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HomeMy WebLinkAbout2006-12-12 CC Meeting Packet Enclosureand authorize the execution of all re PLEASE SEE: Oak Park Heights Request for Council Action Meeting Date December 1 2 th , 2006 Time Required: 5 minutes Agenda Item Title: Boutwel.l's Landing --- Skilled Care Facility — Issuance of Tax Exempt Bonds. r N LO L RE I 6 Agenda Placement New Busin . 5 f Originating Department/R. # uest 4ic Johnson City Administrator Requester's Signature Action Requested Appr . e "Final Note Resolution" and Authorize the Execution of Necessary Documents, Background /Justification (Please indicate if any previous action has been taken or if other public bodies have advised): 1. Memo from Eric Johnson, City Administrator 2. Letter from Alien Black requesting $10 million allocation and fee reductions. 3. Letter from Alien Black updating the City on the status of their overall project. 4. Letter from Trudy Halla of Briggs and Morgan discussing that the City is not directly liable nor is a guarantor of the $10 million dollar financing package. 5. Final Note Resolution — To be adopted by the City Council. The Couti4ihould ado t the Final Note Resolution take action * tt f d . fee reductions uired documents. Page 48 of 79 City orOak Park Heights 14168 Oak Park Blvd. N • 13ox 2007 • Oak Park Heights, MN 55082 • Phone (651) 439 -4439. Fax (651) 439 -0574 December 6, 2006 MEMO TO: City Council Membe s FROM: Eric Johnson, City Admin RE: VSSA Financing Request 1 strator $10 milli VSSA. continues to secure funding to construes e Skilled Nursing Facility expansion (construct and equip.) at the Boutwell's Facility by the issuance of $27000,000 in revenue notes. You will recall that the City did allocate its $10 million dollar bond capacity in 2005 to aid VSSA in. securing this total funding. VSSA has again requested that the City allocate its 2006, $10 million dollar bond capacity for this project, bringing the total pledged by the City to $20,000,000. Staff does recommend that the City provide VSSA its available bond capacity for 2006 for the purposes 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 proceed with the funding placement and execution of all necessary documents by City Staff and Mayor Beaudet. Please note that these bonds would not be the debt of the City, but offer a mechanism for a lower rate, (tax- exempt) of interest for the borrower. Ms. Trudy Hall the City's Bond Counsel from Briggs & Morgan has provided verification that this borrowing is NOT backed by the full faith and credit of the City of oak Park Heights. Procedurally, VSSA has submitted a formal application and paid the required $3,000 application fee to the City to initiate the above process. However in July 2006 the City did adopt a new fee structure to act as a conduit financing agent. Per the City's new Fee Schedule, the City may charge a closing service fee up to 1% of the amount of the total proceeds and an annual service charge fee of up to .5% of the outstanding amount due by VSSA, if the City selected to charge the full amount of such fees, VSSA would be required to pay a closing fee of $ 100,000 to issue the bonds and approximately $50,000 in service fees the first year. VSSA has submitted a request that the City reduce the closing fee to .1% of the total proceeds and waive the annual service fees. Staff does not have an objection to the proposed reductions as the intention of the project will be non - profit in nature, the project is consistent with the with the City's Comprehensive Plan, the project will provide local living opportunities for area seniors and that the reduction of such fees results in the establishment of a financing package that is economically feasible for VSSA by keeping the cost of the overall financing low. Lastly, the City will have practically little if not any, annual reporting/servicing requirements or annual staff liability that would precipitate an annual service fee, Page 49 of 79 . ' Servicesi �� � � � l� �A� �� ^ �� /� ' . , ' = . 2845 klamline Avenue Nardi Mr. Eric A. JOhnson, City Administrator City of Oak Park Heights 14163 Oak Park Bou[evard North Oak Park Heights, MN55O82-2OO7 Subject: City Fee for VSSA Bonds Dear Eric: We wish to thank the City of Oak Park H ' htsfortheopportunityiommrkwithyouto provide for community needs in the greatr Oak Park Heghts ares. We continue to value and appreciate our relationship 6nd the opportunity to work together in making a difference. The purpose of this letter is to request consideration in the fees charged VSSA by the City for a $1O.00O allocation of tax exempt bonds. VSSA is asking ifthe City of Dak Park Heights would consider a .1% fee for initiating the tax exempt bonds or $10.000 and to not have annua[ service fees. V8SAheosubrnittedaform.aiapo|icationandpoidtherequ{rod$ initiate the bond process. VVe understand that n the surnmer of 2006 the City. adopted a new fee schedule with the option of charging up to 1% of the amount of total proceeds and an annual service charge fee as well. We are requesting that the City consider a closing fee of .1% of total proceeds ($1O.000) and not have anannual service fee. We are requesting this consideration because this wHI be a not-for-profit care center that includes Medicaid and Medicare and will serve very low ncome oder adults, that the project tisin|inevithourpneviouadiscuaaionsandthe comprehensive plan, that we will provide living opportunities for older adults in need and that h|a\mpo�antto keep the �nenoingpackage and`coatos economically feasible am possible because the property rate allowed by the state im set 1n advance and is one that can not change. In addition, our purpose in requesting these conduit bonds is that the timing bf receipt of piedges from contributions may not match up with th needs for construction draw down. Therefore, we expectthat much bfthe proceeds from these conduit bonds are ik&y to be in place for a short period of time. Thanks again for the opportunity to work with the Cit of Oak Park Heights to, help meet mportant needs now and in the future. Thonka If you have questions or would like additional Information, please contact me at 651-631 6133 or nnao.nrg. Thanks again. Si rely Dan Lindh, President ' G ge �Oof7Q ^'� "��u����������n�ml.c��u�m`u���non�»�� CITY OF OAK PARK HEIGHTS + DEVELOPMENT APPL CATION 14168 Oak Park Boulevard P,o, Box 2007 Oak Park Heights, MN 55082 (651) 439 -4439 Fax: (651) 439 -0574 Street Location of Property 5 Leal Description of Property 6 ,) 1 ‘1A-- ) 1 5 G A vl ; — t v..); 5 1-<-1 4. I 5)i Owner: Name v 5 5 A te< L ., Address: 2411 4 vr._ . City: ' 5 < ', -- State: ' Zip : 5 . TLL :L_ Telephone: (Home) (Business) 23* I - 4 ► l 2.. c (Fax) i 5l - 4 3t to) `.