Loading...
HomeMy WebLinkAbout16-068 McKenna Crossing Senior Housing7659273v2 Extract of Minutes of a Meeting of the City Council of the City of Prior Lake Pursuant to due call and notice thereof, a regular meeting of the City Council of the City of Prior Lake was duly held in the City of Prior Lake, Minnesota, on Monday, May 23, 20 16, at 7:00 o'clock P.M. The following members were present: Mayor Hedberg, Councilor Keeney, Councilor McGuire, Councilor Morton, Councilor Thompson During said meeting McGuire introduced the following resolution and moved its adoption: RESOLUTION NO. 16-068 RESOLUTION APPROVING THE ISSUANCE AND SALE OF SENIOR HOUSING REVENUE REFUNDING NOTES, GIVING HOST APPROVAL IN CONNECTION THEREWITH AND AUTHORIZING THE EXECUTION OF DOCUMENTS RELATING THERETO AND APPROVAL OF A JOINT POWERS AGREEMENT (McKENNA CROSSING SENIOR HOUSING PROJECT) WHEREAS, (a) The purpose of Minnesota Statutes, Chapter 462C (the "Act"), confers upon cities the power to issue revenue obligations to finance a program for the purposes of planning, administering, making or purchasing loans with respect to a multifamily housing facility for the elderly; (b) The City (as defined below) desires to facilitate the selective development of the community, retain and improve the tax base and help to provide the range of services and employment opportunities required by the population, including senior housing and health care services; and the Project (defined below) will assist the City in achieving those objectives and will enhance the image and reputation of the community; (c) Shepherd’s Path Senior Housing, Inc., a Minnesota nonprofit corporation (the "Borrower"), which is an affiliate of Presbyterian Homes and Services, a Minnesota nonprofit corporation, and an organization described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended (the "Code"), has proposed that the City, along with the City of Hampton, Minnesota ("Hampton") and the City of Mayer, Minnesota ("Mayer"), undertake a program to refinance the Project (as defined below) through the issuance of revenue notes or other obligations, in one or more series pursuant to the Act and in connection therewith the following described notes are to be issued: (i) City of Prior Lake, Minnesota Senior Housing Revenue Refunding Note (McKenna Crossing Senior Housing Project) Series 2016A (the "Prior Lake Note"); (ii) City of Mayer, Minnesota Senior Housing Revenue Refunding Note (McKenna Crossing Senior Housing Project) Series 2016B (the "Mayer Note"); and (iii) City of Hampton, 7659273v2 2 Minnesota Senior Housing Revenue Refunding Note (McKenna Crossing Senior Housing Project) Series 2016C (the "Hampton Note," and together with the Mayer Note and the Prior Lake Note, the "Notes"), in the total aggregate principal amount not to exceed $26,000,000; (d) The "project" consists of the refunding of 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’s $10,000,000 Senior Housing Revenue Bonds (Shepherd’s Path Senior Housing Project) Series 2006A (collectively, the “Series 2006 Bonds”), 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 an d operated by the Borrower. (e) The City has been advised by representatives of the Borrower that conventional, commercial financing to pay the capital cost of the Project is available only on a limited basis and at such high costs of borrowing that the economic feasibility of operating the Project would be significantly reduced; (f) Based on representations of the Borrower, no public official of the City has either a direct or indirect financial interest in the Project nor will any public official either directly or indirectly benefit financially from the Project; (g) In connection with the issuance of the Notes, it is proposed that the City, Hampton, and Mayer, pursuant to Minnesota Statutes, Section 471.59, enter into a Joint Powers Agreement (the "Joint Powers Agreement"). A copy of the proposed form of the Joint Powers Agreement has been presented to the City Council in connection with its consideration of this Resolution, and is currently on file in the offices of the City Manager; (h) The Notes, as and when issued, will not constitute a charge, lien or encumbrance upon any property of the City, Hampton, or Mayer and will not be a charge against the general credit or taxing powers of the City, Hampton, or Mayer; (i) As required by the Act and Section 147(f) of the Code, a notice of public hearing was published in the City's official newspaper and newspaper of general circulation, for a public hearing on the proposed issuance of the Prior Lake Note by the City and the proposal of the Borrower to undertake and refinance the Project; and (j) As required by the Act and Section 147(f) of the Code, the City Council has on this same date held a public hearing on the issuance of the Prior Lake Note by the City and the proposal by the Borrower to undertake and refinance the Project, at which hearing all those appearing who desired to speak were heard and written comments were accepted. BE IT RESOLVED by the City Council of the City of Prior Lake, Minnesota (the "City"), as follows: 7659273v2 3 SECTION 1. LEGAL AUTHORIZATION AND FINDINGS. 