CR 97-150 PH Refunding Revenue Bond - Blake SchoolAugust 12, 1997
PUBLIC HEARING REFUNDING REVENUE BOND -- BLAKE SCHOOL
Proposed Action
Staff recommends approval of the following motion: Move to adopt Resolution 97 -84, giving
preliminary approval for the issuance of revenue refunding bonds for the Blake School project.
A final approval to complete the sale of this bond will be required by the Council at a future date.
Overview
In 1994 the City of Hopkins approved the sale of a $5,75 million tax exempt revenue bond to
finance a series of improvements at Blake School. The school is now requesting the Council to
approve action for the sale of a new bond in the amount of $6.23 million to refund the existing
debt of this previous bond. The purpose of undertaking this action would be to obtain a lower
interest rate in today's market.
The refunding as proposed requires a public hearing. It should be noted the proposed action is
also for a preliminary approval. Final approval of the Council will be required prior to completing
the bond sale.
Primary Issue to Consider
• What is the purpose of this financing?
• Does this project meet the requirements of the City policy regarding taxable /tax exempt
financing?
• What are the implications to the City as relate to this action?
• Has legal counsel reviewed this matter?
Supporting Documents
• Application by Blake School
• Resolution 97 -84
• Letter from Holmes & Galey
Jam s D. Ke gan
Pla ng & Econo Development Director
1 Y
0
P K
Council Report 97 -150
Council Report 97 -150, August 12, 1997 - Page 2
]Primary Issue to Consider
• What is the purpose of this financing?
Local units of government are authorized to issue tax exempt /taxable revenue bonds to
facilitate projects that are felt to be beneficial to the community. Securing financing through
such an issue usually provides for a lower interest rate than could be secured through a private
lending institution.
• Does this project meet the requirements of the City policy regarding taxable /tax exempt
financing?
The City of Hopkins adopted a policy as relates to revenue bond financing in 1991. The
approval criteria within this policy, for the most part, addressed new construction projects.
At the time the original bond was sold for the Blake School project, a public hearing was also
held. At that time it is assumed that the Council felt sufficiently comfortable that the project
met the general intent of the City's revenue bond financing policy. The staff report prepared
for that sale recommended approval based on the fact that Blake School was a large property
owner in the City, provides educational services to the community, and employs a number of
persons in the area.
What are the implications to the City as relate to this action?
These bonds and all such revenue bonds are secured by a pledge of repayment strictly from
the proposed projects. The City is not liable to make any payment should there be a default.
The City is acting only as a facilitator in this project.
The City has not been informed that the owner of the subject property is presently in default
on any bond payments to bond holders.
• Has legal counsel reviewed this matter?
The City Attorney has reviewed the documents related to this transaction; furthermore,
Stefanie Galey of Holmes & Galey represents the City as bond counsel.
Alternatives
The City Council has the following alternatives regarding this matter:
1. Approve the action as recommended by staff.
2. Deny the approval for the sale of bonds. With this action, Blake School would be
required to continue to make payments on the 1994 bond issue,
3. Continue for additional information.
CITY OF HOPKINS
Hennepin County, Minnesota
RESOLUTION NO. 97-84
RESOLUTION GIVING PRELIMINARY APPROVAL FOR THE
ISSUANCE OF REVENUE REFUNDING BONDS FOR
THE BLAKE SCHOOL PROJECT
WHEREAS, pursuant to the Minnesota Municipal Industrial Development Act, Minnesota
Statutes, Sections 469.152 to 469.165 (the "Act "), the City of Hopkins (the "City ") is
authorized to issue its revenue bonds, in anticipation of the collection of revenues of a
project, to finance, in whole or in part, the cost of acquisition, construction,
reconstruction, improvement, betterment, or extension of such project, and to refund its
bonds previously issued for such purpose; and
WHEREAS, the City has previously issued its $5,750,000 Revenue Bonds, Series 1994 (The
Blake School Project) (the "Series 1994 Bonds ") for the purpose of financing a project
consisting of remodeling approximately 45,000 square feet of space and constructing
approximately 35,000 square feet of additional space at the middle school facility located
in the City and owned and operated by The Blake School, a Minnesota nonprofit
corporation (the "Borrower "); and
WHEREAS, the City has been requested by the Borrower to issue its revenue refunding bonds in
order to reduce debt service costs of the Borrower through the refunding of the Series
1994 Bonds; and
WHEREAS, Section 147(f) of the Internal Revenue Code of 1986, as amended, requires that a
public hearing be held on the proposed bond issue after publication of notice in a
newspaper of general circulation within the City at least fourteen (14) days in advance of
the hearing as a condition to the tax exemption of interest on the bonds; and
WHEREAS, the City on this date conducted a public hearing on the proposed issuance of bonds.
