Loading...
Res 2013-67 RESOLUTION NO. 2013 - 67 AUTHORIZING THE ISSUANCE, SALE, AND DELIVERY OF A HEALTH CARE FACILITIES REVENUE NOTE (BHS/ALLINA TCU PROJECT), SERIES 2013, IN THE AGGREGATE PRINCIPAL AMOUNT NOT TO EXCEED $10,000,000, FOR THE BENEFIT OF BENEDICTINE LIVING CENTER OF FRIDLEY, LLC, PAYABLE SOLELY FROM REVENUES PLEDGED PURSUANT TO A LOAN AGREEMENT AND A SERVICING AGREEMENT; APPROVING THE FORM OF AND AUTHORIZING THE EXECUTION AND DELIVERY OF RELATED DOCUMENTS; AND PROVIDING HOST APPROVAL FOR A SUBORDINATE NOTE TO BE ISSUED BY THE CITY OF MOUNDS VIEW BE IT RESOLVED by the City Council of the City of Fridley, Minnesota (the “City”), as follows: Section 1. Recitals and Findings. 1.01. Minnesota Statutes, Sections 469.152 through 469.1655, as amended (the “Act”), authorizes a city to issue revenue obligations to finance, in whole or in part, the cost of the acquisition, construction, reconstruction, improvement, betterment, or extension of a “project,” defined in the Act, in part, as any properties, real or personal, used or useful in connection with a revenue producing enterprise, whether or not operated for profit, engaged in providing health care services, including hospitals, nursing homes, and related medical facilities. 1.02. 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 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. Benedictine Living Center of Fridley, LLC, a Minnesota nonprofit limited liability company (the “Borrower”), which will be controlled by Benedictine Health System, a nonprofit corporation (“BHS”), either as its sole member or as a joint member with Allina Health System, a Minnesota nonprofit corporation (“Allina”), or any affiliate of BHS or Allina, has proposed that the City issue its Health Care Facilities Revenue Note (BHS/Allina TCU Project), Series 2013 (the “Series 2013 Note”), in the aggregate principal amount not to exceed $10,000,000. The Borrower proposes to use the proceeds of the Series 2013 Note, along with equity of the Borrower and the proceeds of the Subordinate Health Care Facilities Revenue Note (BHS/Allina TCU Project), Series 2013 (the “Subordinate Note”), proposed to be issued by the 433046v1 JAE FR110-12 Resolution No. 2013-67 Page 2 City of Mounds View, Minnesota (the “City of Mounds View”) in the aggregate principal amount not to exceed $3,000,000, to (i) finance the acquisition, construction, and equipping of a 50-bed transitional care facility located on the Unity Hospital/Allina campus at 550 Osborne Road, Fridley, Minnesota, which will be owned and operated by the Borrower (the “Project”); (ii) fund capitalized interest on the Series 2013 Note and the Subordinate Note (together, the “Notes”); (iii) fund any required reserves; and (iv) pay costs of issuance of the Notes and other costs related to the Project. 1.04. The City and the City of Mounds View are proposing to enter into a Cooperative Agreement, dated on or after November 1, 2013 (the “Cooperative Agreement”), pursuant to which the City will consent to the issuance by the City of Mounds View of the Subordinate Note and the financing of a portion of the Project with the proceeds of the Subordinate Note, and the City of Mounds View will agree to issue the Subordinate Note to finance a portion of the Project. 1.05. In accordance with the terms of the Act, the City has prepared an application to the Minnesota Department of Employment and Economic Development (“DEED”) for approval of the Project pursuant to the requirements of Section 469.154 of the Act. Section 469.154, subdivision 4 of the Act requires that prior to submitting an application to DEED for approval of a project, the City Council must conduct a public hearing on the proposal to undertake projects authorized to be financed under the terms of the Act. 1.06. Prior to the issuance of the Series 2013 Note, the City Council of the City must conduct a public hearing to (i) approve the issuance of the Series 2013 Note pursuant to the requirements of Section 147(f) of the Internal Revenue Code of 1986, as amended, and regulations promulgated thereunder (the “Code”); and (ii) approve the Project pursuant to Section 469.154, subdivision 4 of the Act. 1.07. Prior to the issuance of the Subordinate Note, the City Council of the City must hold a duly noticed public hearing and provide host approval to the issuance of the Subordinate Note by the City of Mounds View, all pursuant to the requirements of Section 147(f) of the Code. 1.08. On the date hereof, the City Council conducted a duly noticed public hearing at which a reasonable opportunity was provided for interested individuals to express their views, both orally and in writing, on the following: (i) approval of the issuance of the Series 2013 Note pursuant to the requirements of Section 147(f) of the Code and the regulations promulgated thereunder; (ii) approval of the issuance of the Series 2013 Note and approval of the Project pursuant to the requirements of the Act; and (iii) host approval of the issuance of the Subordinate Note by the City of Mounds View pursuant to the requirements of Section 147(f) of Code and the regulations promulgated thereunder. 