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HomeMy WebLinkAbout07(B) - Resolution Giving Host Approval to the Issuance of the City of Mayer, Minnesota, Senior Housing Revenue Note (McKenna Crossing Expansion Project,) Report ITEM: 7B CITY COUNCIL AGENDA REPORT MEETING DATE: September 22, 2026 PREPARED BY: Casey McCabe, Community Development Director Nicole Klekner, Finance Director PRESENTED BY: Casey McCabe AGENDA ITEM: Public Hearing to Consider Approval of a Resolution Giving Host Approval to the Issuance of the City of Mayer, Minnesota, Senior Housing Revenue Note (McKenna Crossing Expansion Project,) Series 2026A, and the City of Mayer, Minnesota, Senior Housing Revenue Note (McKenna Crossing Expansion Project,) Series 2026B, and Approving a Housing Program and Joint Powers Agreement RECOMMENDED ACTION: Approval of the attached resolution. BACKGROUND: Shepherd's Path Senior Housing, Inc., an affiliate of Presbyterian Homes, has asked that the City of Prior Lake hold a public hearing to consider giving host approval for the issuance of bonds to the City of Mayer, Minnesota, Senior Housing Revenue Note Series 2024A & 2026B, and approving a housing program and Joint Powers Agreement (PJA) related to financing for the McKenna Crossing expansion project located at 13810 Shepherds Path NW in Prior Lake. Under federal and State law, in order for bonds to be tax exempt, they must be issued by a political subdivision. In addition, the city in which the project is located must give approval to another city to issue bonds for a project within its jurisdiction. This requires that the City of Prior Lake hold a public hearing giving host approval to the issuance of bonds, approving a housing program and JPA with the City of Mayer (“Mayer”). Shepherd's Path Senior Housing, Inc., a Minnesota nonprofit corporation and 501(c)(3) organization, is proposing to use the proceeds of the notes to finance all or a portion of the construction, improvement, and equipping of a physical expansion that adds 72 independent living units to McKenna Crossing. The Facility is and will be owned and operated by Shepherd's Path Senior Housing, Inc. The aggregate estimated principal amount of the notes to be issued by the City of Mayer to finance the project and related costs will not exceed $30,000,000. Prior Lake and Mayer shall enter into a JPA pursuant to which Prior Lake will consent to the issuance of the notes by Mayer to finance the project and the adoption of the Housing Program by Mayer, and Mayer will agree to issue the notes to finance the project. Mayer will be considering this item on September 28, 2026. Issuance of the notes is anticipated to occur in the fourth quarter of 2026. FINANCIAL IMPACT: No financial impact is anticipated as a result of this action. Shepherd’s path has agreed to pay any and all costs incurred by Prior Lake in connection with the issuance of the notes, whether or City of Prior Lake | 4646 Dakota Street SE | Prior Lake MN 55372 Item 7B Page | 2 not such issuance is carried to completion. Prior Lake will not be issuing bonds and as such, will not receive an issuer administration fee. The notes, if and when issued, will not constitute a charge, lien, or encumbrance, legal or equitable, upon any property of Prior Lake or Mayer. Such notes will not give rise to a pecuniary liability of Prior Lake or Mayer or be a charge against the general credit or taxing powers of Prior Lake or Mayer but are payable only from sums to be paid by Shepherd’s Path pursuant to the loan agreements with Mayer. ALTERNATIVES: 1. Motion and second approving a resolution giving host approval to the issuance of the City of Mayer, Minnesota, Senior Housing Revenue Note (McKenna Crossing Expansion Project,) Series 2026A, and the City of Mayer, Minnesota, Senior Housing Revenue Note (McKenna Crossing Expansion Project,) Series 2026B, and approving a Housing Program and Joint Powers Agreement 2. Motion and second to deny the attached resolution. ATTACHMENTS: 1. Housing Program 2. Joint Powers Agreement 3. Resolution 4646 Dakota Street SE Prior Lake, MN 55372 RESOLUTION 26- A RESOLUTION GIVING HOST APPROVAL TO THE ISSUANCE OF THE CITY OF MAYER, MINNESOTA, SENIOR HOUSING REVENUE NOTE (MCKENNA CROSSING EXPANSION PROJECT), SERIES 2026A, AND THE CITY OF MAYER, MINNESOTA, SENIOR HOUSING REVENUE NOTE (MCKENNA CROSSING EXPANSION PROJECT), SERIES 2026B, AND APPROVING A HOUSING PROGRAM AND JOINT POWERS AGREEMENT Motion By: Second By: WHEREAS, Minnesota Statutes, Chapter 462C, as amended (the “Act”), gives municipalities the power to issue revenue obligations for the purpose of financing a program for the purposes of planning, administering, making or purchasing loans with respect to a multifamily