CR 95-201 PH Refunding Revenue BondNovember 3, 1995
Overview
Primary Issues to Consider
Supporting Documents
S
0
0 P K X C�
PUBLIC HEARING
REFUNDING REVENUE BOND
AUGUSTANA CHAPEL VIEW HOMES, INC.
Council Report 95 - 201
Proposed Action
Staff recommends adoption of the following motion: Move to approve Resolution 95 -105,
providing for the issuance and sale of Housing Facilities Refunding Revenue Bonds to provide
funds for a project on behalf of Augustana Chapel View Homes, Inc.
With approval of this action, the applicant will proceed forward to process the necessary
documents and complete the sale of the bond.
In 1984 the City of Hopkins approved the sale of tax exempt housing bonds to finance
construction of the Chapel View elderly housing project. In 1990, as a result of a bond default,
the City Council approved action allowing the refund of the existing bond debt and authorizing
the sale of new tax exempt revenue bonds for this project by Augustana Chapel View Homes,
Inc. Since that time, staff has not been informed of any default.
The owner of this project is now again requesting action to refund the existing debt. The purpose
of this action is to obtain a lower interest rate. The amount of the issue would be $3,550,000.
The refunding, as proposed, requires a public hearing. Also, the proposed action would combine
the preliminary and final resolutions for issuance and sale. As a result, this is the only action
necessary by the City Council on this matter.
What is the purpose of this financing?
o Does the project meet the requirements of the City policy regarding to taxable /tax- exempt
financing?
o What are the implications to the City as relate to this action?
o Has legal counsel reviewed this matter?
o What are the staff conditions?
Application by Augustana Chapel View Homes, Inc.
o Resolution 95 -105
Jam : s D. Kerrigan
Director of Plannin and Economic Development
■
Council Report 95 -201 - Page 2
Primary Issues to Consider
o What is the purpose of this financing?
o Does the project meet the requirements of the City policy regarding to
taxable /tax- exempt financing?
o What are the implications to the City as relate to this action?
o Has legal counsel reviewed this matter?
Alternatives
Local units of government are authorized to issue tax exempt and taxable revenue bonds
to facilitate projects which it is felt will be beneficial to the community. The tax exempt
portion of the issue are able to secure a lower interest rate, and, therefore, make a project
more "financially feasible."
The City of Hopkins adopted a policy regarding revenue bond financing in 1991. The
approval criteria within this policy for the most part relates to new construction projects.
At the time that the original bond was sold for the Chapel View Project, the City did not
have an application process or policy as relates to revenue bond financing. It is assumed
that the staff and City Council, as part of the hearing process at that time, felt sufficiently
comfortable that the project, as proposed to be undertaken, served a benefit to the
community and, therefore, approved the bond sale.
These bonds and all such revenue bonds are secured by a pledge of repayment strictly
from the proposed project. The City is not liable to make any payment should there be a
default. The City is acting only as a facilitator in this process.
The City has not been informed that the owner of the subject project is in a default of
payments to bond holders.
The City Attorney has reviewed the various documents as relate to this transaction.
Furthermore, Stephanie Galey, of Holmes & Galey, has represented the City as co -bond
counsel
The City Council has the following alternatives regarding this matter:
1 Approve the action as recommended by Staff. This will allow the applicant to proceed
forward to prepare the necessary documents in conjunction with this transaction.
2. Deny the approval for the sale of the bonds.
3. Continue for additional information.
�.� ,, ..; .,.,
11)..) 1
a 1. :J.Sa t;.. 4
Type of Request:
Taxable Bond Issue
Tax- Exempt Bond Issue
Refunding of Previous Bond Issue
APPLICATION FOR TAXABLE/TAX EXEMPT
BOND FINANCING OR BOND REFUNDING
(Complete as appropriate)
1. Applicant /business name: Augustana Chapel View Homes, Inc.
Timothy H. Tucker
Contact person:
Address: 1007 East 14th St.
City:
Mpls.
