HomeMy WebLinkAbout15.F.1. Calling for a Public Hearing on the Issuance of Bonds for St. Francis Regional Medical Center-Res. No. 6063
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CITY OF SHAKOPEE
Memorandum CONSENT
TO: Mayor and City Council
FROM: Mark McNeill, City Administrator
SUBJECT: Calling for Public Hearing - Internal Revenue Bonds
DATE: June 10,2004
INTRODUCTION:
The Council is asked to call for a public hearing on July 6, 2004, to consider the issuance
of bonds to benefit the construction of an addition to St. Francis Regional Medical
Center, and refinancing of two previous bond issues for the hospital.
BACKGROUND:
St. Francis recently announced plans for additions to their campus, and applications have
been made for Planning Commission action that will be heard in July.
City staff has been in contact with representatives of St. Francis Regional Medical
Center, regarding the issuance of up to $65 million in bonds to finance an expansion of
the hospital facility; acquire and install equipment for the facility, and to call and prepay
Series 1987 Bonds and 1998 Bonds that have previously been issued to finance
improvements at the facility.
This is the third time that the City has issued bonds on behalf of St. Francis. The
issuance of bonds by a City to benefit non-profit institutions such as hospitals is allowed
by State law. The advantage to the hospital is that it provides for a more favorable
interest rate. The agreement is that 81. Francis will reimburse all costs incurred by the
City resulting from the issuance of these bonds. This would include any additional costs
that would be incurred by the City on projects that might lose their "bank: qualified"
status as a result of the issuance ofthese bonds.
It is recommended that a public hearing be scheduled for Tuesday, July 6,2004, at 7:00
PM.
RECOMMENDATION:
I recommend that a public hearing be called for the regular City Council meeting of July
6th,
ACTION REQUIRED:
If the Council concurs, it should, by motion, adopt the following resolution:
RESOLUTION NO. 6063
RESOLUTION CALLING FOR A PUBLIC HEARING AND
RATIFYING PUBLICATION OF A NOTICE OF PUBLIC
HEARING WITH RESPECT TO THE PROPOSED ISSUANCE OF
REVENUE BONDS UNDER MINNESOTA STATUES,
SECTIONS 469.152 THROUGH 469.1651
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Mark McNeill
City Administrator
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-t 5T. FRANCIS 1455 ST. FRANCIS AVENUE
SHAKOPEE, MN 55379-3380
Regional Medical Center 952-403-3000
June 9, 2004
City Administrator
Honorable Mayor & City Council Members
City of Shakopee
City Hall
129 South Holmes Street
Shakopee, Minnesota 55379
Ladies and Gentlemen:
On behalf of St. Francis Regional Medical Center, I write to respectfully request
that the City of Shakopee consider a proposal for the issuance of revenue bonds of the
City under Minnesota Statutes, Sections 469.152 to 469.165, as amended (the Municipal
Industrial Development Act), to finance, for the benefit of St. Francis, the construction of
an expansion and other improvements to the St. Francis Regional Medical Center located
at 1455 St. Francis Avenue in the City and the acquisition and installation of equipment
for the Medical Center; to redeem and prepay certain bonds previously issued by the City
for the benefit of St. Francis; and to pay certain costs of issuing and securing the new
bonds.
As you may know, St. Francis Regional Medical Center is a Minnesota nonprofit
corporation exempt from federal income taxation as described in Section 501 (c)(3) of the
Internal Revenue Code of 1986, as amended. St. Francis Medical Center operates a 61-
bed community hospital facility in the City for residents of the City and the surrounding
communities, providing a range of inpatient, outpatient and emergency care services.
The Medical Center's members include Benedictine Health System, Allina Health
System, and Park Nicollet Health Services, all Minnesota nonprofit corporations.
St. Francis is committed to maintaining the quality of health care services
provided by its hospital and related medical facilities in the City. The construction
project described above will help us to meet this goal. Very briefly, the project described
above will consist of the following:
. Construction of a new, three-floor inpatient bed tower providing for 30 additional
Medical/Surgery patient rooms.
. Renovation of the existing emergency room space to increase the number of exam
rooms.
. Expansion of surgery and endoscopy areas, increasing the number of recovery
area bays, adding four new operating rooms and one new endoscopy suite, and
increasing storage and waiting areas. In addition, shell space will support a new
Ortho and Neurology Center and new spine and Bariatric surgery programs.
.
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. Renovation of 4, 1 00 square feet to accommodate the addition of a new diagnostic
and cardiopulmonary services.
. Expansion and renovation of the existing lab to allow additional space for
equipment, processing and storage.
. Relocation of the pharmacy to provide additional space for the preparation of IV
therapy and chemotherapy drugs, as well as for equipment and storage.
