Loading...
5.4. SR 01-10-2000:ity of MEMORANDUM item #5.4. TO: FROM: DATE: SUBJECT: Mayor & City Council Lori Johnson, Finance Director January 10, 2000 Resolution Giving Preliminary Approval To and Calling a Public Hearing on a Proposed Housing Program and Housing Facilities Projects and the Proposed Issuance of Revenue Bonds Therefor by the City of Elk River, Minnesota, Pursuant to a Joint Powers Agreement to be Entered into in Connection Therewith Representatives of Guardian Angels have again requested that the city participate in the issuance of revenue bonds for the Evans Park project, which consists of construction of approximately 20 units of rental senior housing located adjacent to the assisted living facility at Joplin Street and Highway 10. The issue will be similar in all respects to the 1998 revenue issue whereby it is undertaken through a joint powers agreement, more than one city or project is involved, and Guardian Angels compensates the city for any increased interest costs due to this issue causing the city to exceed the bank qualified limit. These bonds are not an obligation of the city and are not considered part of the city's outstanding debt. Carol Mills will be present on Monday to present additional information on this project. Guardian Angels Attorney Dick Helde may also be present to answer other questions you may have. City staff has no concerns regarding this project since it does not affect the city financially and since Guardian Angels has agreed to reimburse the city for any additional interest cost on future 2000 city bond issues due to this bond issue. Action Requested The City Council is asked to consider the attached resolution to call a public hearing for January 24, 2000, to consider this issue. s: \ council\ gabonds.doc 13065 Orono Parkway · P.O. Box 490 · Elk River, MN 55330 * TDD & Phone: (612) 441-7420 · Fax: (612) 441-7425 RESOLUTION 00- A RESOLUTION OF THE CITY OF ELK RIVER A RESOLUTION GIVING PRELIMINARY APPROVAL TO AND CALLING A PUBLIC HEARING ON A PROPOSED HOUSING PROGRAM AND HOUSING FACILITIES PROJECTS AND THE PROPOSED ISSUANCE OF REVENUE BONDS THEREFOR BY THE CITY OF ELK RIVER, MINNESOTA, PURSUANT TO A JOINT POWERS AGREEMENT TO BE ENTERED INTO IN CONNECTION THEREWITH WHEREAS, the City Council of the City of Elk River, Minnesota (the "City") has received a request from the nonprofit corporations listed in Exhibit A (such entities collectively referred to as the "Borrowers"), for the City, or the other Participating Jurisdiction described below if so determined by the City and the other Participating Jurisdiction, to issue its revenue bonds (the "Bonds") in an aggregate principal amount not to exceed $10,000,000 pursuant to the Municipal Housing Programs Act, Minnesota Statutes, Chapter 462C, as amended (the "Housing Programs Act", or the "Revenue Bond Act"); and, WHEREAS, the Borrowers have represented to the City that a portion of the proceeds of the Bonds (the "Evans Park Portion") would be loaned to Evans Park, Inc., a Minnesota nonprofit corporation, to pay costs of the Evans Park Project described in Exhibit B (the "Evans Park Project"), and in accordance with the Housing Program developed therfor (the "Housing Program"), substantially in the form attached hereto as Exhibit E, all pursuant to the provisions of the Housing Programs Act; and, WHEREAS, the Borrowers have represented to the City that proceeds of the Bonds not constituting a part of the Evans Park Portion would be applied to finance or refinance costs of acquiring, constructing, equipping, and furnishing certain senior housing and nursing facilities of the other Borrower located in the other Participating Jurisdiction (defined below) (and referred to, together with the Evans Park Project, as the "Projects"); and, WHEREAS, the Borrowers have requested that the City enter into a Joint Powers Agreement with the jurisdiction listed in Exhibit C (such jurisdiction referred to with the City as the "Participating Jurisdictions") in connection with the proposed issuance of the Bonds; and, WHEREAS, the Borrowers have represented to the City that Minnesota Statutes, Section 471.59 (the "Joint Powers Act" and, taken collectively with the Revenue Bond Act, sometimes referred to together as the "Acts"), provides that two or more governmental units, by agreement entered into through action of their governing bodies, may jointly or cooperatively exercise any power common to the contracting parties, and may provide for the exercise of such power by