HomeMy Public PortalAbout2019-49 Resolution Authorizing The Issuance of Revenue Obligations for the Benefit of PHS Founders Ridge Inc...Member DesLauriers introduced the following resolution and moved its adoption:
CITY OF MEDINA, MINNESOTA
RESOLUTION NO.2019-49
RESOLUTION AUTHORIZING THE ISSUANCE OF REVENUE
OBLIGATIONS FOR THE BENEFIT OF PHS FOUNDERS RIDGE, INC.;
APPROVING THE EXECUTION OF THE REVENUE OBLIGATIONS AND
RELATED DOCUMENTS; AND TAKING OTHER ACTIONS WITH RESPECT
THERETO
BE IT RESOLVED by the City Council (the "City Council") of the City of Medina, Minnesota
(the "City"), as follows:
Section 1. Findings.
1.01. Minnesota Statutes, Chapter 462C, as amended (the "Act"), authorizes the City to carry
out the public purposes described in the Act by providing for the issuance of revenue bonds to provide
funds to finance multifamily housing developments.
1.02. Pursuant to Minnesota Statutes, Section 471.656, as amended, a municipality may 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.
1.03. PHS Founders Ridge, Inc., a Minnesota nonprofit corporation, or any of its affiliates
(collectively, the "Borrower"), has proposed that the City issue one or more series of tax-exempt or
taxable revenue obligations (the "City Note") in an aggregate principal amount not to exceed
$10,000,000. The Borrower has proposed to apply the proceeds of the City Note, along with the proceeds
of revenue notes proposed to be issued by the City of St. Paul Park, Minnesota (the "City of St. Paul
Park") in an aggregate principal amount not to exceed $6,500,000 (the "St. Paul Park Note") and the City
of Independence, Minnesota (the "City of Independence") in an aggregate principal amount not to exceed
$9,000,000 (the "Independence Note," and collectively with the City Note and the St. Paul Park Note, the
"Notes"), to finance the costs of the acquisition, construction, and equipping by the Borrower of
approximately 111 independent senior living apartments as an addition to an existing senior housing
campus located at 6600 Auto Club Road, Bloomington, Minnesota (the "Project").
1.04. The Project financed with the proceeds of the Notes will be owned and operated by the
Borrower.
1.05 In accordance with the Act, the City, the City of St. Paul Park, the City of Independence,
and the City of Bloomington, Minnesota (the "City of Bloomington") have prepared a joint housing
program (the "Housing Program"), which authorizes the issuance of the Notes by the City, the City of St.
Resolution No. 2019-49
August 20, 2019
Paul Park, and the City of Independence to finance the Project. The Housing Program was submitted to
Metropolitan Council for its review and comment.
1.06. The Borrower has represented to the City that it is exempt from federal income taxation
under Section 501(a) of the Internal Revenue Code of 1986, as amended (the "Code), as a result of the
application of Section 501(c)(3) of the Code.
1.07. Under Section 147(f) of the Code, prior to the issuance of the Notes, the City Council
must conduct a public hearing after one publication of notice in a newspaper circulating generally in the
City at least seven (7) days before the hearing. Under Section 462C.04, subdivision 2 of the Act, a public
hearing must be held on the Housing Program after one publication of notice in a newspaper circulating
generally in the City at least fifteen (15) days before the hearing.
1.08. On August 7, 2019, the City Council opened a public hearing a public hearing on the
Project, the Housing Program, and the issuance of the City Note and continued the public hearing to
August 20, 2019. On the date hereof, the City Council conducted the public hearing. As required by
Section 462C.04, subdivision 2 of the Act and Section 147(f) of the Code, notice of the hearing was
published in the Crow River News, the official newspaper of and a newspaper circulating generally in the
City, at least fifteen (15) days before the meeting of the City Council on August 7, 2019. The public
notice provided a general, functional description of the Project, as well as the maximum aggregate
principal amount of the obligations to be issued for the purposes referenced therein, the identity of the
initial owner, operator, or manager of the Project, and the location of the Project. At the public hearing, a
reasonable opportunity was provided for interested individuals to express their views, both orally and in
writing, on the Project, the Housing Program, and the proposed issuance of the City Note.