NOW THEREFORE BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF
HOPKINS, MINNESOTA:
1. The City hereby ratifies the prior publication of the notice of public hearing.
2. The City Council hereby states the preliminary intention of the City to issue
revenue refunding bonds in an amount presently estimated not to exceed
$6,300,000 for the foregoing purposes, subject to compliance with the terms and
conditions of the Act and final agreement between the City, the Borrower and the
initial purchaser of the bonds as to the terms and conditions thereof.
Notwithstanding the foregoing, however, the adoption of this resolution shall not
be deemed to establish a legal obligation on the part of the City to issue or cause
D:\HPK 100 \009\RES\PRELIM. DOC
1 PRELIMINARY RESOLUTION
the issuance of the bonds, and the City may, in its sole and absolute discretion,
determine not to issue the bonds. The bonds, if issued, shall be special, limited
obligations of the City payable solely from the loan repayments to be paid by the
Borrower and such other security devices deemed advantageous. The bonds shall
not constitute nor give rise to a pecuniary liability of the City or a charge against
its general credit or taxing powers.
3. The Borrower shall pay, and has agreed to pay, directly or through the City any
and all costs, expenses and fees incurred by the City in connection with the
proposed project and the refunding, whether or not the bonds are issued or all
operative documents are executed and delivered.
Adopted by the City Council of the City of Hopkins this day of September, 1 997.
ATTEST:
James A. Genellie, City Clerk
BY:
Charles D. Redepenning, Mayor
D:\HPK100 \009\RES\PRELIM.DOC 2 PRELIMINARY RESOLUTION
Type of Request:
Taxable Bond Issue
Tax - Exempt Bond Issue
Refunding of Previous
A1'PLICATXON FOR TAXABLE/T4X EXEMPT
BOND FINANCING OR BOND RfUNDING
(Complete as appropriate)
1. Applicant /business n
Contact person:
Address: /!() AL/6
1 IktYV
city:
'telephone: (work)
Fax: 4 1,,q-qtior7
Interest in property
Applicant's legal co
Firm: eo:i
Address: L 0 0 t)
City: flipt,s
Fax: 336 - 30a/2
3. Applicant's arohitec
Address:
City:
Telephone: (work)
Fax:
Bond Issue
Telephone: (work) B3 `3
state:
sel: %j2 . . R
gyr,
state:
CITY OF HOPKINS
1010 FIRST STREET SOUTH
HOPKINS, MN 55343
OFFICE USE ONLY:
Date Received:
Received by:
State: Zip:
_ (home)
e: 1 1 - 56/466/
Cr JA74)
-; (home)
cZeF k)6 tof•
- &;vv33S
zip: . ,
r
(home)
1
Applicant's contractor: (if selected IV P
Firm:
Address:
City: State: Zip:
Telephone: (work)
Fax:
(5). Property owner (s) of record : g 3Q2110)
Addresses:
City: State: Et/ Zip: .55343
T.lsphone: (work)
Fax: 8 3
Applicant's business form (corporation, partnership, sole
proprietorship, etc,) and state of incorporation or
organization:
If the applicant is a corporation, list the officers, directors
and stockholders holding more than 5% of the stock of the
corporation. State their name, address, telephone and
relationship to the applicant. (If a corporation is not
formed, list the potential officers, directors and
stockholders)
/1
(home)
(home)
2
(1
9. List any cities to w ich you have previously applied for
taxable/tax exempt d financing within the last five years:
1 SI At>a) t/) V\aekS
3
If the applicant is a partnership, list the general partners
and any limited partners with more than 5% interest. (If th
partnership is not formed, giv as much data as possible
conc ruing the potential partners) :
J4 fr
Has the applicant eves been in bankruptcy? If yes, pleas
explain:
O
(4 Has the applicant eva4 defaulted on any bond or martgag
commitment? If yam, please explain:
1. Project name:
PROJECT INFOR'YON
2. Legal description of the site:
3. Brief description of the mature of the business, such as
principal services or products, etc.:
4. Amount of bond issue requested: $ ,, 3 O, C1 e o I iliOn
te
5. who is lending interim financing, and in what amount:
