HomeMy WebLinkAbout5F - Shepherd's Path Financial Assist. App.
MEETING DATE:
AGENDA #:
PREPARED BY:
AGENDA ITEM:
DISCUSSION:
H.\TIF 6-1
16200 Eagle Creek Avenue S.E.
Prior Lake, MN 55372-1714
CITY COUNCIL AGENDA REPORT
May 15, 2006
5F1 and 5F2
PAUL SNOOK, ECONOMIC DEVELOPMENT DIRECTOR
RECEIVE AN APPLICATION FOR FINANCIAL ASSISTANCE FROM
SHEPHERD'S PATH SENIOR HOUSING LLC, AND CONSIDER
APPROVAL OF RESOLUTIONS:
1. CALLING FOR A PUBLIC HEARING FOR JUNE 5, 2006 ON A
PROPOSAL FOR A HOUSING FINANCE PROGRAM AND
ISSUANCE OF REVENUE BONDS TO FINANCE A SENIOR
INDEPENDENT LIVING FACILITY PURSUANT TO
MINNESOTA LAW AND AUTHORIZING PUBLICATION OF
NOTICE OF HEARING
2. CALLING FOR A PUBLIC HEARING FOR JUNE 26, 2006 ON
THE ESTABLISHMENT OF THE DEVELOPMENT PROGRAM
FOR DEVELOPMENT DISTRICT NO.6; THE PROPOSED
ESTABLISHMENT OF TAX INCREMENT FINANCING
DISTRICT NO. 6-1; AND THE PROPOSED ADOPTION OF
THE TAX INCREMENT FINANCING PLAN THEREFORE.
Introduction
The City Council is asked to receive the enclosed Application for Financial
Assistance submitted by Shepherd's Path LLC, and call public hearings on
proposed issuance of conduit bonds, and proposed establishment of Tax
Increment Financing district 6-1 for the purposes of assisting in the
development of the Shepherd's Path senior residential community. This
action does not oblige the City Council to approve this request but only
to conduct the public hearings.
Shepherd's Path Senior Campus is designed to be a full service high quality
residential environment and a comprehensive community resource exclusively
for older adults age 62 and over. Shepherd's Path will serve a wide spectrum
of lifestyle needs from younger active older adults to very frail adults in need of
a wide range of support and services.
In order to have an affordable residential element to Shepherd's Path, conduit
bonds and Tax Increment Financing is necessary in order to keep the rents at
an affordable rate.
Historv.
The development of the senior campus arrives on the heels of the new
Shepherd of the Lake Lutheran Church which was completed in 2003. The
www.cityofpriorlake.com
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senior campus represents the implementation of the master plan developed by
the church to create a multi-generational community where older adults, family
members, church members, youth, volunteers and the residents of Prior lake
have an opportunity to benefit from the synergy of cooperative programs.
Current Circumstances
Shepherd's Path contracted with Maxfield Research to conduct a market
analysis of the senior housing needs in Prior lake. Maxfield's market analysis
shows a total potential market base for senior housing of 660 households in
the Prior lake market area. It is estimated that 45% of the market base will
need or want subsidized I affordable housing. Thus, demand exists for 297
subsidized I affordable senior housing units in the market area. Some but not
all of that demand is or will be met by existing subsidized I affordable units
provided by other sources such as the Scott County HRA.
The analysis also reveals that Scott County is one of the few counties in the
state that has an inadequate number of skilled nursing beds to serve the
senior population. In fact, there are no facilities in Savage or Prior lake.
Maxfield's calculations reveal the potential to support up to 180 beds in the
Prior lake market area through 2009.
Conclusion
The City Council should determine if it desires to consider using conduit bonds
and tax increment financing for this housing development project. If the
Council wishes to proceed, it should, by resolution, set public hearing dates.
The Shepherd Path project meets many of the objectives of the City's 2030
Vision and Strategic Plan under the Housing Quality and Diversity section.
Most importantly, the developers of this project will make available various
styles and levels of senior housing and this is a project that provides for
lifecycle housing, specifically for the senior community.
ISSUES:
The key issue for the council to consider for this agenda is whether to
schedule I call the necessary public hearings. Scheduling public hearings does
not oblige the council to approve the issuance of bonds or the TIF request.
Prior to conducting the public hearings, the council will receive a Tax
Increment Financing Plan which will contain detailed information about the
project together with an analysis showing how the project complies with the
City's Tax Increment Financing Policy. The hearings can be scheduled by
adoption of the attached resolutions. The public hearing for the bonds would
be June 5, 2006, and the public hearing for TIF would be June 26, 2006. It
should be noted that all financial approvals for this project are
conditioned upon approval of a final plat.
