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99-1073council File # �l`1- �oR� Resolution # Green sheet # J E� \ � �, � 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 OF SAINT Presented By Referred To . DdtO RESOLUTION GIVING APPROVAL TO A PROJECT BY PEOPLE, INCORPORATED Ut3DPsR MINNESOTA STATUTES, SECTIONS 469.152 THROUGH 469.165; RSFERRING THE PROPOSAL TO THE MINNESOTA DEPARTMENT OF TRADE AND ECONOMIC DEVELOPMENT FOR APPROVAL, AND APPROVI23G A 30INT POWERS AGREEMENT a� BE IT RESOLVED, by the City Council (the "Council��) of the City of Saint Paul, Ramsey County, Minnesota (the "City") as follows: Section 1. General Recitals a. The purpose of Minnesota Statutes, Sections 469.152 through 469.165 as amended, relating to municipal industrial development (the "Act"), as found and determined by the legislature, is to promote the welfare of the State of Minnesota (the "State") by the active promotion, attraction, encouragement and development of economically sound industry and commerce through governmental action to prevent, so far as possible, the emergence of blighted and marginal lands and areas of chronic unemployment. b. Factors necessitating the active promotion and development of economically sound industry and commerce are the increasing concentration of population in the metropolitan areas and the rapidly rising increase in the amount and cost of governmental services required to meet the needs of the increased population and the need for development of land uses which will provide an adequate tax base to finance these increased costs and access to employment opportunities for such population. Section 2. Describtion of the Project. a. People Incorporated, a Minnesota nonprofit corporation and organization described in Section 501tc)(3) of the Internal Revenue Code of 1986, as amended (the "Corporation") has proposed the issuance of revenue obligations under the Act, in one or more series, in an amount not to exceed $2,000,000 (the "Obligations") to finance the costs of a project fully described in Exhibit B attached hereto (the "Project"), a portion of which is located in the City, as described in Exhibit A attached hereto. � The Project will be owned and operated by the Corporation. 44 c. As more fully described in E�ibit B, portions of the Project are located in the Ciry, the City 45 of Taylors Falls (the "Issuer"), and the City of Minneapolis, Minnesota (the "Host City"). 46 �g-1��1� 47 Section 3. Recitals Relatine to Joint Exercise of Powers. 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 100 101 102 a. Under the Act, the City, the Issuer and the Host City are each authorized and empowered to issue revenue bonds or a revenue note to finance or refinance all or any part of the costs of a project consisting of the refinancing of debt incurred with respect to, or acquisition and betterment of, health care facilities or facilities of organizations described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended (the "Code") and to refund bonds previously issued under the Act. b. The Corporation has requested that the City, the Issuer, and the Host City cooperate (as pernutted by Minnesota Statutes, Section 471.59) through a joint powers agreement in authorizing the financing of the Project through the issuance of the Obligations by the Issuer pursuant to the Act. c. A draft copy of the Joint Powers Agreement among the City, the Issuer and the Host City (the "Joint Powers Agreement") has been submitted to the Council and is on file in the offices of the City Clerk. Section 4. Recital of Representations Made by the Corporation. a. The City has been advised by representatives of the Corporation that: (i) conventional financing is available only on a limited basis and at such high costs of borrowing that the economic feasibility of operating the Project would be significantly reduced; (ii) on the basis of information submitted to the Corporation and their discussions with representatives of area financial institutions and potential buyers of tax-exempt bonds, the Obligations could be issued and sold upon favorable rates and terms to finance the Project; (iii) the Corporation will experience a significant debt service cost savings as a result of the Project; and (iv) the Project would not be undertaken but for the availability of financing under the Act. b. The Corporation has agreed to pay any and all costs incurred by the City in connection with the issuance of the Obligations, whether or not such issuance is carried to completion. c. The Corporation has represented to the City that no public official of the City has either a direct or indirect financial interest in the Project nor will any public official either directly or indirectly benefit financially from the Project. Section 5. Public Hearina. a. As required by the Act and Section 147(f) o£ the Code a Notice of Public Hearing was published in Pioneer Press, the City's official newspaper, and newspaper of general circulation, calling a public hearing on the proposed issuance of the Obligations and the proposal to undertake and finance the Project. b. As required by the Act and Section 147(f) of the Code: i. the Issuer has held or will hold a public hearing on the 103 104 105 106 107 108 109 110 111 112 113 114 115 116 117 118Section 6 119 120 121 a. 122 123 124 125 126 b. 127 128 129 130 131 132 133 134 135 c. 136 137 138 139 140 141 142 143 144 145 146 147 148 149 150 151 152 153 154 155 156 157 158 159 d. 160 161 162 163 �t,`� - l�'t3 issuance of the Obligations and the proposal to undertake and finance the Project; ii. the Host City has held or will hold a public hearing on the issuance of the Obligations and the proposal to undertake and finance the portion of the Project located within the jurisdictional limits of the Host City; and iii. the City Council has on November 3, 1999, held a public hearing on the issuance of the Obligations and the proposal to undertake and finance the portion of the Project located within the jurisdictional limits of the City, at which all those appearing who desired to speak were heard and written comments were accepted. Findinas. It is hereby found, determined, and declared as follows: The welfare of the State and the City requires the provision of necessary health care facilities so that adequate health care services are available to residents of the State and the City at reasonable cost. The City desires to facilitate the selective development of the community, retain and improve the tax base and help to provide the range of services and employment opportunities required by the population. The portion of the Project located in the City will assist the City in achieving those objectives; help to stabilize market valuation of the City; help maintain a positive relationship between assessed valuation and debt; and enhance the image and reputation of the community. On the basis of information made available to this Council by the Corporation it appears, and this Council hereby finds, that: (1) the Project constitutes properties, real and personal, used or useful in connection with a revenue producing enterprise engaged in providing health care services within the meaning of Subdivision 2(d) of Section 469.153 of the Act; (2) the Project furthers the purposes stated in Section 469.152 0£ the Act; (3) the Project would not be undertaken but for the availability of financing under the Act and the willingness of the Issuer to furnish such financing; and (4) the effect of the Project, if undertaken, will be to: (i) encourage the development of economically sound industry and commerce, (ii) assist in the prevention of the emergence of blighted and marginal land, (iii) help prevent chronic unemployment, (d) help the City retain and improve the tax base, (iv) provide the range of service and employment opportunities required by the population, (vi) help prevent the movement of talented and educated persons out o£ the State and to areas within the State where their services may not be as effectively used, (vii) promote more intensive development and appropriate use of land within the City, eventually to increase the tax base of the community, and (viii) provide adequate health care services to residents of the City at a reasonable cost. The City acknowledges, £inds, determines and declares that the provision of necessary health care facilities so that adequate health care services are available to residents of the State at a reasonable cost is a public purpose. 164 Section '7 165 166 a. 167 16S 169 170 171 172 173 b. 174 175 176 177 178 179 180Section 8 181 182 1S3 184 185 186 187 188 189 190 191 Section 9 192 193 a. 194 195 196 197 198 199 200 201 202 203 204 b. 205 206 207 208 209 c. 210 211 212 State Approval a Precondition. � el — ��rt3 The proposal to undertake and finance that portion of the Project located in the City but outside o£ the jurisdictional limits of the Issuer and the Host City, and the issuance of the Obligations, are hereby given approval by the City subject to the approval of the Project by the Department of Trade and Economic Development o£ the State ("DTED"). In accordance with Subdivision 3 of Section 469.154 of the Act, the officers of the City or their designees, are authorized and directed to cooperate with the Issuer in submitting the proposal for the Project to DTED requesting approval, and other officers, employees and agents of the City are hereby authorized to provide DTED with such information as it may require. Limited Oblicrations. The Obligations, when and if issued for the Project, shall not constitute a charge, lien or encumbrance, legal or equitable, upon any property of the City. (There will, however, be a charge, lien or encumbrance on the Project, which is not an asset of the City.) The Obligations, when and if issued, shall recite in substance that the Obligations and the interest thereon, are payable solely from revenues received from the Project and property pledged for payment thereof, and shall not