1.09. The City finds that the Project furthers the economic development purposes stated in Section 469.152 of the Act and constitutes a revenue producing “project,” as defined in Section 469.153, subdivision 2(d) of the Act. 2 433046v1 JAE FR110-12 Resolution No. 2013-67 Page 3 1.10. The Series 2013 Note is to be issued under the terms of this resolution and a Servicing Agreement, dated on or after November 1, 2013 (the “Servicing Agreement”), between the City and Piper Jaffray Lending LLC, a Delaware limited liability company, as servicer (the “Servicer”). It is further proposed that the Series 2013 Note will be sold to Piper Jaffray Lending LLC, a Delaware limited liability company, as lead lender (the “Lead Lender”), who will sell undivided interests in and to the Series 2013 Note to one or more institutional lenders pursuant to one or more participation agreements which shall be evidenced by one or more certificates of participation. The proceeds derived from the sale of the Series 2013 Note are to be loaned by the City to the Borrower pursuant to the terms of a Loan Agreement, dated on or after November 1, 2013 (the “Loan Agreement”), between the City, the Borrower, and the Lead Lender. Proceeds of the Series 2013 Note will be applied by the Borrower, together with the equity of the Borrower and the proceeds of the Subordinate Note, if issued by the City of Mounds View, to finance the acquisition, construction, and equipping of the Project. 1.11. From and after the date of issuance of the Series 2013 Note, the proceeds of the Series 2013 Note are to be disbursed to the Borrower in accordance with the terms of a Disbursing Agreement, dated on or after November 1, 2013 (the “Disbursing Agreement”), between the Borrower, the Servicer, and a disbursing agent selected by the Borrower and acceptable to the Servicer, and applied to the payment of the costs of the acquisition, construction and equipping of the Project. 1.12. In consideration of the loan by the City of the proceeds of the Series 2013 Note to the Borrower and to secure the payment of its obligations under the Loan Agreement and the principal of, premium, if any, and interest on the Series 2013 Note when due, the Borrower will execute and deliver a Combination Mortgage, Security Agreement, Assignment of Leases and Rents and Fixture Financing Statement, dated on or after November 1, 2013 (the “Mortgage”), to the Servicer, as mortgagee. In addition, BHS (the “Guarantor”) will deliver to the Servicer a Guaranty Agreement, dated on or after November 1, 2013 (the “Guaranty”), to guarantee the completion of the acquisition, construction and equipping of the Project and the payment of a portion of the principal of and the interest on the Series 2013 Note. 1.13. The Series 2013 Note will be senior in right of repayment to the Subordinate Note. 1.14. The loan repayments required to be made by the Borrower under the terms of the Loan Agreement will be assigned to the Servicer under the terms of the Loan Agreement and the Servicing Agreement. 1.14. The principal of, premium, if any, and interest on the Series 2013 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 nor 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 and the Servicing Agreement. 3 433046v1 JAE FR110-12 Resolution No. 2013-67 Page 4 Section 2. Host Approval of Subordinate Note. The City hereby approves and authorizes the issuance of the Subordinate Note by the City of Mounds View to finance a portion of the Project and related costs as described in Section 1.03. The Subordinate Note is proposed to be issued under the terms of the Act, a Servicing Agreement, dated on or after November 1, 2013, between the City of Mounds View and the Servicer, and a resolution to be considered by the City Council of the City of Mounds View on October 28, 2013, following a duly noticed public hearing. The estimated maximum aggregate principal amount of the Subordinate Note is presently estimated not to exceed $3,000,000. Section 3. The Series 2013 Note. 3.01. For the purposes set forth above, there is hereby authorized the issuance, sale and delivery of the Series 2013 Note in an aggregate principal amount not to exceed $10,000,000. The Series 2013 Note shall bear interest at rates designated by the terms of the Servicing Agreement and the Series 2013 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 Servicing Agreement, in the form now on file with the City, with the amendments referenced herein. The City hereby authorizes the Series 2013 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. 