FINANCIAL
IMPACT:
The City Council needs to determine if it is important to have Shepherd's Path
be a development that provides opportunity for lifecycle housing, inclusive of
affordable units. If so, conduit revenue bonds and TIF will help achieve the
affordable residential component of the project.
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Conduit Revenue Bonds
It is proposed that the EDA and the City both issue tax-exempt revenue bonds
on behalf of Shepherd's Path to finance a senior housing campus, including 84
independent housing units, 18 memory care units and 10,000 square feet of
community space. The bonds will help keep the residential units affordable,
and provide a significantly greater degree of related services than would occur
without the bonds. The use of the bonds will require (in the development
agreement) that a non-profit maintain ownership and operation of Shepherd's
Path, which will consequently result in a continuum of affordability to the units.
The bonds issued by the EDA would not exceed $10,000,000 and the bonds
issued by the City would not exceed $22,000,000. The bonds will help reduce
borrowing costs for Shepherd's Path. To accomplish this, the EDA and the City
would enter into separate loan agreements with Shepherd's Path under which
Shepherd's Path will agree to pay all principal and interest on both series of
bonds.
The EDA and the City will assign all of their rights to payments under the loan
agreements to a trustee for the bondholders who will purchase the bonds and
loan the purchase price of the bonds directly to Shepherd's Path. The EDA
and the City are merely "conduits" and the money and obligations flow only
between the trustee (for the bondholders) and Shepherd's Path.
The bonds and the resolutions adopted by the EDA and the City for issuing the
bonds will state that when issued, the bonds will not to be payable from any of
the EDA's or the City's funds, other than the revenues received under the Loan
Agreements and pledged to the payment of the bonds, and the EDA and the
City are not subject to any liability on the bonds. The bonds will not constitute
a debt of the EDA or the City.
The bonds issued by the EDA must be factored into the EDA's $10,000,000
bank qualification allowance leaving no amount available for other obligations
that the EDA might issue this year for governmental purposes or other
nonprofit borrowers. It is not expected that there will be any other EDA bonds
issued this year.
For the City, these bonds and others to be issued this year for governmental
purposes will exceed the $10,000,000 limit so no bonds issued by the City will
be Bank Qualified this year. However, Shepherd's Path will agree in the loan
agreement to compensate the City for the additional costs it incurs due to
being unable to designate its bonds as Bank Qualified in 2006.
Issuing the bonds will not affect the credit rating of the EDA or the City on
bonds they issue for municipal purposes. Enclosed is a memo from economic
development legal counsel Briggs and Morgan regarding conduit bonds.
Tax Increment Financino.
Under state law, TIF housing projects can qualify for up to a 25 year term.
However, the estimated term for the Shepherd's Path project is 12 years. The
City's financial consultant, Northland Securities, will have the estimated TIF
amount as part of the TIF Plan for the public hearing on June 26th. Other
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financing for the project includes that from a private financing institution in the
amount of $28,000,000, developer equity of $1,500,000, and resident entrance
deposits of $5,500,000.
Tax Increment financing plays an important part in fulfilling the needs of an
affordable residential element to Shepherd's Path. Through the approval of
pay-as-you-go TIF, the project will be able to meet the needs of low and
moderate income residents of the community. By offsetting or reducing the
property taxes for a period of time through use of TIF, Shepherd's Path will be
able to create a "qualified housing district", which requires that 20% of the
housing units being developed will meet low income guidelines and attendant
rent limitations to meet the income level.
Shepherd's Path has proposed "pay-as-you-go" TIF financing in which they
would fund the improvements and then be reimbursed through TIF.
Shepherd's Path would be paid tax increments over time as they are
generated rather than receiving an upfront payment from the City. If for any
reason tax increments are not generated in the amounts projected there is no
recourse to the City for additional payments.
The city's financial consultant, Northland Securities, has completed a
preliminary review of the project and has deemed it eligible for TIF.
Furthermore, the applicant has received a favorable review of the "but/for" test
and analysis. A requirement of TIF is that the municipality must essentially find
that the proposed TIF assistance is necessary to bring about the proposed
development.
How Conduit Bonds and TIF work toaether
The underwriter for the bonds will require a collateral assignment of the TIF to
provide the financial coverage necessary to market the bonds. Shepherd's
Path will assign and pledge to the trustee on behalf of the bondholders all of its
right, title and interest in a development agreement with the City and a Tax
Increment Financing Note from the City. However, bondholders will not have
any greater rights to tax increments of the City than are given to Shepherd's
Path under the pay-as-you-go arrangement
ALTERNATIVES:
1. Approve the resolutions
2. Deny the resolutions
3. Defer for a specific reason
RECOMMENDED
MOTION:
Alternative 1.
