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HomeMy WebLinkAbout2007-11-27 CC Meeting Packet Enclosure,•,ice.•` oak Park. "eights Req uest for Council Action Meeting; Date Time Required: N ovembe r 7"', 2007 5 Minutes L - rye' � r• t.. R .Agenda Item Title ISSUE REVENUE OBIL GATION BONDS ---W BOUTWELLS LANDING Issue revenue oblig ations pursuant to the p rovisions of Minnesota Statutes Sections 469.152 thou .16 51 as amended the "Act") to (a) re finance, refund and rede outstanding balanc of the C��y's $i Q( )0 000 Health Cade Revenue Note of 2oo5 . Boutwells Land.i�� Care Center Pro`ect ( the "2005 Note" and its $ Health Care Revenue N of 2006 ( out el s_ Landing Care Center Pro' ect both being mere issued to finance the ac uisition of lan site ice. rovements and construction of facilities containing—W8 skilled nursing beds. � Agenda Placement ... -_Neer B usiness rl" i uatin Department/ egdes ro Requester's S ipiature l` hnson Administrator f Action Requested see Belo Background /Justification lea e indicate if any previous action has been taken or if other public bodies have advised): SEAS E 11 11/19/07 Memo f rom E ric Johnson, City Administrator do d Letter from .Alen Black requesting 20 million allocation and ice reductions. 3, Letter dated 11/16/07 from Attorney Trudy Halla of Briggs and Morgan, the ("'ity's Bond Counsel, that provides a short suin nary of the proposal and discussing that the City is not directly liable nor is it a guarantor of the $20 million dollar financing p ackage. 4, Final Note Resolution — To be adopted by the City Council. ACTION RE o The Council should ado Dt the Final Note Resol tioi R Q Take action on the re jested fee reductions o Authorize the execution of all rc uired documents by th Mayor and Cit Ad ininistrator . Page 75 of 84 S •'.r K�r;�� $ Hel 1 of a� ts m 14168 oak Park Blvd, N o Box 2007 * Oak P ark Heights, MN 5 5082 a Phone (651) 4:39 -4439 e Fax (651) 439 -0574 November 19, ooh', MEMO To; Flo: REO City council Members Eric Joh city Admi VSSA Financing Reques lance a nd Refunding Notes In December, 2005 the city issued its $10,000,000 Health care Revenue Note of 2005 (Boutwells landing care center Project) and in December, 2006 the city issued its $10,000,000 health Caro Rcvonue Note of 2006 ( Boutwells Landing care center Project) (the "Prior Notes ") to finance the construction and equipping of a 108-bed addition to the existing Boutwells Landing complex located at 5600 Norwich Parkway in the city. The current proposal is for the city to issue two new separate . notes each in the arou nt of $10,000..000 totaling $20,000,.000. The Notes will refinance and restate the Prior Notes. These notes are to be sold to area banks, most of whom were investors in the financing of the other phases of the Boutwells Landing complex. The city will have no liability for repayment of the Notes and that repayment of the Notes can never be considered a general or moral obligation of the city or give rise to a charge against the general creditor taxing powers of the city, The Notes will be payable solely from amounts paid by the Borrower. Attorney, Trudy Halla, the city's Banal counsel from Briggs & Morgan, has provided verification that this borrowing is NOT backed by the full faith and credit of the city of oak 'ark Heights - see her letter dated 11 6107 as attached Staff does recommend that the City utilize its municipal authorities to issues new rotes that refinance and restate the current rotes, these again will support the of the development of the Skilled Nursing Facility, both for construction and equipment. Enclosed is the "Final Note Resolution" necessary to be approved by the Council to p roceed with the funding placement and execution of all necessary documents by City Staff and Mayer Bea udt, Procedurally, VSSA has submitted a formal application and paid the required $8,000 application fee to the city to initiate the above process. however in ,duly 2006 the City did adopt a new fee structure to act as a conduit financing agent. Per the city's Fee Schedule, and consistent with other communities, the city may charge a closing service fee up to 1.00% of the amount of the fatal proceeds as well as an annual Page 76 of 84 service charge fee of up to .5% of the outstandn amount die by v If the pity selected to charge the full amount of such fees, V SA would be required to pay a closing fee of $200,000 to issue the bonds and approximately $100,000 in service fees fhe first year. Alternatively, VSSA