. Expansion of the cancer center to increase the capacity for chemotherapy
treatments and to provide new private rooms for chemotherapy.
. Upgrading of plant services and infrastructure expansion to accommodate the new
bed tower expansion.
. Renovation of support departments.
The expected construction timeline is September 2004 through January 2007. A
preliminary estimate of the sources and uses of funds is attached.
We will be happy to provide further details related to the project, the redemption
and prepayment of the outstanding bonds, or our organization at your request. Please do
not hesitate to contact me directly at (952) 403-2220 or alan.lem@allina.com.
Finally, enclosed please find payment of an application fee in the amount of
$6,330.00. Thank you for your consideration. We look forward to working with you.
Very truly yours,
~~
Alan Lem
Vice President, Finance
f
.
SOURCES AND USES OF FUNDS
St. Francis Regional Medical Center, Shakopee, MN
2004 New Money and Refunding
level Savings
Dated Date 09/01/2004
Delivery Date 09/01/2004
Refunding of
Sources: Series 1998 New Money Total
Bond Proceeds:
Par Amount 14,610,000.00 38,425,000.00 53,035,000.00
Net OlD (131,507.60) (677,725.90) (809,233.50)
14,478,492.40 37,747,274.10 52,225,766.50
Refunding of
Uses: Series 1998 New Money Total
Project Fund Deposits:
Project Fund 29,435,251.08 29,435,251.08
Refunding Escrow Deposits:
Cash Deposit 0.83 0.83
SlG Purchases 11,468,805.00 11,468,805.00
11,468,805.83 11,468,805.83
Other Fund Deposits:
Debt Service Reserve Fund 1,077,100.00 3,235,900.00 4,313,000.00
Capitalized Interest Fund 1,710,231.50 4,497,990.78 6,208,222.28
2,787,331.50 7,733,890.78 10,521,222.28
Delivery Date Expenses:
Cost of Issuance (1.5% of Par) 219,150.00 576,375.00 795,525.00
Other Uses of Funds:
Contingency 3,205.07 1,757.24 4,962.31
14,478,492.40 37,747,274.10 52,225,766.50
May 17, 2004 11:21 pm Prepared by Goldman, Sachs & Co. (v:\...\SIFrancisShakopee:2004) Page 1
RESOLUTION NO. 6063
RESOLUTION CALLING FOR A PUBLIC HEARING AND
RATIFYING PUBLICATION OF A NOTICE OF PUBLIC
HEARING WITH RESPECT TO THE PROPOSED ISSUANCE OF
REVENUE BONDS UNDER MIN'NESOTA STATUTES,
SECTIONS 469.152 THROUGH 469.1651
WHEREAS, The City of Shakopee, Milmesota (the "City") is duly organized and existing under
the Constitution and laws of the State of Mimlesota.
WHEREAS, under the Minnesota Municipal Industrial Development Act, Minnesota Statutes,
Sections 469.152-469.1651, as amended (the "Act"), each home rule charter or statutory city of the State
of Minnesota, including the City of Shakopee, Minnesota (the "City"), is authorized to issue revenue
bonds for the following purposes: (i) 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 (ii) pay, purchase, or discharge all or any
part of the outstanding indebtedness of a contracting party engaged primarily in the operation of one or
more nonprofit hospitals previously incurred in the acquisition or betterment of its existing hospital to the
extent deemed necessary by the governing body of the municipality or redevelopment agency; this may
include any unpaid interest on the indebtedness accrued or to accrue to the date on which the
. . .
indebtedness is finally paid, and any premium the governing body of the municipality ore redevelopment
agency determines to be necessary to be paid to pay, purchase, or defease the outstanding indebtedness;
and
WHEREAS, the City, has proposed to issue revenue bonds (the "Bonds") and loan the proceeds
derived from the sale of the Bonds to St. Francis Regional Medical Center, a Minnesota nonprofit
corporation (the "Borrower"), pursuant to the terms of a Loan Agreement between the City and the
Borrower (the "Loan Agreement") to: (i) finance the construction of an expansion and other
improvements to the regional medical center of the Borrower located at 1455 St. Francis Avenue in the
City (the "Facility"), and the acquisition and installation of equipment for the Facility (collectively, the
"Project"); and (ii) redeem and prepay the outstanding principal amount of the Adjustable Demand
Revenue Notes, Series 1998 (St. Francis Regional Medical Center) (the "Prior Bonds"), issued by the
City for the benefit of the Borrower on September 23, 1998, in the original principal amount of
$12,036,000; and (Hi) pay the costs of issuing the Bonds, funding one or more reserve funds to secure the
Bonds, and pay financing costs with respect to the Bonds and the Project; and
WHEREAS, Section 147(f) of the Internal Revenue Code of 1986, as amended, and regulations
promulgated thereunder, require that prior to the issuance of the Bonds, this Council approve the
financing of the Project and issuance of the Bonds after conducting a public hearing thereon and notice of
such public hearing shall be published at least once, not less than fourteen days prior to the date fixed for
the hearing in a newspaper of general circulation in the City; and
WHEREAS, pursuant to Section 469.154 of the Act, prior to issuance of the Bonds by the City,
the Commissioner of the Minnesota Department of Employment and Economic Development ("DEED")
must approve the Project on the basis of preliminary information submitted by the City; and
WHEREAS, prior to submitting an application to the Commissioner of DEED requesting
approval of the Project the Council must conduct a public hearing on the proposal to undertake and
finance the Project and notice of such public hearing shall be published at least once, not less than
fourteen (14) days, nor more than thirty (30) days prior to the date fixed for the hearing in the official
newspaper and a newspaper of general circulation in the City.
