mayor and undertake such execution or acts on behalf of the City with full force and effect, which execution or acts shall be valid and binding on the City. If for any reason the City Administrator of the City is unable to execute 6 and deliver the documents referred to in this Resolution, such documents may be executed by any person delegated the duties of the. City Administrator, with the same force and effect as if such documents were executed and delivered by the City Administrator of the City. 16. The City understands that the Obligated Group will pay directly or through the City any and all costs paid or incurred by the City in connection with the transactions authorized by this resolution, whether or not the Series 2004 Bonds are issued. 17. This resolution shall be in full force and effect from and after its passage. 7 Adopted by the City Council of the City of Shakopee, Minnesota, this ,2004. CITY OF SHAKOPEE, MINNESOTA By Mayor Attest: By City Clerk SHI55-148 (JAE) 250073v.5 8