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V.2. Public Hearing Regarding a Skilled Nursing and Senior Housing Facility and Consenting to the Issuance of Revenue Obligation Bonds - Augustana Chapel View Homes; Bishop (CR2017-131) November 6, 2017 Council Report 2017-131 PUBLIC HEARING REGARDING A SKILLED NURSING AND SENIOR HOUSING FACILITY AND CONSENTING TO THE ISSUANCE OF REVENUE OBLIGATION BONDS BY THE CITY OF INDEPENDENCE FOR THE BENEFIT OF AUGUSTANA CHAPEL VIEW HOMES, INC. Proposed Action Approve Resolution 2017-075 Consenting to and Approving the Issuance by the City of Independence of Its Revenue Obligations and Taking Other Actions with Respect Thereto. Overview Pursuant to Minnesota Statutes, Chapter 462 C (the “Housing Act) a municipality is authorized to issue revenue bonds to refinance multifamily housing and health care facilities. In 2005 the City of Minneapolis issued Revenue Obligation Bonds to finance and refinance skilled nursing and senior housing facilities (the “Facilities”) at 605 and 615 Minnetonka Mills Road in the City of Hopkins. Augustana Chapel View Homes (the “Borrower”) is proposing that the City of Independence issue $5,500,000 revenue bonds to refinance the previously issued bonds and finance improvements to the facilities. The Hopkins City Council must hold a public hearing and grant host approval for these Bonds as required by state and federal tax law. Following the public hearing the City Council will be asked to approve a resolution which consents to and approves the issuance of the bonds by the City of Independence. The City of Independence will be the actual issuing agent for the bonds. The bonds will not be a general obligation of the City of Hopkins and will not be secured by or payable from revenue derived from any exercise of the taxing authority powers of the City of Hopkins. With this resolution the City Council consents and authorizes the City of Independence to issue bonds not to exceed the amount of $5,500,000 to: (i) refinance the Borrower’s skilled nursing and senior housing facilities located at 605 and 615 Minnetonka Mills Road through the redemption and repayment of the Health Care Facilities Refunding Revenue Bonds, Series 2005A, issued by the City of Minneapolis on February 24, 2005 and the Health Care Facilities Revenue Bonds , Series 2005C, issued by the City of Minneapolis on May 31, 2005, (ii) finance improvements to the Facilities, (iii) fund required reserves, (iv) pay costs of issuance of the Bonds.. Julie Eddington from Kennedy & Graven, the City’s bond counsel and a representative from Augustana Chapel View Homes will be present. Supporting Information • Letter from Kennedy & Graven • Resolution NO. 2017-075 ____________________________________ Nick Bishop, CPA Finance Director Financial Impact: $ __________ Budgeted: Y/N Source: _________________ Related Documents (CIP, ERP, etc.): ______________ ______Notes: ____ ________________ 510378v1 JAE HP110-96 Kennedy 470 U.S. Bank Plaza 200 South Sixth Street Minneapolis MN 55402-1458 (612) 337-9300 telephone (612) 337-9310 fax http://www.kennedy-graven.com Affirmative Action, Equal Opportunity Employer & Graven C H A R T E R E D November 1, 2017 Nick Bishop, Finance Director City of Hopkins 1010 First Street South Hopkins, MN 55343 Re: Resolution providing host approval to the issuance of revenue obligations by the City of Independence to refinance facilities located in the City of Hopkins Dear Nick, Augustana Chapel View Homes, Inc., a Minnesota nonprofit corporation (the “Borrower”), owns and operates skilled nursing and senior housing facilities (the “Facilities”) located at 605 and 615 Minnetonka Mills Road in the City of Hopkins (the “City”). In 2005, the City of Minneapolis (the “City of Minneapolis”) issued revenue obligations for the benefit of the Borrower to finance and refinance the Facilities. The Borrower has now proposed that the City of Independence (the “City of Independence”) issue its revenue obligations (the “Bonds”) in an aggregate principal amount not to exceed $5,500,000 and loan the proceeds thereof to the Borrower to (i) refinance the Facilities by refinancing the revenue obligations issued by the City of Minneapolis; (ii) finance improvements to the Facilities (the “Improvements”); (iii) fund required reserves; and (iv) pay costs of issuance of the Bonds. In order for the City of Independence to issue the Bonds, the City Council of the City must first grant “host approval” to the issuance of the Bonds, as required by state and federal tax law. The City Council is being asked to consider the