HomeMy WebLinkAbout2005-09-27 CC Meeting Packet EnclosureMeeting Date
Time:
See Attached:
September 27 2005
5 Minutes
Oak Park Hcights
Request for Council Action
Agenda Item Title: Variable Rate Demand --- Multi -famil Housin _ Revenue Refundin.. Bonds
Boutwell's Landin
Agenda Placement New Business
Originating Department/Requ
Requester's Signature
Action Requested consider and A e Refundirjg . Bonds
Background/Justification c (Please ind sate if any previous action has been taken or if other public
bodies have advised):
n C*
VSSA is proposing to refinance its existing debt on the Boutwell's facility utilizing the issuance of tax
exempt bonds that will be credit enhanced by Freddie Mac*. The refinancing is being done to take
advantage of better interest rates thus saving money to VSSA. To the total refinancing will be 62.5
million dollars in variable rate bonds/ 30 yr term. As before, the City is not responsible to repay these
bonds nor is our tax base pledged in any form for VSSA revenue.
Mary Ipple from Briggs & Morgan (The City's bond counsel) has been working with the VSSA group
to effectively manage the transaction for the City. These costs are top be fully paid by VSSA and as
required in the City's Development Application Process. VSSA has paid the City's $3,000 Application
Feed in full.
Staff recommends that the City Council approve the attached resolution; approving and
authorizing the refunding and refinance of the tax - exempt revenue bonds as issued by the City
for the acquisition and construction of a 410 unit senior continuum care retirement community
located at and surrounding 5600 Norwich Ave., in the City (the "Project "), pursuant to
Minnesota Statutes, Chapter462C
1. Council Resolution
2. Financing Summary,
3. Notice of Public Hearing,
4. September 8 letter from Briggs & Morgan, outlining the transaction in detail and from the
Issuer's (City) perspective.
*What is Freddie Mac?
Freddie Mac is a stockholder - owned corporation chartered by Congress to increase the supply of funds that mortgage lenders, such as
commercial banks, mortgage bankers, savings institutions and credit unions, can make available to homebuyers and multifamily investors.
Since Freddie Mac was created in 1970, we have pursued the purpose our Congressional founders set out for us: to provide a continuous
and low -cost source of credit to finance America's housing. We achieve this purpose by
Making mortgage funds available whenever and wherever Americans need them by linking the worldwide capital markets to the U.S.
mortgage markets. Providing a continuous, reliable and low -cost flow of mortgage capital to finance housing for the nation's homebuyers
and renters. Bringing the benefits of the market in which we operate -- -the secondary mortgage market —to families and communities across
the nation
Freddie Mac conducts its business primarily by buying mortgages from lenders, packaging the mortgages into securities and selling the
securities - guaranteed by Freddie Mao —to investors. Mortgage lenders use the proceeds from selling loans to Freddie Mac to fund new
mortgages, constantly replenishing the pool of funds available for lending to homebuyers and apartment owners. Just as stock and bond
markets have put investor capital to work for corporations, the secondary mortgage market puts private investor capital to work for
homebuyers and apartment owners, providing a continuous flow of affordable funds for home financing.
For the most part, the process is invisible to borrowers and renters. But because Freddie Mac exists, millions of Americans have benefited
from lower monthly mortgage payments and better access to home financing. In fact, for 34 years we have opened doors for one in six
homebuyers and more than two million renters in America.