1. Number of employees in Hopkins?
A. Before this project:
B. After this project:
2. Projected annual sales: $
3. Projected annual payroll: $
BU IWESS IEPORUTION
Fg11 Time Zart Time
4. Is the project associated with an existing Hopkins business?
A. Yes
B. No
4
5. If this project is associated with an existing Hopkins
burin ss, which of the following apply:
A. Relocation
B. Expansion
C. Rehabilita
j s A C.r1 ; KA A,t vv
6. Will you occupy this pr ect after completion?
r)
A. Yes 2(
B. No
ec`c ply 1 t e , f Oe w, iL
7. It no, state name of future lessees and status of commitments
or lease agreements:
8. Estimated date of construction: Completion: A//1
9. Will any public official of the City, directly or indix ctly,
to the best of your knowledge, benefit by the issuance of the
City's tax - exempt financing for this project according to
Minnesota Statutes, Section 412.87?
If sQ, please explain:
LIIII&J&MTARIKEin
You must provide all of the following items with your application,
unless the Director of Planning & Economic Development waives a
requirement:
1. If the project requires approval by the Zoning and Planning
Commission, you must apply for these approvals prior to or with
this application. It Zoning or Planning Commission approval is
not required, you must submit a list of property owners end
their addresses, for your property and for all properties
within 350 feet. An abstract company must certify this list.
Abstract companies are listed in the yellow pages.
2. A writt n opinion, with supporting justification, from an
expert aoceptabl to th Director of Planning & Economic
Development, to document tat th development will not
adversely effect similar, existing developments. This
requirement may be waived if there are no similar developm nts
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 couns 1.
4. ,U„ atuaication fee of $5.00 . Make your check out to the City
of Hopkins. This fee is not refundable and is separate from
the Bond Counsels', City Attorneys', or closing fees.
PROCam:IRH
1. Return this application to the Community Development
Department,
2. The City Council will hold.a public hearing and decide whether
to approve your application. City staff will notify you of the
meeting.
- EXEXPTITAXABLB BOND Pn1AX[Cirm
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.
3. Construction must begin within one year of preliminary
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 financing:
a. Shall &Lot discriminate in the hiring and firing of
employees on the basis of race, color, creed, religion,
national origin, sex, marital status, age, disability or
the need for public assistance.
b. Shall pay employees as provided under the United States
Cod Section 276A, as amended through June 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 can show that thes
quotas are not possible because of a shortage of qualified
personnel in speci,.=ic 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 above requirements shall apply to all subcontractors
working on the project.