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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, Minnesota, 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 of said City duly called and held
on the date therein indicated, insofar as such minutes relate to calling for a public hearing on the
City's revenue bonds to finance a housing finance program for the Shepherd's Path Senior Housing,
LLC Project.
WITNESS my hand this
day of May, 2006.
City Manager
1903366vl
NOTICE OF PUBLIC HEARING ON A
PROPOSAL FOR A HOUSING FINANCE PROGRAM AND
THE ISSUANCE OF REVENUE BONDS TO FINANCE
A SENIOR HOUSING DEVELOPMENT
(SHEPHERD'S PATH SENIOR HOUSING, INC. PROJECT)
Notice is hereby given that the City Council of the City of Prior Lake (the "City") will meet
at the Prior Lake Fire Station 1, 16776 Fish Point Road, in the City of Prior Lake (the "City") at
7:00 p.m. on Monday, June 5, 2006 to consider the proposal of Shepherd's Path Senior Housing,
Inc. (the "Borrower") that the City and the Economic Development Authority of the City of Prior
Lake, Minnesota (the "EDA") undertake a housing finance program to finance the Project
hereinafter described, pursuant to Minnesota Statutes, Chapter 462C, by the issuance of revenue
obligations.
The "Project" consists of the acquisition, construction and equipping of an elderly housing
development of approximately 154 senior rental housing units including approximately 84
independent housing units, 54 assisted living units, 18 memory care units together with
approximately 35,000 square feet of common space, to be located adjacent to the Shepherd of the
Lake Lutheran Church located at 13760 McKenna Road in the City. The Project will be owned and
operated by the Borrower.
The maximum aggregate estimated principal amount of bonds or other obligations to be
issued in one or more series to finance the Project pursuant to the housing finance program will be
$32,000,000. The Bonds issued by the City on behalf of the Borrower would not exceed
$22,000,000 and the Bonds issued by the EDA on behalf of the Borrower would not exceed
$10,000,000.
The Bonds if and when issued will not constitute a charge, lien or encumbrance upon any
property of the City or the EDA except the Project and the revenues generated by it and such
obligations will not be a charge against the general credit or taxing powers of the City or the EDA
but will be payable from sums to be paid by the Borrower pursuant to a revenue agreement.
A copy of the housing program will be on file with the City Manager at the City Hall
Monday through Friday until the date of the Public Hearing. 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. In addition, interested persons may
file written comments respecting the proposal with the City Manager at or prior to such public
hearing.
[Publish May 20, 2006]
1903366vl
RESOLUTION CALLING PUBLIC HEARING ON THE PROPOSED
ESTABLISHMENT OF DEVELOPMENT DISTRICT NO.6, THE PROPOSED
ADOPTION OF A DEVELOPMENT PROGRAM RELATING THERETO, THE
PROPOSED ESTABLISHMENT OF TAX INCREMENT FINANCING
DISTRICT NO. 6-1 WITHIN DEVELOPMENT DISTRICT NO.6 AND THE
PROPOSED ADOPTION OF A TAX INCREMENT FINANCING PLAN
RELATING THERETO
BE IT RESOLVED by the City Council (the "Council") of the City of Prior Lake,
Minnesota (the "City"), as follows:
1. Public Hearing. This Council shall meet on June 26, 2006, at approximately 7:00
p.m., to hold a public hearing on the following matters: (a) the proposed establishment of
Development District No.6, (b) the proposed adoption of the Development Program relating to
Development District No.6, (c) the proposed establishment of Tax Increment Financing District
No. 6-1 within Development District No.6, and (d) the proposed adoption of a Tax Increment
Financing Plan relating thereto, all pursuant to and in accordance with Minnesota Statutes,
Sections 469.124 through 469.134, both inclusive, as amended and Minnesota Statutes, Sections
469.174 through 469.1799, both inclusive, as amended (collectively, the "Act").
2. Notice of Hearing: Filing of Program and Plan. The City Manager is hereby
authorized to cause a notice of the hearing, substantially in the form attached hereto as Exhibit A,
to be published as required by the Act and to place a copy of the proposed Development Program
and Tax Increment Financing Plan on file in the Manager's Office at City Hall and to make such
copies available for inspection by the public.
The motion for the adoption of the foregoing resolution was duly seconded by
Councilmember and upon vote being taken thereon, the following
voted in favor:
and the following voted against the same:
Whereupon said resolution was declared duly passed and adopted.