-- Applicant Name Address. Type of Request(s) zoning District Amendment of AAA, ." 4 caner /A pp iicant initials rf Base Fee: Escrow Amount: / weio.../ ,,t4, (Other) City: State: Zip:, Telephone: (Name) (usiness) (Fax) (Other) Conditional Use Permit Variance: Single Family Residential Variance: Other Residential /Commercial /Industrial Subdivision Subdivision: Minor Comprehensive Plan Amendment Description of Request(s): hAs M Home Occupation Site Plan Review PUD: Amendment PUD: Concept Plan PUD: General Plan 'Street Vacation ; City Financial Assistance 1 -�."'�' if a request for planning /zoning action on the subject site or any part thereof has been previously approved, please describe it below: Page 51 of 79 Development Application, Page 2 Owner Signature r �r Applicant Signature General Conditions Application Review The undersigned � undersi ned acknowled es that before this request can be considered and /or approved, all required uired information and fees, including any deposits, must be paid to the City. An incomplete application will be returned to the applicant. The application approval process commences and an application is considered complete when all required information and fees are submitted appropriately to the City. Professional Fee Responsibility It is the understanding of the undersigned that ail City incurred professional fees and expenses associated with the p rocessing of this request(s) will be promptly paid upon receipt, if payment is not received from the applicant, the property owner acknowledges and agrees to be responsible for the unpaid fee balance either by direct payment or a special assessment against the property, Applicants will be billed on a monthly basis for Planning, Engineering, Legal and Community Development fees as they are accrued, It is understood that interest will be charged on the account at the maximum rate allowed by the Fair Credit Act if it becomes thirty (3D) days past due. Failure to p a y administrative and processing fees in a timely manner may result in denial of the application. All fees must be paid at the time of application and shall be paid prior to the issuance of a building permit. The undersigned applicant further acknowledges and consents that all unpaid fees owing the City of Oak Park Heights shall be treated as unpaid utility fees and may be certified for Y .. and may be assessed collection as with delinquent utility billings a y against the subject real g property if unpaid by October 3 of each year. Property Address o Date. - 04 I Date: Page 52of79 Senior Housing Partners December 6, 2006 Mr. Eric Johnson Administrator, City of Oak Park Heights Oak Park Heights, MN Dear Mr Johnson: 2845 Hamiine Ave N St Paul, MN 55113 1 am writing this letter on behalf of Valley Senior Services Alliance (VSSA), which owns and operates Boutwells Landing in Oak Park Heights. On the 10 of November 2005, the city approved a general concept plan for the expansion of the current campus to include a new skilled care facility, memory care and historic village. Pursuant to this resolution (05µ11 -52) we are providing this letter as required to update the status of the project. 1) Skilled Care We have completed the necessary architectural, structural and mechanical drawings an now having a construction company pricing these plans to determine construction costs and time line outcomes. Simultaneously we are also in communication and negotiation with existing nursing home owners to acquire their skilled nursing licensed beds. The state of Minnesota has a moratorium on the expansion of licensed beds and requires new facilities to acquire licensed beds from existing providers and then subsequently seek approval for relocation to a new site, Approval is most successful when the beds are acquired from local providers; however also in many cases these beds are not available or economical. We continue to actively pursue discussion and negotiations with providers to meet this need. We are optimistic that we will be successful and the pressing need to meet our increasing internal demand causes us to make this a key priority in the first quarter of 2007. Based on the continued market need, economic viability of the project, and health department approvals we are hoping to bring this project to the city for final approval in the first halt of 2007. 2) Memory Care — This is an ongoing need at the campus however the skilled care component will be first priority. We do not anticipate this before 2008 3) The historic village continues in both planning and fundraising and we anticipate this will be a project that we would like present to the city with the skilled care submission or hopefully not later than the later half of 2007 based on securing the necessary financial commitments. We think it will make a great contribution to the city as a historic landmark and important [earning opportunity to area students. We would be happy to address the staff or council at your discretion to provide and further information you require. Sincerely, Allen L Black DeveloperNSSA Page 53 of 79 BRIGGS BRIGGS VIA E-MAIL Dear Eric: )973363vi December 6, 2006 2200 IDS Center 80 South 8th Street Minneapols MN 55402-215) tel 612.977.8400 fax 612.977.8650 Eric Johnson City Administrator City of Oak Park Heights 14168 Oak Park Blvd. P.O. Box 2007 Oak Park freights, MN 55082• -2007 Re: City of Oak Park freights, Minnesota — Steed Nursing Care Tax Exempt Loan Participations (Boutwells Landing Care Center Project), Series 2006 We have been asked to serve as Bond Counsel for a proposed issue of Skilled Nursing Care Tax Exempt Loan Participations, Series 2006 for the Bout -wells Landing Care Center Project (the "Tax Exempt Loan Participations ") by the City of Oak Park Heights, Minnesota (the "Issuer ") to be purchased by Piper Jafflay & Co. ( "Piper ") The proceeds of the Tax Exempt Loan Participations will be loaned by the Issuer to VSSA Boutwells Landing, LLC or a related entity (the "Company") and used to fiance the construction and equipping of an approximately 110 -bed, 127,000 square foot skilled nursing care facility to be located at 5600 Norwich Avenue as part of the Boutwells Landing facility (the "Project"). 