has submitted a request that the City reduce the closing fees to I % of the total proceeds ($20,000,000 X 0.10% = $20,000) and waive the annual service f ees. Staff does not have an objection to the proposed reductions as tine int ntion of the project will non- profit ire nature, the project is consist r t it + its t city's Comprehensive Plan.. the pr 0J ct will provide local living opportunities for area seniors and that the reduction of such fees results in the estabiisrt of c€ financin package that is economically feasible for VSSA by lowering the cost of the o v e rall financing. Page 77 of 84 S Sri --: presh 110flies & services g fi N. November 7, 2007 Eric Johnson City of Oak Park Hei 14168 Oak Park Boulevard PO Box 2007 Oak Park Hei MN 55082 Dear Mr. Johnson: On behalf of V Care Center, LL C, we enclose (i) a Development Application in connection with our re for issuance of the proposed $20 million Tax Exempt Loan Participation Notes, Series 2007A and 20077 and (if) our check in the amount of $3,000 in pa of the Application Fee. As in the past, we re that the Cit reduce the percenta fee to $10 000 (.5% of proceeds from the issuance of the Notes If y ou have q uestions or need additional information, please contact me at 651- 631-6120. Sincerel Mark Me CFO /enclosure Mana & Services 2845 Hamline Avenue North Roseville, MN 55113 V 651.631.6100 tel freedoin to Uve well 651.631,6108 fax 8 www.pt-eshomes.or Pa :a -7 of 4- BR,IG,,,-G--S ... ... .. . q. f t C It ', November 16, 2007 VI A E-MAIL Enc Johnson City Admirilstrator City of Oak Fork Heights '14168 Oak Park Blvd, Oak mark Heights, MN 55082 -2007 Trudy J. Halla 612.977.8513 tballa@briggs.com ,.ev qty of Oak ark Heights $20,000,000 'fax Exempt Loan Participation Not (Boutwells Landing Care Center Project), Series 2007A and 200 (the "Notes ") Dear Eric. In December, 2005 the City issued its $10,000,000 Health Care Revenue Note of 2005 ( Boutwells Landing Care Center Pro'ect) mid in December, 2006 the City issued its $10,+ 00,000 Health Care Revenue Note of 2006 (B Landing Care eater prod ect) (the " Prior Notes to finance the construction acid equipping of a 108 -bed addition to the existing Boutwells Landing complex located at 5600 Norwich Parkway In the City (the "Project "), Each of the Prior Notes was issued at the end of a calendar year in order to be designated by the City as "bank q ualified" for such calendar year in anticipation of commencing construction of the Protect in late 2007. The current plan of finance is for tho City to issue two separate nntes each in the amount of $1 00 000 both of which will be purchased by Piper Saffray Lending, LLC. The Votes will reftance and restate the Prior Notes. Piper plans to sell participation interests in the Notes to p area banks most of whom were investors in the financing of the other phases of the Boutwells Lading complex. 'the Dotes will be issued under Minnesota Statute §§ 469.152 through .1651 which provide that the City will have no liability for repayment of the Notes and that repayment of the Notes cma never be considered a general or moral obligation of the City or give rise to a charge against the general creditor taxing pourers of the City, The Notes will be parable solely from g amo unto y aid b the Borrower. l understand that the City and the Borrower are currently p ne otiatm' g planned unit development and other agreements relating to constracwtion and g operation of the Project. Consideration and adoption of tho resolution approvm'g issuance of the Notes and the financing plan will in no gray obligate the City to reach agreement with the 21 a8595V I 2200 IDS Center 80 South 8th Street Minneapolis MN 55402-2157 tel 612.977.8400 fax 63 2.977.8650 Briggs and Morg4io, Prof8slonal Association Minneapolis I St, Paul l wwvvbriggs.com Member - Lex Mundi, a Global p ssodation of Independent Law Firms Page 79 of 84 BRIGGS AND M ORGAN Erie John N ovember 16, 2007 Pa ge 2 Borrower on the development documents and nothing in the fmancing documents can or will amend any ude ig or requirements in the development documents. if you or the council members have any other questions, please feel free to contact me. ZY-ell truly Y01r8, i �t Trudy J. Hal a ` JH4 2I08595vl Page 80 of 84 RESOLUTION A RESOL T10N PROVIDING FOR THE ISSUANCE AND SALE OF $20,000,,000 TAXEXEMPT LOAN PARTICIPAT ION NOTES (BOUTWELLS LANDING CARE CE NTER PROJ SERI 2007A AND 2007B BE rr RESOLVED by the City Council of the City of Oak Park Heights (the "City"), as