housing facility for the elderly and to enter into agreements necessary or convenient in the exercise of powers granted by the Act; and WHEREAS, Minnesota Statutes, Section 471.656, as amended, authorizes a municipality to issue obligations to finance the acquisition or improvement of property located outside of the corporate boundaries of such municipality if the obligations are issued under a joint powers agreement between the municipality issuing the obligations and the municipality in which the property to be acquired or improved is located. Pursuant to Minnesota Statutes, Section 471.59, as amended, by the terms of a joint powers agreement entered into through action of their governing bodies, two or more municipalities may jointly or cooperatively exercise any power common to the contracting parties or any similar powers, including those which are the same except for the territorial limits within which they may be exercised and the joint powers agreement may provide for the exercise of such powers by one or more of the participating governmental units on behalf of the other participating units; and WHEREAS, the City of Prior Lake, Minnesota (“Prior Lake” or the “Host City”), has received from 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”), a proposal that the City of Mayer, Minnesota (the “Issuer”), undertake a housing finance program (the “Housing Program”) to finance the Project (as defined below) through the issuance of revenue notes, revenue bonds, or other obligations, in one or more series, pursuant to the Act and, in connection with that proposal, the Issuer is to issue the City of Mayer, Minnesota Senior Housing Revenue Note (McKenna Crossing Expansion Project), Series 2026A (the “Series 2026A Note”), and the City of Mayer, Minnesota Senior Housing Revenue Note (McKenna Crossing Expansion Project), Series 2026B Note (the “Series 2026B Note” and, together with the Series 2026A Note, the “Notes”), in an aggregate principal amount not to exceed $30,000,000; and WHEREAS, the project to be financed by the Notes consists of (i) the construction, improvement, and equipping of a physical expansion that adds 72 independent living units (the “Addition”) to McKenna Crossing, an existing senior living facility located at 13810 Shepherds Path NW in Prior Lake (the “Existing Facility” and, together with the Addition, the “Facility”), (ii) the funding of any required reserve funds, (iii) the payment of any capitalized interest, and (iv) the costs of issuing the Notes (collectively, the “Project”). The Facility will be owned and operated by the Borrower; and WHEREAS, pursuant to the Act, Minnesota Statutes, Sections 471.59 and 471.656, as amended, and Section 147(f) of the Code, a public hearing on the Housing Program, the proposal to undertake and finance the Project located within the jurisdictional limits of Prior Lake, and the proposed issuance of the Notes by the Issuer was held by the City Council of Prior Lake this same date, following duly published notice, at which time all persons who desired to speak were heard; at which all those appearing who desired to speak were heard and written comments were accepted; and WHEREAS, Prior Lake has been advised that the Notes, as and when issued, will not constitute a charge, lien, or encumbrance, legal or equitable, upon any property of Prior Lake or the Issuer, except the revenues to be derived from one or more loan agreements to be entered into between the Issuer and the Borrower. Such Notes will not give rise to a pecuniary liability of Prior Lake or the Issuer or be a charge against the general credit or taxing powers of Prior Lake or the Issuer, but are payable only from sums to be paid by the Borrower pursuant to the loan agreements; and WHEREAS, Prior Lake and the Issuer are proposing to enter into a Joint Powers Agreement (the “Joint Powers Agreement”) pursuant to which Prior Lake will consent to the issuance of the Notes by the Issuer to finance the Project and the adoption of the Housing Program by the Issuer, and the Issuer will agree to issue the Notes to finance the Project; and WHEREAS, the Borrower has agreed to pay any and all costs incurred by Prior Lake in connection with the issuance of the Notes, whether or not such issuance is carried to completion. NOW THEREFORE, BE IT HEREBY RESOLVED BY THE CITY COUNCIL OF PRIOR LAKE, MINNESOTA as follows: 1. Host Approval. The City Council hereby gives the host approval required under Section 147(f) of the Code and, pursuant to Minnesota Statutes, Section 471.656, Subd. 2(2), the City Council hereby consents to the issuance of the Notes by the Issuer. The Housing Program is hereby approved. 