1895513v3
Exhibit A
CITY OF PRIOR LAKE
COUNTY OF SCOTT
STATE OF MINNESOTA
NOTICE OF PUBLIC HEARING
NOTICE IS HEREBY GIVEN that the City Council (the "Council") of the City of Prior
Lake, Scott County, Minnesota, will hold a public hearing on Monday, June 26, 2006, at 7:00
p.m., at the Prior Lake Fire Station 1, 16776 Fish Point Road, in the City of Prior Lake,
Minnesota, relating to the proposed establishment of Municipal Development District No.6 and
the adoption of a Development Program therefor, the proposed establishment of Tax Increment
Financing District No. 6-1 within Municipal Development District No. 6 and the proposed
adoption of a Tax Increment Financing Plan therefor, pursuant to Minnesota Statutes, Section
469.174 through 469.1799, inclusive, as amended. Copies of the Development Program and Tax
Increment Financing Plan as proposed to be adopted will be on file and available for public
inspection at the office of the City Manager at City Hall.
The property proposed to be included in Development District No.6 is described in the
Development Program on file in the office of the City Manager. The property proposed to be
included in Tax Increment Financing District No. 6-1 is described in the Tax Increment
Financing Plan on file in the office ofthe City Manager.
A map of Municipal Development District No.6 and Tax Increment Financing District
No. 6-1 is set forth below:
[INSERT MAP of Municipal Development District No. 6 and Tax Increment Financing
District No. 6-1J
All interested persons may appear at the hearing and present their views orally or in
writing prior to the hearing.
1895513v3
RESOLUTION CALLING FOR A PUBLIC HEARING
ON A PROPOSAL FOR A HOUSING FINANCE PROGRAM
AND THE ISSUANCE OF REVENUE BONDS TO
FINANCE A SENIOR INDEPENDENT LIVING FACILITY
PURSUANT TO MINNESOTA LAW, AND AUTHORIZING
THE PUBLICATION OF A NOTICE OF THE HEARING
(a) WHEREAS, Minnesota Statutes, Chapter 462C (the "Act"), confers upon cities, the
power to issue revenue bonds to finance multifamily housing developments within the boundaries
of the city; and
(b) WHEREAS, the City Council of the City of Prior Lake, Minnesota (the "City"), has
received from Shepherd's Path Senior Living, Inc (the "Borrower"), a proposal that the City and the
Economic Development Authority of the City of Prior Lake (the "EDA") undertake a program to
assist in financing a Project hereinafter described, through the issuance of revenue bonds or
obligations (in one or more series) (the "Bonds") pursuant to the Act; and
(c) WHEREAS, before proceeding with consideration of the request of the Borrower it
is necessary for the City to hold a public hearing on the housing finance program and proposal
pursuant to the Act:
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Prior Lake,
Minnesota, as follows:
1. A public hearing on the housing finance program and proposal of the Borrower will
be held at the time and place set forth in the Notice of Public Hearing hereto attached.
2. The housing finance program and general nature of the proposal and an estimate of
the principal amount of Bonds to be issued to finance the proposal are described in the attached
form of Notice of Public Hearing.
3. A draft copy of the housing finance program with proposed forms of all attachments
and exhibits will be on file in the office of the City Manager from the date the Notice of Public
Hearing is published.
4. The City Manager is hereby authorized and directed to cause notice of the hearing to
be given one publication in the official newspaper of the City and also in a newspaper of general
circulation available in the City, not less than 15 days nor more than 30 days prior to June 5, 2006,
the date fixed for the hearing, substantially in the form of the attached Notice of Public Hearing.
The motion for the adoption of the foregoing resolution was duly seconded by member
, and after full discussion thereof and upon vote being taken thereon, the
following voted in favor thereof:
and the following voted against the same:
whereupon said resolution was declared duly passed and adopted.
1903366vl
CITY OF PRIOR LAKE, MINNESOTA
PRIOR LAKE
ECONOMIC DEVELOPMEN'l" AUTHORITY
Application for Financial Assistance
Submitted by: Shenherd's Path Senior Housing LLC.
CITY OF PRIOR LAKE
APPLICATION FOR FINANCIAL ASSISTANCE
GENERAL INFORMATION:
Business Name:
Shepherd's Path Senior Housin!!
Date 2/7/2006
Address:
13760 McKenna Road. Prior Lake. MN 5372
Type (Partnership, etc.):
Non Profit 501 C3. Structured as an LLC
Authorized Representatives:
Name: Kermit Mehlum
Phone (952) 230-2988
Name: Allen Black
Phone 651.631.6310
Description of Business: Non Profit Senior Housing an Services.