1.1 Findings. The City hereby finds, determines and declares as follows: (a) The City is a municipal corporation and a political subdivision of the State of Minnesota and is authorized under the Act to assist the project referred to herein, and to issue and sell the Prior Lake Note, as hereinafter defined, for the purpose, in the manner, and upon the terms and conditions set forth in the Act and in this Resolution. (b) The issuance and sale of the City of Prior Lake, Minnesota Senior Housing Revenue Refunding Note (McKenna Crossing Senior Housing Project), Series 2016A (the "Prior Lake Note") by the City, pursuant to the Act, is in the best interest of the City, and the City hereby determines to issue the Prior Lake Note and to sell the Prior Lake Note to Bremer Bank, National Association in Minneapolis, Minnesota or another bank in Minnesota (the "Lender"), as provided in an Agreement to Purchase (the "Purchase Agreement") to be entered into between the Borrower, the City, and the Lender. The City will loan the proceeds of the Prior Lake Note (the "Loan") to the Borrower in order to finance the refunding, in part, of the Series 2006 Bonds. A draft of the Purchase Agreement has been submitted to the City Council. (c) Pursuant to a Series 2016A Loan Agreement (the "Loan Agreement") to be entered into between the City and the Borrower, the Borrower has agreed to repay the Prior Lake Note in specified amounts and at specified times sufficient to pay in full when due the principal of, premium, if any, and interest on the Prior Lake Note. In addition, the Loan Agreement contains provisions relating to the maintenance and operation of the Project, indemnification, insurance, and other agreements and covenants which are required or permitted by the Act and which the City and the Borrower deem necessary or desirable for their refinancing of the Project. A draft of the Loan Agreement has been submitted to the City Council. (d) Pursuant to a Series 2016A Pledge Agreement (the "Pledge Agreement") to be entered into between the City and the Lender, the City has pledged and granted a security interest in all of its rights, title, and interest in the Loan Agreement to the Lender (except for certain rights of indemnification and to reimbursement for certain costs and expenses). A draft of the Pledge Agreement has been submitted to the City Council. (e) Pursuant to a Mortgage, Security Agreement, Fixture Financing Statement and Assignment of Leases and Rents (the "Mortgage") given by the Borrower to the City, Hampton, and Mayer, and assigned by the City, Hampton, and Mayer to the Lender pursuant to an Assignment of Mortgage, Security Agreement, Fixture Financing Statement and Assignment of Leases and Rents (the "Assignment"), the Borrower has secured payment of amounts due under the Loan Agreement and Notes by granting to the Lender a mortgage and security interest in the property described therein. A draft of the Mortgage and the Assignment have been submitted to the City Council. 7659273v2 4 (f) A copy of the proposed form of the Joint Powers Agreement has been presented to the City Council in connection with its consideration of this Resolution, and has been submitted to the City Council. (g) The Prior Lake Note will be a special, limited obligation of the City. The Prior Lake Note shall not be payable from or charged upon any funds other than the revenues pledged to the payment thereof, nor shall the City be subject to any liability thereon. No holder of the Prior Lake Note shall ever have the right to compel any exercise of the taxing power of the City to pay the Prior Lake Note or the interest thereon, nor to enforce payment thereof against any property of the City. The Prior Lake Note shall not constitute a debt of the City within the meaning of any constitutional or statutory limitation. (h) On the basis of information available to the City it appears, and the City hereby finds, that the Project constitutes properties, real and personal, used or useful in connection with a multifamily housing facility for the elderly within the meaning of the Act; that the Project furthers the purposes stated in the Act; that the availability of the financing under the Act and the willingness of the City to furnish such financing will be a substantial inducement to the Borrower to undertake the Project, and that the effect of the Project, if undertaken, will be to assist in the prevention of the emergence of blighted and marginal land, to help prevent chronic unemployment, to help the surrounding area retain and eventually improve the tax base, to provide the range of service and employment opportunities required by the population, to help prevent the movement of talented and educated persons out of the state and to areas within the State where their services may not be as effectively used, and to promote more intensive development and use of land within the City and surrounding communities, and to provide available adequate senior housing facilities to residents of the State at a reasonable cost. (i) It is desirable, feasible and consistent with the objects and purposes of the Act to issue the Prior Lake Note, for the purpose of refinancing the costs of the Project. SECTION 2. THE PRIOR LAKE NOTE. 2.1 Authorized Amount and Form of Prior Lake Note. The Prior Lake Note is hereby approved and shall be issued pursuant to this Resolution in substantially the form submitted t o the City Council with such appropriate variations, omissions and insertions as are necessary and appropriate and are permitted or required by this Resolution, and in accordance with the further provisions hereof; and the total aggregate principal amount of the Prior Lake Note that may be outstanding hereunder is expressly limited to not more than $5,250,000, but presently expected to be $5,155,000, unless a duplicate Note is issued pursuant to Section 2.7. The Prior Lake Note shall bear interest at a rate or rates as set forth therein. 