one of the participating governmental units on behalf of the other participating units; and, WHEREAS, the Borrowers have represented to the City that, in connection with revenue bonds issued under the Housing Program Act, Section 462.14C, Subd. 3 provides for joint action between cities pursuant to the Joint Powers Act, and contracts for housing programs and development of financial services for housing between a city and another city or other political subdivision or state agency; and, WHEREAS, the Borrowers have represented to the City that the Participating Jurisdictions is a "city" under the Housing Programs Act with power to issue bonds under the Housing Programs Act; and, WHEREAS, the Borrowers have represented to the City that pursuant to Minnesota Statutes, Section 462C.04, and Section 147(f) of the Internal Revenue Code of 1986, as amended, it is necessary for the City to conduct a public hearing before the City issues the Bonds; and, WHEREAS, the Borrowers have agreed to reimburse the City for the cost of publication of notice of the hearing in the official newspaper of the City, together with any legal fees to be incurred by the City and any loss or expense of the City for its inability (due to the issuance of the Bonds) to designate the City's bonds in 2000 as "qualified tax-exempt" obligations, as well as any other costs incurred by the City related to the Joint Powers Agreement. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Elk River, Minnesota, that: 1. The City Council shall hold a public hearing on the Housing Program and the issuance of the Bonds on Monday, January 24, at 6:00 o'clock p.m. at the City Hall, 13065 Orono Parkway, Elk River, Minnesota. Publication of a legal notice in connection therewith, substantially in the form attached hereto as Exhibit D, is hereby ratified and confirmed. 2. The Housing Program is hereby given preliminary approval and the proposal to finance and refinance the Projects is hereby given preliminary approval, subject to holding a public hearing thereon and the Council's adoption in its ole and absolute discretion of a definitive Bond Resolution. 3. The issuance of one or more series of revenue bonds (the "Bonds"), pursuant to a Joint Powers Agreement (the "Joint Powers Agreement") between the City and the other Participating Jurisdiction, in substantially the form now on file in the offices of the City and presented to this meeting, and all pursuant to the Acts, the Bonds to be in a aggregate principal amount not to exceed approximately $10,000,000, and to be issued to finance and refinance the Projects, is hereby approved, subject to holding a public hearing thereon and the Council's approving in its sole and absolute discretion a definitive Bond Resolution. 4. Evans Park, Inc., the other Borrower, Dorsey & Whitney LLP, as bond counsel, officers of the City, and other City representatives and officials, together with officers of the other Joint Powers Jurisdiction, are also authorized to initiate the preparation of such loan agreements, indentures and related documents as may be necessary or appropriate to the financing and refinancing of the projects to be financed and refinanced from the proceeds of the Bonds so that, when and if this Council gives its final approval thereto, such financing and refinancing may be carried out expeditiously. 5. In no event shall the Bonds ever be payable from or charged upon any funds of the City other than amounts payable under the revenue agreement which are to be pledged to the payment thereof; no holder of the Bonds shall ever have the right to compel the exercise of the taxing power of the City to pay the Bonds or the interest thereon, or enforce the payment thereof against any property of the City other than the City's interest in the Project facilities; the Bonds shall not constitute a general or moral obligation of the City or a charge, lien or encumbrance, legal or equitable, upon any property of the City; and the Bonds do not constitute an indebtedness of the City within the meaning of any constitutional, statutory, or charter limitation. Passed and adopted by the City Council of the City of Elk River, Minnesota, this 10tt~ day of January 2000. Stephanie A. Klinzing, Mayor ATTEST: Sandra A. Peine, City Clerk EXHIBIT A (List of Borrowers) Evans Park, Inc., a Minnesota nonprofit corporation. St. Therese Home, Inc., a Minnesota nonprofit corporation. EXHIBIT B (Project Description) The Evans Park Project consists of the following: The