Legal Counsel: Grover Saver. Leonard. Q"Brien Wilford. Spence & Gale
612.332.1030
Address: 1 00 South 5th Street Suite 1200. Minneapolis. MN 55402
Submitted By
Name:
Allen Black
Title:
Board Member and Proiect Develooer
Signature:
1/7/2006
~~~~
Date:
.........................................................................
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FINANCIAL BACKGROUND:
1. Has the principal signing this application or the organization making the
application ever filed for bankruptcy? NO
If "Yes", please explain the circumstances
2. Has the principal signing this application or the organization making the
application ever defaulted on any loan commitment? No
3. Has the principal signing this application or the organization making the
application filed for conventional financing for the project? Yes we are
concurrently oroceedine with bond financim! with issuance authority throueh the
City of Prior Lake.
4. List financial references:
Name Northland Securities. Mark Beese
Telephone (612) 851-5909
Name Pioer Jaffrev. Brad Wirt
Telephone (612) 303-6704
Name
Telephone
5. Have you ever used Tax Increment Financing or any form of public financial
assistance before? If yes, where and when and for what project?
This is a sinele asset LLC. Other senior oroiects. in the Twin Cities develooed bv
Presbyterian Homes utilize TIF financing.
PROJECT INFORMATION:
1. Location/address of proposed project: 13760 McKenna Road. Prior Lake
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2. Amount of assistance requested? The Proiect is seekine 15 Year. 90% Pay as-
you-eo TIF
3. Need for assistance: Necessary to secure financinlZloroiect feasibility to orovide
affordable housine units. 20% of the units affordable at 50% of median income..
4. Present ownership of site: Sheoherds Path Senior Housinl! is a ioint venture bv
Sheoherd of The Lake Lutheran Church (50%)and Presbyterian Homes and
Services (50%)
5. Number of permanent jobs created as a result of project: Phase I = 35 FTE and
when fully built out and added 75 FTE
6. Estimated annual sales: Present: New Business
Future: $3.500.000
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7. Market value of project following completion: $35.000.000 estimated nroiect cost
8. Who will own the project upon completion? Shepherds Path Senior Housing LLC
9. Name and address of architect: Pone Architects. 1255 Enerl!V Park Drive. St Paul.
MN 55108 Dan Weatherman and Ward Isaacson
10. Anticipated construction start date: Ami! 2006
Completion Date: June 2007
11. Estimated project related costs:
a. Land acquisition
b. Site development
c. Building cost
d. Equipment
e. Architectural/engineering fee
f. Legal fees
g. Off-site development costs
h. Other
12. Sources of fmancing
a. Private financing institution
b. City funds
c. Other public funds.
d. Developer equity
e. Resident Entrance Deposits
$4.100.000
$1.800.000
$21.500.000
$1.600.000
$800.000
$100.000
$5.000.000
$28.000.000
None, Pay as you go TIF
$1.500.000
$5.500.000
See Attached Proforma
.Please identify source and nature of standards.
CITY OF PRIOR LAKE
PRE-APPLICATION
FOR FINANCIAL ASSISTANCE
Legal name of applicant: Sheoherd's Path Senior Housin2 LLC
Address: 13760 McKenna Road,
Prior Lake. MN 55372
Telephone number: 651.631.6310
E-mail address: AblackfQ),senioroartners.com
Name of contact person: Allen Black
Type of financial assistance requested:
X Tax Increment Financing
Tax Abatement
Cash Contribution
Low Interest Loan
X Conduit Bonds
Fayade Improvement
Other:
PROJECT INFORMATION:
The following information must accompany this Pre-Application.
1. A map showing the location of proposed development.
2. General description of the project including estimated cost, size and location of
building(s); business type or use; traffic information including parking, projected
vehicle counts and traffic flow; timing of the project; estimated market value
following completion.
3. Indicate the purpose and need for the requested financial assistance.
4. The existing Comprehensive Guide Plan Land Use designation and zoning of the
property. Include a statement as to how the proposed development will conform
to the land use designation and how the property is or will be zoned.
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5. A statement identifying the public benefits of the proposed project including
estimated increase in property valuation, new jobs to be created and other
community assets.
6. Background information on developer's company or corporation, including
principals, history and past projects.
