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Home My WebLink About9A McKenna Crossing Bond Refunding Phone 952.447.9800 / Fax 952.447.4245 / www.cityofpriorlake.com 4646 Dakota Street SE Prior Lake, MN 55372 CITY COUNCIL AGENDA REPORT MEETING DATE: APRIL 25, 2016 AGENDA #: 9A PREPARED BY: CASEY MCCABE, COMMUNITY DEVELOPMENT SPECIALIST PRESENTED BY: DAN ROGNESS, COMMUNITY DEVELOPMENT DIRECTOR AGENDA ITEM: CONSIDER APPROVAL OF A RESOLUTION CALLING FOR A PUBLIC HEARING ON APPROVING THE ISSUANCE OF, AND GIVING HOST APPROVAL TO THE ISSU ANCE OF SENIOR HOUSING REVENUE REFUNDING NOTES TO REFINANCE A PROJECT BY SHEPHERD'S PATH SENIOR HOUSING, INC. AND AUTHORIZING THE PUBLICATION OF A NOTICE OF THE HEARING (MCKENNA CROSSING SENIOR HOUSING PROJECT DISCUSSION: Introduction The purpose of this agenda item is to request the City Council call a public hearing to consider the issuance of, and giving host approval to the issuance of senior housing revenue refunding notes to refinance the McKenna Crossing Senior Housing project. This action does not oblige the City Council to approve the refunding request, only to hold a public hearing. History In 2006, the City of Prior Lake approved the issuance of City and Economic Development Authority revenue bonds that were used to finance the acquisition, construction and equipping of an elderly housing development of 154 senior rental housing units. This project included 82 independent housing units, 54 assisted living units and 18 memory care units, together with approximately 35,000 square feet of common space located at 13760 McKenna Road in Prior Lake. Current Circumstances The City of Prior Lake has received a request from Shepherd’s Path Senior Housing, Inc., a Minnesota nonprofit corporation, that Prior Lake and two other Minnesota communities (cities of Mayer and Hampton) each undertake a program to assist in refinancing the McKenna Senior Housing project through the issuance of revenue refunding notes. On April 18, the Prior Lake EDA reviewed and recommended a new Private Activity Revenue Bond Policy (the city currently has no policy). This will be reviewed by the City Council on May 9th, which will provide for an an application fee and a bond administration fee. These fees will then apply to the request by Shepherd’s Path. 2 Conclusion A public hearing and City Council approval of the refinancing request of the McKenna Senior Housing project is required under Minnesota Statutes, Chapter 462C and Section 147(f) of the Internal Revenue Code of 1986, as amended. ISSUES: The City Council should determine if it desires to consider using Senior Housing Revenue Refunding Notes to assist with this refunding request. If the Council wishes to proceed, it should set the date of public hearing by adopting the attached resolution. FINANCIAL IMPACT: There is no direct financial impact to schedule a public hearing. The refunding bonds being requested are known as ‘conduit’ bonds. In effect, the City is allowing its name and issuance authority to be used by the applicant. The total maximum aggregate estimated principal amount of notes or other obligations to be issued by the issuers (Prior Lake, Mayer and Hampton) is $26,000,000; of which, Prior Lake’s portion is anticipated to be less than $6,000,000. ALTERNATIVES: 1. Motion and second to approve a resolution calling for a public hearing on approving the issuance of, and giving host approval to the issuance of Senior Housing Revenue Refunding Notes to refinance a project by Shepherd’s Path Senior housing, Inc. and authorizing the publication of a notice of the hearing. 2. Motion and a second to deny the resolution. 3. Motion and second to table action and provide staff with further direction. RECOMMENDED MOTION: Alternative #1 4646 Dakota Street SE Prior Lake, MN 55372 RESOLUTION 16-XXX RESOLUTION CALLING FOR A PUBLIC HEARING ON APPROVING THE ISSUANCE OF, AND GIVING HOST APPROVAL TO THE ISSUANCE OF SENIOR HOUSING REVENUE REFUNDING NOTES TO REFINANCE A PROJECT BY SHEPHERD’S PATH SENIOR HOUSING, INC. AND AUTHORIZING THE PUBLICATION OF A NOTICE OF THE HEARING (MCKENNA CROSSING SENIOR HOUSING PROJECT) Motion By: Second By: WHEREAS, The purpose of Minnesota Statutes, Chapter 462C (the "Act"), is among other things, to confer upon cities the power to issue revenue bonds to finance projects as defined therein; and WHEREAS, The City of Prior Lake, Minnesota ("Prior Lake") has received from Shepherd’s Path Senior Housing, Inc. (the "Borrower"), a Minnesota nonprofit corporation and 501(c)(3) organization, which is an affiliate of Presbyterian Homes and Services, a