1.09. On August 5, 2019, the City Council of the City of Bloomington held a duly noticed
public hearing with respect to providing host approval for the issuance of the Notes pursuant to
Minnesota Statutes, Section 471.59 and Section 147(f) of the Code and adopted a resolution approving
the issuance of the Notes, the Housing Program, and a Cooperative Agreement (the "Cooperative
Agreement") between the City of Bloomington, the City, the City of St. Paul Park, and the City of
Independence.
1.10. The City Note is to be issued under the terms of this resolution. Choice Financial Group,
a North Dakota banking corporation (the "Lender"), has agreed to purchase the City Note. The proceeds
derived from the sale of the City Note (the "Loan") are to be loaned by the City to the Borrower pursuant
to the terms of a Loan Agreement (the "Loan Agreement") between the City and the Borrower. Proceeds
of the City Note will be applied by the Borrower to (i) finance a portion of the construction and equipping
of the Project; (ii) finance capitalized interest on the City Note, if necessary; and (iii) pay the costs of
issuing the City Note. The proceeds of the City Note will be disbursed pursuant to the terms of the Loan
Agreement and the Construction Loan Disbursement Agreement (the "Disbursing Agreement") between
the Lender, the Borrower, and a title company named therein.
1.11. The loan repayments required to be made by the Borrower under the terms of the Loan
Agreement and certain other rights will be assigned to the Lender under the terms of an Assignment of
Loan Agreement (the "Assignment") between the City and the Lender.
1.12. In consideration of the Loan by the City and to secure the payment of its obligations
under the Loan Agreement and the principal of, premium, if any, and interest on the City Note when due,
the Borrower will execute and deliver a mortgage document granting a mortgage lien on certain property
of the Borrower (the "Mortgage") in favor of the Lender. The Loan will be further secured by, among
other documents, a Security Agreement (the "Security Agreement") from the Borrower in favor of the
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Lender and a Guaranty Agreement (the "Guaranty") from Presbyterian Homes and Services, a Minnesota
nonprofit corporation, in favor of the Lender.
1.13. The principal of, premium, if any, and interest on the City Note (i) shall be payable solely
from the revenues pledged and otherwise available therefor; (ii) shall not constitute a debt of the City
within the meaning of any constitutional or statutory limitation; (iii) shall not constitute or give rise to a
pecuniary liability of the City or a charge against its general credit or taxing powers; and (iv) shall not
constitute a charge, lien, or encumbrance, legal or equitable, upon any property of the City other than the
City's interest in the Loan Agreement.
Section 2. The City Note.
2.01. For the purposes set forth above, there is hereby authorized the issuance, sale, and
delivery of the City Note in an aggregate principal amount not to exceed $10,000,000. The City Note
shall bear interest at a rate or rates designated by the terms of the City Note, and shall be designated, shall
be numbered, shall be dated, shall mature, shall be subject to redemption prior to maturity, shall be in
such form, and shall have such other terms, details, and provisions as are prescribed in the form of the
City Note now on file with the City, with the amendments referenced herein. The City hereby authorizes
the City Note to be issued as a "tax-exempt bond" the interest on which is not includable in gross income
for federal and State of Minnesota income tax purposes.
2.02. All of the provisions of the City Note, when executed 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 City Note shall
be substantially in the form now on file with the City, which form is hereby approved, with such
necessary and appropriate variations, omissions, and insertions as the Mayor and the City Administrator
(the "Mayor" and the "City Administrator," respectively), in their discretion, shall determine. The Mayor
and the City Administrator are authorized and directed to prepare the City Note, and the City Note shall
be delivered to the Lender. The execution of the City Note with the manual or facsimile signatures of the
Mayor and the City Administrator and the delivery of the City Note by the City shall be conclusive
evidence of such determination. The City Council of the City hereby authorizes and directs the Mayor
and the City Administrator to execute and deliver the City Note.
2.03. The City Note shall be a special, limited obligation of the City, and the principal of,
premium, if any, and interest on the City Note shall be payable solely from the proceeds of the City Note,
the revenues derived from the Borrower pursuant to the terms of the Loan Agreement and the security
provided by the Borrower in accordance with the terms of the Loan Agreement, the Mortgage, the
Security Agreement, the Guaranty, the other related loan documents described in the Loan Agreement,
and any and all other security of any kind or nature provided by the Borrower to the Lender.