SIGNATURE:
Applicant's Signature:
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Title:
Date:
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Senior Housing Partners
2845 Hamline Ave N
St Paul, MN 55113
March 3, 2006
Paul Snook
Economic Development Director
City of Prior Lake
16776 Fish Point Road SE
Prior Lake, MN 55372
Dear Mr. Snook:
Attached is description of Shepherds Path narrative outline of our project and the needs for Tax
Increment Financing. We have addressed those issues which may be of interest however we certainly
will be happy to further elaborate on any topics you may request
Sincerely,
Allen L Black
Vice President
. Page 2
March 3, 2006
SheDherds Path Vision
Shepherds Path Senior Campus is designed to be a gracious, full-service, high quality
residential environment and a comprehensive community resource exclusively for older
adults age 62 and over. This approach to senior housing reflects a changing evolution
from the congregate rental units of the 1980s, to a comprehensive continuum of programs
designed to accommodate the lifestyle needs of diverse market segments: from younger
active older adults who may simply desire to live among peers and be relieved of some of
the daily tasks of home ownership, to very frail older adults in need of wide range of
support and services.
The project is physically connected to Shepherd of Lakes Lutheran Church, is a
partnership between the church and Presbyterian Homes and Services. Further
development on the campus will involve a planned YMCA center, youth athletics
facilities, a youth counseling center and college classes offered by Augsburg College.
This develv.pment J.I;.o}lJ.l;.osents the implemculaiion of the master plan, planned by the church to
create a multi-generational community experience. Older adults, family members, church
members, youth, volunteers and the residents of Prior Lake have an opportunity to "share the
path" and benefit from the synergy of cooperative programs.
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Tax In"'J.l;.oment Financing (111') is an important element in fulfilling the needs of the
community. 1brough the al'l-Uvval of pay-as-you-go TIF the project will be able to meet the
needs of low and moderate income residents in the community. By offsetting/reducing
property taxes for a period of time Shepherds Path will be able to create a "Qualified Housing
District". This district requires that 20% of the housing units being developed will meet low
income guidelines and subsequent rent control/limitations. Shepherds Path would recognize
these limitations throughout the housing continuum including independent housing, assisted
living and memory care apartments. For those residents needing financial assistance for
personal services, the project will seek participation by additional sources including county,
state and federal programs and ongoing internal mission benevolence fundraising.
Presbyterian Homes has developed several other comparable projects using pay-as-you-
go TIF agreements including:
Chanhassen - Summerhouse of Chanhassen
Mahtomedi - St Andrews Village
Bayport - Croixdale
Little Canada - The Mayfield
Monticello - St Benedicts Center and Mississippi Shores
Minnetonka - Beacon Hill
Oakdale - Echo Ridge
Spring Lake Park - Oakcrest
Woodbury - Summerhouse
Shoreview - Summerhouse
Andover - The Farmstead
. Page 3
March 3, 2006
The Project
The main building on the Shepherds Path Senior Campus will have a "Town Centre" which
will provide services that may be used by Boutwells' residents and members of the
surrounding communities as well. The Town Ctiu.l..." will have features that allow it to be a
gathering place, a place to shop, an information center, a place to eat, and a place to relax with
friends. There will be a "Path" of shops, a bank, a library, a cafe, an auditorium, classrooms, a
chapel, and a beauty shop. There also will be a medical fitness center with a therapeutic pool,
exercise equipment, therapy services, and trained staff to support and assist clients in exercise
routines.
Town Center
The Town Centre will serve as the heart of the Shepherds Path Senior Campus community.
Its many amenities will bring to the residents, as well as the Prior Lake community,
comprehensive services to provide a practical and valuable facility for seniors lluJ.H the area
The design of the Town Centre will reinforce the philosophy of the "community path"
interconnecting the senior housing, church and future YMCA. Features of the Town Centre
include:
. Chapel- a beautifully appointed chapel will be available to residents and to the
community. There will be regularly scheduled ecumenical services under the
direction of Shepherds Path Senior Campus chaplain as well as special services
that will focus on specific denominations under the direction of area clergy.
. Auditorium - this large room will be available for a variety of meetings for all
residents and for the entire community
. The Market & Book Store - basic grocery items, phannacy pick-up, greeting
cards, and dry cleaning pick-up will offer a convenient way for residents to do
casual shopping every day.
. Library - containing books, newspapers, current periodicals, access to the
Internet, and comfortable sitting areas.
. Bank - banking services will be }J.lV vided on a regularly scheduled basis.
. Beauty/Barber Shop - a full-service beauty shop and barbershop will be in
operation at scheduled times throughout the week.
. The Cafe - a pleasant sunny cafe will provide special casual dining for the
residents and members of the community as well.
. Lounge - a place for residents and their guests as they gather to socialize before
mealtime.
. Page 4
March 3, 2006
· AtriumlRe....r Con - central point of contact for general information, and
directions as needed.
· Medical Fitness Center - a Medical Fitness Center specifically focused on the
senior population. The large therapeutic pool will be available for classes,
individual therapeutic swim, and exercise. The center will provide a full range of
aquatic and land exercise including cardiac and strength mining fitness
equipment, therapy and socialization opportunities.