follows: Authority. The City is, by the Constitution and laws of the State Of Minnesota, including Minnesota Statutes, Section 469,152 through 165 1, as amended (the ",pct ")5 authorized to issue and sell its revenue bonds or other obligations for the purpose of financing or refinancing the cost of acquiring and constructing health care facilities, nc uding skilled nursing facilities, and to enter into agreements necessary or convenient in the exercise of the pourers granted by the pct. 2. Descri of Protect VSSA Care Center, LLC, a Minnesota limited liability company ( the "Company"), has requested that the City assist in financing site improvements and the construction and equipping of an approximately 108 -bed skilled nursing; facility (the Rroi ect 3. Plan of Financln y On December 29, 2005 the City Issued its $10,003,000 Health Care Revenue Note of 2005 (Boutwells Landing Care Center Project) (the "2405 Note ") to partially finance the Project and designated the 2005 Note as a `qualified tax-exempt obligation." $54,040 was disbursed under; the 2005 Nate. On December 28, 2006, the City issued its $10,004,000 f-lealth Care Revenue Note of 2006 (Boutwells Landing Care Center Project) (the "2406 Note" ) to partially finance the PrQJect and designated the 2006 Note as a "qualified t(ax- exen1 t obligation." $50,000 was disbursed under~ the 2006 Note. The Company has proposed to this Council that in order - to refinance the amount disbursed wider the 2005 Note and the 2006 Note the City issue its $10,000,000 Tax Exempt Loan Participation Note (Boutwells Landing :are Center Project) Series 2007A and its $10,400,000 Tax Exempt Loan Participation ation Nate (Boutwells Landing Care Center Project) Series 20077 (collectively, the "Notes "). The rotes will be purchased by Ripen Jaffray Lending, LL (the "Lender "). The City and the Lender will enter into a Servicing Agreement dated as of December 1, 2007 (the "Servicing Agreement "). The proceeds of the Notes will be loaned to the Company pursuant to a Loan Agreement dated as of December 1, 2007 among the City, the Company and the Lender ( the "Loan Agreement ") and disbursed pursuant to the Disbursing Agreement dated as of December 1, 2007, among the Company, the Mender and First American Title Insurance Conipwiy (the "Disbursing Agreement"). Repayment of the Dotes will be secured by collateral provided by the Company incl uding the Combination Mortgage, Security Agreement and Fixture l Financing Statement and Assignment of Leases and Rents, dated as of December 1, 2007, from the Company to the Lender (the 'f ortgage "), by which the Company grants to the Lffld.er a mortgage Iien on and security interest in the Project, as security for the payment of the Notes and assigns to the Lender its interests in all leases and rents with respect to the moi.1 aged property, a Guaranty Agreement dated as of December 1, 2007, from Presbyterian Hones and Services to 2 r o8485v r Page 81 of 84 the Lender to secure repayment of the Notes and the Company's obligations under the Loan Agreement, including guaranteei payment of the costs of constructing the Project and a Pledge Agreement dated as of December 1, 2007 from the Company to the Lender (the „ fledge Agreement "). 4. Documents Presented. Forms of the following documents related to the No have been submitted to the City: (a) The Loan Agreement; (b) The Servicing Agreement-, (c) The Mortgage (not executed by the City), (d) The Guaranty (not executed by the C ity); (e) The Disbursing Agreement (not executed by the Ci ty) ; and (f) The Pledge .Agreement (not executed by the City). 5. Findin _�, It is hereby found, determined and declared that: (a) Based on Company representations to the City, the Project constitutes a health care/skilled nursing proje authorized by an described. In the Act. (b) There is 110 l itigation pending or, to the City's actual knowledge, threatened against the City relating to the Notes, the Loan Agreement or the Servicing Agreement (collectively, the City Note Documents ") or questioning the due organizati "City of the City, or the powers or authority of the City to issue the Notes and undertake the transactions contemplated hereby. (c) The execution, delivery and performance of the C obligations under the City Note Documents do not and will not violate any order of any court or other agency of government of which the City is aware or 'in which the City is a party, or any indenture, agreement or other instrument to which the City