constitute a debt of the City. Approval and Execution of Joint Powers Agreement. The Joint Powers Agreement is hereby made a part of this Resolution as though fully set forth herein and is hereby approved in substantially the form presented to the City Council. The Mayor and the Clerk, or the authorized designee of either of the foregoing, are authorized and directed to execute, acknowledge, and deliver the Joint Powers Agreement on behalf of the City with such changes, insertions, and omissions therein as the City Attorney may hereafter deem appropriate, such execution to be conclusive evidence of approval of such document in accordance with the terms hereof. The Mayor and the C1erk, or the authorized designee of either of the foregoing, are authorized and directed to execute and deliver such other documents or certificates needed from the City for the sale of the Obligations. The approvals in this Section are specifically subject to approval of the Joint Powers Agreement by the Issuer and the Host City and approval of the Project by DTED. 213Section 10 214 215 216 217 Ratification. The actions of the Clerk taken with respect to causing the Notice of Public Hearing, in the form attached hereto as Ezchibit A, to be published in the official newspaper of the City and a newspaper of general circulation in the City not less than 14 days prior to the hearing are ratified and confnmed in all respects. c�q, - �o�i3 Requested by Department of: Adoption Certified by Council Secretasy B � \ c�- ' �� .� - r Approved by Mayor: Date � ✓ �� Sy: Plannina & Economic Development By' ` '�� Form Approved by C' y ttomey By: Approved by M ar �ubm'ss on Council Y Adopted by Council: Date '� \c-�'1 , � �� EXf�IT A �q — l�`�3 NOTICE OF PUBLIC HEARING ON PROPOSED PROJECT AND THE ISSUANCE OF PRIVATE ACTIVITY BONDS TO FINANCE HEALTH CARE FACII.ITIES CITY OF SAINT PAUL, RAMSEY COUNTY, MINNESOTA I30TICE IS HEREBY GNEN that the Ciry Council of the Ciry of Saint Paul Minnesota will meet on November 3, 1999, at 5:30 p.m. in the Ciry Council Chambers in the Saint Paul City Hall, third floor, located at 15 West Kellogg Boulevard, Saint Paul, Minnesota for the purpose of conducting a public hearing on a proposal by People Incorporated, a Minnesota nonprofit corporation (the "Corporation"), that the City approve the issuance by the City of Taylors Falls, Minnesota, of health care facilities revenue obligations, in one or more series (the "Obligations"), to finance a project more fiilly described below, pursuant to Minnesota Statutes, Sections 469.152 through 469.165 (the "Act"). The project (the "Project") will consist of (a) refinancing debt incurred by the Corporation with respect to real and personal property; (b) financing real property unprovements; and (c) acquiring fiuniture and equipment, all on behalf of the Corporation which is the owner and operator, in the masimum amount of $862,503, more fully described below: Furniturc Facility I�uptcave- & �quiP- Faei�iTy 1�Iamc & f.ocation RaciTity DescripC�n Refinauciag men�s ment Toiale Administrative Offices 12,000 sq. fr., 1-story, 145,596 9,805 16,800 172,201 317 York Ave. multi-use St. Paul, MN 55101 adminisuative office building Apollo 6,400 sq.ft. 2-story 104,362 45,500 149,862 25 N. Dale 5treet building for the St. Paul, MN 55102 community support program drop-in center (serves 11,000 clients/yeaz) Array East 10-bed residential cue 25,500 3,000 28,500 700 E. 8`" Street facIlity St. Paul, MN 55106 Array Midway Program community support 2,500 2,500 1919 Univeisity Ave. pTOgram dcop-in centeL Suite 112 (serves 100 St. Paul, MN 55104 clierns/yeaz) Edgebrook 4-bed residential caze 94,279 6,500 100,779 2250 Ecigebrook facility St. Paul, MN 55119 Hewitt Crisis Residence 16-bed crisis residence 12,400 6,050 18,450 1593 Hewitt Avenue St. Paul, MN 55104 Maghakian 16-bed residential caze 198,100 78,400 276,500 1100 Hancock Sueet facility St. Paul, MN 55106 Fumihue Facility Impcove- &_E4uig- Facilixy Aiame &.LocaYiou Facility Descr�pdon - 3tefinaaei�g menfs - meut Totais -- Ruth House 5-bed residential caze 105,211 8,500 113,711 246 Ruth Street facility St. Paul, MN 55119 ST. PAiIL TOTAL 862,503 � _ �0`�3 The Corporation has proposed combining the financing for the Project with the financing of other projects under the Act which are located in the Cities of Minneapolis and Taylors Falls, Minnesota, with the total amount of the Obligations to be issued by the City of Taylars Falls presently being estimated at not to eYCeed $2,000,000. The obligations and interest thereon shall not be payable from nor charged against any funds of the City other than revenue pledged for the payment thereof, nor shall the City be subject to any liability thereon. No holders of the obligations shall ever have the right to compel any exercise of the tu�ing power of the City to pay the obligations or the interest thereon, nor to enforce payment against any properry of the City. 5uch obligations shall not constitute a charge, lien or encumbrance, legal or equitable, upon any properry of the City, nor shall the same constitute a debt of the Ciry within the meaning of any constitutional or statutory lunitations. All persons interested may appear and be heard at the tune and place set forth above or may submit written comments in advance of the hearing. A draft copy of the proposed Application to the Minnesota Department of Trade and Economic Development for approval of the project, together with all attachments and e7chibits thereto, is available for public inspection in the offices of the Department of Planning and Economic Development, 1300 City Hall Annex, 25 West Fourth Street, Saint Paul, Minnesota 55102 between the hours of 8:00 a.m. to 4:30 p.m. Monday through Friday, except legal holidays, to and including the date of the hearing. All written comments or questions should be addressed to the Ciry of Saint Paul, Department of Planning and Economic Development, 1300 Ciry Hall Annex, 25 West 4th Street, Saint Paul, Minnesota 55102, attn. Allen Carlson EXfIIBIT B PROJECT DESCRIPTION a �_�o't� Finance the costs of a project (the "Project") on behalf of the owner and operator, People, Incorporated, a Minnesota nonprofit corporauon (the "Corporation") consisting of (a) refinancing debt incurred by the Corporation with respect to real and personal property; (b) financing real properry unprovements; and (c) acquiring furniture and equipment, all as described below: Fumimra Faeility - - Improve- & Equig- Faci}iiy Name & I.ocativn Paei�ity DescripYion Refinaneiug - meats ment Totals _ Anchor House 13-bed residential caze 67,861 30,700 4,500 103,061 1622 Hillside Ave. N. facIlity Minneapolis, MN 55411 Array West 6-bed residential care 61,806 1,500 13,800 77,106 1800 Penn Avenue N. facIlity Minneapolis, MN 55411 Nancy Page 16-bed residentialcare 132,913 197,260 5,500 335,673 245 S. Clifron Ave. faclliry Minneapolis, MN 55403 People House II 8-bed residential caze 265,522 30,240 295,762 1380 W. Minnehaha facility Parkway Minneapolis, MN 55409 Project Hope Program community housing 2,000 2,000 3210 Lyndale Ave. N. support program Suite 105 Minneapolis, MN 55412 NortUside Communiry community support 33,000 33,000 Support Program program drop-in center 1501 W. Broadway (serves 750 Minneapolis, MN 55411 clients/year) Seazch Program community support 1,295 1,295 630 Cedaz Avenue f{204 program Minneapolis, MN 55454 MIlVNEAPOLIS TOTAL 847,897 Administrative Offices 12,000 sq. ft., 1-story, 145,596 9,805 16,800 172,201 317 York Ave. multi-use St. Paul, MN 55101 administrative office building Apollo 6,400 sq.ft. 2-story 104,362 45,500 149,862 25 N. Dale Sueet building for the St. Paul, MN 55102 community support program drop-in center (serves 11,000 clients/yeaz) Array East 10-bed residential caze 25,500 3,000 28,500 700 E. 8`" Street facIlity St. Paul, MN 55106 Furnimre FacIlity Improve- & Equip- _ Faciliry Name &#,ucatiok FaeifiLy Description Refmaneing menfs ment Tatais Array Midway Program community support 2,500 2,500 1919 University Ave. program drop-in center Suite 112 (serves 100 St. Paul, MN 55104 clients/yeaz) Edgebrook 4-bed residential care 94,279 6,500 100,779 2250 Edgebrook facility St. Paul, MN 55119 Hewitt Crisis Residence 16-bed crisis residence 12,400 6,050 18,450 1593 Hewirt Avenue St. Paul, MN 55104 MagUakian 16-bed residential caze 198,100 78,400 276,500 1100 Hancock Street facility St. Paul, MN 55106 Ruth House 5-bed residential caze 105,211 8,500 113,711 246 Ruth Sueet facility St. Paul, MN 55119 ST. PAUL TOTAL 862,503 Taylor Aouse 5-bed residemial caze 118,?A8 11,700 129,948 455 Center Street facility Taylors Falls, MN 55084 TAYLORSFALLS TOTAL 129,948 Subtotal(rounded) 1,294,000 458,005 88,445 1,840,450 Issuance Costs pess than 26,300 11,100 37,400 2%) TOTAL 1,320,000 557,550 1,877,550 (rounded) Q`l - L°�t3 � -��tt� TOTAL # OF SIGNATURE PAGES �� /d �o�q9 GREEN SHEET Q,R - �0�,3 No 101679 � � oe..,�.� � �� arcwnowEr/ CQ/ I 1 lsll ane�art � �F� ❑ wuwy�auntrsort ❑ n��xtuLLaaviKei¢ � � WYORI� � / �• L j`°/ "� 1' (CLJP ALL OCATIONS FOR SIGNATURE) � � T �� ,, ��`iL f�eoy�l�g �a ��oG.� f-esP/sfi`�+-, g%vi' � l�yy o�f J��,7� i �/v � a.0 0� 0� l�a c; /if J'Pve�'rve ,� . S�- Cc �J�"�� J6- ��/� Z'� c� r��r; �ro��.0 �/1t�,b$� o,� Tv�,a�� /� v e��!?��ati-r� a�J/'roF��i y 4� o�?�.F �a u,�-s �pr�r o-cur�- � �re �, � c� r � C`�e, 0 �Q,c� �w /�2�� .ECaMMENDATION Aowove A1 or Reiect (Rl PERSONALSERVICE CONiRACiS MUSTANSWER TNE FOLLOWING QUESTIONS: PLANNING COMMISSION q6 COMMITfEE CIVII SERVICE COMMISSION �IMTI PRO M ISSUE, OPPI e �`P, .L6dG �,`l, ��e� � �� o�' �, i�h� fa /�ut'sV r�,,7� - f� 7"�/�-r� � �eo / ��S � � Has tliis P��m ever wdked uMer a contract torfhis departmenl7 YES NO Flas this D��m ever been a dly empWyeeT � vES no Doec thic P�um D� a sk� not nomWry�p�s�se0 bY �Y arrerR WY emPbyee4 YES NO I8 Mia pnaorJfirm a terpetetl oendoYt . YES NO �'E''f/�/i1C$�LG2 `/��°� � / � i' e�llY�L�Q ��✓ S�� 4�6? �s z- 5�� 9, /� S s �%/� ��/ ,YS�� 6� a� _ s{ /,�� yr e eds �-u,�a �O cd�� rv� IF �ovm r , ��SV �iJ2 GL., B ` � � L'B��- .S l� /�� ('��%`� ,7`'�c�r �i7'e � cLf'-� �d G �z�c� !