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 Piper an expert opinion (the "Bond Opinion "), upon which each of them and the holder of the Tax Ex.empt Loan Participations may rely, as to (i) the validity and enforceability of the Tax Exempt Loan Participations and the Issuer's obligations under the financing documents, and (ii) exemption of interest on the Tax Exempt Loan Participations 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 Tax Exempt Loan Participations, 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. The Bond Counsel opinion 'Mil be executed and delivered by us in written form on the date the Tax Exempt Loan Participations are 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 Piper 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 Briggs and Morgan, Professional Asso clalion Minneapolis 1 St. Paul I www.Mriggs.corn Member - Lex Mundi, a Global Association of independent Law Firms Page 54 of 79 BRIGGS AND MORGAN Eric Johnson December 6, 2006 Page 2 proceeds and various tax matters) without undertaking to verify the same by independent investigation. As Bond Counsel, we do not review the financial condition of the Company or the financial feasibility of the financing, and we will express no opinion relating to the foregoing. We wish to point out to the parties that we have represented Piper 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 Tax. Exempt Loan Participations Counsel in this proposed financing notwithstanding our representation of Piper 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 Tax Exempt Loan Participations and the time we anticipate devoting to the financing, we estimate that our fee as Bond Counsel for this transaction in 2006 will be in the range of $1 0,000, plus out of pocket disbursements. Such fee may vary: (i) if the principal amount of Tax Exempt Loan Participations actually issued differs significantly from the amount stated above, GO if the manner in which the Tax Exempt Loan Participations 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 Tax Exempt Loan Participations 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 bill to the Company for the time expended and disbursements made by us to the date of termination at our standard hourly rates. As set forth in Minnesota Statutes Sections 469J52 to .1651, and as will be reiterated in the documents relating to the Tax Exempt Loan Participations, the Issuer will not be liable for repayment of the Tax Exempt Loan Participations issued for the Project, and Piper will have no rights against any property or taxing powers of the Issuer. The obligations will not constitute an indebtedness of the Issuer. 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, Tkq cc: Mark Meyer (via e -mail) Bradley Wirt (via e-mail) 1973363v1 Sincerely, Parkt eittAtotX4WrIA.-- Professional Association Page 55 of 79 185()404v2 FINAL NOTE RESOLUTION UTION CITY Y COI` OAK PARK HEIGHTS, M IN N ESO A 10,000,000 HEALTH I CARE REVENUE NOTE OF 2006 (BOU'I'\VEI_JI..JS LANDING ClARi: CENTER PROJECT) ADOPTED: December 12, 2006 Page 56of79 AR'1 1 DEFINITIONS, ONS, LEGAL AUTHORIZATION AND FINDINGS 1 1.1 Definitions 1 1.2 Legal Authorization 113 Findings 1... 2 1.4 Authorization and Ratification of Project 3 ARTICLE 2 NO "1 3 2.1 Authorized Amount and Form of Note 3 2.2 The Note 4 2.3 Execution . 4 2.4 Delivery of Note .4 2.5 Disposition of Note Proceeds 5 2.6 Registration of Transfer 5 217 Mutilated, Lost or Destroyed Note 5 2.8 Ownership of Note 6 2.9 Limitation on Note Transfers 6 2 New . f ... .... .................. a .......... G ►� �� Issuance i +� ♦ yam/ •1 ����� i11fi• ••• .9a r /tJ 0Fti 1<if L• .61.<dl ltdsle ARTICLE 3 GENERAL COVENANTS ? ✓NANTS 6 3,1 Payment of Principal and Interest C 3.2 Performance of and Authority for Covenants 7 3,3 Enforcement and Performance of Covenants 7 3.4 Nature of Security 7 3.5 Designation of Qualif ed Tax Exempt Obligations 8 Mali= 4 MISCELLANEOUS S 8 4.1 Severability 8 4,2 Authentication of Transcript .. 8 4.3 Authorization to Execute Agreements. 8 1 85r14o4v2 'FABLE OF CONTENTS Page Page 57 of 79 NOTE RESOLUTION BE IT RESOLVED by the City Council of the City of Oak Park Heights, Minnesota, as follows: ARTICLE'', 1 DEFINITIONS, LEGAL AUTHORIZATION AND FINDINGS 1.1 Definitions, 'File terms used herein, unless the context hereof shall require otherwise shall have the following meanings, and any other terms defined in the Loan Agreement shall have the same meanings when used herein as assigned to them in the Loan Agreement unless the context or use thereof indicates another or different meaning or intent. 1850404v2 Act: Minnesota Statutes, Section 469.152 through . l 651, as amended; Bond Counsel: the firm of Briggs and Morgan, Professional Association, of' Minneapolis, N4innesota, and any opinion of Bond Counsel shall be a written opinion signed by such Counsel; Borrower: VSSA Care Center, LLC, a Minnesota limited liability company, its successors, assigns, and any surviving, resulting or transferee business entity \vhich may assume its obligations under the Loan Agreement; City: the City of Oak Park Heights, Minnesota, its successors and assigns; Disbursing Ag -ec ment: the Disbursing Agreement: to be executed among the Borrower and the Purchaser; Land: the real property and any other casements and rights described in Exhibit A attached to the Loan Agreement; Loan Agreement: the agreement to be executed by the City and the 13orrowei•, providing for the issuance of the Note and the loan of the proceeds thereof to the Borrower to finance