Telephone: (work)
Fax: 333 - 7323
Interest in property: owner
2. Applicant's legal counsel:
Firm:
Address:
City: Mpls
APPLICANT INFORMATION
333 -1551
CM 01' HOPKINS
State:
CITY OF HOPKINS
1010 FIRST STREET SOUTH
HOPKINS, MN 55343
OFFICE USE ONLY:
Date Received:
Received by:
MN
home)
Jon Albrightson
Zip: 55404
Hagerty, Johnson, Albrightson & Beitz
701 4th Av. S. Suite 1700
State: MN
Telephone: (work) 349 -9000 (home)
Fax: 332 -3751
Zip:
3. Applicant's architect: N/A
Address:
City: State: Zip:
Telephone: (work) (home)
Fax:
55415
Q001/008
11/02/95 16:52 FAX 612 935 1834 CITY OF HOPKINS
4 . Applicant's contractor: (If selected):
Firm:
Address:
City:
State:
Telephone: (work)
(home)
Fax
5. Property owner (s of record: Au•ustana Cha.el View Homes Inc.
Addresses: 1007 East 14th St.
City :. Mpls• State:
Telephone: (work) — 333-1 5 1
Fax: 333 -7323
6. Applicant's business form (corporation, art
propr1etorship, etc.) and state of inco p n, sole
o rganization: rporation hi on or
ri:/f
7. If the applicant is a corporation, list the
more officers, directors
and stockholders holding than 5% of the stock of the
corporation. State their name, address, telephone
relationship to the applicant. arid formed, list the , o (If a corporation is not
stockholders): p tential officers, directors and
Non stock holding corporation
MN Zip; 55404
(home)
Zip:
N/A
X1002/008
.11/02/05 16:52 FAX 612 035 1834 CITY OF HOPKINS
L
8. If the applicant is a partnership, list the general partners
and any limited partners with more than 5% interest. (If the
partnership is not formed, give as much data as possible
concerning the potential partners):
9. List any cities to which you have previously applied for
taxable /tax exempt, bond financing within the last five years:
10. Has the applicant ever been in bankruptcy? If yes, please
explain:
11. Has the applicant ever defaulted on any bond or mortgage
commitment? If yes, please explain:
N/A
M inneapol is
No
0003/008
11/02/95 16:53 FAX 612 935 18
1. Project name: Chapel View Care Center & Chapel View Apartments
3. Brief description r the nature or the business, such as
principal services or products, etc.:
2. Legal description . of the site:
Hopkins, MN 55343
2. Projected annual sales: $
CITY OF HOPKINS
pRQJECT INFORMATION
Nursing Facility and Senior Apartments
Amount of bond issue requested: $ 3,500,000
5. Who is lending intc_rim financing, and in what amount: N/A
A. Before this p.co j ec:. l.:
B. , After this project:
pPSiNESS INFORMATION
1. Number of employees in Hopkins?
615 & 605 Minnetonka M i I Is Rd
Approx. $25,000,000
3 . Projected annual payroll: $ _ Approx. $12,000,000
See Official Statement
Full Time Par- Time
Is the project associated with an existing Hopkins business?
A Yes X
B. No
0004/008
11/02/95 10:53 FAX 012 935 1834 CITY OF HOPKINS
5. If this project is associated with an existing Hopkins
business, which of the following apply:
A. Relocation N/A
B. Expansion
C. Rehabilitation
6. Will you occupy this project after completion?
A. Yes
B. No
7. If no, state name of future lessees and status of
or lease agreements:
None
N/A
8. Estimated date of construction: _N /A Completion
commitments
9. Will any public official of the City, directly or indirectly,
to the best of your knowledge, benefit by the
Y the issuance of the
City s .tax- exQmpt financing . for this project accordin to
Minnesota Statutes, Section 412.87? g
If so, please explain:
FILING REQUIREMENTS
You must provide all of the following items with nt o
unless the Director of Planning & Economic Development m wa ives
requirement: p Ives a
If the project requires approval by the Zoning and Plannin
Commicci:on, you must apply for these a g
this application. If Zoning or plannin prior to or with
not re g m�azssion approval is
quired, you must submit a list of
their ddci ;•e55e5, tar your � property owners and
within 350 . feet. .A,r,. abstx-actpc company and for , all •properties
Abstract companies are listed in the yellow this list.
pages .
r•
Ej 005/008
5
11/02/95 16:53 FAX 612 035 1834 CITY OF IIOPKINS
2. A written opinion, with supporting justification, from an
expert acceptable to the Director of Planning & Economic
Development,, to document that the development will not
adversely effect similar, existing developments. This
requirement may be waived if there are no similar developments
in the area of your project.