1819164v1
RESOLUTION
RESOLUTION AUTHORIZING THE ISSUANCE AND SALE OF THE CITY
OF OAK PARK HEIGHTS, S, S OTA VARIABLE RATE DEMAND
MULTIFAMILY HOUSING REVENUE REFUNDING BONDS (BOUTWELLS
LANDING PROJECT), SERIES 2005, TO REFUND CERTAIN TAX EXEMPT
OBLIGATIONS ISSUED BY THE CITY; APPROVING THE FORM AND
AUTHORIZING THE EXECUTION OF THE BONDS AND VARIOUS
DOCUMENTS RELATING THERETO AND APPROVING THE ISSUANCE
AND SALE OF THE BONDS
WHEREAS, the City of Oak Park Heights, Minnesota (the "Issuer "), is authorized by
Chapter 462C, Minnesota Statutes, as amended (the "Act "), to issue revenue bonds for the
purpose of financing or refinancing projects including any land, building or other improvement
and real or personal property, whether or not in existence, to the end that more adequate
residential housing facilities for seniors and low- and middle- income families and persons may
be provided, to enter into financing agreements with others for the purpose of providing revenues
to pay such bonds, and further to secure the payment of such bonds; and
WHEREAS, pursuant to the terms of the Act, the Issuer issued its (a) $10,000,000 Senior
Housing Development Refunding Note (Boutwells Landing Project), Series 2000, (b) its Tax
Exempt Loan Participation Notes (Boutwells Landing Project), $10,000,000 Series 2000A,
$10,000,000 Series 20000B, and $10,000,000 Series 2000C and (c) its Tax Exempt Loan
Participation Notes (Boutwells Landing - McKean Square Project), $10,000,000 Series 2003A,
$9,985,000 Series 2003E and $4,015,000 Series 2003C; (collectively, the `Prior Bonds ") to
finance the acquisition, installation and construction of 421 residential rental apartment units and
site improvements known as Boutwells Landing, McKean Square and Town Centre, located at
and adjacent to 5 600 Norwich Parkway in Oak Park Heights, Minnesota (the "Project "); and
WHEREAS, VSSA Boutwells Landing, LLC, a Minnesota limited liability company (the
"Borrower ") has requested the Issuer to issue variable rate demand multifamily housing revenue
refunding bonds in the maximum aggregate principal amount of $62,500,000 in accordance with
the provisions of the Act and to loan the proceeds thereof to the Borrower to refinance the costs
of the Project and refund the outstanding principal amount of the Prior Bonds; and
WHEREAS, proposed forms of the following documents (the "Bond Documents ") have
been submitted to the City Council of the Issuer (the `Council ") and filed in the office of the City
Administrator of the Issuer (the "City Administrator") and are there available for public
inspection:
(a) a Financing Agreement to be dated as of November 1, 2005 (the
"Financing Agreement "), among the Issuer, the Borrower and U.S. Bank National
Association, a national banking association (the "Trustee");
(b) a Trust Indenture, to be dated as of November 1, 2005 (the "Indenture ")
between the Issuer and the Trustee;
(c) an Intercreditor Agreement to be dated as of November 1, 2005 (the
"Intercreditor Agreement"), among the Issuer, the Trustee and the Federal Home Loan
Mortgage Corporation, a shareholder-owned government sponsored enterprise organized
and existing under the laws of the United States ("Freddie Mac") and acknowledged by
the Borrower;
(d) a Bond Purchase Agreement (the "Bond Purchase Agreement") among the
Issuer, U,S. Bancorp Piper Jaffray Inc. (the "Underwriter") and the Borrower; and
(e) an Official Statement (the "Official Statement") pertaining to the Bonds as
hereinafter defined; and
WHEREAS, the Borrower has proposed that the refunding bonds be supported by a credit
enhancement facility (the "Credit Facility") provided by Freddie Mac; and
WHEREAS, the Council desires to issue its Variable Rate Demand Multifamily Housing
Revenue Refunding Bonds (Boutvvells Landing Project), Series 2005, in the maximum aggregate
principal amount of $62,500,000 (the "Bonds").
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF OAK PARK
HEIGHTS, MINNESOTA, THAT:
Section 1. Approvals and Authorizations. The forms of the Bond Documents are
hereby approved. The Mayor and the City Administrator are hereby authorized and directed to
execute the Bond Documents (except the Official Statement) and to affix the seal of the Issuer
thereto and the Mayor and the City Administrator are further authorized and directed to execute
and authenticate such other documents, instruments or certificates as are deemed necessary or
desirable by bond counsel or the City Attorney in order to issue and secure the Bonds. Such
documents are to be executed in substantially the form hereinabove approved, provided that such
documents may be completed, corrected or revised as deemed necessary by the parties thereto in
order to carry out the purposes of this Resolution. Copies of all of the documents shall be
delivered, recorded, and filed as provided therein. When executed, the right, title and interest of
the Issuer in, to and under the Financing Agreement (except as therein provided) shall have been
assigned to the Trustee pursuant to the Indenture and Freddie Mac pursuant to the Intercreditor
Agreement.