3.02. All of the provisions of the Series 2013 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 Series 2013 Note shall be substantially in the form set forth in the Servicing Agreement, which form is hereby approved, with such necessary and appropriate variations, omissions, and insertions (including changes to the name of the Series 2013 Note, the aggregate principal amount of the Series 2013 Note, the stated maturities and maturity dates of the Series 2013 Note, the interest rates on the Series 2013 Note, and the terms of optional and mandatory redemption of the Series 2013 Note) as the Mayor and the City Manager of the City (the “Mayor” and “City Manager,” respectively), in their discretion, shall determine. Upon approval of the Project by DEED, the Mayor and the City Manager are authorized and directed to prepare and execute the Series 2013 Note as prescribed in the Servicing Agreement and the Series 2013 Note shall be delivered to the Servicer on behalf of the Lead Lender. The execution of the Series 2013 Note with the manual or facsimile signatures of the Mayor and the City Manager and the delivery of the Series 2013 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 Manager to execute and deliver the Series 2013 Note. 3.03. The Series 2013 Note shall be a special limited obligation of the City, and the principal of, premium, if any, and interest on the Series 2013 Note shall be payable solely from the proceeds of the Series 2013 Note, the revenues derived from the Borrower pursuant to the terms of the Loan Agreement and the Servicing Agreement, and the security provided by the Borrower in accordance with the terms of the Loan Agreement, the Servicing Agreement, the Mortgage, and any and all other security of any kind or nature provided by the Borrower to the Servicer. 4 433046v1 JAE FR110-12 Resolution No. 2013-67 Page 5 Section 4. The Note Documents. The Cooperative Agreement, the Servicing Agreement and the Loan Agreement (collectively, the “Note Documents”) are hereby approved. The Mayor and the City Manager are hereby authorized and directed to execute and deliver the Note Documents. All of the provisions of the Note Documents, 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 Note Documents shall be substantially in the form on file with the City, with such omissions and insertions as do not materially change the substance thereof, or as the Mayor and City Manager, in their discretion, shall determine, and the execution of the Note Documents by the Mayor and City Manager shall be conclusive evidence of such determination. Section 5. Disbursements of Series 2013 Note Proceeds. The proceeds of the Series 2013 Note shall be disbursed in accordance with the terms of the Loan Agreement, the Servicing Agreement, and the Disbursing Agreement for the payment of the costs of the Project and related costs in accordance with the terms of the Loan Agreement, the Servicing Agreement, and the Disbursing Agreement. Section 6. Other Documents. The Mayor, the City Manager, and the Finance Director/Treasurer 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 Series 2013 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 Series 2013 Note. The City hereby approves the execution and delivery by the Servicer of the Servicing Agreement, the Disbursing Agreement, the Mortgage, and all other instruments, certificates, and documents prepared in conjunction with the issuance of the Series 2013 Note that require execution by the Servicer. The City hereby authorizes Kennedy & Graven, Chartered, acting as bond counsel, to prepare, execute, and deliver its approving legal opinion with respect to the Series 2013 Note. Section 8. Servicer Authorized to Act. The Servicer is hereby authorized to accept the Mortgage in order to secure payment of the Series 2013 Note and is hereby authorized to take all actions necessary or appropriate under the terms of the Mortgage to ensure timely payment of the principal of, premium, if any, and interest on the Series 2013 Note. The Servicer is further authorized to accept the Guaranty from the Guarantor. Section 9. Disclosure Documents. The City has not participated in the preparation of any official statement or other disclosure document relating to the offer and sale of the Series 2013 Note and the City assumes no responsibility for the sufficiency, accuracy, or completeness of any information set forth in any such disclosure document. 