�P �6 � / �� , � /'�N� .�T�.dW9hC/ � i°� � �Ct� �'/G'f �f✓ r � /��C9�Z'2�f/ �'r.ers A.�. ��'I��, ffl', l8�'CR. COET/REVplUE BU�GETED (GRCLE ON� SOURCE ACTNITY NUMBER Lu�.��'��5 �'�!'�'�„ti �4r z: ��r� YEE �� ,� �� -�� Interdepartmental Memorandum �.�r�.�� .r�n� TO: Council President Bostrom Council member Benanav Council member Blakey Council member Coleman f�l.�u SUBJECT: DATE: Council member Harris Council member Lantry Council member Reiter Brian Sweeney Allen Carison RESOLUTION GIVING HOST CITY APPROVAL TO THE ISSUANCE OF HEALTH FACILITIES REVENUE OBLIGATIONS FOR A PROJECT BY PEOPLE, INCORPORATED, UNDER MINNESOTA STATUTES, SECTIONS 469.152 THROUGH 469165; REFERRING THE PROPOSAL TO THE MINNESOTA DEPARTMENT OF TRADE AND ECONOMIC DEVELOPMENT FOR APPROVAL, AND APPROVING A JOINT POWERS AGREEMENT October 20, 1999 I. EXECUTIVE SUMMARY People, Inc. is seeking from the City of Saint Paul to approve the issuance of $1,320,000 of the 501(c)(3) tax exempt revenue bonds and $557,550 of tasable revenue bonds to (a) refinance existing debt incurred by the corparation with respect to real and personal property; (b) finance real properiy improvements; and acquire furniture and equipment. Because People, Inc. owns several properties in the metropolitan area, the City of Taylor Falls will acriaaliy issue the bonds as a small pool issuer. For the City of Saint Paul's part, it needs only to conduct a public hearing and approve a joint powers agreement. Suminary of the fmancing is as follows: Sources Tax exempt bonds Tasable Bonds $1,320,OQ0 557.550 Uses Refinaucing Improvements Equipment Cost of Issuance $1,294,QOQ 458,005 88,445 37.400 $1,887,550 Totals $1,877,550 �q- �c��3 Saint Paul's portion of the issue is $862,503. II. BACKGROUND People, Inc. is a non-profit human services agency that provides program and residenfial facilities in a five-county metropolitan azea around the Twin Cities. People, Inc. promotes independence and community integrarion for people with mental illness and other disabilities, many of whom have complex and neglected needs. Services include residential programs, residential crisis services, drop-in centers with psycho-social rehabilitation, case management, pre-vocational training, supportive services to assist individuals in maintaining independent living, and counseling and education for families of persons with mental illness. People, Inc. also provides programs for developmentally disabled deaf adults and adults with epilepsy. In Anoka, People, Inc. provides case management to individuals who are recovering from dependency on alcohol or other mood-altering drugs. Attached is a listing and map of the residential homes People, Inc. owns in Saint Paul. Basically, homes are single family residences occupied by up to four individuals. This arrangement meets the zoning code definition of a family for single faanily residence's purposes. The homes pursuant to the zoning code do not by definition constitute group homes. IIL FINANCING Attached is a suminary of the fmancial structure of the bond financing. The attractiveness of this bond transaction is that it is bank-qualified. Pursuant to the 1986 Tax Code banks are generally denied deductions for their interest expense allocable to the purchase of t�-exempt bonds. In the case of bank-qualified bonds however, banks may deduct up to 80% of their canying costs of borrowing funds to lend. The result is that the purchaser of the bonds (banks) obtains a much higher rate of return on the transaction, thus the interest rate on the bonds is much lower to the borrower (approximately 25 to 50 basis points lower ). The interest rate on the bonds will be 5.8%, whereas, the lender will realize a taxable return of 8.65%. The interest rate on the bonds will be adjustable based on changes in the Five-Year U.S. Treasury Constant Maturity Index. The term of the bonds will be 16.5 years. Attached aze the audited financial statements of People, Inc. The annual debt service requirement on the bonds will be approximately $124,000. Based upon People, Inc.'s revenue statement debt coverage on the bonds will be at least 2.31. The loan to value ratio on the assets is less than 80% and is a requirement of the bonds. The obligafions and interest on the bonds shall not be payable from nor charged against any funds of the City of Saint Paul other than the revenue pledged from the projects, nor shall the City be subject to any liability. The joint powers agreement that the City is being requested to execute approves the City of Taylor Fa11s to issue the bonds as a sma11 pool issuer and to issue bonds for facilities within the �la - to�1� jurisdiction of the City. III. RECOMI��NDATION Based upon the low loan to value ratio, high debt coverage ratio and fmancial stability of People, Inc. staff assigns a risk rating of acceptable. Staff recommends that the attached resolution be considered for approval to issue the revenue bonds, refer the application to DTED, and execute the joint powers agreement subject to review and approval by the Assistant City Attomey. IV. ATTACHIVIENTS 1. City Council Resolution 2. Executive sunmiary of the project K:�Shazed�CARLSOAP\people im\CTTY COiJNCII..RP'C.wpd FROM � FRX N0. : 6514558484 07 1999 01:08PM P2 OCT-67-19'39 11�51 6512283251 P.�72.�92 � to�t3 �Tp! °.02 Midwest Healthcare Capital has been retained to arrange a tax-exempt financing/refinancing on behalf of People, Incorporated located in St. Paul, Minnesota. Please keep this request for financing confidential. �q-�oZ3 Purpose: The Obligor desires to refinance outstanding notes for a variety of residential properties as listed below. In addition, the Obligor is financing needed remodeling and renovation on its buildings also described below: People, Incorporated Egecutive Summary Dated August 5,1999 Refinancin�• Facility Administrative Apollo People House II People House II People House II Balloon Anchor Anchor ARRAY West ARRAY West Nancy Page Edgebrook Ruth Taylor Maghakian � � MIDWEST HEALTHCARE CAPITAL Healthcaze Tac-Exempt Finance Specialists 161 EAST MARIE AVE. WEST ST. PAUL, MINNESOTA Si118 (651) 455-8300 FAX (651) 45i-8484 Email: mhealihcap@aoLcom Location Monthly Payment Estimated Balance as of 6/30199 St. Paul St. Paul Minneapolis Minneapolis Minneapolis Minneapotis Minneapolis Minneapolis Minneapolis Minneapolis St. Paul St. Paul Taylor Falls St Paul $2,200 1,450 1,922 254 0 612 915 565 688 1,458 729 814 856 1 107* $145,596 104,362 204,788 14,858 45,876 61,828 6,033 57,604 4,202 132,913 94,279 105,211 118,248 198,100 otals $13 570 $1294 000 � This amount represents montt�ly interest only payments. . The weighted average interest rate for all existing loans listed above is 8.22% ' � �4,- �o�� New Proiect• Maghakian Renovation: Three-Yeaz Renovation of existing residences: Total New Project Amount: Total Refinancin� and New Proiect Amounts: Parties to the Transaction $78,400 468,065 $546,450 $1,840,450 Obli or: People, Incorporated, a Minnesota non-profit (501(c)(3)) corporation. Issuer: Because the properties included in the proposed transaction are located in several municipalities, we will work with the Obligor to select a municipality which is willing and able to issue the financing as bank-qualified. Transaction Manaeer Steve Fenlon Midwest Healthcare Capital West St. Paul, Minnesota Bond Counsel: Mary Frances Skala Fryberger, Buchanan, Smith & Frederick Duluth, Minnesota Transaction Details Note A Amount Amourtt to be financed Issuance Costs (2% limit) $1,294,000 26,300 Note A Tax-Exempt Total: $1,320,000 Term: This note is a consolidation of all existing long-term debt into a single note, which when combined, results in a weighted average term of 198 months (16.5 years). The ta�c-exempt note will be amortized over a sixteen and one-half vear term. Level payments of principle and interest will be due monthly in arreazs. 2 � � a�-i�23 Tax-Eaempt Note A Amount: $1,320,000 Interest Rate: 5.$0% Monthly Payment: $10,372 *Annual Debt Service: $124,474 * Subject to interest rate adjushnents on the 60�' month and on each fifth anniversary thereafter, as described below. Interest Rate: The initial interest rate is 5.80% based upon a 365/365-day accrual method. Please bear in mid that the Issuer will represent that this transaction is bank-qualified, which allows the lender to deduct 80% of its carrying costs. Thus, the taxable equivalent is 8.65% assuming that you avoid Federal taxes at a rate of 34%, that you pay state taxes at a rate of 9.5%, and that your melded cost of funds is 3.75%. This ta;cable equivalent rate is 284 basis points over the yield of Treasury securities on August 3, 1999 with remaining maturities of five years. Payment: The first 60 monthly payxnents of principal and interest will be $10,372.80 each. Subsequent payments will be in an amount sufficient to fully amortize the remaining principal over the remaining term at the adjusted rate, determined as described below. Interest Rate Adjustment: Note B Amount On each fifth anniversary the interest rate will be adjusted based on changes in the Five-Year U.S. Treasury Constant Maturity Index. The maximum increase to the initial tax-exempt rate will be 250 basis points. If Treasury yields at the time of the rate adjustment warrant it, the maximum increase would result in a tax-exempt rate of 330%, with a taxable equivalent rate of 12.58%. Amount to be financed Issuance Costs (2% limit) Note B Tag-Exemut Total: $546,450 11 100 $557,550 Term: This note will be structured to permit People, Inc. to draw-down funds over a three year period as it rennovates its existing residences as described in the attached three-year capital budget. During this three-yeaz draw phase, People, Inc. will make monthiy payments of interest only. On the third anniversary of this loan, the outstanding principal amount will be amortized over a fifteen-year ' ` �l0. — �o�t 3 term based upon