the Project, including any amendments or supplements thereto made in accordance with its provisions; Note: the $10,000,000 Health Care Revenue Note of 2006 (Bout \Fells Landing Care Center Project), to be issued by the City pursuant to this Resolution and the Loan Agree i.ent; Note Register the records kept by the City Administrator to provide for the registration of transfer of ownership of the Note; Page 58 of 79 Pledge Agreement: the agreement to be executed by the City and the Purchaser pledging, and assigning the Loan Agreement to the Purchaser; Principal Balance: so much of the principal sum on the Note as has been disbursed and remains unpaid at any time; Project: (a) the acquisition of the Land which is a ljacent to the Company's existing facilities located at 5600 Norwich Avenue, Oak Park Heights; and (b) the construction and equipping of a 1 -bed, approximately 1 27,000 square foot, skilled nursing facility lity thereon; Project Costs: the total of all "Acquisition Costs" and "Loan and Carrying Charges," as those terms are defined in the Loan Agreement; Purchaser: Piper .Taff & Co., a Delaware corporation, Minneapolis, Minnesota, its successors and assigns; Refunding: the issuance of bonds to redeem and refund the Note and finance the Project; Resolution: this Resolution of the City adopted December 12, 2006, together with any supplement or amendment thereto; All references in this instrument to designated) "Articles," "Sections" and other subdivisions are to the designated Articles, Sections and subdivisions of this instrument as originally executed. The words "herein„" "hereof' and "hereunder" and other words of similar import refer to this Resolution as a whole not to any particular Article, Section or subdivision. 1.2 l.e'o l Authorization. The City is a political subdivision of the State of Minnesota and is authorized under the Act to initiate the multifamily housing development herein referral to, and to issue and sell the Note for the purpose, in the manner and upon the terms and conditions set forth in the Act and in this Resolution. 1.3 Findings. The City Council has heretofore determined, and sloes hereby determine, as follows: (1) the City is authorized by the Act to enter into a Loan Agreement for the public purposes expressed in the Act; ( the City has made the necessary arrangements with the Borrower for the establishment within the City of a Project as more fully described in the Loan Agreement and which will be of the character and accomplish the purposes provided by the Act, and the City has by this Resolution authorized the Project and execution of the Loan 1850404v2 2 Page 59 of 79 The City has heretofore and does hereby authorize the Borrower, in accordance with the provisions of the Act and subject to the terms and conditions set forth in the Loan Agreement, to provide for f nancing the Project by such means as shall be available to the Borrower and in the manner determined by the Borrower, and with out. advertisement for bids as may be required for the construction and acquisition of municipal facilities; and the City hereby ratifies, affirms, rms, and approves all actions heretofore taken by the Borrower consistent with and in anticipation of such authority. The Note issued pursuant: to this Resolution shall be in substantially the form set forth on Exhibit A hereto, with such appropriate variations, omissions and insertions as are permitted or required by this Resolution, and in accordance with the further provisions hereof; md the total 1 85040442 Agreement, the Pledge Agreement and the Note, which documents specify the terms and conditions of the refinancing of the Project; ( the proceeds of the Note will be used to finance the Project Costs, including the costs and estimated costs permitted by the Act; ( it is desirable, feasible and consistent with the objects and purposes of the Act to issue the Note, f or the purpose of financing the Project; ( the Note and the interest accruing thereon do not constitute an indebtedness of the City within the meaning of any constitutional or statutory limitation and do not constitute or give rise to a pecuniary liability or a charge against the general credit or taxing powers of the City and neither the full faith and credit nor the taxing powers of the City is pledged for the payment of the Note or interest thereon; and (6) the Note is a "qualified 501(o)(3) bond" within the meaning of Section 145(a) of the Internal Revenue Code of 1986 (the "Code ") and is to be issued within the exemption provided under Section 103(a) of the Code; provided that nothing herein shall prevent the City from hereafter qualifying the Note under a different exemption if and to the extent, such exemption is permitted by law and consistent with the objects and purposes of the Project; and (7) the City hereby designates the Note as a "qualified tax-exempt obligation under Section 265(b)(3) of the Code. 1.4 Authorization and Ratification of ARTICLE 2 NOTE 2,1 Authorized .Amount. and Form ofNote. 3 Page 60 of 79 principal amount of the Note that may be outstanding hereunder is expressly limited to 1 0,000,000 unless a duplicate Note is issued pursuant to Section 2,7. 850404v2 2.2 The Note. The Note shall be dated as of the date of delivery. shall be payable at the times and in the manner, shall bear interest at a rate not to exceed 8% per annum, and shall be subject to such other terns and conditions as are set forth in the Note on the date of delivery of the Note. Execution of the Note by the Mayor and Administrator shall constitute fixing of the interest rate and final maturity date for purposes of the Act. 2.3 Execution. rtion. The Note shall be executed on behalf of the City by the signatures of its Mayor and Administrator and shall be sealed with the seal of the City. In case any officer whose signature shall appear on the Note shall cease to be such officer before the delivery of the Note, such signature shall nevertheless be valid and sufficient for all purposes, the same as if it had remained in office until delivery. In the event of the absence or disability of the N4ayor or the Administrator such officers of the City as, in