2.04. As provided in the Loan Agreement, the City Note shall not be payable from or charged
upon any funds other than the revenues pledged to its payment, nor shall the City be subject to any
liability thereon, except as otherwise provided in this paragraph. No holder of the City Note shall ever
have the right to compel any exercise by the City of its taxing powers to pay any of the City Note or the
interest or premium thereon, or to enforce payment thereof against any property of the City except the
interests of the City in the Loan Agreement and the revenues and assets thereunder, which will be
assigned to the Lender under the Assignment. The City Note shall not constitute a charge, lien, or
encumbrance, legal or equitable, upon any property of the City, except the interests of the City in the
Loan Agreement, and the revenues and assets thereunder, which will be assigned to the Lender under the
Assignment. The City Note shall recite that the City Note is issued pursuant to the Act and that the City
Note, including interest and premium, if any, thereon, is payable solely from the revenues and assets
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pledged to the payment thereof, and the City Note shall not constitute a debt of the City within the
meaning of any constitutional or statutory limitations.
2.05. The City Note is hereby deemed a "qualified tax-exempt obligation" within the meaning
of Section 265(b)(3) of the Code.
Section 3. Agreements. The Mayor and the City Administrator are hereby authorized and
directed to execute and deliver the Loan Agreement, the Assignment, and the Cooperative Agreement.
All of the provisions of the Loan Agreement, the Assignment, and the Cooperative 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 Loan Agreement, the Assignment, and the Cooperative Agreement
shall be substantially in the forms on file with the City which are hereby approved, with such omissions
and insertions as do not materially change the substance thereof, or as the Mayor and the City
Administrator, in their discretion, shall determine, and the execution thereof by the Mayor and the City
Administrator shall be conclusive evidence of such determination.
Section 4. Disbursements of City Note Proceeds. The proceeds of the City Note shall be
disbursed in accordance with the terms of the Loan Agreement and the Disbursing Agreement.
Section 5. Other Documents. The Mayor, the City Administrator, and the Finance Director
of the City are hereby authorized to execute and deliver, on behalf of the City, such other documents as
are necessary or appropriate in connection with the issuance, sale, and delivery of the City Note,
including one or more certificates of the City, an endorsement of the City to the tax certificate of the
Borrower, an Information Return for Tax -Exempt Private Activity Bond Issues, Form 8038, and all other
documents and certificates as shall be necessary and appropriate in connection with the issuance, sale, and
delivery of the City Note. The City hereby authorizes Kennedy & Graven, Chartered, as bond counsel to
the City ("Bond Counsel") to prepare, execute, and deliver its approving legal opinion with respect to the
City Note.
Section 6. Declaration of Intent to Reimburse Costs. The United States Department of the
Treasury has promulgated final regulations governing the use of the proceeds of tax-exempt bonds, all or
a portion of which are to be used to reimburse the City or a borrower from the City for project
expenditures paid prior to the date of issuance of such bonds. Those regulations (Treasury Regulations,
Section 1.150-2) (the "Regulations") require that the City adopt a statement of official intent to reimburse
an original expenditure not later than sixty (60) days after payment of the original expenditure. The
Regulations also generally require that the bonds be issued and the reimbursement allocation made from
the proceeds of the bonds occur within eighteen (18) months after the later of: (i) the date the expenditure
is paid; or (ii) the date the project is placed in service or abandoned, but in no event more than three years
after the date the expenditure is paid. The Regulations generally permit reimbursement of capital
expenditures and costs of issuance of the bonds.
To the extent any portion of the proceeds of the City Note will be applied to expenditures with
respect to the Project, the City reasonably expects to reimburse the Borrower for the expenditures made
for costs of the Project from the proceeds of the City Note after the date of payment of all or a portion of
such expenditures. All reimbursed expenditures shall be capital expenditures, costs of issuance of the
City Note, or other expenditures eligible for reimbursement under Section 1.150-2(d)(3) of the
Regulations and also qualifying expenditures under the Act.
Section 7. The City and Its Officers. Employees, and Agents.
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7.01. Except as otherwise provided in this resolution, all rights, powers, and privileges
conferred and duties and liabilities imposed upon the City or the City Council by the provisions of this
resolution or of the aforementioned documents shall be exercised or performed by the City or by such
members of the City Council, or such officers, board, body, or agency thereof as may be required or
authorized by law to exercise such powers and to perform such duties.
