CR 97-168 Prelim Approval Refunding Bond - St ThereseSeptember 25, 1997
PRELIMINARY APPROVAL, REFUNDING REVENUE BOND - -ST. THERESE
Proposed Action
Staff recommends approval of the following motion: Move to adopt Resolution 97 -91, giving
preliminary approval for the issuance of revenue refunding bonds for St. Therese Southwest, Inc.,
Project.
A final approval to complete the sale of this bond will be required by the Council at a future date.
Overview
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Council Report 97 -168
In 1986 the City of Hopkins approved the sale of a $15 million tax exempt revenue bond to assist
in the development of the St.Therese elderly housing project in south Hopkins. There was
eventually a default on payments to these bond holders as a result of a bankruptcy reorganization
plan. In 1994 a new bond was sold to refund the existing bond. St. Therese Southwest is now
requesting the Council to approve action for the sale of a new bond in an amount not to exceed
$10,500,000 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.
It should be noted the proposed action is for a preliminary approval. Final approval by the
Council at a public hearing will be required prior to completing the bond sale.
Primary Issues to Consider
• What is the purpose of this type of 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 St. Therese Southwest
• Resolution 97 -91
• Letter from Holmes & Galey
Jame D. K-rri:an
Plan ng & Economic De elopment Director
Council Report 97- , September 17, 1997 - Page 2
Primary Issues to Consider
What is the purpose of this type of financing?
Local units of government are authorized to issue tax exempt revenue bonds to facilitate
projects that are felt to be beneficial to the community. To utilize this type of financing tool,
the applicant needs to meet very specific federal requirements. This bond financing is, for the
most part, available only for certain types of industrial or housing projects.
Does this project meet the requirements of the City policy regarding taxable /tax exempt
financing?
The City of Hopkins adopted a policy relating to revenue bond financing in 1991. The
approval criteria within this policy, for the most part, relates to new construction projects.
At the time the original bond was sold for the St. Therese project, the City did not have an
application process or policy regarding revenue bond financing. It is assumed that the Council
and City staff felt sufficiently comfortable that the proposed project was beneficial to the
community and, therefore, approved the bond sale. The action on this matter presently under
consideration has no impact on this project, which was constructed as a result of the 1986
action by the City Council.
• 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, St. Therese Southwest would
be required to continue to make payments on the 1994 bond issue.
3. Continue for additional information.
CITY OF HOPKINS
RESOLUTION NO. 97-91
RESOLUTION GIVING PRELIMINARY APPROVAL FOR THE
ISSUANCE OF REVENUE REFUNDING BONDS FOR
ST. THERESE SOUTHWEST, INC. PROJECT
WHEREAS, pursuant to Minnesota Statutes, Chapter 462C (the "Act "), the City of Hopkins (the
"City ") is authorized to issue its revenue bonds, in anticipation of the collection of
revenues of a multifamily housing 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 $8,500,000 Elderly Housing Revenue Refunding
Bonds (St. Therese Southwest, Inc. Project), Series 1994A, its $1,810,000 Subordinated
Elderly Housing Revenue Refunding Bonds (St. Therese Southwest, Inc. Project), Series
1994B and its $880,000 Subordinated Elderly Housing Revenue Refunding Bonds (St.
Therese Southwest, Inc. Project), Series 1994C (collectively, the "Series 1994 Bonds ")
for the purpose of refunding bonds previously issued to finance a project consisting of
224 apartment units for independent seniors, located in the City and owned and operated
by St. Therese Southwest, Inc., 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 restructure debt of the Borrower through the refunding of the Series 1994 Bonds.
NOW THEREFORE BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF
HOPKINS, MINNESOTA:
1. The City Council hereby states the preliminary intention of the City to issue
revenue refunding bonds in an amount presently estimated not to exceed
$10,500,000 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
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.
2. 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
D:\HPK100 \008\RES\PRELIM.DOC 1 PRELIMINARY RESOLUTION
Adopted by the City Council of the City of Hopkins this day of October, 1997.
ATTEST:
Terry Obermaier, City Clerk
D:\HPK100 \008\RES\PRELIM.DOC
proposed project and the refunding, whether or not the bonds are issued or all
operative documents are executed and delivered.
By
Charles D. Redepenning, Mayor
2 PRELIMINARY RESOLUTION
STATE OF MINNESOTA )
) SS.
COUNTY OF HENNEPIN )
I, the undersigned, being the duly qualified and acting City Clerk of the City of Hopkins,
Minnesota (the "City "), do hereby certify that attached hereto is a compared, true and correct
copy of a resolution giving preliminary approval to the issuance of revenue refunding bonds by
the City in connection with the St. Therese Southwest, Inc. Project, duly adopted by the City
Council of the City on October 7, 1997 at a regular meeting thereof duly called and held, as on
file and of record in my office, which resolution has not been amended, modified or rescinded
since the date thereof, and is in full force and effect as of the date hereof, and that the attached
Extract of Minutes as to the adoption of such resolution is a true and accurate account of the
proceedings taken in passage thereof.
WITNESS My hand and the official seal of the City this day of
1997.
