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92-085 - 12-08 Approve Revenue Bonds Colonial Acres Home and Covenant Retirement CommunitiesResolution 92-85 December 8, 1992 Member Johnson introduced the following resolution and moved its adoption: RESOLUTION APPROVING AN AMENDMENT TO CITY HOUSING PLAN AND PROGRAM TO PROVIDE REFINANCING OF A NURSING HOME, ELDERLY HOUSING FACILITY AND GIVING PRELIMINARY APPROVAL TO ASSISTED HOUSING FACILITY AND THE ISSUANCE BY THE CITY OF REVENUE BONDS THEREFOR, ON BEHALF OF COLONIAL ACRES HOME, INC. AND COVENANT RETIREMENT COMMUNITIES, INC. WHEREAS, by the provisions of Minnesota Statutes, Chapter 462C, as amended (the "Act"), the City of Golden Valley (the "City"), is authorized to Plan, administer, and develop housing programs including elderly housing facili- ties, assisted housing facilities and health care facilities, and to issue and sell revenue bonds to make loans to refinance such developments, which revenue bonds shall be payable solely from the revenues to be derived in respect of such developments; and WHEREAS, the City has prepared pursuant to the Act a Housing Plan and Program for the City, which Housing Plan and Program has been approved by the City Council (as amended from time to time, the "Housing Plan"). The Act provides that, prior to issuing revenue bonds or obligations with respect to a development described in Section 462C.05, Subd. 4, of the Act, the City shall prepare a Program setting forth the information required by Section 462.03, Subd. la, and Section 462C.05, Subd. 6, of the Act, submit the Program for review to the Metropolitan Council, and, after holding a public hearing thereon, submit the Program to the Minnesota Housing Finance Agency for review, as pro- vided in Section 462C.01 of the Act, on the basis of the considerations stated in Section 462C.04 of the Act; and WHEREAS, Colonial Acres Home, Inc., a Minnesota nonprofit corporation and its "parent", Covenant Retirement Communities, Inc., an Illinois nonprofit corporation (together, the "Corporation"), has proposed an amendment to the Housing Plan (the "Amendment") under the Act to provide refinancing of a nursing home, elderly housing facility and assisted housing facility in the City, in accordance with the City's Housing Plan, a copy of which Amendment is attached hereto as Exhibit A; and WHEREAS, a description of the facilities to be refinanced under the Amendment is set forth in the Amendment and is hereby incorporated herein by reference and made a part hereof (as described in Exhibit A, the "Facilities"); and WHEREAS, the refinancing is proposed to be part of the refinancing of other debt of affiliates of the Corporation, including debt incurred in connec- tion with the 65 -bed nursing home and 28 -unit assisted living facility of Ebenezer Covenant Home, Inc., a Minnesota nonprofit corporation ("Ebenezer"), in Buffalo, Minnesota (the "Buffalo Project"); and WHEREAS, under the Amendment, it is proposed that the City and the City of Buffalo enter into a joint powers agreement whereby one of the cities issues the bonds (the "Bonds") for the refinancing of the Facilities and the Buffalo Project; NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF GOLDEN VALLEY (the "City"), as follows: Resolution 92-85 - Continued December 8, 1992 1. The City's Amendment to City Housing Plan and Program is hereby con- firmed, approved and ratified. The Amendment is hereby adopted by the City pur- suant to Section 462C.05, Subdivision 4 of the Act, and the issuance of the Bonds of the City, in an aggregate principal amount of not to exceed $13,000,000 with the portion thereof attributable to the Facilities, including reserves, not to exceed $8,815,000, is hereby approved for the purpose of providing refinanc- ing for the Facilities and the Buffalo Project. The Bonds shall not be issued until the Amendment has been reviewed, as required by the Act and until the City, the Corporation and the purchaser of the Bond or Bonds have agreed upon the details of the Bonds and the provisions for their payment. The principal of, premium, if any, and interest on the Bonds, when, as and if issued, shall be payable solely from the revenues to be derived from the Facilities and the Buffalo Project, including loan repayments to be made by the Corporation and Ebenezer with respect thereto, and the property pledged to the payment thereof, and shall not constitute a debt of the City within the meaning of any constitu- tional or statutory limitation. 