level monthly payments of princvipal and interest and subject to an interest rate adjustment on each fifth year anniversary. Tag-Egempt Note B Amount: $557,550 Interest Rate: 5.80% Monthly Payment: $4,644 "Annual Debt Service: $55,738 * Subject to interest rate adjustments on the 60�' month and on each fifth anniversary thereafter, as described below. Interest Rate: The initial interest rate is 5.80% based upon a 365/365-day accrual method. Please beaz in mid that the Issuer will represent that this transaction is bank-qualified, which allows the lender to deduct 80% of its carrying costs. Thus, the taYable equivalent is 8.65% assuming that you avoid Federal taaces at a rate of 34%, that you pay state taaces at a rate of 9.5%, and that your melded cost of funds is 3.75%. This t�able equivalent rate is 284 basis points over the yield of Treasury securities on August 3, 1999 with remaining maturities of five years. Payment: The first 60 monthly payments of principle and interest will be $4,644.89 each. Subsequent payments will be in an amount sufficient to fully amortize the remaining principle over the remaimng term at the adjusted rate, determined as described below. Interest Rate Adjustment: On each fifth anniversary the interest rate will be adjusted based on changes in the Five-Year U. S. Treasury Constant Maturity Index. The maximum increase to the initial tax-exempt rate will be 250 basis points. If Treasury yields at the time of the rate adjustment warrant it, the maximum increase would result in a tax-exempt rate of 830%,_with a taxable equivalent rate of 12.58%. Security: The Obligor will promise unconditionally to repay, and cross- collateralize the notes with a mortgage on all properties being refinanced and an appraised collateral value sufficient to provide a ratio of loan to appraised value of 80% or less. Prepayment: The Obligor would have the right to prepay the note(s) in full or in part on any payment date, subject to thiriy days' notice, without penalty or service charge. If the Obligor desires, we would also seek the right to reamortize the note in the event of a material partial payment, thereby reducing the annual debt service. More �� a a- �23 precisely, in the event that one of the affected facilities is closed or sold and a proportionate loan payment is made, the Lender will agree to reamortize the note and release the affected property from the mortgage, provided that the loan to value ratio will be 75% or less after the proportionate prepayment and release of property. Schedule: We would appreciate an indication of your interest in this financing in one week, as we intend to close in September, 1999. ' Peoule, Incorporated Financial I�iEhliehts Current Assets: Current Liabilities: Working Capital: Fixed Assets: Long-Term Liabilities: Net Worth: Revenues: Net Income: Non-Cash Charges: Interest Expense: Cash Flow Available For Debt Service: Annual Debt Service Unaudited 6-30-99 $1,391,281 674,700 716,581 2,386,750 1.203,520 $1,899.811 $3,102,067 $69,107 90,888 48,714 $208,709 $180,213 Debt Service Coverage: 231x (Annualized) Notes ' Audited 12-31-98 $1,086,391 70, ll9 1,016,272 2,129,225 1.058,424 $2,087.073 $6,046,344 $118,953 182,351 95,869 $397,173 2.20x Audited 12-31-97 $1,032,574 96.799 935,775 2,031,965 1,016,122 $1,951,618 $6,315,130 $545,758 188,999 131 494 $866,251 4.81x a q - t��t 3 Audited 12-31-96 $842,681 152,411 690,270 2,141,266 1,354.315 $1,477,221 $5,562,287 $120,067 179,693 133,559 $433319 2.40x 1) Fixed assets include a fund designated by People, Incorporated's Board for capital improvements. The balance of this fund has been as follows: 12-31-98 12-31-97 12-31-96 $141,935 $139,442 $137,131 2) The 12-31-97 net income was extraordinazily high due to a non-recurring capital gain of $453,426 on sale of property. 0 ' � °[q- to�t� People,Incorporated Or�anizational Profile People, Incorporated is a nonprofit, human services agency that provides programs and residential facilities in the five-county metropolitan azea. People, Incorporated promotes independence and community integration for people with mental illness and other disabilities, many of whom have complex and neglected needs. People, Incorporated provides services to clients through the following programs: Administration Office Lynn Lindsay, Director of Finance (lglindsavna juno.com) 317 York Avenue Saint Paul, Minnesota 55101 Chemical Dependencv Program Chemical Dependenc�e Mana�ement-Anoka Co. Joan White, Director 2665-4�' Avenue North Anoka, Minnesota 55303 Development Disabilities Proerams People II Sue Hajiani, Director 1380 West Minnehaha Parkway Minneapolis, Minnesota 55409 SEARCH Anne Barnwell, Director 630 Cedar Avenue #204 Minneapolis, Minnesota 55454 Home Health A¢ency Jack Ruth, Director 317 Yark Avenue Saint Paul, Minnesota 55101 Mental Health Pro¢rams A.R.C.H. Joan White, Director 2665 — 4�' Avenue North Anoka, Minnesota 55303 (651) 774-0011 voice (651) 774-6535 tty (651) 774-0606 fax Anchor House Frances Slagle, Director 1622 Hillside Avenue North Minneapolis, Minnesota 55411 APOLLO Leonard Weiss, Director 25 North Dale Street Saint Paul, Minnesota 55102 Edgebrook House Mary Zasada, Director 2250 Edgebrook Saint Paul, Minnesota 55119 Hewitt Crisis Residence Sue Kruger, Director 1593 Hewitt Avenue Saint Paul, Minnesota 55104 People's Joblink Laurie Janssen, Director 317 York Avenue Saint Paul, Minnesota 55101 Nancv Pa�e Pro�ram Mary Zasada, director 245 South Clifton Avenue Minneapolis, Minnesota 55403 � Northside Communit�port Program Joan White, Director 1501 West Broadway Minneapolis, Minnesota 55411 People's Network Pro�ram/SCH Jack Ruth, Director 317 York Avenue Saint Paul, Minnesota 55101 Project Hope Joan White, Director 3210 Lyndale Avenue N., Ste. 105 Minneapolis, Minnesota 55412 Ruth House Mary Zasada, Director 246 Ruth Street Saint Paul, Minnesota 55119 Tavlor House Sue Kruger, Director 455 Center St. Taylor Falls, Minnesota 55084 Maghakian 1100 Hancock Street St. Paul, MN 55106 � � - to23 Mental Health/HearinE Impairment Pro¢rams Arrav East Tom Houlton, Director 700 East 8�' Street Saint Paul, Minnesota 55106 Arrav Midway/Communitv Livin� Linda Eckhardt, Director I919 University Avenue, Suite 112 Saint Paul, Minnesota 55104 Arrav West Tom Houlton, Director 1800 Penn Avenue North Minneapolis, Minnesota 55411 Deaf and Hard of Hearin� Services at Ramsev County Linda Eckhardt, Director 160 East Kellogg Boulevard #6200 Saint Paul, Minnesota 55101 Note: The following facilities have multiple programs and accordingly are listed more than once: 317 York Avenue Saint Paul, Minnesota 55101 Services Provided Mental Health 2665-4�' Avenue North Anoka, Minnesota 55303 People, Incorporated provides a variety of inental health services to adults with serious and persistent mental illness, some of whom aze also deaf or hazd of hearing. Services include: � Residential programs Drop-in centers with psycho-social rehabilitation Supportive services to assist individuals in maintaining independent living Teaching clients to work with their medical physician Counseling and education for families of persons with mental illness Short-term crisis stabilization Housing search Bus training ' c�q - lo'i3 Residential crisis service Pre-vocational training Case management Housing support Social and recreational activities in a drop-in setting Independent living/social skills trauung Home health aid and nurse visits Medication monitoring Money management People, Incorporated provided services in 1998 in the following facilities: APOLLO Center Home Health Agency (HHA) Joblink Vocational Services Northside Community Support Hewitt Crisis Residence ARRAY East ARRAY West ARRAY Midway ARRAY Community Living Deaf and Hard of Hearing Services Nancy Page Anchor People's Family Services People's Network Program Supported Community Housing ARCH At Ramsey County Project HOPE Ruth-Edgebrook Housing Support Taylor House Chemical Dependencv People, Incorporated's Anoka CD Case Management program provides case management services to individuals who are recovering from dependency on alcohol or from other mood-altering drugs. Develoumental Disabilities People, Incorporated's People II program offers an ICF/MR facility for developmentally disabled deaf adults; and People, Incorporated's SEARCH program provides services for adults with epilepsy. Oreanizationai Milestones: 1969 People, Incorporated is formally organized. 1977 Array East opens; the first residential program in the United States for individuals who are Deaf or Hard of Hearing and mentally ill. 1986 Array West opens; the first, and only continuing, residentiai program in the state for individuals who are Deaf or Hard of Hearing, mentally ill, and have histories of behavioral problems. r� � � a`( -10�13 1988 SEARCH opens; the first, and only continuing, apartment tranung program in the state for individuals with epilepsy, many of whom have mental illness. People II opens; the first residential program in the state for individuals who are Deaf or Hard of Hearing and have both developmental disabilities and challenging behaviors. 1941 Home Health Agency opens; the first home health service in the state designed specifically to serve individuals with mental illness. 1993 Hewitt Crisis Residence opens; residential service begun in 1970 was converted to the first residential crisis program in the state for individuals with mental illness. 1994 Joblink's Grow Program opens; the first horticulture-training program in the state for individuals with mental illness. 1995 Homeless Outreach Program opens; division of Northside Community Support Program: the only outreach program in the state for the unsheltered homeless individuals with mental illness. 