2023-70EXTRACT OF MINUTES OF MEETING
OF THE CITY COUNCIL OF THE
CITY OF CHANHASSEN, MINNESOTA
HELD: September 11, 2023
Pursuant to due call and notice thereof, a meeting of the City Council of the City of
Chanhassen, Carver and Hennepin Counties, Minnesota, was duly called and held at the City Hall
in the City on September 11, 2023, at 7:00 p.m.
The following members were present: Ryan, Schubert, von Oven, Kimber
and the following were absent: McDonald
Member Kimber introduced the following resolution and moved its adoption:
RESOLUTION NO.2023-70
RESOLUTION AUTHORIZING THE ISSUANCE AND
DELIVERY OF AN ALLONGE TO THE CITY OF CHANHASSEN'S
HOUSING AND HEALTH CARE REVENUE REFUNDING NOTE, SERIES 2014B
(PHS/LAKE MINNETONKA CAMPUS PROJECT)
BE IT RESOLVED, by the City Council of the City of Chanhassen, Carver and Hennepin
Counties, Minnesota (the "Issuer"), as follows:
Section 1. Findinas.
A. Pursuant to the provisions of Minnesota Statutes, Chapter 462C, as amended, and
a resolution of the Issuer adopted on April 28, 2014, the Issuer previously issued its Housing and
Health Care Revenue Refunding Note, Series 2014B (PHS/Lake Minnetonka Campus Project),
dated June 3, 2014 (the "2014 Note"), in favor of Northeast Bank, a Minnesota state banking
corporation (the "Lender"), in the original principal amount of $9,300,000.
B. Pursuant to a Loan Agreement dated as of June 3, 2014 (the "2014 Loan
Agreement"), between the Issuer and PHS/Lake Minnetonka, LLC, a Minnesota limited liability
company whose sole member is a Section 501(c)(3) nonprofit organization (the "Borrower"), the
Issuer loaned the proceeds of the 2014 Note to the Borrower for the purpose of refinancing of a
portion of the then -outstanding principal amount of the $28,000,000 Housing and Health Care
Revenue Note (PHS/Lake Minnetonka Campus Project) Series 2010 issued by the City of Spring
Park, Minnesota ("Spring Park") to (i) finance the acquisition, construction, and equipping of new
facilities, the demolition of two existing buildings, and renovation of existing facilities to create a
senior housing development which consists of approximately 236 senior housing units, including
approximately 166 independent living units, 52 assisted living units, 18 memory care units, and an
approximately 20,000 square foot town center for use by the residents of the senior housing units
located at 4501, 4523, 4527, and 4599 Shoreline Drive in Spring Park; (ii) refund Spring Park's
outstanding Multifamily Housing Revenue Bonds (Presbyterian Homes Housing and Assisted
Living, Inc. Project) Series 2007 issued to finance the acquisition and renovation of a 75-unit
multifamily housing development comprised of 2 buildings located at 4599 and 4601 Shoreline
Drive and 2380 Island Drive in Spring Park (the "Park Hill Apartments") and to refinance the
acquisition and renovation of a 51-unit multifamily housing development comprised of 3 buildings
located at 4579, 4589, and 4599 Shoreline Drive in Spring Park (the "Shoreview Apartments")
(together, the "Spring Park Portion"); (iii) refund a portion of the outstanding City of Arden Hills,
Minnesota Health Care and Housing Revenue Refunding Bonds (Presbyterian Homes of Arden
Hills, Inc. Project), Series 1999B, which were issued to finance the renovation and improvement
of the approximately 192-bed skilled nursing facility located at 4527 Shoreline Drive in Spring
Park and also were used to finance the costs of the refinancing, acquisition, construction, or
renovation of certain housing and health care facilities in the Cities of Arden Hills (the "Arden
Hills Portion") and Bloomington, Minnesota and Ankeny, Iowa (the "Ankeny Portion")
(collectively, the "Project"), and the Borrower agreed to repay the 2014 Note upon the terms set
forth in the 2014 Note.
C. Pursuant to a Pledge Agreement, dated as of June 3, 2014 (the "2014 Pledge
Agreement"), between the Issuer and the Lender, the Issuer pledged and assigned to the Lender a
security interest in all of Issuer's right, title and interest in and to the 2014 Loan Agreement, except
for certain rights of indemnification and reimbursement for certain costs and expenses.
D. The Issuer has been advised by the Lender that the 2014 Note is currently owned
by the Lender and that the interest rate on the 2014 Note is currently a variable rate to be adjusted
on certain Adjustment Dates (as defined in the 2014 Note) to a rate per annum equal to 67% of the
sum of the then current LIBOR swap rate for five year obligations, as further described in the 2014
Note (the "Current Index"), plus 265 basis points (the "Adjusted Rate"); provided, however, that
on the date of adjustment, the Adjusted Rate must not be adjusted by more than 200 basis points
from the previous interest rate, and that the Adjusted Rate must never be less than 2.85% nor more
than 6.00%.
E. As a result of the discontinuation of the Current Index on June 30, 2023, the Lender
and Borrower have agreed to modify the terms of the 2014 Note pursuant to an Allonge to Note
substantially in the form attached hereto as Exhibit A (the "Allonge"), in order to (i) replace the
Current Index used to calculate the interest rate on the 2014 Note with 1 Month Term SOFR, as
further described in the Allonge (the "Replacement Index"), and (ii) make corresponding
adjustments to the spread used to calculate the Adjusted Rate (as defined in the 2014 Note).
F. The Lender has advised the Issuer that the Adjusted Rate as defined in the Allonge
to Note is a rate comparable to the Adjusted Rate as defined in the 2014 Note.
