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2a Elderly Housing DevelopmentCIT¥OF CHANHASSEN 7700 Market Boulevard PO Box 147 Chanhassen, MN 55317 ' Administration Phone: 952.227.1100 Fax: 952.227.1110 Building Inspections Phone: 952.227.1180 Fax: 952.227.1190 Engineering Phone: 952.227.1160 Fax: 952.227.1170 Finance Phone: 952.227.1140 Fax: 952.227.1110 Park & Recreation Phone: 952.227.1120 Fax: 952.227.1110 Recreation Center 2310 Coulter Boulevard Phone: 952.227.1400 Fax: 952.227.1404 Planning & Natural Resources Phone: 952.227.1130 Fax: 952.227.1110 Public Works 1591 Park Road Phone: 952.227.1300 Fax: 952.227.1310 Senior Center Phone: 952.227.1125 Fax: 952.227.1110 Web Site www. ci.chanhassen.mn.us TO: FROM: DATE: Mayor City Council. Bruce M. DeJong, Finance Director~ 0~ July 7, 2003 SUB J: Public Hearing on the Issuance of Revenue Bonds to Finance an Elderly Housing Development on Behalf of PHM/Chanhassen, Inc. The City of Chanhassen is holding a public hearing regarding a resolution giving approval to the issuance of tax exempt revenue bonds for Presbyterian Homes Minnesota and authorizing a joint powers agreement with the City of Victoria to allocate our remaining bank qualification. This process is necessary for them to obtain financing for their senior care units in Villages on the Pond. The project will require bonding in the amount of $27,300,000. The City of Victoria actually issue the bonds and lend the proceeds to Presbyterian Homes. The reason that Victoria is issuing the bonds is so that a portion of the amount can be bank qualified. If we were to issue more than $10,000,000 in bonds for the year, then they would not be bank qualified. The City of Chanhassen's part is to join the joint powers agreement and lend our bank qualification to allow for a lower interest rate. We then contract with a bank to act as trustee on our behalf. The bonds will be repaid through a combination of rental revenue from the project and tax increment generated in TIF District 8. This resolution does not obligate the cities of Victoria or Chanhassen to any tax levy or repayment because these bonds only commit the revenue stream of the project for repayment. This allows the developer access to favorable interest rates because of our tax-exempt status to reduce the overall cost of financing the project. This resolution was prepared by our bond counsel at Briggs & Morgan who represent us in the transaction. Recommendation Staff recommends that the City Council hold the public heating and adopt the resolution as presented on July 14, 2003. The Cily ol Chanhassen ,, A growing community with clean lakes, quality schools, a charming downtown, lhriving businesses, winding trails, and beautiful parks. A great place to live, work, and play. RESOLUTION GIVING APPROVAL TO THE ISSUANCE OF TAX EXEMPT LOAN REVENUE OBLIGATIONS AND AUTHORIZING EXECUTION OF A JOINT POWERS AND ALLOCATION AGREEMENT RELATING TO BANK QUALIFICATION OF SUCH REVENUE OBLIGATIONS WHEREAS, PHM/Chanhassen, Inc., a Minnesota nonprofit corporation (the "Borrower") proposes to acquire, construct and equip an approximately 161 unit elderly housing development located at the Southeast comer of the intersection of Highway 101 and Lake Drive in the City (the "Project"); and WHEREAS, the Borrower has proposed that the City of Chanhassen (the "City") and the City of Victoria, Minnesota ("Victoria") enter into a joint powers agreement under Minnesota Statutes § 471.59, to jointly issue "bank qualified" tax exempt revenue obligations in the aggregate principal amount of not more than $27,300,000 (the "Bonds") to finance the Project pursuant to Minnesota Statutes, Chapter 462C (the "Act"); and WHEREAS, Section 265(b) of the Internal Revenue Code of 1986, as amended (the "Code"), allows a governmental unit such as the City to designate obligations as "qualified tax exempt obligations" even if it is not the issuer of the obligations thereby allocating all or a portion of its "small issuer status" limit of $10,000,000 under Section 265(b) ("bank qualification") of the Code upon the conditions set forth in Section 265(b) of the Code; and WHEREAS, the Bonds will be payable solely from revenues of the Borrower, will not be a general or moral obligation of the City or Victoria, or any other political subdivision of the State of Minnesota, but will be payable solely from revenues of the Borrower, to the extent and in the manner provided in the documents executed in connection with the issuance of the Bonds; and WHEREAS, the City has issued, or expects to issue during calendar year 2003 $2,195,000 of governmental bonds or "qualified 501(c)(3) bonds" or any other obligations within the meaning of Section 265(b) of the Code that need to be taken into account in determining whether the City is a "qualified small issuer" within the meaning of Section 265(b) of the Code and does not expect to issue any additional amounts of such bonds. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Chanhassen, Minnesota, as follows: 1. The City will receive substantial benefit from the Project which will help to provide additional elderly multifamily housing facilities within the meaning of the Act, accessible and available to residents of the City, and also facilities providing needed health, wellness, congregate dining and other services particularly needed by the elderly in the City. 2. This Council has received a copy of the Joint Powers and Allocation Agreement between the City and Victoria (the "Allocation Agreement"). Pursuant to such Agreement, the City hereby designates $7,805,000 of the Bonds to be issued by the City of Victoria for the Project as "qualified tax-exempt obligations" for purposes of Section 265(b) of the Code and 1546655vl agrees that the amount of such designation bears a reasonable relationship to the benefit to the City of the Project. 3. In no event shall the Bonds ever be payable from or charged upon any funds of the City; the City is not subject to any liability thereon; no owners of the Bonds shall ever have the right to compel the exercise of the taxing power of the City to pay any of the Bonds or the interest thereon, nor to enforce payment thereof against any property of the City; the Bonds shall not constitute a charge, lien or encumbrance, legal or equitable, upon any property of the City; and the Bonds do not constitute an indebtedness of the City within the meaning of any constitutional, statutory, or charter limitation. 4. The City hereby gives the host approval of the Project for purposes of Section 147(f) of the Internal Revenue Code and to the issuance of the obligations for the Project by the City of Victoria, Minnesota. 5. The Allocation Agreement is hereby approved in substantially the form now on file in the office of the City; and the Mayor and Manager of the City are authorized to execute the same in the name of and on behalf of the City. In the event of the disability or the resignation or other absence of the Mayor or Manager of the City, such other officers of the City who may act in their behalf shall without further act or authorization of the City do all things and execute all instruments and documents required to be done or to be executed by such absent or disabled officials. The approval hereby given to the Allocation Agreement includes approval of such additional details therein as may be necessary and appropriate and such modifications thereof, deletions therefrom and additions thereto as may be necessary and appropriate and approved by the City Attorney and by the City officials authorized herein to execute the Allocation Agreement prior to their execution; and such City officials are hereby authorized to approve said changes on behalf of the City. Adopted by the City Council of the City of Chanhassen, Minnesota, this 14th day of July, 2003. Attest: Mayor City Manager 1546655vl STATE OF MINNESOTA COUNTIES OF CARVER AND HENNEPIN CITY OF CHANHASSEN I, the undersigned, being the duly qualified and acting Manager of the City of Chanhassen, Minnesota, DO HEREBY CERTIFY that I have compared the attached and foregoing extract of minutes with the original thereof on file in my office, and that the same is a full, true and complete transcript of the minutes of a meeting of the City Council of said City duly called and held on the date therein indicated, insofar as such minutes relate to a resolution giving host approval to the issuance of revenue bonds and authorizing execution of a Joint Powers and Allocation Agreement. WITNESS my hand this day of July, 2003 City Manager 1546655vl