3. A public hearing notice and resolution of preliminary approval.
You must have these items prepared by the City's bond counsel.
1. Return this application to the Community Development
Department.
An application fec of $5,000. Make your check out to the C
of Hopkins. This fee is not refundable and is separate f
the Bond Couns'el.s ' , City Attorneys', or closing fees.
PROCEDURE
The City Council will hold a public hearing and decide whether
to apprc,vA your application. City staff will notify you of the
meeting.
REOUIREMENTS FOR _TAX - EXEMPT /TA_XABLE BOND FINANCING
Your application must meet the following requirements for approval
of taxable /tax- exempt bond financing:
1. The project shall not require a significant amount of public
money. for City improvements if the City Council determines that
the site is premature for development..
2. The notes or bonds shall be for an issue not less than
$250,000.
rnnstruction must begin within one year of proliminaxy
approval. The City Council may grant a time extension if just
cause is shown.
4. Contractors doing work on projects funded in whole or in part
by tax- exempt.finaneing:
a. Shall not discriminate in the hiring and firing of
employee ' on thu basis of race, color, creed, religion,
national origin, sex, marital status, age, disability or
the need,:for public assistance.
•
i 7.1008/008
6
J.1/02/95 16:54 FAX 612 935 1834 CITY OF HOPKINS Q007/008
b. Shall pay employees as provided under the United States
Code, Section 276A, as amended through Jude 23, 1986, and
under Minnesota Statutes 1985, Sections 177.41 - 177.44.
c. Shall employ Minnesota residents in at least 80% of the
jobs created by the project. In addition, at least 60% of
these employees shall be residents of the seven - county
metropolitan area. Residential status shall be determined
as of the date of the project's approval by the City
Council. However, if the contractor oan show that these
quotas are not possible because of a shortage of qualified
personnel in specific skills, the contractor may request a
release from the City Council of the two residency
requirements. These requirements shall continue for the
length of the construction project.
d. Shall be active participants in a State of Minnesota
apprentice program, approved by the Department of Labor
and Industry.
e. The abu',e .cequiresnenLi *hall apply to all subcontractors
wurkiny on the project.
5. Yon mist use the City's Bond Counsel
6. The. project must involve an existing business that the City
wishes to expand or a new business which the City wishes to
attract. A business is the manufacturing, distribution, sale,
storage or making of any merchandise, real estate, produce
food, housing or services which will produce income for one or
more individuals. An existing business is a commercial project
Lhat.. has operated for at least one year in the uity,. A new
business in a c:nmmrrial project which does . not qualify as an
existing business.
a. Existing business criteria: The City will consider any
expansion, relocation or rehabilitation of an existing
business for approval.
b. New business criteria: The City will only consider a new
business for approval if it:
(1) Offers at least 400 hours Per week of new,
year- around employment, or
(2) Involves the rehabilitation of a vacant or scheduled
to be vacated structure, or
(3) Is within a designated development or redevelopment
target area, and
(4) Has a low potential for creating pollution.
7. The project must exceed minimum code requirements by includiny
at least five of the following features into the project:
7
! d
11/02/95 16:54 FAX 612 935 1V °1 CITY OF IIOPKINS
008/008
f inancap
a. Brick
b. Building design should be a distinctive, non- gerieric
style.
c. A noticeable increase in the size and quantity of
landscape plantings over what the City normally requires.
d. Underground irrigation of all landscaping.
Open space other than required setbacks.
f. At least 10% more parking than code requires.