Section 2. Authorization
A. The Issuer approves the terms of the Allonge in substantially the form attached
hereto as Exhibit A, subject to modifications as approved by Taft Stettinius & Hollister LLP as
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bond counsel to the Issuer, the Mayor and the City Manager, provided that delivery of the Allonge
shall be conclusive evidence of approval.
B. The Mayor and the City Manager are authorized and directed to execute and deliver
the Allonge and any other related documents necessary to evidence the modifications agreed to by
Borrower and Lender and/or necessary, in the opinion of Taft Stettinius & Hollister LLP as bond
counsel to the Issuer, to maintain the tax exempt status of interest on the 2014 Note, all as approved
as to form and substance by bond counsel. All prior actions of the Mayor and the City Manager
taken with regard to the Allonge are ratified and approved.
Section 3. Deliverv. Delivery of the Allonge shall be made at a place mutually
satisfactory to the Issuer, the Lender, and the Borrower. The Allonge, when prepared in
accordance with this Resolution and executed, shall be delivered by or under the direction of the
City Manager to the Lender in exchange for the execution and delivery of the Allonge by the
Lender and the Borrower.
Section 4. Effect of Resolution. Except as amended or modified by the Allonge, all
terms and conditions of the 2014 Note remain in full force and effect.
Adopted: September 11, 2023
By:%
Elise Ryan, Nvor
ATTEST:
im wissen. City lerk
3
128779230v2
(signature page to Allonge)
Agreed to and accepted as of the Effective Date.
LENDER:
NORTHEAST BANK
By
Its
12877923M
(signature page to Allonge)
Agreed to and accepted as of the Effective Date.
BORROWER: PHS/LAKE MINNETONKA, LLC, a Minnesota
limited liability company
By
Its
128779230v2
Exhibit A
ALLONGE TO NOTE
This Allonge to Note is dated and effective as of , 2023 (the "Effective
Date"), and is attached to and made a part of that certain Housing and Health Care Revenue
Refunding Note, Series 2014B (PHS/Lake Minnetonka Campus Project), dated June 3, 2014 (the
"Note"), issued by the City of Chanhassen, Minnesota, a municipal corporation and political
subdivision of the State of Minnesota (the "Issuer"), in the original principal amount of
$9,300,000.00 in favor of Northeast Bank, a Minnesota state banking corporation ("Lender"), for
the benefit of PHS/Lake Minnetonka, LLC, a Minnesota limited liability company whose sole
member is a Section 501(c)(3) nonprofit organization (the "Borrower").
1. Due to the unavailability of the LIBOR swap rate for five year obligations (as
described in the Note) after June 30, 2023, and as contemplated by the terms of the Note in the
event of such unavailability, paragraph 2 of the Note is hereby deleted and replaced in its entirety
with the following:
"2. On June 1, 2019, June 1, 2024, and June 1, 2029 (each an "Adjustment
Date"), the interest rate on this Note will be adjusted to a rate per annum equal to, (i) for
each Adjustment Date occurring on or before June 30, 2023, 67% of the sum of the then
current LIBOR swap rate for five year obligations (as such rate is published by the Federal
Reserve in its Federal Reserve Statistical Release Document No. H.15(519), "Selected
Interest Rates," or such equivalent successor publication as selected by the Lender) plus
265 basis points (the "Adjusted LIBOR Rate") or, (ii) for each Adjustment Date occurring
after June 30, 2023, 67% of the sum of the then current 1 Month Term SOFR Rate (as
defined below), plus 273 basis points (the "Adjusted SOFR Rate" and, together with the
Adjusted LIBOR Rate, the "Adjusted Rate"); provided, however, that on any Adjustment
Date the Adjusted Rate shall not be adjusted by more than 200 basis points from the
previous interest rate, and that the Adjusted Rate shall never be less than 2.85% nor more
than 6.00%. All such adjustments to the interest rate shall be made and become effective
as of the applicable Adjustment Date and the interest rate as adjusted shall remain in effect
through and including the day immediately preceding the next Adjustment Date or June 1,
2034 (the "Final Maturity Date"), as applicable.
As used herein, "1 Month Term SOFR Rate" means the 1 Month Term SOFR rate
for five year obligations published by Wells Fargo in its Wells Fargo, Interest Rate Risk
Management, Daily Rate Update, Source by Wells Fargo Securities (the "WF Release
Document"). The "1 Month Term SOFR rate for five year obligations" will be determined
by the Lender using the intersection of the I Term SOFR and Bullet that corresponds to
a 5 year rate term. In the event the WF Release Document becomes unavailable or no longer
publishes the applicable rate, or the Lender elects to change publications as may be
permitted hereunder, the Lender reserves the right to select an alternative, but equivalent,
successor publication or source, in its sole discretion.
Upon an Event of Default as defined in the Loan Agreement (hereinafter defined),
the interest rate shall be adjusted by an increase of 400 basis points (the "Default Rate")
until such time as the Event of Default has been cured."
2. All other terms and conditions of the Note are acknowledged and confirmed, and
no other modification or amendment is made to the Note except as set forth in this Allonge.
3. This Allonge may be signed in counterparts which, taken together, will form one
original.
4. The Loan Agreement is deemed amended to the extent necessary to reflect the
amendments made to the Note by this Allonge.
(signature pages to follow)
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12877923M
(signature page to Allonge)
IN WITNESS WHEREOF, the undersigned representatives of the Issuer, the Lender, and
the Borrower have executed this Allonge to Note as of the Effective Date.
ISSUER:
CITY OF CHANHASSEN, MINNESOTA
By:s /
Its Mayor
Its City Manager
128779229