enclosed resolution on November 6, 2017, following the public hearing. By adopting the resolution, the City will provide host approval for the issuance of the Bonds by the City of Independence to refinance the Facilities and finance the Improvements, which will satisfy the requirements of the Internal Revenue Code of 1986, as amended. In addition, the City is being asked to execute a Cooperative Agreement (the “Cooperative Agreement”) with the City of Independence, which will satisfy the requirements of Minnesota Statutes, Sections 471.59 and 471.656, as amended. The Bonds will be issued as conduit revenue bonds of the City of Independence secured solely by the revenues derived from the operation of the Borrower’s Facilities and from other security provided by the Borrower, including proceeds of a mortgage agreement with the trustee for the Bonds. The Bonds will not constitute a general or moral obligation of the City or the City of Independence, will not be secured by or payable from any property or assets of the City or the City of Independence, and will not be secured by any taxing power of the City or the City of Independence. The Bonds will not be subject to any debt limitation imposed on the City and the issuance of the Bonds will not have any adverse impact on the credit rating of the City or the City of Independence, even in the event that the Borrower encounters financial difficulties with respect to the Facilities. & 510378v1 JAE HP110-96 I will attend the City Council meeting on November 6, 2017 and can answer any questions that may arise during the meeting. Please contact me with any questions you may have prior to the City Council meeting. KENNEDY & GRAVEN, CHARTERED Julie Eddington 510187v1 JAE HP110-96 CITY OF HOPKINS, MINNESOTA RESOLUTION NO. 2017-075 RESOLUTION CONSENTING TO AND APPROVING THE ISSUANCE BY THE CITY OF INDEPENDENCE OF ITS REVENUE OBLIGATIONS AND TAKING OTHER ACTIONS WITH RESPECT THERETO WHEREAS, the City of Hopkins, Minnesota (the “City”) is a home rule charter city and political subdivision duly organized and existing under its Charter and the laws of the State of Minnesota; and WHEREAS, pursuant to Minnesota Statutes, Sections 469.152 through 469.1655, as amended (the “Industrial Development Act”), the City is authorized to carry out the public purposes described in the Industrial Development Act by providing for the issuance of revenue bonds to provide funds to finance or refinance revenue-producing enterprises located within the City, whether or not operated for profit, engaged in providing health care services, including, without limitation, hospitals and related medical facilities or to refund, in whole or in part, bonds previously issued under the authority of the Industrial Development Act; and WHEREAS, pursuant to Minnesota Statutes, Chapter 462C, as amended (the “Housing Act”), a municipality is authorized to issue revenue bonds to finance or refinance developments consisting of multifamily housing and new or existing health care facilities (including nursing and assisted living facilities); and WHEREAS, Minnesota Statutes, Section 471.656, as amended, authorizes a municipality to issue obligations to finance or refinance the acquisition or improvement of property located outside of the corporate boundaries of such municipality if the obligations are issued under a joint powers agreement between the municipality issuing the obligations and the municipality in which the property to be acquired or improved is located; and WHEREAS, pursuant to Minnesota Statutes, Section 471.59, as amended, by the terms of a joint powers agreement entered into through action of their governing bodies, two municipalities may jointly or cooperatively exercise any power common to the contracting parties or any similar powers, including those which are the same except for the territorial limits within which they may be exercised and the joint powers agreement may provide for the exercise of such powers by one or more of the participating governmental units on behalf of the other participating units; and WHEREAS, Augustana Chapel View Homes, Inc., a Minnesota nonprofit corporation (the “Borrower”), has proposed that the City of Independence, Minnesota (the “City of Independence”) issue its revenue obligations (the “Bonds”), in one or more series, as taxable or tax-exempt obligations, in an aggregate principal amount not to exceed $5,500,000, under the provisions of the Industrial Development Act, the Housing Act, and Minnesota Statutes, Sections 471.59 and 471.656, as amended, and loan the proceeds thereof to the Borrower