acquisition, construction, equipping, and furnishing of approximately 20 units of rental senior housing facilities, to be located adjacent to the existing assisted-living facility of Evans Park, Inc., at Joplin Street and US Highway 10, in Elk River, Minnesota, and to be owned by Evans Park, Inc. B-1 EXHIBIT C (Participating Jurisdictions) City of Elk River, Minnesota. City of New Hope, Minnesota. C-1 EXHIBIT D NOTICE OF PUBLIC HEARING ON A PROPOSED HOUSING PROGRAM AND PROJECT AND THE ISSUANCE OF REVENUE BONDS BY CITY OF ELK RIVER, MINNESOTA NOTICE IS HEREBY GIVEN that a public hearing shall be conducted by the City Council of the City of Elk River (the "City") on a proposal by Evans Park, Inc. and St. Therese Home, Inc., each of which is a Minnesota nonprofit corporation, that the City, or the other Participating Jurisdiction named below, acting pursuant to a joint powers agreement (the "Joint Powers Agreement") between the City and the City of New Hope (together referred to as the "Participating Jurisdictions"), issue revenue bonds, pursuant to Minnesota Statutes, Chapter 462C, as amended. Under the proposal, the City, or the other Participating Jurisdiction, acting pursuant to the Joint Powers Agreement, will issue its revenue bonds (the "Bonds"), in one or more series, and a portion of the proceeds of the Bonds (the "Evans Park Portion") would be loaned to Evans Park, Inc., a Minnesota nonprofit corporation, to pay costs of financing the Evans Park Project described below. Proceeds of the Bonds not constituting a part of the Evans Park Portion would be loaned to St. Therese Home, Inc., a Minnesota nonprofit corporation ("St. Therese"), and applied to pay or refinance costs of acquiring, constructing, equipping, and furnishing senior housing and nursing facilities (the "St. Therese Portion"), owned and operated by St. Therese. The St. Therese Portion would be applied specifically to the refunding of the outstanding City of New Hope Industrial Development Revenue Bonds (St. Therese Home, Inc. Project), Series 1977, originally issued in the amount of $13,375,000 and currently outstanding in the amount of $3,105,000, and to the acquisition and construction of improvements to the existing senior housing and nursing facilities owned and operated by St. Therese and located at 8000 Bass Lake Road, New Hope, Minnesota. The proposed Evans Park Project consists of the acquisition, construction, equipping, and furnishing of approximately 20 units of rental housing facilities for seniors, to be located at Joplin Street and US Highway 10, in Elk River, Minnesota, adjacent to the existing assisted-living facility owned and operated by Evans Park, Inc. The Evans Park Project will be owned and operated by Evans Park, Inc. or a commonly controlled affiliate. D-1 The aggregate face amount of the Bonds will not exceed $10,000,000, with not more than $4,000,000 thereof constituting the Evan Park Portion. The hearing will be held in the City Hall, located at 13065 Orono Parkway, Elk River, Minnesota, on Monday, January 24, 2000, at 6:00 o'clock p.m. At such time and place the City shall give all parties who appear or submit written comments an opportunity to express their views with respect to the proposal. Dated: January 5, 2000 s/s Sandy Peine City Clerk D-2 EXHIBIT E Housing Program Relating to the Issuance of City of Elk River Revenue Bonds Under Minnesota Statutes, Chapter 462C, in Part for The Financing of Elderly Housing Development on Behalf of Evans Park, Inc. 1. Local Housing Policy. The City's housing policies are currently set forth in the City's Comprehensive Plan and in related plans and documents. This Housing Program has been developed pursuant thereto, all in accordance with and as contemplated by Minnesota Statutes, Chapter 462C, as amended (sometimes referred to herein as the "Act"). Under the Act, the City, prior to issuing revenue bonds or other obligations with respect to a multi-family housing development, as described in Section 462C.05, subd. 4, thereof, or a combination health care and elderly housing development, as described in Section 462C.05, subd. 7, is to adopt a program setting forth the information required by the Act, including but not limited to Section 462C.05, Subd. 6, of the Act. This Program advances the City's stated housing goals by enhancing and increasing the City's supply of affordable rental housing facilities for elderly persons at reasonable rental rates, all as authorized, contemplated, and prescribed by the Act. 2. Program. This