CR 90-148 Nursing Home Facilities
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July 10, 1990
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council Report: 90-148
NURSING HOME FACILITIES REVENUE BOND
Long Term Care Foundation - Series 1990
Proposed Agtion.
staff recommends adoption of the following motion: Ade'p't Resolution
No. 90-aO_...i2Lovid.Jng for the issuance and sale of housil1fL-facilitie~
k~venue bonds ~~Euant to Minnesota statute, Chapter 462C, as amendedl
on behalf of the Long Term Care Foundation.
Approval of this action will allow the City of Minneapolis, through
the Joint Powers Agreement, to complete the sale of these bonds. No
further action will be undertaken by the City of Hopkins.
Qyerviev.
The Long Term Care Foundation, a newly formed non~profit corporation,
is requesting the city to approve the issuance of tax exempt housing
bonds. These bonds will be used to iinance the purchase of the
Hopkins Nursing Home. At the June 19 council meeting, the following
actions were approved:
o Resolution authorizing the City of Hopkins to enter a Joint
Powers Agreement with the City of Minneapolis for the issuance
of tb,ese bonds.
o Resolution giving preliminary approval to the project and its
financing.
Bacause the Joint Powers Agreement indicates that the City of
Minneapolis will sell the bonds, final approval by the City of Hopkins
is not n~cessary. However, as one of the conditions of the
preliminary approval, the council stated that they wish to also take
fillal action prior to the sale.
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What are the specifics of the bend i.ssue?
What are the implications of such an issue for the City?
What additional action is required?
Have the conditions of the pl:'eliminary resolution been
addressed?
What at'e the specifics of the payment in lieu of agreement'?
1'U'P,;M)aimL.lDt onlMi2JL..
o nesolution no. 90-80
o Payment In Li.eu Of Agreement
Plannrng
pment Director
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CR: 90-148
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Based upon the action requested, the City Council has the following
itSES to consider:
o What are the specifics of the bond issue?
The proposed bond issue would not exceed $2 r 500,000. The proceeds
from this sale would be used by the Long Term Care Foundati.on to
facilitate their purchase of the Hopkins Nursing Home from Beverly
Enterpri.ses.
Beverly Enterprises is liquidating 18 of their Long Te.rm Care
facilities in the Twin City Metropolitan Area.
The applicant is anticipating to use approximately $100 r 000 of the
proceeds to upgrade the existing facility.
o Wnat are the implications of such an issue for the city?
In the past .the city has financed a number of housing projects with
revenue bonds.
The purpose of this type of financing is to try to lower interest
rates to facilitate development. The city, by placing its name on the
bonds, provides a tax exempt status and therefore a lower interest
rate.
Repayment of the bonds is str ictly from the revenue of the proj ect.
The city 12 under no financial obligation should there be a default.
o What additional action is required?
This would be the final approval by the City of Hopkins concerning
t..'tlis it.em. with approval of this act,ion the City of Minneapolis would
be in a position to complete the salt:!. of this issue for all cities
that have executed the Joint Powers Agreement.
o Have the condit.ions of the preliminary resolution been addressed?
me ei.ght conditions identified in the p,reliminary resolution have
been addressed by the applicant.
o What are the specifics ot the paym~nt in lieu of agreement?
L~ng Term Care Foundation ha$ prepared a payment in lieu of agreement
to b$ axecuted between them and the City of Hopkins. Because the Long
Term Care Foundation is a non-profit corporation, they are not
required to pay property taxes. The payment in lieu of agreement will
finaure that the city continues to receive revenue from this project.
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The payment in lieu agreement states that the Long Term Care
Foundation shall pay to the city an annual payment in an amount equal
to the amount of the real property tax which the City would have
received from thi.s facility had it remained under the ownership of a
non tax exempt organization. This payment shall be based upon a
calculation prepared by the City and Long Term Care Foundation on an
annual basis.
~m.j;ivee:!i.
The city council has the fcllo~Ning alternatives regarding this issue:
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1. Approve the action as requested by staff. This action will
allow the city of Minneapolis to complete the sale of these
bonds.
2. Deny the final approval. with this action the Long Term Care
Foundation would have to review the financial feasibility of
purchasing the Hopkins Nursing Home utilizing some other form
of financing. Because of the probable increase in interest
rates, such a purchase may no longer be feasible.
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CITY OF HOPKINS
Hennepin County, Minnesota
RESOLUTION NO: 90-80
RESOI.t),TION RELATING TO A PROJECT FOR THE
LONG TERM CARE FOUNDATION; CONFIR1\.11NG THE
At..'THORlZATION THEREOF; AUTHORIZING
EXECU110N CF AN AGREEMEI:\TT FOR P A Y!v1BNTS IN
UEUOFTAXES.
BE rr RESOLVED by the City Council of the City of Hopkins, Mi.nnesota as
follows:
1. By Resolutions duly adopted June 12, 1990 (the Prior Resolutions)
this Council p:re1iminarUy approved, subject to certain specified cQnditions, a Project
cofJ$isting generally of the acquisition a.nd betterment of the Hopkins HealthCare
Center by The Lor!g T~rm Care Foundation (th~ "Foundation"); and approved and
Authoriud. execution of a Joint Powere Agreement benveetl the City and various
other Mir...iesota cities, including the City of Minneapolis, authorizing tl-t.e City of
MiMeapoUs, h"i. its ovro. behalf and in behalf of the other cities signatory to the Joint
Powe..~ Agreement, to sell, and issue revenue bonds to finance the Project and
other, similar projects loc.ted in the other cities.
2. The City has now received dra.ft copies of various documents
relating to the Project and its financing, including a draft Agrf:ement (the HmOT
Agreement") whereby b,1e Foundation 2grees to pay to the City annually an amount
in lieu of tax~s. The form of that Agrgement is hereby approved and its execution
by the appropriate officer or officers of th~ City authorized.
3. The Council hereb}'~ conf!rfils its p!el1m.inary approval of the Project
and detemrlnes the conditions of that approval spedfiw in the Prior Resolutions to
be satisfied if the do<.'umtt:nts received by tl1e CIty relating thereto are satisfactory in
SUbst81lee to the staff and oo~ ff)f the Cirj. The st(l.![ and. cou.'1j(1j for the C.ity
shall revJew such documents: and repert thereon to the Mayor. The execution by
the City of the IO!fll Powera Agreement and the piJot Agreement substantially it, the
forms the-mof submitted t~ th~ Cty but including !luch changGS therein as may be
recommended by the fitaff Md COWl5el tor the City, $hall be conclusive evidence of
the approval by ate City of those documents and of satisfaction of the cond1t1ons
spidfied. in the Prior Resolutions.
Ne 1 son'w-:-Berg, Mayor
ATTEST:
James ).", 'Ge-nefj ie, C i ty c"1'eri<
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