Walkway along street frontages.
h. All parking stall widths at least ten feet.
i. All signs shall be at least 20% smaller or fewer
allowed by code, than
CI L), staff shall review compliance with the appropriate
request for rerundih of p
y previous bond issues.
9. You must pay an administrative fee to the City of one half
percent of the bond issue. The City will credit the
application fee against the administrative fee,
AGREEMENT
1. by signing this application, agreo to t.ha followingi
1. I have read and will abide by all the requirements of the
City for taxable /tax - exempt financing. I will also commit
all contractors, subcontractors and any other major
contributors to the project to all segments applicable to
them. I am aware that failure to comply by myself or an
of the above can result in cancellation of the resolutio
2 The above information is true and correct.
3. 1 agree to pay all costs involved in the legal and fi
review of this project. These costs include the Bond
Counsel and City Attorney, and all costs involved in the
issuance of the bonds to finance the project_
4. I understand that the City reserves the right to deny
final approval, regardless of preliminary approval or the
degree of construction completed.
A plicant
i1/14"-114_ (-/40,( eaul9
Date
CITY OF HOPKINS
Hennepin County, Minnesota
RESOLUTION NO. 95-105
A RESOLUTION PROVIDING FOR THE ISSUANCE AND SALE OF
HOUSING FACILITIES REFUNDING REVENUE BONDS,
TO PROVIDE FUNDS FOR A PROJECT ON BEHALF OF
AUGUSTANA CHAPEL VIEW HOMES, INC.
BE IT RESOLVED by the City Council of the City of Hopkins, Minnesota (the "City "), as
follows:
1. Authority. The City is, by the Constitution and laws of the State of Minnesota,
including Minnesota Statutes, Chapter 462C, as amended (the "Act "), authorized
to issue and sell its revenue bonds and refunding revenue bonds for the purpose of
financing and refinancing costs of authorized housing projects and to enter into
agreements necessary or convenient in the exercise of the powers granted by the
Act.
2. Authorization of Proiect: Documents Presented. Augustana Chapel View Homes,
Inc., a Minnesota nonprofit corporation (the "Corporation "), has proposed to this
Council that the City issue and sell its City of Hopkins housing Facilities
Refunding Revenue Bonds (Augustana Chapel View Homes, Inc. Chapel View
Project), Series 1995, in substantially the form set forth in the hereinafter -
mentioned Indenture (the "Bonds "), pursuant to the Act and loan the proceeds
thereof to the Corporation in order to refinance costs incurred in the acquisition,
construction and equipping of an elderly housing project located at 615
Minnetonka Mills Road in the City (referred to generally herein, together with any
related site improvements, as the "Project''), by causing to be refunded in full the
City's outstanding Housing Facilities Refunding Revenue Bonds (The Augustana
Home of Minneapolis Project), Series 1990, originally issued on July 23, 1990, in
the aggregate principal amount of $3,500,000 and currently outstanding in the
aggregate principal amount of $3,345,000 (sometimes referred to generally as the
"Series 1990 Bonds" or the "Refunded Bonds "). Forms of the following
documents relating to the Bonds have been submitted to the City and are now on
file in the office of the City Clerk:
(a) Loan Agreement (the "Loan Agreement ") dated as of December 1, 1995
between the City and the Corporation, whereby the City agrees to make a
loan to the Corporation of the gross proceeds of sale of the Bonds and the
Corporation agrees to provide for the refunding and redemption in whole
of the Refunded Bonds, as more fully provided therein, and to pay
amounts in repayment of the loan sufficient to provide for the full and
prompt payment of the principal of, premium, if any, and interest on the
Bonds when due; and
D: 11HPK10010031RCS1SGAU'I'I 'Olt ,DOC 1 AUTHORIZING} RESOLUTION
(b) Trust Indenture (the "Indenture ") dated as of December 1, 1995, between
the City and American Bank, N.A., as trustee (the "Trustee "), authorizing
the issuance of and pledging certain revenues, including those to be
derived from the Loan Agreement, as security for the Bonds, and setting
forth proposed recitals, covenants and agreements relating thereto; and