Housing Program comprises an effort by the City to advance its housing goals by providing financing for the elderly housing development described in paragraph 4 below (sometimes referred to herein generally as the "Facilities"). The proposed acquisition and construction of the Facilities is expected to increase the City's supply of affordable rental housing facilities for elderly persons. The method of financing to be advanced for this Program shall consist of the issuance of revenue bonds (the "Bonds") by the City, on behalf of the jurisdictions listed in Exhibit I hereto (the "Participating Jurisdictions"), pursuant to the provisions of the Act and a joint powers agreement to be entered into between the Issuer and the other Participating Jurisdictions under the provisions of Minnesota Statutes, Section 471.59, as amended (the "Joint Powers Agreement"). The proceeds of the Bonds will be loaned to the entities named in Exhibit 2 hereto (the "Borrowers") pursuant to individual loan agreements with the City to provide for the repayment of each Borrower's loan. A portion of the proceeds of the Bonds (the "Evans Park Loan") shall be loaned to Evans Park, Inc., a Minnesota nonprofit corporation (referred to herein as "Evans Park"), to provide permanent financing for the Facilities, and repayment of the Evans Park Loan shall be provided for by Evans Park entering into a loan agreement with respect to the Facilities (the "Evans Park Loan Agreement"). E-1 Under the Evans Park Loan Agreement, Evans Park will agree to make or cause to be made payment sufficient to provide for payment in full of all principal of, premium, if any, and interest on the Evans Park Loan when due. Additional security may be provided for the Bonds as determined by the original purchasers of the Bonds, including loan agreements and security agreements from the other Borrowers. Of the $10,000,000 aggregate principal amount of Bonds to be issued under the Joint Powers Agreement, the amount of the Evans Park Loan is to be not in excess of $4,000,000. It is anticipated that the timetable for the financing will be carried out on an expedited basis and be concluded by not later than the end of the current calendar year. This Program is contemplated to be undertaken pursuant to Section 462C.05, subd. 4, of the Act and, therefore, it is contemplated that there shall be no specific limitation on the gross income of the occupants. Program requirements as to the Facilities are to be monitored by the City or private parties, as will be provided in the applicable agreements to be entered into in connection with the issuance of the Bonds. 3. Need for the Program. This Program is needed as a means of implementing the City's stated housing goals, as provided in the Act and the City's Comprehensive Plan. The Comprehensive Plan recognizes and is consistent with a goal of maintaining and improving the number of units of affordable housing for elderly persons and families in the City. Finally, the City believes that accomplishment of its housing goals should occur through private development, supported by government financing programs. By virtue of issuing the bonds and providing financing for the Facilities, the City will be assisting in the improvement of and the reduction of the overall costs of operating the Facilities. 4. Description of Facilities. The Facilities, which are to be the subject of the proposed financing, consist of approximately 20 units of rental housing facilities for seniors to be developed and to be located at Joplin Street and US Highway 10, in the City (the "Facilities"). The Facilities will be owned by Evans Park, Inc., a Minnesota nonprofit corporation (referred to herein as the "Borrower"). It is anticipated that the proceeds of the bonds may also be used, in part, to pay for certain costs of issuance of the Bonds, to the extent such costs are reasonable and are within an amount equal to 2.00% of the proceeds of the Bonds, and to fund necessary reserves, including a debt service reserve fund. Issuance costs in excess of available bond proceeds are to be paid for by the Participating Borrowers from funds other than proceeds of the Bonds. E-2 EXHIBIT 1 (To the Housing Program) PARTICIPATING JURISDICTIONS City of Elk River, Minnesota. City of New Hope, Minnesota. E-3 EXHIBIT 2 (To the Housing Program) PARTICIPATING BORROWERS Evans Park, Inc., a Minnesota nonprofit corporation. St. Therese Home, Inc., a Minnesota nonprofit corporation. s: \ document \resoluti\housprog.doc E-4