1996 Array Midway opens; the state's first drop-in center for people who aze Deaf or Hard of Heazing and Mentally ill. 1997 Project Hope opens; the first program in the state to provide long-term, safe, affordable housing to African Americans with mental illness and chemical dependency. Senior Mana¢ement: Tim Burkett, Ph.D., Executive Director. Psychologist with over 20 years of experience directing community-based programs for the mentally ill and developmentally disabled. He warked at Community Involvement Programs for 16 years, flie last five as Executive Directar. In his current position at People, Incorporated, he is responsible far more than 20 programs with a total budget of more than $6 million. The director of Program Operations for People, Incorporated is Mary Kay McJilton, OTR. She has a degree in occupational therapy from the College of St. Catherine and 3E yeazs of human service experience. She has warked with children with developmental disabilities and complex medical conditions and adults with mental illness and chemical dependency issues. At People, Incorparated, she served as Program Director far five years and for the past 15 years as the Director of Operations supervising the Program Directors who run the 22 programs within the corporation. The director of finance is Lynn G. Lindsay. He has a finance degree from Columbia University and 20 years of experience in financing and banking that ranges from the non- profit sector to Vice-President and Manager of international banking at American National Bank. He has served as a financial advisor and business analyst for several corporations, including the Bush Foundation. Board of Directors Name• Diane Al�rens Senator Ellen Anderson Ernest E. Bethe III Richard L. Breitman Galen Cadle Lee Carlson Pat Hart Robert Hennesy Janice Hogan Louise Klas Sidney Lange Nancy McKillips Rolf Schubert Scott Sponheim Beth Waterman Mary S. White � , c{,`l - Lo23 Occupation Raznsey County Commissioner (retired) Minnesota State Legislator Senior Risk Management, Cargill Attorney-at-Law Senior Vice President, St. Anthony Pazk State Bank Executive Director, Risk Management, NRG Energy, Inc. Community affairs volunteer Public relations, 3M Company (retired) Chair, Social Science Dept., U of M Community affairs volunteer Program coordinator, Wilder Research Center Director, Metropolitan State University VP, Corporate R&D, H.B. Fuller Company Psychologist, VA Medical Center Vice President, Health Partners Community affairs volunteer council File # �l`1- �oR� Resolution # Green sheet # J E� \ � �, � 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 OF SAINT Presented By Referred To . DdtO RESOLUTION GIVING APPROVAL TO A PROJECT BY PEOPLE, INCORPORATED Ut3DPsR MINNESOTA STATUTES, SECTIONS 469.152 THROUGH 469.165; RSFERRING THE PROPOSAL TO THE MINNESOTA DEPARTMENT OF TRADE AND ECONOMIC DEVELOPMENT FOR APPROVAL, AND APPROVI23G A 30INT POWERS AGREEMENT a� BE IT RESOLVED, by the City Council (the "Council��) of the City of Saint Paul, Ramsey County, Minnesota (the "City") as follows: Section 1. General Recitals a. The purpose of Minnesota Statutes, Sections 469.152 through 469.165 as amended, relating to municipal industrial development (the "Act"), as found and determined by the legislature, is to promote the welfare of the State of Minnesota (the "State") by the active promotion, attraction, encouragement and development of economically sound industry and commerce through governmental action to prevent, so far as possible, the emergence of blighted and marginal lands and areas of chronic unemployment. b. Factors necessitating the active promotion and development of economically sound industry and commerce are the increasing concentration of population in the metropolitan areas and the rapidly rising increase in the amount and cost of governmental services required to meet the needs of the increased population and the need for development of land uses which will provide an adequate tax base to finance these increased costs and access to employment opportunities for such population. Section 2. Describtion of the Project. a. People Incorporated, a Minnesota nonprofit corporation and organization described in Section 501tc)(3) of the Internal Revenue Code of 1986, as amended (the "Corporation") has proposed the issuance of revenue obligations under the Act, in one or more series, in an amount not to exceed $2,000,000 (the "Obligations") to finance the costs of a project fully described in Exhibit B attached hereto (the "Project"), a portion of which is located in the City, as described in Exhibit A attached hereto. � The Project will be owned and operated by the Corporation. 44 c. As more fully described in E�ibit B, portions of the Project are located in the Ciry, the City 45 of Taylors Falls (the "Issuer"), and the City of Minneapolis, Minnesota (the "Host City"). 46 �g-1��1� 47 Section 3. Recitals Relatine to Joint Exercise of Powers. 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 100 101 102 a. Under the Act, the City, the Issuer and the Host City are each authorized and empowered to issue revenue bonds or a revenue note to finance or refinance all or any part of the costs of a project consisting of the refinancing of debt incurred with respect to, or acquisition and betterment of, health care facilities or facilities of organizations described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended (the "Code") and to refund bonds previously issued under the Act. b. The Corporation has requested that the City, the Issuer, and the Host City cooperate (as pernutted by Minnesota Statutes, Section 471.59) through a joint powers agreement in authorizing the financing of the Project through the issuance of the Obligations by the Issuer pursuant to the Act. c. A draft copy of the Joint Powers Agreement among the City, the Issuer and the Host City (the "Joint Powers Agreement") has been submitted to the Council and is on file in the offices of the City Clerk. Section 4. Recital of Representations Made by the Corporation. a. The City has been advised by representatives of the Corporation that: (i) conventional financing is available only on a limited basis and at such high costs of borrowing that the economic feasibility of operating the Project would be significantly reduced; (ii) on the basis of information submitted to the Corporation and their discussions with representatives of area financial institutions and potential buyers of tax-exempt bonds, the Obligations could be issued and sold upon favorable rates and terms to finance the Project; (iii) the Corporation will experience a significant debt service cost savings as a result of the Project; and (iv) the Project would not be undertaken but for the availability of financing under the Act. b. The Corporation has agreed to pay any and all costs incurred by the City in connection with the issuance of the Obligations, whether or not such issuance is carried to completion. c. The Corporation has represented to the City that no public official of the City has either a direct or indirect financial interest in the Project nor will any public official either directly or indirectly benefit financially from the Project. Section 5. Public Hearina. a. As required by the Act and Section 147(f) o£ the Code a Notice of Public Hearing was published in Pioneer Press, the City's official newspaper, and newspaper of general circulation, calling a public hearing on the proposed issuance of the Obligations and the proposal to undertake and finance the Project. b. As required by the Act and Section 147(f) of the Code: i. the Issuer has held or will hold a public hearing on the 103 104 105 106 107 108 109 110 111 112 113 114 115 116 117 118Section 6 119 120 121 a. 122 123 124 125 126 b. 127 128 129 130 131 132 133 134 135 c. 136 137 138 139 140 141 142 143 144 145 146 147 148 149 150 151 152 153 154 155 156 157 158 159 d. 160 161 162 163 �t,`� - l�'t3 issuance of the Obligations and the proposal to undertake and finance the Project; ii. the Host City has held or will hold a public hearing on the issuance of the Obligations and the proposal to undertake and finance the portion of the Project located within the jurisdictional limits of the Host City; and iii. the City Council has on November 3, 1999, held a public hearing on the issuance of the Obligations and the proposal to undertake and finance the portion of the Project located within the jurisdictional limits of the City, at which all those appearing who desired to speak were heard and written comments were accepted. Findinas. It is hereby found, determined, and declared as follows: The welfare of the State and the City requires the provision of necessary health care facilities so that adequate health care services are available to residents of the State and the City at reasonable cost. The City desires to facilitate the selective development of the community, retain and improve the tax base and help to provide the range of services and employment opportunities required by the population. The portion of the Project located in the City will assist the City in achieving those objectives; help to stabilize market valuation of the City; help maintain a positive relationship between assessed valuation and debt; and enhance the image and reputation of the community. On the basis of information made available to this Council by the Corporation it appears, and this Council hereby finds, that: (1) the Project constitutes properties, real and personal, used or useful in connection with a revenue producing enterprise engaged in providing health care services within the meaning of Subdivision 2(d) of Section 469.153 of the Act; (2) the Project furthers the purposes stated in Section 469.152 0£ the Act; (3) the Project would not be undertaken but for the availability of financing under the Act and the willingness of the Issuer to furnish such financing; and (4) the effect of the Project, if undertaken, will be to: (i) encourage the development of economically sound industry and commerce, (ii) assist in the prevention of the emergence of blighted and marginal land, (iii) help prevent chronic unemployment, (d) help the City retain and improve the tax base, (iv) provide the range of service and employment opportunities required by the population, (vi) help prevent the movement of talented and educated persons out o£ the State and to areas within the State where their services may not be as effectively used, (vii) promote more intensive development and appropriate use of land within the City, eventually to increase the tax base of the community, and (viii) provide adequate health care services to residents of the City at a reasonable cost. The City acknowledges, £inds, determines and declares that the provision of necessary health care facilities so that adequate health care services are available to residents of the State at a reasonable cost is a public purpose. 