2. Submission of the Amendment to the Metropolitan Council is hereby ratified, confirmed and approved. The Mayor, City Clerk and other officers and employees of the City are hereby authorized to submit the Amendment to, and to complete and submit all related certificates or accompanying documentation, as may be required by the Minnesota Housing Finance Agency, to such Agency, for review, pursuant to Subdivision 2 of Section 462C.04 of the Act. 3. Pursuant to Subdivision 1, Section 462C.07, of the Act, in the making of a loan to the Corporation with respect to the Amendment and in the issuance of the Bonds by the City, the City may exercise, within its corporate limits, any of the powers the Minnesota Housing Finance Agency may exercise under Chapter 462A, Minnesota Statutes, without limitation under the provisions of Chapter 475, Minnesota Statutes. 4. The Corporation and Ziegler Securities, as underwriter, are authorized to prepare and distribute at their expense a Preliminary Official Statement and other documents relating to the issuance of the Bonds. Forms of all documents shall be submitted to this Council for consideration at its next regular meeting. 5. Preliminary approval of the issuance of the Bonds is subject to a requirement that the Corporation pay to the City $31,715 at the closing of the sale of the Bonds as compensation to the City for the effect of the Bonds on the City's prospective ability to issue bonds designated as "qualified tax-exempt obligations" within the meaning of Section 265(b)(3) of the Internal Revenue Code of 1986, as amended. A „ ATTEST: �Vagry y. "kken, Shirley J. el n, City Clerk The motion for the adoption of the foregoing resolution was seconded by Member Russell, and upon a vote being taken thereon, the following voted in favor thereof: Bakken, Johnson, Russell, Stockman and Thompson; and the following voted against the same: none, whereupon said resolution was declared duly passed and adopted, signed by the Mayor and his signature attested by the City Clerk. Resolution 92-85 - Continued EXHIBIT A December 8, 1992 AMENDMENT TO CITY HOUSING PLAN AND PROGRAM RELATING TO THE ISSUANCE OF CITY OF GOLDEN VALLEY REVENUE BONDS UNDER MINNESOTA STATUES, CHAPTER 462C, FOR THE REFINANCING OF A NURSING HOME, ELDERLY HOUSING FACILITY AND ASSISTED HOUSING FACILITY, ON BEHALF OF COLONIAL ACRES HOME, INC. AND COVENANT RETIREMENT COMMUNITIES, INC. 1. City Housing Plan. Pursuant to Chapter 462C, Minnesota Statutes, as amended (the "Act"), the City has adopted a Housing Plan and Program dated August, 1985 (as amended from time to time, the "Housing Plan"), which serves as a basis for the provision of housing for residents of the community. The Housing Plan, as amended hereby, describes various housing goals in the City, including providing housing opportunities for citizens of all ages and income levels, without discrimination, while maintaining a diversity of high-quality living environments through imaginative and sound planning principles. Under the Act, the City, prior to issuing revenue bonds or other obligations with respect to a multi -family housing development and health care facilities, as described in Section 462C.05, Subd. 1 and Subd. 2 thereof, has adopted a program setting forth the information required by the Act, including but not limited to Section 462C.03, Subd. la, and Section 462C.05, Subd. 6, of the Act. The Program, as previously adopted, advances the aforementioned housing goals by enhancing the City's supply of affordable rental housing facilities for elderly persons at reasonable rental rates, and through the renovation, upgrading and improvement of the City's existing housing stock, all as authorized, con- templated and prescribed by the Act and the Housing Plan. 2. Program. This Amendment to Housing Program comprises an effort by the City to advance the aforementioned housing goals by providing refinancing for the nursing home, assisted living facility and elderly housing facility described in paragraph 4 below (the "Facilities"). The proposed refinancing of the Facilities is anticipated to produce debt service savings that will permit the maintenance of rental rates at the most reasonably affordable levels. In addition, the refinancing will involve the rehabilitation of