2.2 The Prior Lake Note. The Prior Lake Note shall be dated as of the date of delivery to the Lender, shall be payable at the times and in the manner, shall bear interest at the rate, and shall be subject to such other terms and conditions as are set forth therein. 7659273v2 5 2.3 Execution. The Prior Lake Note shall be executed on behalf of the City by the signatures of its Mayor and the City Manager and shall be sealed with the seal of the City; provided that the seal may be intentionally omitted as provided by law. In case any officer whose signature shall appear on the Prior Lake Note shall cease to be such officer before the delivery of the Prior Lake Note, such signature shall nevertheless be valid and sufficient for all purposes, the same as if had remained in office until delivery. In the event of the absence or disability of the Mayor or the City Manager such officers of the City as, in the opinion of the City Attorney, may act in their behalf, shall without further act or authorizat ion of the City Council execute and deliver the Prior Lake Note. 2.4 Delivery of Initial Prior Lake Note. Before delivery of the Prior Lake Note there shall be filed with the Lender (except to the extent waived by the Lender) the following items: (1) an executed copy of each of the following documents: (a) the Purchase Agreement; (b) the Loan Agreement; (c) the Pledge Agreement; (d) the Mortgage; (e) the Assignment; (f) the Joint Powers Agreement; (2) an opinion of Counsel for the Borrower as prescribed by the Lender and Bond Counsel; (3) the opinion of Bond Counsel as to the validity and tax exempt status of the Prior Lake Note; (4) a 501(c)(3) determination letter from the Internal Revenue Service evidencing that the Borrower is exempt from income taxation under Section 501(c)(3) of the Code; (5) such other documents and opinions as Bond Counsel may reasonably require for purposes of rendering its opinion required in subsection (3) above or that the Lender may reasonably require for the closing. 2.5 Disposition of Proceeds of the Prior Lake Note. Upon delivery of the Prior Lake Note to Lender, the Lender shall, on behalf of the City, disburse the proceeds of the Prior Lake Note for refunding, in part, the Series 2006 Bonds in accordance with the terms of the Loan Agreement. 2.6 Registration of Transfer. The City will cause to be kept at the office of the City Manager a Note Register in which, subject to such reasonable regulations as it may prescribe, the 7659273v2 6 City shall provide for the registration of transfers of ownership of the Prior Lake Note. The Prior Lake Note shall be initially registered in the name of the Lender and shall be transferable upon the Prior Lake Note Register by the Lender in person or by its agent duly authorized in writing, upon surrender of the Prior Lake Note together with a written instrument of transfer satisfactory to the City Manager, duly executed by the Lender or its duly authorized agent. The following form of assignment shall be sufficient for said purpose. For value received ___________ hereby sells, assigns and transfers unto ________________ the within Note of the City of Prior Lake, Minnesota, and does hereby irrevocably constitute and appoint ___________________ attorney to transfer said Note on the books of said City with full power of substitution in the premises. The undersigned certifies that the transfer is made in accordance with the provisions of Section 2.9 of the Resolution authorizing the issuance of the Prior Lake Note. Dated: Registered Owner Upon such transfer the City Manager shall note the date of registration and the name and address of the new Lender in the applicable Note Register and in the registration blank appearing on the Prior Lake Note. 2.7 Mutilated, Lost or Destroyed Note. In case the Prior Lake Note issued hereunder shall become mutilated or be destroyed or lost, the City shall, if not then prohibited by law, cause to be executed and delivered, a new Note of like outstanding principal amount, number and tenor in exchange and substitution for and upon cancellation of such mutilated Note, or in lieu of and in substitution for such Note destroyed or lost, upon the Lender's paying the reasonable expenses and charges of the City in connection therewith, and in the case of a Note destroyed or lost, the filing with the City of evidence satisfactory to the City with indemnity satisfactory to it. If the mutilated, destroyed or lost Note has already matured or been called for redemption in accordance with its terms it shall not be necessary to issue a new Note prior to payment. 2.8 Ownership of Note. The City may deem and treat the person in whose name the Prior Lake Note is last registered in the Prior Lake Note Register and by notation on the Prior Lake Note whether or not such Note shall be overdue, as the absolute owner of such Note for the purpose of receiving payment of or on account of the Principal Balance, redemption price or interest and for all other purposes whatsoever, and the City shall not be affected by any notice to the contrary. 