the opinion of the City Attorney, may aet in their behalf, shall without further aet or authorization of the City Council execute and deliver the Note. 2.4 Delivery of Note. Before delivery of the Note there shall be filed with the Purchaser (exeelt to the extent waived by the Purchaser) the following items: Note; f } an executed copy of each of the following documents: (a) the Loan Agreement; (b) the Pledge Agreement; (c) the Disbursing Agreement; (d) a Cost Certificate signed by the Borrower certifying the use of the proceeds of the Note. (2) an opinion of Counsel for the Borrower as prescribed by Bond Counsel and Purchaser; (3) the opinion o Bond Counsel as to the validity and tax exempt status of the 4 Page 61 of 79 ( such other documents and opinions as Bond Counsel may reasonably require for purposes or rendering its opinion required in subsection ( above or that the Purchaser may reasonably require for the closing. 2.5 f)i� clsition of Note Proceeds. Upon delivery of the Note, the Purchaser shall, on behalf of the City, advance at least $50,000 into the Construction Fund held by the Purchaser on behalf of the City as provided in the Disbursing Agreement. tintil the Refunding, no amounts in the Construction Fund (except for interest earnings thereon) may be disbursed. If the Refunding has not occurred by December 1, 2007, amounts in the Construction Fund shall he applied to prepay the Note on such date. Earnings i ngs on amounts in the Construction Fund may he disbursed to pay interest on the Note. The Purchaser or the Borrower shall provide the City with a full accounting of all funds disbursed for Project Costs. 2.6 Rsg *lrjt .o } f Transfer. The City will cause to be kept at the office of the Administrator a Note Register in which, subject to such reasonable regulations as it may prescribe, the City shall provide thr the registration of transfers of ownership of the Note. The Note shall be initially registered in the name of the Purchaser and shall be transferable upon the Note Register by the Purchaser in person or by its agent duly authorized in writing, upon surrender of the Note together with a written instrument of transfer satisfactory to the Administrator, duly executed by the Purchaser or its duly authorized agent. 'The - following form of assignment shalt he sufficient for said purpose. For value received hereby sells, assigns and transfers unto the within Note of the City of Oak Park Heights, Minnesota, and does hereby irrevocably constitute and appoint attorney to transfer said Note on the full hooks of said City with ul l power of substitution in the premises. The undersigned certifies that the transfer be made in accordance with the provisions of Section 2.9 of the Resolution relating to the above Note. Dated Registered Owner Upon such transfer the Administrator shall note the date of registration and the name and address of the new Purchaser in the Note Register and in the registration blank appearing on the Note. 2.7 Mutilated, Lost or Destroyed Note. In case any Note issued hereunder shall become mutilated or he destroyed or lost, the City shall, if not then prohibited by law, cause to be executed and delivered, a new Note of like 850404v2 5 Page 62 of 79 outstanding principal amount, number and tenor in exchange and substitution for and upon cancellation of such mutilated Note, or in lieu of and in substitution for such Note destroyed or lost, upon the Purchaser's paying the reasonable expenses and charges of the City in connection therewith, and in the case of a Note destroyed or lost, the filing with the City of evidence satisfactory to the City with indemnity satisfactory to it. If the mutilated, destroyed or lost Note has already matured red or been c a l l e d for redemption option i n accordance with th its terms it shall not be necessary to issue a new Note prior to payment. 2.8 ()wnershi Nate. The City may deem and treat the person in whose name the Note is last registered in the Note Register and by notation on the Note whether or not such Note shall be overdue, as the absolute owner of such Note for the purpose of receiving payment of or on account of the Principal Balance, redemption price or interest and for all other purposes whatsoever, and the City shall not be affected by any notice to the contrary. 2.9 Limitation on Note Transfers. The Note has been issued without registration under state or other securities laws, l)ursuarnt to an exemption for such issuance; and accordingly the Note may not be assigned or transferred in whole or part, nor may a participation interest in the Note be given pursuant to any participation agreement, except in accordance with an applicable exemption from such registration requirements. 2.10 Issuance of New Notes. Subject to the provisions of Section 2.9. the City shall, at the request : and expense of the Purchaser, issue new notes, in aggregate outstanding principal amount equal to that of the Note sur'r'endered, and of like tenor except as to cumber, principal amount, and the amount of the monthly installments payable thereunder, and registered in the name of the Purchaser or such transferee as may be designated by the Purchaser. ARTICLE GENERAL COVI: 3.1 Payment of Principal and Interest. The City covenants that it will promptly pay or cause to he paid the principal of and interest on the Note at the place, on the dates, solely from the source and in the manner provided herein and in the Note, The principal and interest are payable solely from and secured by revenues and proceeds derived from the Loan Agreement, the Pledge Agreement and the Disbursing Agreement, and which revenues and proceeds are hereby specifically pledged to the payment thereof in the manner and to the extent specified in the Note, the Loan Agreement, the Pledge Agreement and the Disbursing .agreement; and nothing in the Note or in this Resolution 850e1 Oil v2 6 Page 63 of 79 shall be considered as assigning, pledging or otherwise encumbering. any other funds or assets of the City, 3.2 Performance ofy and Authority for Covenants. The City covenants that it will faithfully perform at all times any and all covenants, under takings stipulations and provisions contained in this Resolution, in the Note executed, authenticated and delivered hereunder and in all proceedings of the City Council pertaining thereto; that it is duly authorized under the Constitution and laws of the State of Minnesota including particularly and without limitation the Act, to issue the Note authorized hereby, pledge the revenues and assign the Loan Agreement in the manner and to the extent set forth in this Resolution, the Note, the i..foan. Agreement, the Pledge Agreement and the Disbursing Agreement; that all action on its part for the issuance of the Note and for the execution and delivery thereof has been duly and effectively taken; and that the Note in the hands of the Purchaser is and will be a valid and enforceable special limited obligation of the City according to the terms thereof. 