to (i) refinance the Borrower’s skilled nursing and senior housing facilities (the “Facilities”) located at 605 and 615 Minnetonka Mills Road in the City through the redemption and prepayment of the Health Care Facilities Refunding Revenue Bonds (Augustana Chapel View Homes, Inc. Project), Series 2005A, issued by the City of Minneapolis, Minnesota (the “City of Minneapolis”) on February 24, 2005, and the Health Care Facilities Revenue Bonds (Augustana Chapel View Homes, Inc. Project), Series 2005C, issued by the City of Minneapolis on May 31, 2005; 510187v1 JAE HP110-96 2 (ii) finance improvements to the Facilities (the “Improvements”); (iii) fund required reserves; and (iv) pay costs of issuance of the Bonds; and WHEREAS, Section 147(f) of the Internal Revenue Code of 1986, as amended (the “Code”), and regulations promulgated thereunder require that prior to the issuance of the Bonds, the City Council of the City (the “City Council”) consent to the issuance of the Bonds by the City of Independence after conducting a public hearing thereon preceded by publication of a notice of public hearing (in the form required by Section 147(f) of the Code and applicable regulations) in a newspaper of general circulation within the City at least fourteen (14) days prior to the public hearing date; and WHEREAS, a notice of public hearing (the “Public Notice”) was published at least fourteen (14) days before the regularly scheduled meeting of the City Council on the date hereof in the Sun Sailor, the official newspaper of and a newspaper of general circulation in the City, with respect to the required public hearing under Section 147(f) of the Code; and WHEREAS, on the date hereof, the City Council conducted a public hearing at which a reasonable opportunity was provided for interested individuals to express their views, both orally and in writing, on the following: (i) consent to the issuance of the Bonds by the City of Independence pursuant to the requirements of Section 147(f) of the Code and the regulations promulgated thereunder; and (ii) approval of the issuance of the Bonds by the City of Independence to refinance the Facilities and finance the Improvements; and WHEREAS, the City and the City of Independence are proposing to enter into a Cooperative Agreement (the “Cooperative Agreement”), pursuant to which the City will consent to the issuance of the Bonds by the City of Independence to refinance the Facilities and finance the Improvements, and the City of Independence will agree to issue the Bonds for such purposes; and NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF HOPKINS, MINNESOTA, AS FOLLOWS: 1. The City Council finds that it is in the best interest of the City to approve the issuance of the Bonds by the City of Independence to refinance the Facilities and finance the Improvements and hereby consents to the issuance of the Bonds by the City of Independence for the purposes set forth above in an amount not to exceed $5,500,000. 2. The Mayor and the City Manager are hereby authorized and directed to execute and deliver the Cooperative Agreement and any other documents deemed necessary to fulfill the intentions of this resolution. All of the provisions of the Cooperative Agreement, when executed and delivered as authorized herein, shall be deemed to be a part of this resolution as fully and to the same extent as if incorporated verbatim herein and shall be in full force and effect from the date of execution and delivery thereof. The Cooperative Agreement shall be substantially in the form on file with the City which is hereby approved, with such omissions and insertions as do not materially change the substance thereof, or as the Mayor and the City Manager, in their discretion, shall determine, and the execution thereof by the Mayor and the City Manager shall be conclusive evidence of such determination. 3. The Mayor and City Manager and other officers, employees, and agents of the City are hereby authorized and directed to prepare and furnish to bond counsel and the original purchaser of the Bonds certified copies of all proceedings and records of the City relating to the approval of the issuance of the Bonds, including a certification of this resolution. 510187v1 JAE HP110-96 3 4. The Borrower will, upon demand, reimburse the City for costs paid or incurred by the City in connection with this resolution. 5. This resolution shall be in full force and effect from and after its passage. Approved by the City Council of the City of Hopkins, Minnesota this 6th day of November, 2017. Molly Cummings, Mayor ATTEST: Amy Domeier, City Clerk