is a party or by which it or any of its property is bound, or be in conflict Frith, result in a breach of, or constitute (with due notice or lapse of time or both) a default under any such indenture, agreement or other instrument, (d) It is desirable that the Notes be issued by the City upon the terms set forth in the Servicing Agreement under the provisions of which the City's interest in the Loan Agreement will be pledged to the Lender, as security for the p ayinent of principal of, prernium, if any, and interest on the Notes. (e) Under the provisions of the Act, and as provided in the City Nate Documents, the Notes are not to be payable from nor charged upon any funds other than amounts payable pursuant to the Loan Agfeemen.t, amounts realized under the Mortgage, the Pledge Agreement and the Guaranty, and moneys in the funds and accounts held by 21 08485v] 2 Page 82 of 84 the Lender which are pledged to the payment thereof; the City is not subject to any liability thereon; no owners of the Notes shall ever have the right to compel the exercise of the taxin g power of the City to pay the Notes or the interest thereon, nor to enforce p ay ment thereof ag ainst any propefty of the City; the Notes shall not constitute a general or moral obligation of the City or a charge, lien or encumbrance, legal or equitable, upon any p of the City (other than the interest of the City in the loan repayments to be made by the Company under the Loan Agreement); and the Notes issued shall recite that the Notes, including interest thereon, shall not constitute or give rise to a. charge against the general credit or taxing powers of the City. 6. Approval and Execution of Documents. The forms of the Notes and the City Note Documents are approved. The City Note Documents are authorized to be executed in the name and on behalf of the City by the Mayor and th.e City Administrator, at such time, if any, as they may deem appropriWce, or executed or attested by other offi cers of the City, in substantially the form on file, but with all such changes therein, not inconsistent with the .pct or other law, as ma y pp � be approved b the officers executing the sari. -.e, which approval sham be conclusively evidenced by the execution thereof; and then shall b e delivered to the Lender. Modifications to the forms of Guaranty, Mortgage, Disbursing Agreement and Pledge Agreement and other collateral security documents may be made at the discretion of the parties thereto. 7. A moval Exec ution and Delivery of N The City is authorized to issue the Notes, in an aggregate � a g - re rate v principal muount of not to exceed $20,000,000, in the form and upon the ternns set forth in the Servicing Agreement, which tern. - is are for this purpose incorporated in this resolution and made a part hereof; provided, however, that the inter rates on the Notes shall be as set forth in the final form of the Servicing Agreement, to be approved, executed and delivered by the officers of the City authorized to do so by the provisions of this Resolution, which approval shall be conclusively evidenced by such exec ution and d e l iver y ,- and provided further that in no event, shall such rates exceed e *ght percent (8 per annum. The Lender h as agree(l to p urchase the Notes at par. The Mayor, City Administrator and other City officers are authorized to execute the Dotes as prescribed in the Servicing Agreement at such time, if any, as they may deem appropriate, and to deliver then: to the Lender, together with a certified copy of this Resolution and the other documents required by the Servicing Agreement, for authenticatiol1, registration and delivery to the sender. S. Certificates etc. The Mayor, City Administrator and other officers of the City are authorized at such time if any, as they may deem appropriate, to prepare and furn'sh to bond counsel and the fender, certified copies of all proceedings and records of the City relating to the Notes, and such other affidavits and certifi as may be required to show the facts appearing from the books and records in the officers custody and control or as otherwise known to them; and all such certifi copies, certificates and affidavits, including any heretofore furnished, shall constitute representations of the City as to the truth of all statements contained therein. 2 1 08485, l 3 Page 8 3 of 84 Adopted by the City Council of the City of Oar Park Heights, this 27th day of November, 2307. Attest: ity Administrator Mayo* 2108485vl 4 Page 84 of 84