The use, distribution and circulation of the Official Statement by the Underwriter are
hereby approved, ratified, confirmed and authorized, subject to such further amendments or
additions thereto as may be required by the Bond Purchase Agreement, and the Underwriter is
hereby authorized to use, distribute and circulate the Official Statement in connection with the
marketing of the Bonds.
Section 2. Issuance of Bonds, The issuance of the Bonds is hereby authorized and
the sale thereof pursuant to the Bond Purchase Agreement is hereby approved. The form of
Bonds set forth in the Indenture is hereby approved; the Bonds shall be executed with the manual
or facsimile signatures of the Mayor and the City Administrator on the face of the Bonds in
substantially such form with appropriate insertions and variations, and the seal of the Issuer or a
facsimile thereof is hereby adopted and authorized to be affixed or imprinted thereon; and the
1819164v1
Mayor or the City Administrator are authorized and directed to deliver the Bonds to the Trustee
for authentication under the Indenture and, when they have been authenticated, to deliver them or
cause them to be delivered to the Underwriter pursuant to the Bond Purchase Agreement against
price t of the purchase rice as specified therein, plus any accrued interest due, and to deposit the
p
amount so received as provided in the Indenture.
Section 3. Terms of Bonds. The Bonds shall be in the maximum aggregate principal
amount of $62,500,000, shall be dated as of the date of issue, or as otherwise provided in the
Indenture, and shall be issued as fully registered bonds without coupons in denominations of
$100,000 and $5,000 multiples in excess thereof or as otherwise provided in the Indenture. The
Bonds may be issued in book - entry -only form. The Bonds shall mature on November 1, 2035
and shall bear monthly or semiannual interest payable on the first or fifteenth day of each month
or appropriate semiannual payment dates, as set forth in the Indenture, commencing as soon as
practicable after their date of issuance, at a rate or rates which shall be determined as provided in
the form of the Bonds and Indenture. The Bonds may be made subject to purchase at the
election of the owners thereof, to mandatory redemption prior to maturity and to redemption
prior to maturity at the option of the Borrower in such manner as provided in the indenture. The
actual interest rates of the Bonds shall be established by the Underwriter, as remarketing agent,
in the manner contemplated by the Indenture, provided that such rates shall not exceed twelve
percent (12 %) per annum. The numbers and provisions for redemption of the Bonds, the
provisions for tender of the Bonds by the registered owners thereof, the registration and
exchangeability privileges, the medium and place of payment, and the priorities in revenues
under the Indenture, shall be as set forth (a) in the form of the Bonds, which form is hereby
approved and incorporated herein by reference as if set forth in full, and (b) in the form of the
Indenture hereinbefore approved and so incorporated.
Section 4. Determinations. In accordance with the Act, it is hereby found,
determined and declared that:
(a) the refinancing of the costs of the Project will promote the public health,
welfare, safety, convenience and prosperity by providing more adequate residential
housing facilities for elderly and low and middle- income families and persons;
(b) the amount necessary in each year for the payment of maturing principal
of and interest on the Bonds shall be determined in the manner and subject to the
limitations set forth in the Indenture and the Financing Agreement, under which the
maximum amount of interest which may be payable in any year is limited to twelve
percent (12 %) on the outstanding principal amount of the Bonds, and the maximum
amount of principal which may become payable in any year by reason of maturity,
redemption in advance of maturity, or otherwise is the original principal amount of the
Bonds, provided that smaller amounts of principal may be payable in particular years by
reason of redemptions in advance of maturity;
(c) except as may be required by Freddie Mac in connection with the Credit
Facility, no reserve funds are required in connection with the retirement of the Bonds or
the maintenance of the Project; and
1819164v1 3
(d) the Financing Agreement provides and shall provide that the Borrower
shall maintain or cause to be maintained the Project and carry or cause to be carried all
proper insurance with respect thereto.
Section 5. Authentication of Bonds. The Trustee is hereby requested to authenticate
the Bonds and to deliver them to, or upon the order of, the Mayor or the City Administrator.
Section 6. Investment of Funds. The Trustee shall be, by virtue of this Resolution
and without further authorization from the Issuer, authorized, directed and requested to invest
and reinvest all moneys available therefor held by it pursuant to the Indenture which by the terms
of the Indenture may be invested, or to deposit and redeposit such moneys in such accounts as
may be permitted by the Indenture, at the direction of the Borrower and subject to the terms and
limitations contained in the Indenture.