3.3 Enf orcement and Performance of Covenants. The City agrees to enforce all covenants and obligations of the Borrower under the 1loan Agreement and Disbursing Agreement, upon request of the Purchaser and being indemnified to the satisfaction of the City for all expenses and claims arising therefrom, , and to perform all covenants and other provisions pertaining to the City contained in the Note and the Loan Agreement and subject to Section 3 ,4. Notwithstanding anything contained in the Note, the Loan Agreement, the Pledge Agreement: or any other document referred to in Section 2.4 to the contrary, under the provisions of the Act the Note may not be payable from or be a charge upon any funds of the City other than the revenues and proceeds pledged to the payment thereof, nor shall the City he subject to any liability thereon, nor shall the Note otherwise contribute or give rise to a pecuniary liability of the City or, to the extent permitted by law, any of the City's officers, employees and agents. No holder of the Note shall ever have the right to compel any exercise of the taxing power of the City to pay the Note or the interest thereon, or to enforce orce payrment thereof against any property of the City other than the revenues pledged under the Pledge Agreement; and the Note shall not constitute a charge, lien or encumbrance, legal or equitable, upon any 'Property of the City; and the Note shall not constitute a debt of the City within the meaning of any constitutional or statutory limitation; but nothing in the Act impairs the rights of the Purchaser to enforce the covenants made for the security thereof as provided in this Resolution, the Loan Agreement, the Pledge Agreement and - tire Disbursing Agreement, and in the Act, and by authority of the Act the City has made the covenants and agreements herein for the benefit of the Purchaser; provided that in any event, the agreement of the City to perform or enforce the covenants and other provisions contained in the Note, the Loan Agreement, the Pledge Agreement and the Disbursing 1850404v2 3.4 Nature of Security. 7 Page 64 of 79 Agreement shall be subject at all tines to the availability of revenues under the Loan Agreement sufficient to pay all costs of such performance. or the enforcement thereof, and the City shall not be subject to any personal or pecuniary liability thereon. 3.5 l: csgnation of Qualified Tax Exempt Obligations. The Note is designated by the City as a "qualified tax - exempt obligation" For purposes of Section 265(b)(3) of the Code. 4.1 Severability. 4.2 Authentication of Transcript. script. ARTICLE 4 M I SCEr1Z1AN l (3U S If any provision of this Resolution shall be held or deemed to be or shall, in fact, be inoperative or unenforceable as applied in any particular case in any - jurisdiction or . jurisdictions or in all jurisdictions or in all cases because it conflicts with any provisions of any constitution or statute or rule or public policy, or for any other reason, such circumstances shall not have the effect of rendering the provision in question inoperative or unenforceable in any other case or circumstance, or of rendering any other provision or provisions herein contained invalid, inoperative, or unenforceable to any extent whatever. The invalidity of any one or more phrases, sentences, clauses or paragraphs in this Resolution contained shall not affect the remaining portions of this Resolution or any part thereof The officers of' the City are directed to furnish to Bond Counsel certified copies of this Resolution and all documents referred to herein, and affidavits or certificates as to all other matters which are reasonably necessary to evidence the validity of the Note. Alt such certified copies, certificates and affidavits, including any heretofore furnished, n shall constitute recitals of the City as k) the correctness of all statements contained therein. 4.3 Authorization to Execute Agreements, The forms of the proposed Loan Agreement and Pledge Agreement are hereby approved in substantially the form heretofore presented to the City Council, together with 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 Bond Counsel prior to the execution of the documents, and the Mayor and of the Administrator of the City are authorized to execute the Loan Agreement and the fledge Agreement in the name of and on behalf of the City and such other documents as Bond Counsel consider appropriate in . connection with the issuance of the Note. In the event of the absence or disability of the Mayor or the Administrator such officers of the City as, in the opinion of the City Attorney, may act in their behalf; shall without further act or authorization of the City Council do all things and execute all instruments and documents required to be done or executed by such absent or disabled officers. The execution of any instrument by the appropriate officer or officers of the U5oca4v2 8 Page65of79 City herein authorized shall be conclusive evidence of the approval of such documents in accordance with the terms hereof. Attest: Administrator 1850404 v2 Adopted: December 12, 2006 Mayor of the City of Oak Park 1Zcights 9 Page66of79 EXHIBIT A UNITED STATES OF AMERICA STA'IIIrJ OF MINNESOTA COUNTY OF WASHINGTON CITY OF OAK PARK FIEIGI -YFS HEALTH CARE REVENUE NOTE OF 2006 (BOUTW EL1_.S LANDING