2. Joint Powers Agreement. The Mayor and the City Manager are hereby authorized and directed to execute and deliver the Joint Powers Agreement and any other documents deemed necessary to fulfill the intentions of this resolution. All of the provisions of the Joint Powers Agreement, when executed and delivered as authorized herein, shall be deemed to be a part of this resolution as fully and to the same extent as if incorporated verbatim herein and shall be in full force and effect from the date of execution and delivery thereof. The Joint Powers Agreement shall be substantially in the form on file with the City which is hereby approved, with such omissions and insertions as do not materially change the substance thereof, or as the Mayor and the City Manager, in their discretion, shall determine, and the execution thereof by the Mayor and the City Manager shall be conclusive evidence of such determination. 3. Electronic Signatures Authorized. The execution of any instrument by the appropriate officer or officers of the City herein authorized may be by electronic signature if such an option is available and shall be conclusive evidence of the approval of such documents in accordance with the terms hereof. For purposes of this paragraph: (i) “electronic signature” means a manually signed original signature, an electronic image of a handwritten signature, or a digital signature provided by DocuSign, Adobe Sign, or any other electronic signature provider 2 acceptable to the parties, which in each case is transmitted by electronic means; and (ii) ”transmitted by electronic means” means sent in the form of a facsimile or sent via the internet as a PDF (i.e. portable document format) or other replicating image attached to an electronic mail or internet message. nd Passed and adopted by the Prior Lake City Council this 22 day of September 2026. VOTE Briggs Braid Churchill Lake Hellier Aye ☐ ☐ ☐ ☐ ☐ Nay ☐ ☐ ☐ ☐ ☐ Abstain ☐ ☐ ☐ ☐ ☐ Absent ☐ ☐ ☐ ☐ ☐ _______________________ Jason Wedel, City Manager 3 303062923v3 CITY OF MAYER, MINNESOTA HOUSING FINANCE PROGRAM (MCKENNA CROSSING EXPANSION PROJECT) This housing finance program is undertaken by the City of Mayer, Minnesota (the “City”), pursuant to a joint powers agreement, for a Project, hereinafter described, to be located within the City of Prior Lake, Minnesota (the “Host City”). The Project will be financed, in part, by the issuance of one or more series of revenue bonds or other obligations (the “Notes”), to be issued by the City pursuant to Minnesota Statutes, Chapter 462C (the “Act”) and in accordance with a loan agreement (the “Loan Agreement”) between the City and 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. The “Project” will consist of financing all or a portion of (i) the construction, improvement, and equipping of a physical expansion that adds 72 independent living units (the “Addition”) to McKenna Crossing, an existing senior living facility located at 13810 Shepherds Path NW in the Host City (the “Existing Facility” and, together with the Addition, the “Facility”), (ii) the funding of any required reserve funds, (iii) the payment of any capitalized interest, and (iv) the costs of issuing the Notes. The Project will be owned and operated by the Borrower. The Project is intended to be a “multifamily housing development” designed for rental primarily to “elderly or disabled persons” within the meaning of Minnesota Statutes, Section 462C.05, subdivision 4. Consequently, no income limits apply under the Act or other state law. The Project is intended to finance newly constructed “residential rental property for family units” within the meaning of Section 145(d) of the Internal Revenue Code of 1986, as amended (the “Code”). Each unit will contain separate and complete facilities for living, sleeping, eating, cooking, and sanitation. Once available for occupancy, each unit will be rented or held available for rental on a continuous basis until the Notes are fully paid and the longest applicable “qualified project period” has expired, as provided in Treasury Regulations, Section 1.103-8(b)(7). The Existing Facility is comprised of 154 senior housing units, including 85 independent living units, 51 assisted living units, 18 memory care units, together with approximately 35,000 square feet of common space. The Addition is currently expected to add 72 independent living units, consisting of the following units: Unit Description Number of Units Average Sq. Feet/Unit Approximate Base Rent(1) Approximate Entrance Deposit(2) Independent Living: One-bedroom 12 806 – 858 $2,539 – $2,703 $ 60,450 – $ 64,350 One-bedroom w/ den 21 926 – 1,187 $ 2,917 – $3,739 $ 69,450 – $ 89,025 Two-bedroom 24 1,230 – 1,279 $3,875 – $4,029 $ 92,250 – $ 95,925 Two-bedroom w/ den 15 1,361 – 1,567 $4,287 – $4,936 $102,075 – $117,525 (1)Upon opening in 2028. (2)25% of the entrance fee deposit is due at reservation; the remaining 75% is due at lease signing; 100% of entrance fee is refundable, with refund to be paid within 120 days of resident vacating unit. The City will issue the Notes in one or more series of tax-exempt and/or taxable obligations to finance the Project in an aggregate principal amount of Notes not to exceed $30,000,000. The Borrower will be required, pursuant to the Loan Agreement, to make payments sufficient to pay when due the 303062923v3 principal of, premium, if any, and interest on the Notes. The Notes may be structured so as to take advantage of whatever means are available or necessary and are permitted by law to enhance the security for and marketability of the Notes. Substantially all of the net proceeds of the Notes (the initial principal amount thereof, less amounts deposited in reasonably required reserves or paid out as costs of issuance of the Notes) will be used to pay the costs of the Project, including any functionally related and subordinate facilities. Because the Borrower is treated as an organization described in Section 501(c)(3) of the Code, no allocation of authority to issue tax-exempt bonds is required pursuant to Minnesota Statutes, Chapter 474A. Issuance of the Notes is anticipated to occur in the fourth quarter of 2026. The Project is not inconsistent with any Housing Plan adopted by the City under Minnesota Statutes, Chapter 462C. The Borrower will be required to operate the Project in accordance with state and local anti-discrimination laws and ordinances, applicable land use and development restrictions, and applicable state and local building codes. The City has adequate existing capacity to administer, monitor, and supervise the Project, although the City reserves the right to contract with other public agencies or private parties for these purposes. The costs of the Project and the program of financing the Project, including specifically the costs of the City and the Host City, generally will be paid or reimbursed by the Borrower. All statements of fact and representations in this Housing Program are based solely on information provided, and representations made, to the City by the Borrower. Adopted on September 28, 2026. 303182701v2 JOINT POWERS AGREEMENT PROVIDING FOR THE ISSUANCE OF REVENUE BONDS TO FINANCE SENIOR HOUSING AND HEALTHCARE FACILITIES (MCKENNA CROSSING EXPANSION PROJECT) This Agreement is entered into as of September 1, 2026, by and between the City of Mayer, Minnesota (the “Issuer”) and the City of Prior Lake, Minnesota (the “Host City” and, together with the Issuer, the “Cities”). Each of the Cities is a municipal corporation duly organized under the laws of the State of Minnesota. WHEREAS, the Issuer proposes to adopt a housing program (the “Housing Program”) in accordance with Minnesota Statutes, Chapter 462C; and WHEREAS, it has been proposed by 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, that the Issuer undertake a program to assist in financing the Project (defined below) through the issuance by the Issuer of revenue bonds or other obligations, in one or more series, in an aggregate principal amount not to exceed $30,000,000 (the “Obligations”); and WHEREAS, the Cities desire to assist the Borrower pursuant to this Agreement; NOW, THEREFORE, for and in consideration of the mutual covenants and representations hereinafter contained, the parties hereto agree as follows: 1. Minnesota Statutes, Section 471.59 (the “Joint Powers Act”) provides that two or more governmental units, by agreement entered into through action of their governing bodies, may jointly or cooperatively exercise any power common to the contracting parties, and may provide for the exercise of such power by one of the participating governmental units. 2. In connection with revenue bonds issued under Minnesota Statutes, Chapter 462C (the “Act”), Section 462C.14, Subdivision 3 provides for joint action between cities pursuant to the Joint Powers Act. 3. The Borrower has proposed, and the Cities hereby agree, to enter into this Agreement pursuant to the Joint Powers Act. The Issuer will issue the Obligations in accordance with the Act and loan the proceeds thereof to the Borrower pursuant to agreements with the Borrower that obligate the Borrower to use the proceeds of the Obligations to finance the Project (defined below). The Issuer will issue the Obligations in an aggregate principal amount not to exceed $30,000,000. 