Section 7. Incidental Action. The proper officers of the Issuer are hereby authorized
and directed to prepare and furnish to bond counsel certified copies of all proceedings and
records of the Issuer relating to the Bonds and to execute and deliver such other documents, and
to take such other action as may be necessary or appropriate in order to effectuate the delivery of
the Bond Documents, the performance of the Issuer's obligations thereunder, and the issuance
and sale of the Bonds.
The approval hereby given of the various documents referred to above includes the
approval of such additional details and revisions therein as may be necessary or convenient to
carry out the purposes of this Resolution, and as may be approved by bond counsel or this
Resolution, and as may be approved by bond counsel or the City Attorney prior to the execution
of the documents. The execution of any instrument by the appropriate officers of the Issuer
herein authorized shall be conclusive evidence of the approval by the Issuer of such instrument
in accordance with the terms hereof.
Section 8. Nature of Obligation. Under the provisions of the Act, and as provided in
the Financing Agreement and the Indenture, the Bonds shall be special, limited obligations of the
Issuer payable solely from, and secured by a pledge of, the revenues derived from the Trust
Estate, as defined in the Indenture. The Issuer will not pledge any of its property or secure the
payment of the Bonds with its property. The Bonds and the interest thereon shall never
constitute the debt, indebtedness or financial obligation of the Issuer within the meaning of any
provision or limitation of the Constitution or statutes of the State of Minnesota and shall neither
constitute nor give rise to a peccary liability of the Issuer or a charge against its general credit
or taxing powers. The Issuer will not pay out of its general fund or otherwise contribute any part
of the cost of the Project or the refinancing thereof. Neither the members of the Council nor any
officer, employee or agent of the Issuer shall incur any personal liability by reason of the
issuance of the Bonds or the other actions contemplated by this Resolution.
Section 9. Resolution ,Irrepealable. After the Bonds are issued, this Resolution shall
constitute a contract between the Issuer and the owners of the Bonds and shall remain in force
until the Bonds, both principal and interest, shall be fully paid, canceled and discharged.
Nothing herein shall prevent the amendment, in accordance with their terms or as may be
permitted or required by law, of the documents authorized hereby.
1819164v1 4
Section 10. Ratification. All action heretofore taken by the Issuer and by the officers
thereof inconsistent herewith directed toward the refinancing of the costs to the Project incurred
to acquire, construct and install senior housing facilities, the refunding, in whole or in part, of the
Prior Bonds and the issuance and sale of the Bonds is hereby ratified, approved and confirmed.
Section 11. Severability. If any paragraph, clause or provision of this Resolution
except Section 8 hereof, such judgment shall not affect, impair or invalidate the remaining
paragraphs, clauses or provisions hereof.
ATTEST:
Adopted: September 27, 2005.
City Administrator
1819164v1 5
By:
Its: Mayor
STATE OF MINNESOTA
COUNTY OF WASHINGTON
CITY OF OAK PARK HEIGHTS
I, the undersigned, being the duly qualified and acting City Administrator of the City of
Oak Park Heights, 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 the
authorization of the issuance of the $62,500,000 Variable Rate Demand Multifamily Housing
Revenue Refunding Bonds (Boutwells Landing Project) Series 2005.
(SEAL)
1819164v1
WITNESS niy hand and seal of said City this day of , 2005.
City Administrator
Financing Summary
Boutwells Landing
Boutwells Landing is owned by Valley Senior Services Alliance ("VSSA'). VSSA is
owned b y Presbyterian Homes and Services (70 %), Lakeview Hospital 00%) and
Croixdale Residence (10 %). Boutwells Landing was financed in three separated phases
through the issuance of tax exempt obligations by the City, of Oak Park Heights. Phase 1
consisted of 94 units of assisted living that includes 29 memory care units. Phase II
consists 101 units of independent senior living apartments, 56 units of independent senior
livin g townhomes and a 30,000 square foot town center. Phase III consists of 159 units of
independent senior living townhomes and brownstone buildings. The tax-exempt debt is
owned entirely by local banks. The debt on all of the phases is prepayable. The
outstan s ing debt of the facility is approximately $63.5 million.