CARE CENTER 1 ~I JR PR J EC`1') No. R -1 $10,000,000 FOR VALUE RECEIVED the CITY OF OAK PARK HEIGHTS, Washington County, Minnesota (the "City ") hereby promises to pay PIPER JAITRAY & CO., in Minneapolis, Minnesota, its successors or registered assigns (the "Purchaser "), from the source and in the manner hereinafter provided, the principal sum of TEN MILLION AND N0 /100 DOLLARS ($1 0,0000,000), or so much thereof as has been advanced and remains unpaid from time to time (t he "Principal Balance "), with interest thereon at the rate of percent ( %) per annum or at such higher rate as hereinafter provided in paragraph 1(b,) hereof, in any coin or currency which at the time or times of payment is legal tender for the payment of public or private debts in the United States of' America, in accordance with the terms hereinafter set forth, I 85 0404 v2 1 (a) Interest shall accrue on the Principal Balance from and after the date hereof. Interest shall be due and payable on the earlier of (i0 date of the Refunding (as defined in the Resolution authorizing this Note), (ii) December 1, 2008, (iii) the date the Purchaser transfers this Note to another person through assignment or purchase, (iv) the date of payment in full of this Note, and (v) on December 1, 2036 (the "Final Maturity Date") at which time the entire remaining Principal Balance and accrued interest shall he Fully clue and payable. (l_) If the interest on this Note should become subject to federal income taxation pursuant to a "Determination of Taxability" as that term is defined in Section 4,017 of the Loan Agreement (the "Loan Agreement") of even date herewith between the City and VSSA Care Center, 1.JI.�C a Minnesota limited liability company (the "Borrower"), and the Purchaser delivers to the Bor a copy of the notice of the "Determination of Taxability ", the interest rate shall be immediately adjusted to be dual to ten percent (10 °4) and each monthly installment thereafter payable shall be accordingly adjusted. In addition the Purchaser shall be entitled to receive upon demand an amount equal to the aggregate difference between (i) the monthly payments theretofore made to the Purchaser on this Note between the "Date of~ Taxabi l ity ", as that term is defined in Section 4.07 of the Loan Agreement, and the date of receipt by the Borrower of Awl Page 67 of 79 1850404v2 notice of such "Determination of Taxability ", and (ii) the monthly payments which would have been nmde during such period if the adjusted rate had been in effect throughout such period. (2) In any event, the payments hereunder shall be sufficient to pay all principal and interest due, as such principal and interest becomes due, and to p ty any premium, at maturity, upon redemption, or otherwise. Interest shall be computed on the basis of a 3600 day year but shall be payable on the actual days elapsed. (3) Principal and interest and premium due hereunder shall he payable at the principal office of the Purchaser or at such other place as the Purchaser may designate in writing. (4) This Note is issued by the City to provide funds for a project, as defined in Section 469.153, N!Iinnesota Stat ut consisting of the acquisition of land and the construction thereon of a 110-bed, approximately 127,000 square foot, skilled nursing facility by the Borrower, and this Note is further issued pursuant to and in full compliance with the Constitution and laws of the State of Minnesota, particularly Section 469.152 through .1 651, Minnesota Statutes, and pursuant to a resolution of the City Council duly adopted on December 12, 2006 (the "Resolution"). ( This Note is secured by a Pledge Agreement of even date herewith by the City to the Purchaser (the "Pledge Agreement "). Amounts held by the Purchaser relating to the Note shall be disbursed pursuant to the (Disbursing Agreement of even date herewith arilong the Borrower and the Purchaser (the "Disbursing Agreement "). The Purchaser shall authorize disbursements from the Construction Fund to or at the order of the Borrower upon compliance with the terms and conditions of the Disbursing Agreement. The Lender shall authorize disbursements from the Construction Fund to or at the order of the Borrower upon compliance with the terms and conditions of the Disbursing Agreement. (6) The City, f sir itself, its successors and assigns, hereby waives demand, presentment, protest and notice of dishonor; and to the extent permitted by law, the Purchaser may extend interest and /or principal of or any service charge or premium due on this Note, or release any part or parts of the property and interest subject to any security document from the same, all without notice to or consent of any party liable hereon or thereon and without releasing any such party from such liability and whether or not as a result thereof the interest on the Note is no longer exempt from the Federal income tax. In no event, however, may the Final Maturity Date be extended beyond December 1, 2036, (7) This Note may be prepaid in wh.oie on any date on or after January 1, 2007 at the option of the Company, at a redemption price equal to the Principal Balance of' the Note plus accrued interest: thereon. 'the Note is subject: to extraordinary mandatory redemption in whole but not in part on December 1, 2008, unless extended as provided below, if the Refunding of the Note has not occurred on or before such date, without AA -2 Page 68 of 79 185 notice, at a redemption price equal to the Principal Balance to be redeemed plus accrued interest thereon, without premium. The extraordinary mandatory redemption date shall be extended one or more times to a date not later than December 1, 2009 with the consent of the Purchaser and upon delivery to the Purchaser of an opinion of Bond Counsel to the effect that such extension will not adversely affect ect the tax exempt status of interest paid on the Note. (8) In the event of prepayment of this Note, the Purchaser shall apply any such prepayment first against accrued interest on the Principal Balance and then against the principal amounts due under the Note. The monthly payments due under paragraph 1 hereof, shall continue to be