7.02. No covenant, stipulation, obligation, or agreement herein contained or contained in the
aforementioned documents shall be deemed to be a covenant, stipulation, obligation, or agreement of any
member of the City Council, or any officer, agent, or employee of the City in that person's individual
capacity, and neither the City Council nor any officer or employee executing the City Note shall be liable
personally on the City Note or be subject to any personal liability or accountability by reason of the
issuance thereof.
7.03. No provision, covenant, or agreement contained in the aforementioned documents, the
City Note, or in any other document relating to the City Note, and no obligation therein or herein imposed
upon the City or the breach thereof, shall constitute or give rise to any pecuniary liability of the City or
any charge upon its general credit or taxing powers. In making the agreements, provisions, covenants,
and representations set forth in such documents, the City has not obligated itself to pay or remit any funds
or revenues, other than funds and revenues derived from the Loan Agreement which are to be applied to
the payment of the City Note, as provided therein.
7.04. Except as herein otherwise expressly provided, nothing in this resolution or in the
aforementioned documents expressed or implied, is intended or shall be construed to confer upon any
person or firm or corporation, other than the City or any holder of the City Note, any right, remedy, or
claim, legal or equitable, under and by reason of this resolution or any provisions hereof, the
aforementioned documents and all of their provisions being intended to be and being for the sole and
exclusive benefit of the City and any holders from time to time of the City Note.
Section 8. Severability. In case any one or more of the provisions of this resolution, other
than the provisions contained in Section 2.03 hereof, or of the aforementioned documents, or of the City
Note issued hereunder shall for any reason be held to be illegal or invalid, such illegality or invalidity
shall not affect any other provision of this resolution, or of the aforementioned documents, or of the City
Note, but this resolution, the aforementioned documents, and the City Note shall be construed and
endorsed as if such illegal or invalid provisions had not been contained therein.
Section 9. Validity of the City Note. The City Note, when executed and delivered, shall
contain a recital that it is issued pursuant to the Act, and such recital shall be conclusive evidence of the
validity of the City Note and the regularity of the issuance thereof, and that all acts, conditions, and things
required by the laws of the State of Minnesota relating to the adoption of this resolution, to the issuance
of the City Note, and to the execution of the aforementioned documents to happen, exist, and be
performed precedent to the execution of the aforementioned documents have happened, exist, and have
been performed as so required by law.
Section 10. Authorization for Other Acts. The officers of the City, Bond Counsel, other
attorneys, engineers, and other agents or employees of the City are hereby authorized to do all acts and
things required of them by or in connection with this resolution, the aforementioned documents, and the
City Note for the full, punctual, and complete performance of all the terms, covenants, and agreements
contained in the City Note, the aforementioned documents and this resolution. In the event that for any
reason the Mayor is unable to carry out the execution of any of the documents or other acts provided
herein, any persons delegated the duties of the Mayor shall be authorized to act in the capacity of the
Mayor and undertake such execution or acts on behalf of the City with full force and effect, which
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execution or acts shall be valid and binding on the City. If for any reason the City Administrator is
unable to execute and deliver the documents referred to in this resolution, such documents may be
executed by any person delegated the duties of the City Administrator, with the same force and effect as if
such documents were executed and delivered by the City Administrator.
Section 11. Payment of Costs. The Borrower has agreed to pay directly or through the City
any and all costs paid or incurred by the City in connection with the transactions authorized by this
resolution, whether or not the City Note is issued.
Section 12. Payment of City's Administrative Fee. The Loan Agreement will require the
Borrower to pay the City's bond administrative fee in the amount of 50 basis points of the original
aggregate principal amount of the City Note when the City Note is issued.
Section 13. Effective Date. This resolution shall be in full force and effect from and after its
passage.
Adopted by the City Council of the City of Medina, Minnesota, this 20t'' day of August, 2019.
Kathleen Martin, Mayor
Attest:
-» 6 S7r-----2
Jodi ijV1. Gallup, City Clerk
The motion for the adoption of the foregoing resolution was duly seconded by member Anderson and
upon vote being taken thereon, the following voted in favor thereof:
Albers, Anderson, DesLauriers, Martin, Pederson
And the following voted against same:
None
Whereupon said resolution was declared duly passed and adopted.
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