(c) Combination Mortgage, Security Agreement and Fixture Financing
Statement and Assignment of Leases and Rents (the "Mortgage "), dated as
of December 1, 1995, from the Corporation to the City, and to be assigned
by the City to the Trustee pursuant to an Assignment of Mortgage, by
which the Corporation grants, as security for the payment of the Bonds, a
mortgage lien on and security interest in the Project, as mortgaged
thereunder, and as more fully described therein; and
(d) Escrow Agreement (the "Escrow Agreement ") dated as of December 1,
1995, by and between the City, the Corporation, and American Bank,
N.A., as escrow agent, on behalf of the owners of thc Refunded Bonds,
providing for thc dcfcasancc and redemption in whole of the Refunded
Bonds, on the call date therefor, as further provided in the Escrow
Agreement and the Indenture; and
(e) Bond Purchase Agreement (the "Bond Purchase Agreement "), by and
between Miller, Johnson & Kuehn Incorporated (the "Underwriter "), the
Corporation, and the City, providing for the purchase of the Bonds from
the City by the Underwriter and setting the terms and conditions of
purchase; and
(f) an Official Statement, including all Appendices thereto (the "Official
Statement "), dated November 28, 1995, describing the offering of the
Bonds, and certain terms and provisions of the foregoing documents.
3. Findings. It is hereby found, determined and declared that:
(a) There is no litigation pending or, to the best of its knowledge, threatened
against the City relating to the Bonds, the Loan Agreement, the Mortgage,
the Assignment of Mortgage, the Escrow Agreement, thc Bond Purchase
Agreement or the Indenture or questioning the due organization of the
City, or the powers or authority of the City to issue the Bonds and
undertake thc transactions contemplated hereby.
(b)
The execution, delivery and performance of the City's obligations under
the Bonds, the Indenture, the Bond Purchase Agreement, the Mortgage, the
Assignment of Mortgage, the Escrow Agreement, and the Loan Agreement
do not and will not violate any order of any court or other agency of
government of which the City is aware or in which the City is a party, or
any indenture, agreement or other instrument to which the City is a party
D:1HPKIOO003\RES1.SGAt' HOR.Ix)C 2 AUTHORIZING RESOL(]TION
or by which it or any of its property is bound, or be in conflict with, result
in a breach of, or constitute (with due notice or lapse of time or both) a
default under any such indenture, agreement or other instrument.
(c) The Bonds will be issued by the City upon the terns set forth in the
Indenture, and the City's interests in the Loan Agreement (except for its
rights to indemnity and payment of expenses and repayment of advances)
will be pledged to the Trustee as security for the payment of principal of
premium, if any, and interest on the Bonds.
(d) The Loan Agreement provides for payments by the Corporation to the
Trustee for the account of the City of such amounts as will be sufficient to
pay the principal of, premium, if any, and interest on the Bonds when due.
(e) Under the provisions of the Act, and as provided in the Loan Agreement
and Indenture, the Bonds are not to be payable from nor charged upon any
funds other than amounts payable pursuant to the Loan Agreement and
moneys in the funds and accounts held by thc Trustee under the Indenture
which are pledged to the payment thereof, the City is not subject to any
liability thereon; no owners of the Bonds shall ever have the right to
compel the exercise of the taxing power of the City to pay any of the
Bonds or the interest thereon, nor to enforce payment thereof against any
property of the City (other than thc interest of the City in the Loan
Repayments to be made by the Corporation under thc Loan Agreement);
and each Bond issued under the Indenture shall recite that such Bond,
including interest thereon, shall not constitute or give rise to a charge
against the general credit or taxing powers of the City.
(f) A public hearing has been held on this date on the question of issuance of
the Bonds, after due publication of notice thereof, as required by the
provisions of Section 147(1) of the Internal Revenue Code of 1986, as
amended. Publication of notice of such public hearing is hereby ratified
and confirmed.