5. You must use the City's Bond Counsel.
7. The project must exceed minimum code requirements by including
at least five of the following features into the project:
8. 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, sal
storage or making of any merchandise, real estate, produce
food, housing or services which will produce income for on or
more individuals. An existing business is a commercial project
that has operated for at least one year in the city. A new
business is a commercial project which does not qualify as an
existing business.
as 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 oonsiler a n w
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 schedul d
to be vacated structure, or
(3) Is within a designated development or redevelopment .
target area, and
(4) Has a low potential for creating pollution.
z
a. Brick
b. Building design should be a distinctive, non - generic
style.
a. A noticeable increase in the size and quantity of
landscape plantings over what the City normally requires.
d. Underground irrigation of all landscaping.
e. Open space, other than required setbacks.
f. At least 104 more parking than code requires.
g. Walkway along street frontages.
h. All parking stall widths at least ton feet.
i. All signs shall be at least 204 smaller or fewer than
allowed by coda.
S. city staff shall review compliance with the appropriate
request for refunding of 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 admi,nistratiV fee.
1, by signing this application, agree to the following:
1. 1 have read and will abide by all the requirements of the
City . for taxable /tax - exempt financing. 1 will also commit
all contractors, subcontractors and any other major
contributors to the project to all segments applicable to
them. 1 am aware that failure to comply by myself or any
of the above can result in cancellation of the resolution
2. The above information is true and correct.
3. . 1 agree to pay all costs involved in the legal and fiscal
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. 1 understand that the City reserves the right to deny
final approval, regardless of preliminary approval or the
degree of construction completed.
HOLMES & GALEY, LTD.
Alugust 2$, 1997
ity of Hopkins
ttn: Jim Kerrigan
1 t) 10 South First Street
opkins, MN 55343
I ^\ IpKirtu `,0091c0itIt \CTY,RISK.DOC
C)NL. FINANCIAL PLAZA. SUITE 1200, 120 SOUTH SIXTH STRFET, MINNI•./ POLIS, MINNCSOIA 55402
TELEPHONE: (612) 268.9300 • FACES ►MILE: (612) 288 -9400
City of Hopkins, Minnesota
Revenue Refunding Bonds
(The Blake School Project)
Series 1997
STEFANIE N. GALEY
OI•E[T r)IAI : (612) 305-4260
he City of Hopkins issued its $5,750,000 Revenue ]Bonds, Series 1994 . (The Blake School
oject) in October 1994 for the purpose of financing certain remodeling and additions to the
hool's middle school facility located at 110 Blake Road in the City. The Blake School has now
r quested the City of Hopkins to issue tax - exempt revenue refunding bonds in an amount
c ently estimated not to exceed $6,300,000 to refund the 1994 Bonds, in order to achieve
debt service savings.
he bonds will be issued by the City and the proceeds will be loaned to the school, which is a
nprofit 501(c)(3) corporation. The City has the authority to issue such bonds under Minnesota
.tatutes, Sections 469.152 to 469.1651, the Municipal Industrial Development Act. The bonds
ill be secured solely by payments from the school under a loan agreement with the City; no City
nds, revenues or taxes will be pledged or made available to pay the bonds. In accordance with
ity policy, regarding such bonds, the school will pay the City a service fee equal to one -half of a
rcent of the principal amount of the bonds.
order for the bonds to be tax-exempt, the City Council is required under federal law to hold a
ublic hearing before issuing the bonds. That hearing has been scheduled for Tuesday,
. eptember 2, 1997. A notice for the hearing was published in the Hopkins Sailor on Wednesday,
ugust 13`h.
n September 2 after the conclusion of the public hearing, the Council will be asked to
pprove a resolution giving preliminary approval to the issuance of the Bonds. After the final
ocumcnts have been prepared, and the final terms of the Bonds have been determined, the
ouncil will be asked to give its final approval to the sale of the bonds. This will occur at a later
'ouncil meeting; the timing will be dependent upon market interest rates reaching a level at
hick debt service savings can be optimized.
City of Hopkins
A.. ugust 28, 1997
Fa ge 2
u r firm serves as bond counsel in connection with the issuance of these bonds. if you or any
ember of the Council have any questions regarding the bonds, please do not hesitate to contact
e at 305 -4260.
NG/bjxn
nclosure
cp: Jerre Miller
11).114PK1001009 \CORK \C:TY RISK.I))C