2.9 Limitation on Note Transfers. The Prior Lake Note will be issued to an "accredited investor" and without registration under state or other securities laws, pursuant to an exemption for such issuance; and accordingly the Prior Lake Note may not be assigned or transferred in whole or part, nor may a participation interest in the Prior Lake Note be given pursuant to any participation agreement, except to another "accredited investor" or "financial institution" in accordance with an applicable exemption from such registration requirements and 7659273v2 7 with full and accurate disclosure of all material facts to the prospective purchaser(s) or transferee(s). 2.10 Issuance of a New Note. Subject to the provisions of Section 2.9, the City shall, at the request and expense of the Lender, issue a new note, in aggregate outstanding prin cipal amount equal to that of the Prior Lake Note surrendered, and of like tenor except as to number, principal amount, and the amount of the periodic installments payable thereunder, and registered in the name of the Lender or such transferee as may be designated by the Lender. SECTION 3. GENERAL COVENANTS. 3.1 Payment of Principal and Interest. The City covenants that it will promptly pay or cause to be paid the principal of and interest on the Prior Lake Note at the place, on the dates, solely from the source and in the manner provided herein and in the Prior Lake Note. The principal and interest are payable solely from and secured by revenues and proceeds derived from the Loan Agreement and the Pledge Agreement, which revenues and proceeds are hereby specifically pledged to the payment thereof in the manner and to the extent specified in the Prior Lake Note, the Loan Agreement, and the Pledge Agreement; and nothing in the Prior Lake Note or in this Resolution shall be considered as assigning, pledging, or otherwise encumbering any other funds or assets of the City. 3.2 Performance of and Authority for Covenants. The City covenants that it will faithfully perform at all times any and all covenants, undertakings, stipulations and provisions contained in this Resolution, in the Prior Lake Note executed, authenticated and delivered hereunder and in all proceedings of the City Council pertaining thereto; that it is duly authorized under the Constitution and laws of the State of Minnesota including particularly and without limitation the Act, to issue the Prior Lake Note authorized hereby, pledge the revenues and assign the Loan Agreement in the manner and to the extent set forth in this Resolution, the Prior Lake Note, the Loan Agreement, and the Pledge Agreement; that all action on its part for the issuance of the Prior Lake Note and for the execution and delivery thereof has been duly and effectively taken; and that the Prior Lake Note in the hands of the Lender is and will be a valid and enforceable special limited obligation of the City according to the terms thereof. 3.3 Enforcement and Performance of Covenants. The City agrees to enforce all covenants and obligations of the Borrower under the Loan Agreement, upon request of the Lender and being indemnified to the satisfaction of the City for all expenses and claims arising therefrom, and to perform all covenants and other provisions pertaining to the City contained in the Prior Lake Note and the Loan Agreement and subject to Section 3.4. 3.4 Nature of Security. Notwithstanding anything contained in the Prior Lake Note, the Loan Agreement, the Pledge Agreement, or any other document referred to in Section 2.4 to the contrary, under the provisions of the Act the Prior Lake Note may not be payable from or be a charge upon any funds of the City other than the revenues and proceeds pledged to the payment thereof, nor shall the City be subject to any liability thereon, nor shall the Prior Lake Note otherwise contribute or give rise to a pecuniary liability of the City or, to the extent p ermitted by law, any of the City's officers, employees and agents. No holder of the Prior Lake Note shall ever have the right to compel any exercise of the taxing power of the City to pay the Prior Lake 7659273v2 8 Note or the interest thereon, or to enforce payment thereof against any property of the City other than the revenues pledged under the Pledge Agreement; and the Prior Lake Note shall not constitute a charge, lien or encumbrance, legal or equitable, upon any property of the City; and the Prior Lake Note shall not constitute a debt of the City within the meaning of any constitutional or statutory limitation; but nothing in the Act impairs the rights of the Purchaser to enforce the covenants made for the security thereof as provided in this Resolution, the Loan Agreement, and the Pledge Agreement, and in the Act, and by authority of the Act the City has made the covenants and agreements herein for the benefit of the Lender; provided that in any event, the agreement of the City to perform or enforce the covenants and other provisions contained in the Prior Lake Note, the Loan Agreement, and the Pledge Agreement, shall be subject at all times to the availability of revenues under the Loan Agreement sufficient to pay all costs of such performance or the enforcement thereof, and the City shall not be subject to any personal or pecuniary liability thereon. 