VSSA is proposing to refinance the existing debt on the facility utilizing the issuance of
tax exempt bonds through the City of 'Oak Park Heights that will be credit enhanced by
Freddie Mac ".A," rated). The bonds will issued ,a.s variable rate bonds with a 30 -year
term and amortization. The total bond issue will be $62 5 million with VSSA providing a
equity contribution to pay off the debt, fund reserves and pay costs of issuance.
� Vii? •4�° r
The ro osed timeline will have the bonds closing in imd. November, 20005.
P p :�
' Stillwater 'Evening Gazatte; September 8, 2004
• • .. NOTICE-OF PUBLIC HEARING .. .
THE ISSUANCE OF REVENUE BONDS TO REFINANCE
• AN ELDERLY HOUSING DEVELOPMENT .
' - . (BOUTWELLS LANDING ,PROJECT)
TO WHOM !T MAY CONCERN:
Notice is hereby given that the City Council o #,the City of • Oak. Park Heights, Minnesota .
(the "City ), will meet in the City • Council ..Chambers at City Hall,- 14168 Oak Park
Boulevard in the at 7:0O p.m. on Tuesday, September 27, 2005, to consider th e pr
posal of Valley Senior Services Alliance ("VSSA ") or a limited liability. company of which
VSSA is a member (the "Company "); that the City refund and refinance tax exempt rev -
enue bonds previously issued by the City to finance the acquisition and construction of
a 410 unit senior continuwrn care.retirernent comrnunity boated at and surrounding :5600
Norwich Avenue in the City (the •"Project") pursuant to Minnesota Statutes, Chapter
462C. - .
The Project, which ,consists of 71 buildings, lncluding'215 senior rental townhornes and
brownstone apartments, 1 O1 units of congregate senior. apartments, 65 units of assisted
• living and 29 memory care -units, is.. owned by the Company and operated, by '
Presbyterian Homes-Management Services, Inc.. •
The estimated principal amount of bonds Or other obligations to be issued to finance or
refinance the Project .pursuant; to the housing finance .program will be $62,500,0OO.
The revenue bonds will not constitute: a charge, Lien or encumbrance upon any property
of the City, 'except the :Project and the revenues .to ,be• derived from the Project. Such
revenue bonds will not be a charger against the Citys general credit or taking powers but
are payable from sums to be paid tribe pursuant,to a revenue agreement.
At the time and place fixed for the public hearing, the .City Council of the City will give all.
persons who appear at the hearing an opportunity to express their views with respect to
the housing finance program and proposal. Written comments will be considered if sub -
mitted at the above City office on or before the date.of the hearing.
'August' 31, 2005
• By ' Eric Johnson
its City Administrator
9/8
BRIGGS AND MORGAN
PROFESSIONAL ASSOCIATION
September 8, 2005
VIA U.S. MAIL
Eric Johnson
City Administrator
O Park Heights, City of
Oak Park Heights City Hall
14168 Oak Park Blvd.
P.O. Box 2007
Oak Park Heights, MN 55082-2007
Kenneth Dayton
MMA Financial
2177 Youngman Avenue
St. Paul, MN 55116
12 e:
Ladies and Gentlemen:
Bradley Wirt
Piper Jaffray & Co.
800 N;
N� Mall
�,j v o 1. L � V i V i. Mall
i,.L.l l
MSJ13N0 I
Minneapolis, MN 55402-7020
Mark Meyer
VSSA Boutwells Landing, LLC
c/o Presbyterian Homes and Services
2845 Haxnline Avenue North
Suite 200
Roseville, MN 55113
City of Oak Park Heights, Minnesota --- Variable Rate Demand Multifamily
Housing Revenue Refunding Bonds ( Boutwells Landing Project), Series
2OO5m
We have been asked to serve as Bond Counsel for a proposed issue of Variable Rate Demand
Multifamily Revenue Refunding Bonds, Series 2005 for the Boutwells Landing Project (the "Bonds ") by
the City of Oak Park Heights, Minnesota (the "Issuer ") to be underwritten by Piper Jaffray & Co. (the
"Underwriter "). The proceeds of the Bonds will be loaned by the Issuer to VSSA Boutwells Landing,
LLC (the "Company ") and used to (a) refund and redeem three prior issues of tax-exempt Notes of the
Issuer which finance the 421 -unit senior housing facilities at or adjacent to 5600 Norwich Parkway in Oak
Park Heights (the "Project ") and to (b) finance certain costs of issuance of the Bonds.