164 Section '7 165 166 a. 167 16S 169 170 171 172 173 b. 174 175 176 177 178 179 180Section 8 181 182 1S3 184 185 186 187 188 189 190 191 Section 9 192 193 a. 194 195 196 197 198 199 200 201 202 203 204 b. 205 206 207 208 209 c. 210 211 212 State Approval a Precondition. � el — ��rt3 The proposal to undertake and finance that portion of the Project located in the City but outside o£ the jurisdictional limits of the Issuer and the Host City, and the issuance of the Obligations, are hereby given approval by the City subject to the approval of the Project by the Department of Trade and Economic Development o£ the State ("DTED"). In accordance with Subdivision 3 of Section 469.154 of the Act, the officers of the City or their designees, are authorized and directed to cooperate with the Issuer in submitting the proposal for the Project to DTED requesting approval, and other officers, employees and agents of the City are hereby authorized to provide DTED with such information as it may require. Limited Oblicrations. The Obligations, when and if issued for the Project, shall not constitute a charge, lien or encumbrance, legal or equitable, upon any property of the City. (There will, however, be a charge, lien or encumbrance on the Project, which is not an asset of the City.) The Obligations, when and if issued, shall recite in substance that the Obligations and the interest thereon, are payable solely from revenues received from the Project and property pledged for payment thereof, and shall not constitute a debt of the City. Approval and Execution of Joint Powers Agreement. The Joint Powers Agreement is hereby made a part of this Resolution as though fully set forth herein and is hereby approved in substantially the form presented to the City Council. The Mayor and the Clerk, or the authorized designee of either of the foregoing, are authorized and directed to execute, acknowledge, and deliver the Joint Powers Agreement on behalf of the City with such changes, insertions, and omissions therein as the City Attorney may hereafter deem appropriate, such execution to be conclusive evidence of approval of such document in accordance with the terms hereof. The Mayor and the C1erk, or the authorized designee of either of the foregoing, are authorized and directed to execute and deliver such other documents or certificates needed from the City for the sale of the Obligations. The approvals in this Section are specifically subject to approval of the Joint Powers Agreement by the Issuer and the Host City and approval of the Project by DTED. 213Section 10 214 215 216 217 Ratification. The actions of the Clerk taken with respect to causing the Notice of Public Hearing, in the form attached hereto as Ezchibit A, to be published in the official newspaper of the City and a newspaper of general circulation in the City not less than 14 days prior to the hearing are ratified and confnmed in all respects. c�q, - �o�i3 Requested by Department of: Adoption Certified by Council Secretasy B � \ c�- ' �� .� - r Approved by Mayor: Date � ✓ �� Sy: Plannina & Economic Development By' ` '�� Form Approved by C' y ttomey By: Approved by M ar �ubm'ss on Council Y Adopted by Council: Date '� \c-�'1 , � �� EXf�IT A �q — l�`�3 NOTICE OF PUBLIC HEARING ON PROPOSED PROJECT AND THE ISSUANCE OF PRIVATE ACTIVITY BONDS TO FINANCE HEALTH CARE FACII.ITIES CITY OF SAINT PAUL, RAMSEY COUNTY, MINNESOTA I30TICE IS HEREBY GNEN that the Ciry Council of the Ciry of Saint Paul Minnesota will meet on November 3, 1999, at 5:30 p.m. in the Ciry Council Chambers in the Saint Paul City Hall, third floor, located at 15 West Kellogg Boulevard, Saint Paul, Minnesota for the purpose of conducting a public hearing on a proposal by People Incorporated, a Minnesota nonprofit corporation (the "Corporation"), that the City approve the issuance by the City of Taylors Falls, Minnesota, of health care facilities revenue obligations, in one or more series (the "Obligations"), to finance a project more fiilly described below, pursuant to Minnesota Statutes, Sections 469.152 through 469.165 (the "Act"). The project (the "Project") will consist of (a) refinancing debt incurred by the Corporation with respect to real and personal property; (b) financing real property unprovements; and (c) acquiring fiuniture and equipment, all on behalf of the Corporation which is the owner and operator, in the masimum amount of $862,503, more fully described below: Furniturc Facility I�uptcave- & �quiP- Faei�iTy 1�Iamc & f.ocation RaciTity DescripC�n Refinauciag men�s ment Toiale Administrative Offices 12,000 sq. fr., 1-story, 145,596 9,805 16,800 172,201 317 York Ave. multi-use St. Paul, MN 55101 adminisuative office building Apollo 6,400 sq.ft. 2-story 104,362 45,500 149,862 25 N. Dale 5treet building for the St. Paul, MN 55102 community support program drop-in center (serves 11,000 clients/yeaz) Array East 10-bed residential cue 25,500 3,000 28,500 700 E. 8`" Street facIlity St. Paul, MN 55106 Array Midway Program community support 2,500 2,500 1919 Univeisity Ave. pTOgram dcop-in centeL Suite 112 (serves 100 St. Paul, MN 55104 clierns/yeaz) Edgebrook 4-bed residential caze 94,279 6,500 100,779 2250 Ecigebrook facility St. Paul, MN 55119 Hewitt Crisis Residence 16-bed crisis residence 12,400 6,050 18,450 1593 Hewitt Avenue St. Paul, MN 55104 Maghakian 16-bed residential caze 198,100 78,400 276,500 1100 Hancock Sueet facility St. Paul, MN 55106 Fumihue Facility Impcove- &_E4uig- Facilixy Aiame &.LocaYiou Facility Descr�pdon - 3tefinaaei�g menfs - meut Totais -- Ruth House 5-bed residential caze 105,211 8,500 113,711 246 Ruth Street facility St. Paul, MN 55119 ST. PAiIL TOTAL 862,503 � _ �0`�3 The Corporation has proposed combining the financing for the Project with the financing of other projects under the Act which are located in the Cities of Minneapolis and Taylors Falls, Minnesota, with the total amount of the Obligations to be issued by the City of Taylars Falls presently being estimated at not to eYCeed $2,000,000. The obligations and interest thereon shall not be payable from nor charged against any funds of the City other than revenue pledged for the payment thereof, nor shall the City be subject to any liability thereon. No holders of the obligations shall ever have the right to compel any exercise of the tu�ing power of the City to pay the obligations or the interest thereon, nor to enforce payment against any properry of the City. 5uch obligations shall not constitute a charge, lien or encumbrance, legal or equitable, upon any properry of the City, nor shall the same constitute a debt of the Ciry within the meaning of any constitutional or statutory lunitations. All persons interested may appear and be heard at the tune and place set forth above or may submit written comments in advance of the hearing. A draft copy of the proposed Application to the Minnesota Department of Trade and Economic Development for approval of the project, together with all attachments and e7chibits thereto, is available for public inspection in the offices of the Department of Planning and Economic Development, 1300 City Hall Annex, 25 West Fourth Street, Saint Paul, Minnesota 55102 between the hours of 8:00 a.m. to 4:30 p.m. Monday through Friday, except legal holidays, to and including the date of the hearing. All written comments or questions should be addressed to the Ciry of Saint Paul, Department of Planning and Economic Development, 1300 Ciry Hall Annex, 25 West 4th Street, Saint Paul, Minnesota 55102, attn. Allen Carlson EXfIIBIT B PROJECT DESCRIPTION a �_�o't� Finance the costs of a project (the "Project") on behalf of the owner and operator, People, Incorporated, a Minnesota nonprofit corporauon (the "Corporation") consisting of (a) refinancing debt incurred by the Corporation with respect to real and personal property; (b) financing real properry unprovements; and (c) acquiring furniture and equipment, all as described below: Fumimra Faeility - - Improve- & Equig- Faci}iiy Name & I.ocativn Paei�ity DescripYion Refinaneiug - meats ment Totals _ Anchor House 13-bed residential caze 67,861 30,700 4,500 103,061 1622 Hillside Ave. N. facIlity Minneapolis, MN 55411 Array West 6-bed residential care 61,806 1,500 13,800 77,106 1800 Penn Avenue N. facIlity Minneapolis, MN 55411 Nancy Page 16-bed residentialcare 132,913 197,260 5,500 335,673 245 S. Clifron Ave. faclliry Minneapolis, MN 55403 People House II 8-bed residential caze 265,522 30,240 295,762 1380 W. Minnehaha facility Parkway Minneapolis, MN 55409 Project Hope Program community housing 2,000 2,000 3210 Lyndale Ave. N. support program Suite 105 Minneapolis, MN 55412 NortUside Communiry community support 33,000 33,000 Support Program program drop-in center 1501 W. Broadway (serves 750 Minneapolis, MN 55411 clients/year) Seazch Program community support 1,295 1,295 630 Cedaz Avenue f{204 program Minneapolis, MN 55454 MIlVNEAPOLIS TOTAL 847,897 Administrative Offices 12,000 sq. ft., 1-story, 145,596 9,805 16,800 172,201 317 York Ave. multi-use St. Paul, MN 55101 administrative office building Apollo 6,400 sq.ft. 2-story 104,362 45,500 149,862 25 N. Dale Sueet building for the St. Paul, MN 55102 community support program drop-in center (serves 11,000 clients/yeaz) Array East 10-bed residential caze 25,500 3,000 28,500 700 E. 8`" Street facIlity St. Paul, MN 55106 Furnimre FacIlity Improve- & Equip- _ Faciliry Name &#,ucatiok FaeifiLy Description Refmaneing menfs ment Tatais Array Midway Program community support 2,500 2,500 1919 University Ave. program drop-in center Suite 112 (serves 100 St. Paul, MN 55104 clients/yeaz) Edgebrook 4-bed residential care 94,279 6,500 100,779 2250 Edgebrook facility St. Paul, MN 55119 Hewitt Crisis Residence 16-bed crisis residence 12,400 6,050 18,450 1593 Hewirt Avenue St. Paul, MN 55104 MagUakian 16-bed residential caze 198,100 78,400 276,500 1100 Hancock Street facility St. Paul, MN 55106 Ruth House 5-bed residential caze 105,211 8,500 113,711 246 Ruth Sueet facility St. Paul, MN 55119 ST. PAUL TOTAL 862,503 Taylor Aouse 5-bed residemial caze 118,?A8 11,700 129,948 455 Center Street facility Taylors Falls, MN 55084 TAYLORSFALLS TOTAL 129,948 Subtotal(rounded) 1,294,000 458,005 88,445 1,840,450 Issuance Costs pess than 26,300 11,100 37,400 2%) TOTAL 1,320,000 557,550 1,877,550 (rounded) Q`l - L°�t3 � -��tt� TOTAL # OF SIGNATURE PAGES �� /d �o�q9 GREEN SHEET Q,R - �0�,3 No 101679 � � oe..,�.