5 433046v1 JAE FR110-12 Resolution No. 2013-67 Page 6 Section 10. The City and Its Officers, Employees, and Agents. 10.01. As required by the terms of Section 469.154 of the Act, the employees, officers, and agents of the City are hereby authorized and directed to submit an application to DEED for approval of the Project and the issuance of the Series 2013 Note. 10.02. 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. 10.03. 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 of the City, or any officer, agent, or employee of the City in that person’s individual capacity, and neither the City Council of the City nor any officer or employee executing the Series 2013 Note shall be liable personally on the Series 2013 Note or be subject to any personal liability or accountability by reason of the issuance thereof. 10.04. No provision, covenant, or agreement contained in the aforementioned documents, the Series 2013 Note, or in any other document relating to the Series 2013 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 and the Servicing Agreement which are to be applied to the payment of the Series 2013 Note, as provided therein and in the Servicing Agreement. 10.05. 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 Series 2013 Note issued under the provisions of this resolution, any right, remedy, or claim, legal or equitable, under and by reason of this resolution or any provisions hereof, this resolution, 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 Series 2013 Note issued under the provisions of this resolution. Section 11. Severability. In case any one or more of the provisions of this resolution, other than the provisions contained in Section 3 hereof, or of the aforementioned documents, or of the Series 2013 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 Series 2013 Note, but this resolution, the aforementioned documents, and the Series 2013 Note shall be construed and endorsed as if such illegal or invalid provisions had not been contained therein. 6 433046v1 JAE FR110-12 Resolution No. 2013-67 Page 7 Section 12. Validity of the Series 2013 Note. The Series 2013 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 Series 2013 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 Series 2013 Note, and to the execution of the aforementioned documents to happen, exist, and be performed prior to the execution of the aforementioned documents have happened, exist, and have been performed as so required by law. Section 13. 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 Series 2013 Note for the full, punctual, and complete performance of all the terms, covenants, and agreements contained in the Series 2013 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 execution or acts shall be valid and binding on the City. If for any reason the City Manager 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 Manager, with the same force and effect as if such documents were executed and delivered by the City Manager. Section 14. Designation as Bank-Qualified Obligation. The City hereby designates the Series 2013 Note as a “qualified tax-exempt obligation” for purposes of Section 265(b)(3) of the Code. Section 15. 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 Series 2013 Note is issued. Section 16. 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 one-eighth of one percent (0.125%) of the principal amount of the Series 2013 Note when the Series 2013 Note is issued. In addition, the Loan Agreement will include a provision requiring the Borrower to compensate the City for any economic loss it incurs if it must issue general obligation bonds in 2013 that are not “qualified tax-exempt obligations” for purposes of Section 265(b)(3) of the Code. Section 17. Effective Date. This resolution shall be in full force and effect from and after its passage. 7 433046v1 JAE FR110-12 Resolution No. 2013-67 Page 8 PASSED AND ADOPTED BY THE CITY COUNCIL OF THE CITY OF FRIDLEY THIS TH 28 DAY OF OCTOBER 2013. Scott J. Lund, Mayor ATTEST: Debra A. Skogen, City Clerk 8 433046v1 JAE FR110-12