3.5 Qualified Tax Exempt Obligation. In order to qualify the Prior Lake Note as a "qualified tax-exempt obligation" within the meaning of Section 265(b)(3) of the Internal Revenue Code of 1986, as amended (the "Code"), the City hereby makes the following factual statements and representations; (a) the Prior Lake Note is not treated as a "private activity bond" under Section 265(b)(3) of the Code; (b) the City hereby designates the Prior Lake Note as a qualified tax-exempt obligation for purposes of Section 265(b)(3) of the Code; (c) the reasonably anticipated amount of tax-exempt obligations (other than obligations described in clause (ii) of Section 265(b)(3)(C) of the Code) which will be issued by the City (and all entities whose obligations will be aggregated with those of the City) during the calendar year 2016 will not exceed $10,000,000; (d) not more than $10,000,000 of obligations issued by the City during the calendar year 2016 have been designated for purposes of Section 265(b)(3) of the Code; and (e) the aggregate face amount of the Prior Lake Note does not exceed $10,000,000. SECTION 4. MISCELLANEOUS. 4.1 Severability. If any provision of this Resolution shall be held or deemed to be or shall, in fact, be inoperative or unenforceable as applied in any particular case in any jurisdiction or jurisdictions or in all jurisdictions or in all cases because it conflicts with any provisions of any constitution or statute or rule or public policy, or for any other reason, such circumstances shall not have the effect of rendering the provision in question inoperative or unenforceable in any other case or circumstance, or of rendering any other provision or provisions herein contained invalid, inoperative, or unenforceable to any extent whatever. The invalidity of any one or more phrases, sentences, clauses or paragraphs in this Resolution contained shall not affect the remaining portions of this Resolution or any part thereof. 7659273v2 9 4.2 Authentication of Transcript. The officers of the City are directed to furnish to Bond Counsel certified copies of this Resolution and all documents referred to herein, and affidavits or certificates as to all other matters which are reasonably necessary to evidence the validity of the Prior Lake Note. All such certified copies, certificates and affidavits, including any heretofore furnished, shall constitute recitals of the City as to the correctness of all statements contained therein. 4.3 Authorization to Execute Agreements. The forms of the proposed Joint Powers Agreement, Purchase Agreement, Loan Agreement, and the Pledge Agreement are hereby approved in substantially the form presented to the City Council, together with such additional details therein as may be necessary and appropriate and such modifications thereof, deletions therefrom and additions thereto as may be necessary and appropriate and approved by Bond Counsel prior to the execution of the documents. The Mayor and the City Manager of the City are authorized to execute the Joint Powers Agreement, the Purchase Agreement, the Loan Agreement, and the Pledge Agreement and such other documents as Bond Counsel consider appropriate in connection with the issuance of the Prior Lake Note, in the name of and on behalf of the City. In the event of the absence or disability of the Mayor or the City Manager such officers of the City as, in the opinion of the City Attorney, may act on their behalf, shall without further act or authorization of the City Council do all things and execute all instruments and documents required to be done or executed by such absent or disabled officers. The execution of any instrument by the appropriate officer or officers of the City herein authorized shall be conclusive evidence of the approval of such documents in accordance with the terms hereof. 4.4 Host Approval. The City Council hereby gives the host approval required under Section 147(f) of the Code and, pursuant to Minnesota Statutes §471.656, Subd. 2(4), consents to the issuance of the Hampton Note and the Mayer Note, each in an amount not to exceed $10,000,000, and the execution and delivery by the City of the Joint Powers Agreement. 7659273v2 10 Adopted by the City Council of the City of Prior Lake, Minnesota, this 23rd day of May, 2016. _______________________________________ Mayor ATTEST: City Manager The motion for the adoption of the foregoing resolution was duly seconded by Member Thompson, and after full discussion thereof and upon vote being taken thereon, the following voted in favor thereof: VOTE Hedberg Keeney McGuire Morton Thompson Aye ☒ ☒ ☒ ☒ ☒ Nay ☐ ☐ ☐ ☐ ☐ Abstain ☐ ☐ ☐ ☐ ☐ Absent ☐ ☐ ☐ ☐ ☐ whereupon said resolution was declared duly passed and adopted. STATE OF MINNESOTA COUNTY OF SCOTT CITY OF PRIOR LAKE I, the undersigned, being the duly qualified and acting City Manager of the City of Prior Lake, DO HEREBY CERTIFY that I have compared the attached and foregoing extract of minutes with the original thereof on file in my office, and that the same is a full, true and complete transcript of the minutes of a meeting of the City Council duly called and held on the date therein indicated, insofar as such minutes relate to a resolution authorizing the issuance of a revenue note. WITNESS my hand this 9j7 day of May, 2016. .�l (---------' City Manager 11 7659273v2