In performing our services as Bond Counsel, our client will be the Issuer. Our principal
responsibility as Bond Counsel is to provide the Issuer, the Company and the Underwriter an expert
opinion (the "Bond Opinion "), upon which each of then and the holder of the Bonds may rely, as to 0i)
the validity and enforceability of the Bonds and the Issuer's obligations under the financing documents,
and (ii) exemption of interest on the Bonds from federal and Minnesota income taxes. We will also
assume principal responsibility for drafting the financing documents and any security documents agreed
to by the parties.
We do not expect to give any opinion with respect to the Company's participation in the
financing or the status of title or the priority of any mortgage lien or security interest securing the Bonds.
As to these and other matters the parties will be relying upon the opinion to be given by counsel for the
Company or upon a policy of title insurance.
1807620v1 SAINT PAUL OFFICE u FIRST NATIONAL BANK BUILDING ® 1 WW.BRIGGS.COM
MEMBER -- LEX MUNDI. A GLOBAL ASSOCIATION OF INDEPENDENT LAW FIRMS
2200 IDS CENTER
80 SOUTH EIGHTH STREET
MINNEAPOLIS, MINNESOTA 55402
TELEPHONE (612) 977 -8400
FACSIMILE (612) 977-8650
WRITER'S DIRECT DIAL
WRITER'S E -MAIL
E I C E E
September 8, 2005
Page 2
The Bond Counsel opinion will be executed and delivered by us in written form on the date the
Bonds is purchased and will be based on facts and law existing as of that date. Upon delivery of the Bond
Opinion, our responsibilities as Bond Counsel will be concluded with respect to this financing.
In rendering the Bond Opinion, we will rely upon representations of the Issuer, the Company and
the Underwriter set forth in the financing documents, the certified proceedings, and other certifications of
public officials, officials of the Company and other .persons (including certifications as to the use of Bond
proceeds and various tax matters) without undertaking to verify the same by independent investigation.
A B n C ; ur, _� - l � -. ; ' � ' e ' financial n of the Company or the financial feasibility of
� �. �.�iivv 'rr t,, do not 1 11 ►' �,� 'v� 't,�.14 lll[�.�l�fCl� �`.�11LT1�.�C�r1
S .
the financing, and we will express no opinion relating to the foregoing.
We wish to point out to the parties that we have represented the Underwriter from time to time on
legal matters unrelated to the present financing and may do so in the future. While these representations
may be "adverse" under applicable ethics rules, this letter will confirm our understanding that the parties
are agreeable to our acting as Bonds Counsel in this proposed financing notwithstanding our
representation of the Underwriter on other matters. If our understanding is not correct, please contact us.
We understand that the Company will be responsible for payment of our fees and disbursements
as Bond Counsel. Based upon our current understanding of the terms, structure, size and schedule of the
financing represented by the Bonds and the time we anticipate devoting to the financing, we estimate that
our fee as Bond Counsel for this transaction will be in the range of $50,000, plus out of pocket
disbursements. Such fee may vary: (i) if the principal amount of Bonds actually issued differs
significantly from the amount stated above, (ii) if the manner in which the Bonds are marketed (private
placement) changes, (iii) if material changes in the structure of the financing occur, or (iv) if unusual or
unforeseen circumstances arise which require a significant increase in our time or responsibility. If Bonds
are in fact issued we will submit our statements for services and disbursements to the Company at or
promptly after the closing.
If the transaction is cancelled before closing for whatever reason, we would then submit our hill
to the Company for the time expended and disbursements made by us to the date of termination at our
standard hourly rates.
If the foregoing omits or misstates any item, please contact me. Otherwise, we will assume our
participation as Bond Counsel and the scope of our engagement as Bond Counsel are acceptable to you.
We are pleased to be working on this matter and look forward to bringing it to a successful conclusion.
TJH/rc
1807620v1
Sincerely,
aaCe-liel
Professional Association