� � �� arcwnowEr/ CQ/ I 1 lsll ane�art � �F� ❑ wuwy�auntrsort ❑ n��xtuLLaaviKei¢ � � WYORI� � / �• L j`°/ "� 1' (CLJP ALL OCATIONS FOR SIGNATURE) � � T �� ,, ��`iL f�eoy�l�g �a ��oG.� f-esP/sfi`�+-, g%vi' � l�yy o�f J��,7� i �/v � a.0 0� 0� l�a c; /if J'Pve�'rve ,� . S�- Cc �J�"�� J6- ��/� Z'� c� r��r; �ro��.0 �/1t�,b$� o,� Tv�,a�� /� v e��!?��ati-r� a�J/'roF��i y 4� o�?�.F �a u,�-s �pr�r o-cur�- � �re �, � c� r � C`�e, 0 �Q,c� �w /�2�� .ECaMMENDATION Aowove A1 or Reiect (Rl PERSONALSERVICE CONiRACiS MUSTANSWER TNE FOLLOWING QUESTIONS: PLANNING COMMISSION q6 COMMITfEE CIVII SERVICE COMMISSION �IMTI PRO M ISSUE, OPPI e �`P, .L6dG �,`l, ��e� � �� o�' �, i�h� fa /�ut'sV r�,,7� - f� 7"�/�-r� � �eo / ��S � � Has tliis P��m ever wdked uMer a contract torfhis departmenl7 YES NO Flas this D��m ever been a dly empWyeeT � vES no Doec thic P�um D� a sk� not nomWry�p�s�se0 bY �Y arrerR WY emPbyee4 YES NO I8 Mia pnaorJfirm a terpetetl oendoYt . YES NO �'E''f/�/i1C$�LG2 `/��°� � / � i' e�llY�L�Q ��✓ S�� 4�6? �s z- 5�� 9, /� S s �%/� ��/ ,YS�� 6� a� _ s{ /,�� yr e eds �-u,�a �O cd�� rv� IF �ovm r , ��SV �iJ2 GL., B ` � � L'B��- .S l� /�� ('��%`� ,7`'�c�r �i7'e � cLf'-� �d G �z�c� !�P �6 � / �� , � /'�N� .�T�.dW9hC/ � i°� � �Ct� �'/G'f �f✓ r � /��C9�Z'2�f/ �'r.ers A.�. ��'I��, ffl', l8�'CR. COET/REVplUE BU�GETED (GRCLE ON� SOURCE ACTNITY NUMBER Lu�.��'��5 �'�!'�'�„ti �4r z: ��r� YEE �� ,� �� -�� Interdepartmental Memorandum �.�r�.�� .r�n� TO: Council President Bostrom Council member Benanav Council member Blakey Council member Coleman f�l.�u SUBJECT: DATE: Council member Harris Council member Lantry Council member Reiter Brian Sweeney Allen Carison RESOLUTION GIVING HOST CITY APPROVAL TO THE ISSUANCE OF HEALTH FACILITIES REVENUE OBLIGATIONS FOR A PROJECT BY PEOPLE, INCORPORATED, UNDER MINNESOTA STATUTES, SECTIONS 469.152 THROUGH 469165; REFERRING THE PROPOSAL TO THE MINNESOTA DEPARTMENT OF TRADE AND ECONOMIC DEVELOPMENT FOR APPROVAL, AND APPROVING A JOINT POWERS AGREEMENT October 20, 1999 I. EXECUTIVE SUMMARY People, Inc. is seeking from the City of Saint Paul to approve the issuance of $1,320,000 of the 501(c)(3) tax exempt revenue bonds and $557,550 of tasable revenue bonds to (a) refinance existing debt incurred by the corparation with respect to real and personal property; (b) finance real properiy improvements; and acquire furniture and equipment. Because People, Inc. owns several properties in the metropolitan area, the City of Taylor Falls will acriaaliy issue the bonds as a small pool issuer. For the City of Saint Paul's part, it needs only to conduct a public hearing and approve a joint powers agreement. Suminary of the fmancing is as follows: Sources Tax exempt bonds Tasable Bonds $1,320,OQ0 557.550 Uses Refinaucing Improvements Equipment Cost of Issuance $1,294,QOQ 458,005 88,445 37.400 $1,887,550 Totals $1,877,550 �q- �c��3 Saint Paul's portion of the issue is $862,503. II. BACKGROUND People, Inc. is a non-profit human services agency that provides program and residenfial facilities in a five-county metropolitan azea around the Twin Cities. People, Inc. promotes independence and community integrarion for people with mental illness and other disabilities, many of whom have complex and neglected needs. Services include residential programs, residential crisis services, drop-in centers with psycho-social rehabilitation, case management, pre-vocational training, supportive services to assist individuals in maintaining independent living, and counseling and education for families of persons with mental illness. People, Inc. also provides programs for developmentally disabled deaf adults and adults with epilepsy. In Anoka, People, Inc. provides case management to individuals who are recovering from dependency on alcohol or other mood-altering drugs. Attached is a listing and map of the residential homes People, Inc. owns in Saint Paul. Basically, homes are single family residences occupied by up to four individuals. This arrangement meets the zoning code definition of a family for single faanily residence's purposes. The homes pursuant to the zoning code do not by definition constitute group homes. IIL FINANCING Attached is a suminary of the fmancial structure of the bond financing. The attractiveness of this bond transaction is that it is bank-qualified. Pursuant to the 1986 Tax Code banks are generally denied deductions for their interest expense allocable to the purchase of t�-exempt bonds. In the case of bank-qualified bonds however, banks may deduct up to 80% of their canying costs of borrowing funds to lend. The result is that the purchaser of the bonds (banks) obtains a much higher rate of return on the transaction, thus the interest rate on the bonds is much lower to the borrower (approximately 25 to 50 basis points lower ). The interest rate on the bonds will be 5.8%, whereas, the lender will realize a taxable return of 8.65%. The interest rate on the bonds will be adjustable based on changes in the Five-Year U.S. Treasury Constant Maturity Index. The term of the bonds will be 16.5 years. Attached aze the audited financial statements of People, Inc. The annual debt service requirement on the bonds will be approximately $124,000. Based upon People, Inc.'s revenue statement debt coverage on the bonds will be at least 2.31. The loan to value ratio on the assets is less than 80% and is a requirement of the bonds. The obligafions and interest on the bonds shall not be payable from nor charged against any funds of the City of Saint Paul other than the revenue pledged from the projects, nor shall the City be subject to any liability. The joint powers agreement that the City is being requested to execute approves the City of Taylor Fa11s to issue the bonds as a sma11 pool issuer and to issue bonds for facilities within the �la - to�1� jurisdiction of the City. III. RECOMI��NDATION Based upon the low loan to value ratio, high debt coverage ratio and fmancial stability of People, Inc. staff assigns a risk rating of acceptable. Staff recommends that the attached resolution be considered for approval to issue the revenue bonds, refer the application to DTED, and execute the joint powers agreement subject to review and approval by the Assistant City Attomey. IV. ATTACHIVIENTS 1. City Council Resolution 2. Executive sunmiary of the project K:�Shazed�CARLSOAP\people im\CTTY COiJNCII..RP'C.wpd FROM � FRX N0. : 6514558484 07 1999 01:08PM P2 OCT-67-19'39 11�51 6512283251 P.�72.�92 � to�t3 �Tp! °.02 Midwest Healthcare Capital has been retained to arrange a tax-exempt financing/refinancing on behalf of People, Incorporated located in St. Paul, Minnesota. Please keep this request for financing confidential. �q-�oZ3 Purpose: The Obligor desires to refinance outstanding notes for a variety of residential properties as listed below. In addition, the Obligor is financing needed remodeling and renovation on its buildings also described below: People, Incorporated Egecutive Summary Dated August 5,1999 Refinancin�• Facility Administrative Apollo People House II People House II People House II Balloon Anchor Anchor ARRAY West ARRAY West Nancy Page Edgebrook Ruth Taylor Maghakian � � MIDWEST HEALTHCARE CAPITAL Healthcaze Tac-Exempt Finance Specialists 161 EAST MARIE AVE. WEST ST. PAUL, MINNESOTA Si118 (651) 455-8300 FAX (651) 45i-8484 Email: mhealihcap@aoLcom Location Monthly Payment Estimated Balance as of 6/30199 St. Paul St. Paul Minneapolis Minneapolis Minneapolis Minneapotis Minneapolis Minneapolis Minneapolis Minneapolis St. Paul St. Paul Taylor Falls St Paul $2,200 1,450 1,922 254 0 612 915 565 688 1,458 729 814 856 1 107* $145,596 104,362 204,788 14,858 45,876 61,828 6,033 57,604 4,202 132,913 94,279 105,211 118,248 198,100 otals $13 570 $1294 000 � This amount represents montt�ly interest only payments. . The weighted average interest rate for all existing loans listed above is 8.22% ' � �4,- �o�� New Proiect• Maghakian Renovation: Three-Yeaz Renovation of existing residences: Total New Project Amount: Total Refinancin� and New Proiect Amounts: Parties to the Transaction $78,400 468,065 $546,450 $1,840,450 Obli or: People, Incorporated, a Minnesota non-profit (501(c)(3)) corporation. Issuer: Because the properties included in the proposed transaction are located in several municipalities, we will work with the Obligor to select a municipality which is willing and able to issue the financing as bank-qualified. Transaction Manaeer Steve Fenlon Midwest Healthcare Capital West St. Paul, Minnesota Bond Counsel: Mary Frances Skala Fryberger, Buchanan, Smith & Frederick Duluth, Minnesota Transaction Details Note A Amount Amourtt to be financed Issuance Costs (2% limit) $1,294,000 26,300 Note A Tax-Exempt Total: $1,320,000 Term: This note is a consolidation of all existing long-term debt into a single note, which when combined, results in a weighted average term of 198 months (16.5 years). The ta�c-exempt note will be amortized over a sixteen and one-half vear term. Level payments of principle and interest will be due monthly in arreazs. 