an existing building and site and the discharge of an existing mortgage lien on the Facilities, as contemplated by Section 462C.05, Subd. 1(b). The financing docu- ments will require that the corporation named in paragraph 4 (the "Corporation") expend at least $1,000 per dwelling unit on rehabilitation costs under the Act. The method of financing to be advanced for this Program shall consist of the issuance of revenue bonds by the City pursuant to the Act. Such bonds shall comprise permanent financing for the Facilities and repayment of such bonds shall be provided by the Corporation entering into a loan agreement with the City with respect to such Facilities. Additional security may be provided for the bonds as determined by the original purchaser of the bonds, including a mortgage on the Facilities, and such other security as may be determined to be necessary or desirable. The refinancing is proposed to be part of the refinancing of other debt of affiliates of the Corporation, including debt incurred in connection with a 65 -bed nursing home and 28 -unit assisted living facility of Ebenezer Covenant Home, Inc. in Buffalo, Minnesota (the "Buffalo Project"). It is proposed that the City and the City of Buffalo enter into a joint powers agreement whereby one of the cities issues the bonds for the refi- nancing of the Facilities and the Buffalo Project. The aggregate principal amount of the issue is expected to be not in excess of $13,000,000 and the por- tion thereof attributable to the Program, including reserves, is $8,815,000. No Resolution 92-85 - Continued December 8, 1992 more than 2.00% of the proceeds of the Bonds may be used for issuance costs. Issuance costs in excess of available bond proceeds are to be paid for by the Corporation from funds other than proceeds of the Bonds. Rehabilitation costs will include any of the items described in Section 462C.02, Subd. 8 of the Act. It is anticipated that the timetable for the financing will be carried out on an expedited basis and be concluded by not later than January 30, 1993. Required rehabilitation will be completed by January 1, 1995. This Amendment to the Program is contemplated to be undertaken pursuant to Section 462C.05, Subd. 4 and Subd. 7, of the Act and, therefore, it is contemplated that there shall be no specific limitation on the gross income of the occupants. It is nevertheless the anticipation of the Corporation that residents of the financed facilities will consist primarily of moderate income persons. Program requirements as to the Facilities are to be monitored by the City or private parties, as will be provided in the applicable agreements to be entered into in connection with the issuance of the Bonds. 3. Need for the Program. The Act and the City's Housing Plan and Program, as amended hereby, establish the need and necessity for the refinancing of the Facilities included in this Amendment to the City's Housing Plan and Program. The Housing Plan and Program, as amended hereby, recognizes and is consistent with a goal of maintaining and increasing the number of units of affordable housing for elderly as well as low and moderate income persons and families in the City. The Housing Plan, as amended hereby, also emphasizes the promotion of middle income housing developments and multi -family developments. Finally, the Housing Plan, as amended hereby, affirms that achievement of the City's housing goals should occur through private development, supported by government financing programs. By virtue of issuing the Bonds and providing refinancing for the Facilities, the City will be assisting in the reduction of the overall costs of operating the Facilities and the attendant reduction in charges otherwise necessary to be made to the residents thereof. 4. Description of Facilities. The Facilities which are to be the sub- ject of the proposed financing consist of the Corporation's (a) existing 129 -unit elderly housing facility located at 5800 St. Croix Avenue in the City, (b) existing 119 -bed nursing home located at 5825 St. Croix Avenue in the City, and (c) existing 16 -unit assisted living facility located at 5800 St. Croix Avenue in the City. The Facilities are currently owned by Colonial Acres Home, Inc., a Minnesota nonprofit corporation, and its "parent", Covenant Retirement Communities, Inc., an Illinois nonprofit corporation (together, the "Corporation").