NOW, THEREFORE, BE IT RESOLVED THAT:
1. The City Council shall meet at 7:00 p.m. on Tuesday, July 6,2004, to conduct a public
hearing on the issuance of the Bonds as requested by the Borrower.
2. The City hereby approves and ratifies publication of a notice of the hearing in the
Shakopee Valley News, a official newspaper and in a newspaper of general circulation in the City on
June 17,2004, a date nineteen (19) days prior to the date of the public hearing. The form of the notice is
attached hereto as Exhibit A.
Adopted by the City Council of the City of Shakopee, Milmesota on this 15th day of June, 2004.
Mayor
Attest:
City Clerk
EXHIBIT A
FORMOFNOTICEOFPUBLICHE~G
CITY OF SHAKOPEE, MINNESOTA
NOTICE OF A PUBLIC HEARING WITH RESPECT TO THE
FINANCING AND REFINANCING OF A PROJECT IN
ACCORDANCE WITH THE PROVISIONS OF MINNESOTA
STATUTES, SECTIONS 469.152-469.1651, AS AMENDED
NOTICE IS HEREBY GIVEN that the City Council of the City of Shakopee, Milmesota (the
"City") will hold a public hearing on Tuesday, July 6, 2004, on or after 7:00 p.m. at City Hall,
129 Holmes Street South, Shakopee, Minnesota, to consider a proposal for the issuance of revenue
obligations of the City (the "Bonds") under Minnesota Statutes, Sections 469.152-469.1651, as amended
(the "Act"), on behalf of St. Francis Regional Medical Center, a Minnesota nonprofit corporation (the
"Borrower"), to: (i) finance the construction of an expansion and other improvements to the regional
medical center of the Borrower located at 1455 St. Francis Avenue in the City (the "Facility"), and the
acquisition and installation of equipment for the Facility (collectively, the "Project"); and (ii) redeem and
prepay the outstanding principal amount of the Hospital Facilities Variable Rate Demand Revenue Bonds,
Series 1987 (Benedictine Health System - St. Francis Regional Medical Center), issued by the City for the
benefit ofthe Borrower in the principal amount of $8,000,000 (the "Series 1987 Bonds"); (iii) redeem and
prepay the outstanding principal amount of the Adjustable Demand Revenue Notes, Series 1998
(St. Francis Regional Medical Center), issued by the City for the benefit of the Borrower in the original
principal amount of $12,036,000 (the "Series 1998 Notes," and collectively with the Series 1987 Bonds,
(the "Prior Obligations"); and (iv) pay the costs of issuing the Bonds, funding one or more reserve funds
to secure the Bonds, and pay financing costs with respect to the Bonds and the Project. The Project will
be owned by the Borrower.
At the public hearing, the City Council will consider the adoption oia resolution approving the
Project and giving approval to the issuance ofthe Bonds to finance the costs of the Project, to redeem and
prepay the Prior Obligations, and to pay the costs of issuing the Bonds, funding one or more reserve funds
to secure the Bonds, and pay financing costs with respect to the Bonds and the Project. The aggregate
face amount of revenue bonds proposed to be issued to fmance the Project is presently estimated not to
exceed $65,000,000. The Bonds will be issued by the City and will constitute limited obligations of the
City payable solely from the revenues expressly pledged to the payment thereof, and will not be general
obligations ofthe City and will not be secured by any tax.ing powers of the City or any assets or property
of the City except the interests of the City in the Project that may be granted to the City in conjunction
with this financing.
A copy of the proposed application to the Commissioner of the Minnesota Department of
Employment and Economic Development for approval of the Project will be on file in the offices of the
City Administrator at 129 Holmes Street South, on and after the date of publication of this notice.
Anyone desiring to be heard during this public hearing will be afforded an opportunity to do so.
Dated: June 17,2004
BY ORDER OF THE CITY OF SHAKOPEE,
MINNESOTA