. Theater -a 49 seat theater which provides opportunities for schedule movies and
is designed to serve as a classroom for lifelong learning.
Future Phases
The current site can accommodate the proposed expansion, while preserving the natural
beauty and integrity of the land as open space. The planned skilled care center is designed
to be linked to the main building that currently includes the Town Center, the Commons
assisted living building and the Terrace independent living building. For residents of
these buildings who need nursing care, the location will allow them to remain easily
connected with a spouse or friends who sti1llive throughout the campus.
Projecting an increasing demand for housing and services the site is also planned for
future independent living including a market rate Brownstone apartments and a HUD 202
building which will serve the senior community that meet very low income program
requirements. HUD approves a very limited number of these units annually however the
Shepherds Path application will score higher because of the continuum of care campus.
Comoetitive Imoact
Prior to beginning the design phase and a market study was conducted. Based on the
fmdings of this study the market demand for the project is in excess of the current
provider capacity. Attached is the report.
Prior to project fInancing this study will be updated, however, we are unaware of any
market conditions that would adversely impact the previous market analysis. Based on
our market analysis and comparable project experience we anticipate the project will be
reached stabilized occupancy in 15-18 months.
Prior Lake 2030 Vision
Keeping in line with the City's 2030 Vision, our project will contribute major economic
vitality as well as the preservation of Prior Lakes, unique historical roots and small town
values. It preserves acreage for open space, parks and residential diversity. At the same time
it will help the city diversify it business base with various senior living opportunities along
with services. Our plan also includes major roadway additions and improvements which are
strongly suggested in the 2030 vision. When all phases of the senior living project are
complete there will be over 250 additional new and part time jobs available for the
community. The City's vision also calls for the creation of residential subdivisions that will
add high quality and high value at all price points and our project will certainly do that. But,
. Page 5
March 3, 2006
most of all we will create a housing facility that provides opportunity for lifecyc1e housing and
it will be all on one site.
Scott County
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8
CITY OF PRIOR LAKE, MN PROPOSED TIF DIST. 6-1
This drawing is neither a legally recorded map nor a
survey and is not intended to be used as one. This
drawing is a compilation of records, information, and
data located in various city, county, and state offices,
and other sources affecting the area shown, and is to be
used for reference purposes only. Scott County is not
responsible for any inaccuracies herein contained. If
discrepeancies are found, please contact the Scott
County Surveyors Office.
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May 9, 2006
http://www.co.scott.mn.us/scgis --path/ims?ServiceN ame=overview&Client V ersion=4.0&F 0... 5/9/2006
BRIGGS AND lVlORGAN
2200 FIRST NATIONAL BANK BUILDING
332 MINNESOTA STREET
SAINT PAUL, MINNESOTA 55101
TELEPHONE (651) 808-6600
FACSIMILE (651) 808-6450
PROFESSIONAL ASSOCIATION
WRITER'S DIRECT DIAL
(651) 808-6484
WRITER'S E-MAIL
jboulton@briggs.com
May 9, 2006
VIA EMAIL
Mr. Frank Boyles
Mr. Ralph Teschner
Mr. Paul Snook
City of Prior Lake
16200 Eagle Creek Avenue SE
Prior Lake, MN 55372-1787
Re: Economic Development Authority of the City of Prior Lake, Minnesota -
Senior Housing Revenue Bonds (Shepherd's Path Senior Housing, Inc.
Project), Series 2006
City of Prior Lake, Minnesota - Senior Housing Revenue Bonds (Shepherd's
Path Senior Housing, Inc. Project), Series 2006
Dear Frank, Ralph, Paul, City Council Members and EDA Commissioners:
It is proposed that the EDA and the City of Prior Lake, Minnesota both issue tax-exempt
Bonds on behalf of Shepherd's Path Senior Housing, Inc. (the "Borrower") to finance the
acquisition, construction and equipping of a senior housing campus, including approximately 84
independent housing units, 54 assisted living units, 18 memory care units and approximately
35,000 square feet of common space, to be located adjacent to the Shepherd of the Lake
Lutheran Church in the City (the "Project"). The Bonds issued by the EDA on behalf of the
Borrower would not exceed $10,000,000 and the Bonds issued by the City on behalf of the
Borrower would not exceed $22,000,000.
State and Federal law allows local government units and their agencies to issue bonds and
loan the proceeds to nonprofit corporations to finance or refinance capital expenditures. This
assistance reduces borrowing costs for nonprofit corporations and enables them to provide their
services more cost effectively. It is a fairly common means of obtaining necessary financing for
all nonprofit entities, including senior housing facilities.