(Seal)
City Clerk
D:\HPK100 \008\RES\PRELIM.DOC PRELIMINARY RESOLUTION
Post.it' Fax Not; 7671
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Type of Request:
Taxable Bond Issue
Tax-- Exenpt Bond 13sue
Refunding of Previous Bond Issue
APPLICATION FOR T .XABLE /TAX EXEMPT
BOND FINANCING OR BOND REFUNDI)G
(Complete as appropriate)
1. Applicant /business name: St. Therese Southwest Inc.
Contact person: Michael Pagh
Address: 1011_ Feltl Court
City: Hopkins State: MN
Telephone: (work) 933 -3333
Fax: (612) 933 -8776
Interest in property: Owner /Owner Representative
2. Applicant's legal counsel
Firm: Fredrikson & Byron
Address: 1100 International CTR 900 2nd Ave. South
city; Minneapolis
Fax: (612) 347 -7077
3. Applicant's architect:
Telephone: (work) 347 -7035
APPLICANT INFORMATION
N/A
Stag.
CITY OF HO ?KI S
1010 FIRST STREET SOTH
HOPKINS, M1 55343
OFFICE USE O;TLY :
Date Received:
Received by:
X
(hone)
John Erhart
. MN
(home
Zip: 55343
Zip: 55402
N/A
pp11carit's cotractor: (If selcted;;
Firm: Great Lakes Management Company (Management Agent)
Address: 5000 Glenwood Drive, Suite 150
City: Golden Valley
Telephone: (work) 377 -1800
Fax:
5. Property owner (s) of record: St. Therese Southwest Inc.
City : , Hopkins
(612) 377 -7387
Addresses: 1011 Feltl Court
Telephone: (work) 933 -3333 (home) N/A
Fax: (612) 933 -8776
MN Corporate non - profit, (501C3).
State: MN Zip: 55422
(home) 377 -1800
State: MN Zip: 55343
6. Applicant's business fore (corporation, partnership, sole
proprietorship, etc.) and state of incorporation or
organization:
7. 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):
Charles Rice Pres., Marilyn Moore Vice Pres., Jack Hodnett Treasurer;
James Mullin Secretary, Dick Klein Director, David Cress Director,
Al Hofstede Director, Sister Mary Heinen Director, Nick Simons Director.
8. If the avolicant is a
N/A
None
previously supplied.
Yes, this is a Yes, this is a refunding, therefore, this information was
,1 1
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i li a. i . J
.
and any iinited partn �; i ith re than 5 9 i nter�s� . (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: -
J
es, this is a refundin , therefore, this information
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PROJECT INFORMATION
1. Project name: St. Therese Southwest
2. Legal description of the site: se4, attc-hpd
3. Brief description of the nature of the business, such as
principal services or products, etc.:
Independent Living Senior Rental Apartment Community
4. Amount of bond issue requested:
BUSINESS INFORMATION
1. Number of employees in Hopkins?
A. Before this project:
B. After this project:
Projected annual sales; $ 3,000,000
3. Projected annual payroll: $ 395,000
11,000,000
5. Who is lending interim financing, and in what amount:
Not applicable
Full Time
25
25
Part Time
5
5
4. Is the projec� associated with an existing Hopkins business?
A. Yes X
B. No
If this projec is associated with an existing Hopkins
business, which of the following apply:
A. Relocation N/A
B. Expansion N/A
C. Rehabilitation NJA
6. Will you occupy this project after completion?
A. Yes p,
B. No N A
7. If no, state name of future lessees and status of commitments
or lease agreements:
Status of the operation of the property will not change.
8. Estimated date of construction: N/A completion:
9. Will any public official of the city, directly or indirectly,
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 so, please explain:
No
FILING REQUIREMENTS
You must provide all of the following items with your application,
unless the Director of Planning & Economic Development waives a
requirement:
5
1. If the project requires approval by the Zoning and Planning
Commission, you must apply for these approvals prior to or with
this application. If Zoning or Planning Commission approval is
not required, you must submit a list of property owners and
their addresses, for your property and for all properties
within 350 feet. An abstrabt company must certify this list.
Abstract companies are listed in the yellow pages.
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.
4. An application fee of $5,000. 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.
PROCEDURE
1. Return this application to the Community Development
Department.
■ qt
2. The City Council will hold a public hearing and decide whether
to approve your application. City staff will notify you of the
meeting.
REQUIREMENTS FOR TAX - EXEMPT /TAXABLE 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.
3. Construction must begin within one year of preliminary
approval. The City Council may grant a time extension if just
cause is shown.
::c:7"; actcrs acing r,' : _ t .,', projects funded .n wole or In part
by tax - exempt financing:
a. Shall not 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_
Shill Dal/ amploVatA �s � �oUI 1 A 4 UhLh' � e �Jnited �
Code, Section 276A, as amended through June 23, 1986, and
under Minnesota Statutes 1965, Sections 177.41 — 177.44.
c. Shall employ Minnesota residents in at least 8C 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 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 above requirements shall apply to all subcontractors
working on the project.
5. You must 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
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.
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 including
at least five of the following features. into the project:
a. Brick
b. Building design should be a distinctive, non - generic
style.
QBEEMENT
8
c. 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 10% more parking than code requires.
g. Walkway along street frontages.
h. All parking stall widths at least ten feet.
i. All signs shall be at least 20% smaller or fewer than
allowed by code.
8. 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 administrative fee.
by signing this application, agree to the following:
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 any
of the above can result in cancellation of the resolution.
2. The above information is true and correct.
3. I 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. I understand that the City reserves the right to dRnv
pre1+:t nary approval or zne
degree of Tonst uction completed.
financap
Date
Lot 1, Block 2, Opus 2 Ninth Addition, according to the plat thereof on file or of record in Hennepin County,
Minnesota.
JEXHIENT
LEGAL DESCRIPTION
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