Minnesota nonprofit corporation and 501(c)(3) organization, a proposal that Prior Lake, the City of Mayer, Minnesota, and the City of Hampton, Minnesota each undertake a program to assist in refinancing, among other things, a Project described in Exhibit A, which is located in Prior Lake, through the issuance of revenue notes or obligations (in one or more series) (the "Notes") pursuant to the Act; and WHEREAS, The City of Prior Lake has been advised that a public hearing and City Council approval of the refinancing of the Project is required under the Act and Section 147(f) of the Internal Revenue Code of 1986, as amended. NOW THEREFORE, BE IT HEREBY RESOLVED BY THE CITY COUNCIL OF PRIOR LAKE, MINNESOTA as follows: 1. The recitals set forth above are incorporated herein. 2. A public hearing on the proposal of the Borrower will be held at the time and place set forth in the attached Notice of Public Hearing. The general nature of the Project and an estimate of the aggregate principal amount of the Notes or other obligations to be issued to refinance the Project are described in the Notice of Public Hearing. 3. The City Manager is hereby authorized and directed to cause notice of the hearing to be given one publication in the official newspaper and newspaper of general circulation available in the City, not less than 15 days nor more than 30 days prior to the date fixed for the hearing, substantially in the form of the attached Notice of Public Hearing. PASSED AND ADOPTED THIS 25th DAY OF APRIL, 2016. VOTE Hedberg Keeney McGuire Morton Thompson Aye ☐ ☐ ☐ ☐ ☐ Nay ☐ ☐ ☐ ☐ ☐ Abstain ☐ ☐ ☐ ☐ ☐ Absent ☐ ☐ ☐ ☐ ☐ ______________________________ Frank Boyles, City Manager EXHIBIT A NOTICE OF PUBLIC HEARING ON A PROPOSAL FOR ISSUANCE OF SENIOR HOUSING REVENUE REFUNDING NOTES (MCKENNA CROSSING SENIOR HOUSING PROJECT) Notice is hereby given that the City Council of the City of Prior Lake, Minnesota (the "City"), will meet in City Council chambers at the Prior Lake City Hall, 4646 Dakota Street SE, in the City, at 7:00 p.m. on Monday, May 23, 2016, to consider approving, and giving host approval to, the issuance by the City, the City of Mayer, Minnesota ("Mayer"), and the City of Hampton, Minnesota ("Hampton", and together with the City and Mayer, the "Issuers") of revenue obligations, in one or more series, under Minnesota Statutes, Chapter 462C (the "Act"), in order to refinance the cost of a project located in the City, pursuant to an existing housing program (the "Housing Program") and a joint powers agreement with the Issuers. Shepherd’s Path Senior Housing, Inc. (the "Borrower"), a Minnesota nonprofit corporation and 501(c)(3) organization, which is an affiliate of Presbyterian Homes and Services, a Minnesota nonprofit corporation and 501(c)(3) organization, proposes to refinance a Project consisting of refunding the outstanding principal amount of the City’s $21,445,000 Senior Housing Revenue Bonds (Shepherd’s Path Senior Housing, Inc. Project) Series 2006B, and the Economic Development Authority of the City of Prior Lake $10,000,000 Senior Housing Revenue Bonds (Shepherd’s Path Senior Housing Project) Series 2006A, the proceeds of which were used to finance the acquisition, construction, and equipping of an elderly housing development of 154 senior rental housing units including 82 independent housing units, 54 assisted living units, and 18 memory care units, together with approximately 35,000 square feet of common space, located adjacent to the Shepherd of the Lake Lutheran Church located at 13760 McKenna Road in the City (the “Project”). The Project, known as McKenna Crossing, is and will be owned and operated by the Borrower. The total maximum aggregate estimated principal amount of notes or other obligations to be issued by the Issuers is $26,000,000. The obligations, as and when issued, will not constitute a charge, lien, or encumbrance upon any property of the City or the Issuers, except the Project and the revenues to be derived from the Project. Such notes or obligations will not be a charge against the City's or the Issuers' general credit or taxing powers but are payable from sums to be paid by the Borrower pursuant to a revenue agreement. At the time and place fixed for the public hearing, the City Council of the City will give all persons who appear at the hearing an opportunity to express their views with respect to the proposal. Written comments will be considered if submitted at the above City office on or before the date of the hearing. BY ORDER OF THE CITY COUNCIL OF THE CITY OF PRIOR LAKE, MINNESOTA By Frank Boyles Its City Manager