To accomplish this purpose, the EDA and the City would enter into separate Loan
Agreements with the Borrower under which the Borrower will agree to pay all principal and
interest on both series of Bonds. The EDA and the City will assign all of their rights to payments
under the Loan Agreements to a Trustee (the "Trustee") for the Bondholders who will purchase
the Bonds and loan the purchase price of the Bonds directly to the Borrower. The EDA and the
City are merely conduits and the money and obligations flow only between the Trustee (for the
Bondholders) and the Borrower.
1875567v3
MINNEAPOLIS OFFICE' IDS CENTER' WWW.BRlGGS.COM
MEMBER - LEX MUNDI, A GLOBAL ASSOCIATION OF INDEPENDENT LAW FIRMS
BRIGGS AND MORGAN
May 9, 2006
Page 2
The Bonds and the resolutions adopted by the EDA and the City will recite that the
Bonds, if and when issued, will not to be payable from or charged upon any of the EDA's or the
City's funds, other than the revenues received under the Loan Agreements and pledged to the
payment of the Bonds, and the EDA and the City are not subject to any liability on the Bonds.
No holder of the Bonds will ever have the right to compel any exercise by the EDA or the City of
their taxing powers to pay any of the principal of the Bonds or the interest or premium thereon,
or to enforce payment of the Bonds against any property of the EDA or the City except the
interests of the EDA and the City in payments to be made by the Borrower under the Loan
Agreements. The Bonds will not constitute a charge, lien or encumbrance, legal or equitable,
upon any property of the EDA or the City except the interests of the EDA and the City in
payments to be made by the Borrower under the Loan Agreements. The Bonds are not moral
obligations on the part of the State or its political subdivisions, including the EDA and the City,
and the Bonds will not constitute a debt of the EDA or the City within the meaning of any
constitutional or statutory limitation.
The Bonds issued by the EDA must be factored into the EDA's $10,000,000 Bank
Qualification allowance leaving no amount available for other obligations that the EDA could
otherwise issue this year for governmental purposes or other nonprofit borrowers. The EDA has
indicated these are the only Bonds it expects to issue this year.
With these Bonds and others the City expects to issue this year for governmental
purposes, the City will exceed the $10,000,000 limit so no bonds issued by the City will be Bank
Qualified this year. However, the Borrower will agree in the Loan Agreement to compensate the
City for the additional costs it incurs due to being unable to designate its bonds as Bank
Qualified in 2006.
Issuing the Bonds will not affect the credit rating of the EDA or the City on bonds they
issue for municipal purposes.
Under Federal and State law in order for the Bonds to be tax exempt obligations, they
must be issued by a political subdivision. This requires that the EDA and the City hold a public
hearing and approve issuance of the Bonds and the execution of related documents.
In addition to the Bonds, the Borrower has requested tax increment financing assistance
for the Project. The Borrower has proposed "pay-as-you-go" financing in which the Borrower
would be paid tax increments over time as they are generated rather than requesting an upfront
payment from the City. The underwriter for the Bonds will require a collateral assignment of the
TIF to provide the financial coverage necessary to market the Bonds. The Borrower will assign
and pledge to the to the Trustee on behalf of the Bondholders all of its right, title and interest in a
Development Agreement with the City and a Tax Increment Financing Note from the City.
However, Bondholders will not any have greater rights to tax increments or other revenues of the
City or the EDA than are given to the Borrower under the pay-as-you-go arrangement.
1875567v3
BRIGGS AND MORGAN
May 9, 2006
Page 3
Although the TIF and the Bonds are both part of the total financing package for the
Project, there are some differences. The processes for approval of the TIF and the Bonds can
move along parallel tracks but are separate processes with more notice requirements on the TIF
side. Consequently, the current plan is to hold the public hearing on the issuance of the Bonds
prior to the hearing on the approval of the TIF plan. Moreover, while no revenues of the City or
EDA are pledged to the payment of the Bonds, tax increment fmancing is a payment of a portion
of the property tax revenues generated by the Project to the Borrower in the form of tax
increments.
On the other hand, the Bonds and the TIF are alike in that there is really no risk to the
City or the EDA in the event there are financial difficulties with the Project. The Borrower has
proposed pay-as-you-go TIF so that they only receive the increments that are actually generated
by the Project. If for any reason tax increments are not generated in the amounts projected there
is no recourse to the City or the EDA for additional payments.
If you have any questions please don't hesitate to contact me.
Very truly yours,
Isl Jenny (Bou[ton
Jenny Boulton
JSB
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