due and payable in full until the entire Principal Balance and accrued interest due on this Note have been paid regardless of any partial prepayment made hereunder unless otherwise agreed to by the Purchaser. (9) As provided in the Resolution and subject to certain limit ations set forth therein, this Note is only transferable upon the books of the City at the office of the Administrator by the Purchaser in person or by its agent duly authorized in writing, at the Purchaser's expense, upon surrender hereof together with a written instrument of transfer satisfactory to the Administrator, duly executed by the Purchaser or its duly authorized agent. Upon such transfer the Administrator will note the date of registration and the name and address of the new registered I lolder ire the registration blank appearing below. The City may deem and treat the person in whose name the Note is last registered upon the books of the City with such registration noted on the Note, as the absolute owner hereof, \whether or not overdue, for the purpose of receiving payment of or on the account, of the Principal Balance, redemption price or interest and for all other purposes, and all such payments so made to the Purchaser or upon its order shall be 'valid and effective to satisfy and discharge the liability upon the Note to the extent of the sum or sums so paid, and the City shall not be affected by any notice to the contrary. (10) All of the agreements, conditions, covenants, provisions and stipulations contained in the Resolution, the Loan Agreement, the Pledge Agreement and the Disbursing Agreement are hereby made a part of this Note to the same extent and with the same force and effect as if they were fully set forth herein. (11) This Note and interest thereon and any service charge or premium due hereunder are payable solely from the revenues and proceeds derived from the Loan Agreement, the Pledge Agreement and the Disbursing Agreement and do not constitute a debt of the City \within the meaning of any constitutional or statutory limitation, are not payable from or a charge upon any funds other than the revenues and proceeds pledged to the payment thereof, and do not give rise to a pecuniary liability of the City or, to the extent permitted by law, of any of its officers, agents or employees, and no holder of this Note shall ever have the right to compel any exercise of the taxing power of the City to pay this Note ors the interest thereon, or to enforce payment thereof against any property of the City, and this Note does not constitute a charge, lien or encumbrance, legal or equitable, upon any property of the City, and the agreement of the City to perform or cause the performance of the covenants and other provisions herein referred to shall be A -3 Page69of79 IT IS HEREBY CERTIFIED D ANID RECI'l f) that all conditions, acts and things required to exist, happen and be performed precedent to or in the issuance of this Note do exist, have happened and have been performed in regular and due form as required by law. subject at all tines to the availability of revenues or other funds furnished for such purpose in accordance with the Loan Agreement., sufficient to pay a11 costs of such performance or the enforcement thcreof. (12) It is agreed that time is of the essence of this Note. If an Event of Default (as that term is defined in the Disbursing Agreement or the Loan Agreement) shall occur, then the Purchaser shall have the right and option to declare the Principal Balance and accrued interest thereon, immediately due and payable, whereupon the same, plus any Reinvestment Charge, default prepayment, premium or service charges, shall be due and payable, but solely lroin sums made available under the Loan Agreement, the Pled?.e Agreement and (Disbursing Agreement. Failure to exercise such option at any time shall not constitute a waiver of the right to exercise the same at any subsequent time. (13) The remedies of the Purchaser, as provided herein and in the Loan Agreement, the Pledge .Agreement and the Disbursing Agreement are not exclusive and shall he cumulative and concurrent and may be pursued singly, successively or together, at the sole discretion of the Purchaser, and may be exercised as often as occasion therefor shall occur; and the failure to exercise any such right or remedy shall in no event be construed as a waiver or release thereof. (14) The Purchaser shall not he deemed, by any act of omission or commission, to have waived any of its rights or remedies hereunder unless such waiver is in writing and signed by the Purchaser and, then only to the extent specifically set forth in the writing, A waiver with reference to one event shall not be construed as continuing or as a bar{ to or waiver of any right or remedy as to a subsequent event. (15) This Note has been issued without registration under state or federal or other securities laws, pursuant to an exemption for such issuance; and accord i ngly the Note may not he assigned or transferred in whole or part, nor may a participation interest in the Note be given pursuant to any participation agreement, except in accordance with an applicable exemption from such registration requirements. (16) This Note has been designated by the City as a "qualified tai. - 'exempt obligation" for purposes of Section 165(b)(3) of the Internal Revenue Code of 1 986, as amended . A -4 Page 70 of 79 IN WITNESS WHEREOF, the City has caused this Note to be duly executed in its nape by the manual signatures of the Mayor and Administrator and has caused the corporate s l to y aff xe herel �, an i�� s e� I use this ote; to e to i cc � - . 2006. Attest: ( SEAL ) Administrator CITY OF OAK PARK HEIGHTS, MINNESOTA A A -5 Mayor Page 71 of 79 PROVISIONS AS 'FO REGISTRA'F1-ON The ownership of the unpaid Principal Balance of this Note and the interest accruing thereon is registered on the books of the City of Oak Park Heights in the name of the holder last noted below. Date of Registration December , 2006 185()4()4v2 Name and address Registered owner Piper Jal ray & Co. 8000 Nicollet Mall, 13th Floor Minneapolis, MN 55402 A -6 Signature of Administrator Page 72 of 79