4. Approval an Execution of Documents. The forms of Loan Agreement,
Indenture, Bond Purchase Agreement, Escrow Agreement, Mortgage and
Assignment of Mortgage, referred to in paragraph 2, are approved. The Bond
Purchase Agreement, the Loan Agreement, the Indenture, the Escrow Agreement,
the Mortgage and the Assignment of Mortgage shall be executed in the name and
on behalf of the City by the Mayor, the City Manager and thc City Clerk, or
executed or attested by other officers of the City, in substantially the form on file,
but with all such changes therein, not inconsistent with the At or other law, as
may be approved by the officers executing the same, which approval shall be
conclusively evidenced by thc execution thereof and then shall be delivered to the
Trustee.
I);111YK1001003\RES1.S(IA(jIi 10R,L'X)c 3
Al P ll'1N171AIl: DCCf11 11TTf1A1
5. Approval. Execution and, Dclivery of Bonds. The City shall proceed forthwith to
issue the Bonds, in a principal amount of $3,550,000, in the form and upon the
terms set forth in the Indenture, which terms are for this purpose incorporated in
this resolution and made a part hereof. The Underwriter has agreed pursuant to
the provisions of the Bond Purchase Agreement, and subject to the conditions
therein set forth, to purchase the Bonds at the purchase price set forth in the Bond
Purchase Agreement, and said purchase price is hereby found to be favorable and
is hereby accepted. The Mayor, City Manager, City Clerk and other City officers
are authorized and directed to prepare and execute the Bonds as prescribed in the
Indenture and to deliver them to the Trustee, together with a certified copy of this
Resolution and the other documents required by Section 2.08 of the Indenture, for
authentication, registration and delivery to the Underwriter. As provided in the
Indenture, each Bond shall contain a recital that it is issued pursuant to the Act,
and such recital shall to the extent permitted by law be conclusive evidence of the
validity and regularity of the issuance thereof
6. Official Statement. The City hereby approves the form of and consents to the
circulation by the Underwriter of the Official Statement in offering the Bonds for
sale; provided, however, that the City has not participated in the preparation of the
Official Statement or independently verified the information in the Official
Statement and takes no responsibility for, and makes no representations or
warranties as to, the accuracy or completeness of such information.
7. Certificates, etc. The Mayor, City Manager, City Clerk and other officers of the
City are authorized and directed to prepare and furnish to bond counsel and the
purchaser of the Bonds, whcn issued, certified copies of all proceedings and
records of the City relating to the Bonds, and such other affidavits and certificates
as may be required to show the facts appearing from the books and records in the
officers' custody and control or as otherwise known to them; and all such certified
copies, certificates and affidavits, including and heretofore furnished, shall
constitute representations of the City as to the truth of all statements contained
therein.
8. The City Clerk and any other officer or employee of the City is
authorized and directed to deliver a certified copy of this Bond Resolution to the
Director of Property Taxation, together with such other information as the
Director of Property Taxation may require, and obtain the certificate of the
Director of Property Taxation as to entry of the Bonds on his bond register as and
to the extent required by Section 475.63, Minnesota Statutes.
9. Oualified Tax- Exempt Obligations. The Bonds are hereby designated as
"qualified tax - exempt obligations" within the meaning of Section 265(b)(3) of the
Internal Revenue Codc of 1986, as amended. The Bonds are to be issued on
behalf of an organization described in Section 501(c)(3) of the Code and are to be
issued as "qualified 501(c)(3) bonds" under Section 145 of the Code. The City,
together with all subordinate entities thereof, does not reasonably expect to issue
tax- exempt obligations, including the Bonds (other than private activity bonds not
I) :11 IPK1001003■RES15GAUTHOR.DOC 4 AUTHORIZING RESOLUTION
Adopted by the City Council of the City of Hopkins this day of December, 1995.
ATTEST:
constituting "qualified 501(cX3) bonds "), which, when added together with all
such obligations heretofore issued by the City, or such subordinate entities, in
calendar year 1995, will be in an aggregate amount exceeding $10,000,000 in
calendar year 1995.
James A. Genellie, City Clerk
O: 1lIPK1 U01U(f31RESLSGAUTHOR.LIOC 5 A(1THOR(2INC; (tI:SU1
BY:
Charles D. Redepenning, Mayor