4. As further described in the Housing Program, the Obligations will finance all or a portion of a project consisting of (i) the construction, improvement, and equipping of a physical expansion that adds 72 additional independent living units (the “Addition”) to McKenna Crossing, an existing senior living facility located at 13810 Shepherds Path NW in the Host City (the “Existing Facility” and, together with the Addition, the “Facility”), (ii) the funding of any required reserve funds, (iii) the payment of any capitalized interest, and (iv) the costs of issuing 2 303182701v2 the Obligations (collectively, the “Project”). The Facility is and will be owned and operated by the Borrower. 5. The Issuer has adopted a resolution adopting the Housing Program. 6. Each of the Cities has adopted a resolution evidencing its intent to enter into this Agreement. As required under the Code, the Host City has adopted resolutions granting host approval of the issuance of the Obligations by the Issuer and the Issuer has adopted a resolution approving the issuance of its Obligations. 7. The Issuer shall exercise the powers of the Act by adopting, approving, and executing such resolutions, documents, and agreements as shall be necessary or convenient to authorize, issue, and sell the Obligations and such other resolutions, documents, and agreements as shall be necessary or required in connection with the issuance of the Obligations and giving effect to or carrying out the provisions of this Agreement and documents under which the Obligations are issued and/or secured. 8. The Obligations issued by the Issuer will be special, limited obligations of the Issuer, payable solely from proceeds, revenues, and other amounts pledged thereto and more fully described in a loan agreement between that Issuer and the Borrower, executed in connection with the Project. In no event shall the Obligations ever be payable from or charged upon the general credit, taxing powers, or any funds of the Cities; the Cities are not subject to any liability thereon; no owners of the Obligations shall ever have the right to compel the exercise of the taxing power of the Cities to pay any of the Obligations or the interest thereon, nor to enforce payment thereof against any property of any Cities; the Obligations shall not constitute a charge, lien, or encumbrance, legal or equitable, upon any property of the Cities; and the Obligations do not constitute an indebtedness of any of the Cities within the meaning of any constitutional, statutory, or charter limitation. 9. This Agreement will terminate upon the retirement or defeasance of all of the Obligations or any bonds issued to refund the Obligations. 10. This Agreement may be executed in counterparts, each of which shall be an original, but such counterparts shall together constitute but one and the same instrument. 11. The parties agree that the electronic signature of a party to this Agreement shall be as valid as an original signature of such party and shall be effective to bind such party to this Agreement. For purposes of this paragraph: (i) “electronic signature” means a manually signed original signature, an electronic image of a handwritten signature, or a digital signature provided by DocuSign, Adobe Sign, or any other electronic signature provider acceptable to the parties, which in each case is transmitted by electronic means; and (ii) “transmitted by electronic means” means sent in the form of a facsimile or sent via the internet as a PDF (i.e. portable document format) or other replicating image attached to an electronic mail or internet message. Paper copies or “printouts” of this Agreement, if introduced as evidence in any judicial, arbitral, mediation, or administrative proceeding will be admissible as between the parties to the same extent and under the same conditions as other original business records created and maintained in documentary form. Neither party may contest the admissibility of true and accurate copies of 3 303182701v2 documents transmitted by electronic means and containing, or to which there is affixed, an electronic signature on the basis of the best evidence rule or as not satisfying the business records exception to the hearsay rule. [Remainder of page intentionally blank; signature page follows.] S-1 303182701v2 IN WITNESS WHEREOF, each of the Cities has caused this Agreement to be executed on its behalf by its duly authorized officers, all as of the day and year first above written. CITY OF MAYER, MINNESOTA, the Issuer By________________________________ Mayor By________________________________ City Administrator Signature page to Joint Powers Agreement (McKenna Crossing Expansion Project) S-2 303182701v2 CITY OF PRIOR LAKE, MINNESOTA, the Host City By________________________________ Mayor By________________________________ City Manager Signature page to Joint Powers Agreement (McKenna Crossing Expansion Project)