2 � � a�-i�23 Tax-Eaempt Note A Amount: $1,320,000 Interest Rate: 5.$0% Monthly Payment: $10,372 *Annual Debt Service: $124,474 * Subject to interest rate adjushnents on the 60�' month and on each fifth anniversary thereafter, as described below. Interest Rate: The initial interest rate is 5.80% based upon a 365/365-day accrual method. Please bear in mid that the Issuer will represent that this transaction is bank-qualified, which allows the lender to deduct 80% of its carrying costs. Thus, the taxable equivalent is 8.65% assuming that you avoid Federal taxes at a rate of 34%, that you pay state taxes at a rate of 9.5%, and that your melded cost of funds is 3.75%. This ta;cable equivalent rate is 284 basis points over the yield of Treasury securities on August 3, 1999 with remaining maturities of five years. Payment: The first 60 monthly payxnents of principal and interest will be $10,372.80 each. Subsequent payments will be in an amount sufficient to fully amortize the remaining principal over the remaining term at the adjusted rate, determined as described below. Interest Rate Adjustment: Note B Amount On each fifth anniversary the interest rate will be adjusted based on changes in the Five-Year U.S. Treasury Constant Maturity Index. The maximum increase to the initial tax-exempt rate will be 250 basis points. If Treasury yields at the time of the rate adjustment warrant it, the maximum increase would result in a tax-exempt rate of 330%, with a taxable equivalent rate of 12.58%. Amount to be financed Issuance Costs (2% limit) Note B Tag-Exemut Total: $546,450 11 100 $557,550 Term: This note will be structured to permit People, Inc. to draw-down funds over a three year period as it rennovates its existing residences as described in the attached three-year capital budget. During this three-yeaz draw phase, People, Inc. will make monthiy payments of interest only. On the third anniversary of this loan, the outstanding principal amount will be amortized over a fifteen-year ' ` �l0. — �o�t 3 term based upon level monthly payments of princvipal and interest and subject to an interest rate adjustment on each fifth year anniversary. Tag-Egempt Note B Amount: $557,550 Interest Rate: 5.80% Monthly Payment: $4,644 "Annual Debt Service: $55,738 * Subject to interest rate adjustments on the 60�' month and on each fifth anniversary thereafter, as described below. Interest Rate: The initial interest rate is 5.80% based upon a 365/365-day accrual method. Please beaz in mid that the Issuer will represent that this transaction is bank-qualified, which allows the lender to deduct 80% of its carrying costs. Thus, the taYable equivalent is 8.65% assuming that you avoid Federal taaces at a rate of 34%, that you pay state taaces at a rate of 9.5%, and that your melded cost of funds is 3.75%. This t�able equivalent rate is 284 basis points over the yield of Treasury securities on August 3, 1999 with remaining maturities of five years. Payment: The first 60 monthly payments of principle and interest will be $4,644.89 each. Subsequent payments will be in an amount sufficient to fully amortize the remaining principle over the remaimng term at the adjusted rate, determined as described below. Interest Rate Adjustment: On each fifth anniversary the interest rate will be adjusted based on changes in the Five-Year U. S. Treasury Constant Maturity Index. The maximum increase to the initial tax-exempt rate will be 250 basis points. If Treasury yields at the time of the rate adjustment warrant it, the maximum increase would result in a tax-exempt rate of 830%,_with a taxable equivalent rate of 12.58%. Security: The Obligor will promise unconditionally to repay, and cross- collateralize the notes with a mortgage on all properties being refinanced and an appraised collateral value sufficient to provide a ratio of loan to appraised value of 80% or less. Prepayment: The Obligor would have the right to prepay the note(s) in full or in part on any payment date, subject to thiriy days' notice, without penalty or service charge. If the Obligor desires, we would also seek the right to reamortize the note in the event of a material partial payment, thereby reducing the annual debt service. More �� a a- �23 precisely, in the event that one of the affected facilities is closed or sold and a proportionate loan payment is made, the Lender will agree to reamortize the note and release the affected property from the mortgage, provided that the loan to value ratio will be 75% or less after the proportionate prepayment and release of property. Schedule: We would appreciate an indication of your interest in this financing in one week, as we intend to close in September, 1999. ' Peoule, Incorporated Financial I�iEhliehts Current Assets: Current Liabilities: Working Capital: Fixed Assets: Long-Term Liabilities: Net Worth: Revenues: Net Income: Non-Cash Charges: Interest Expense: Cash Flow Available For Debt Service: Annual Debt Service Unaudited 6-30-99 $1,391,281 674,700 716,581 2,386,750 1.203,520 $1,899.811 $3,102,067 $69,107 90,888 48,714 $208,709 $180,213 Debt Service Coverage: 231x (Annualized) Notes ' Audited 12-31-98 $1,086,391 70, ll9 1,016,272 2,129,225 1.058,424 $2,087.073 $6,046,344 $118,953 182,351 95,869 $397,173 2.20x Audited 12-31-97 $1,032,574 96.799 935,775 2,031,965 1,016,122 $1,951,618 $6,315,130 $545,758 188,999 131 494 $866,251 4.81x a q - t��t 3 Audited 12-31-96 $842,681 152,411 690,270 2,141,266 1,354.315 $1,477,221 $5,562,287 $120,067 179,693 133,559 $433319 2.40x 1) Fixed assets include a fund designated by People, Incorporated's Board for capital improvements. The balance of this fund has been as follows: 12-31-98 12-31-97 12-31-96 $141,935 $139,442 $137,131 2) The 12-31-97 net income was extraordinazily high due to a non-recurring capital gain of $453,426 on sale of property. 0 ' � °[q- to�t� People,Incorporated Or�anizational Profile People, Incorporated is a nonprofit, human services agency that provides programs and residential facilities in the five-county metropolitan azea. People, Incorporated promotes independence and community integration for people with mental illness and other disabilities, many of whom have complex and neglected needs. People, Incorporated provides services to clients through the following programs: Administration Office Lynn Lindsay, Director of Finance (lglindsavna juno.com) 317 York Avenue Saint Paul, Minnesota 55101 Chemical Dependencv Program Chemical Dependenc�e Mana�ement-Anoka Co. Joan White, Director 2665-4�' Avenue North Anoka, Minnesota 55303 Development Disabilities Proerams People II Sue Hajiani, Director 1380 West Minnehaha Parkway Minneapolis, Minnesota 55409 SEARCH Anne Barnwell, Director 630 Cedar Avenue #204 Minneapolis, Minnesota 55454 Home Health A¢ency Jack Ruth, Director 317 Yark Avenue Saint Paul, Minnesota 55101 Mental Health Pro¢rams A.R.C.H. Joan White, Director 2665 — 4�' Avenue North Anoka, Minnesota 55303 (651) 774-0011 voice (651) 774-6535 tty (651) 774-0606 fax Anchor House Frances Slagle, Director 1622 Hillside Avenue North Minneapolis, Minnesota 55411 APOLLO Leonard Weiss, Director 25 North Dale Street Saint Paul, Minnesota 55102 Edgebrook House Mary Zasada, Director 2250 Edgebrook Saint Paul, Minnesota 55119 Hewitt Crisis Residence Sue Kruger, Director 1593 Hewitt Avenue Saint Paul, Minnesota 55104 People's Joblink Laurie Janssen, Director 317 York Avenue Saint Paul, Minnesota 55101 Nancv Pa�e Pro�ram Mary Zasada, director 245 South Clifton Avenue Minneapolis, Minnesota 55403 � Northside Communit�port Program Joan White, Director 1501 West Broadway Minneapolis, Minnesota 55411 People's Network Pro�ram/SCH Jack Ruth, Director 317 York Avenue Saint Paul, Minnesota 55101 Project Hope Joan White, Director 3210 Lyndale Avenue N., Ste. 105 Minneapolis, Minnesota 55412 Ruth House Mary Zasada, Director 246 Ruth Street Saint Paul, Minnesota 55119 Tavlor House Sue Kruger, Director 455 Center St. Taylor Falls, Minnesota 55084 Maghakian 1100 Hancock Street St. Paul, MN 55106 � � - to23 Mental Health/HearinE Impairment Pro¢rams Arrav East Tom Houlton, Director 700 East 8�' Street Saint Paul, Minnesota 55106 Arrav Midway/Communitv Livin� Linda Eckhardt, Director I919 University Avenue, Suite 112 Saint Paul, Minnesota 55104 Arrav West Tom Houlton, Director 1800 Penn Avenue North Minneapolis, Minnesota 55411 Deaf and Hard of Hearin� Services at Ramsev County Linda Eckhardt, Director 160 East Kellogg Boulevard #6200 Saint Paul, Minnesota 55101 Note: The following facilities have multiple programs and accordingly are listed more than once: 317 York Avenue Saint Paul, Minnesota 55101 Services Provided Mental Health 2665-4�' Avenue North Anoka, Minnesota 55303 People, Incorporated provides a variety of inental health services to adults with serious and persistent mental illness, some of whom aze also deaf or hazd of hearing. Services include: � Residential programs Drop-in centers with psycho-social rehabilitation Supportive services to assist individuals in maintaining independent living Teaching clients to work with their medical physician Counseling and education for families of persons with mental illness Short-term crisis stabilization Housing search Bus training ' c�q - lo'i3 Residential crisis service Pre-vocational training Case management Housing support Social and recreational activities in a drop-in setting Independent living/social skills trauung Home health aid and nurse visits Medication monitoring Money management People, Incorporated provided services in 1998 in the following facilities: APOLLO Center Home Health Agency (HHA) Joblink Vocational Services Northside Community Support Hewitt Crisis Residence ARRAY East ARRAY West ARRAY Midway ARRAY Community Living Deaf and Hard of Hearing Services Nancy Page Anchor People's Family Services People's Network Program Supported Community Housing ARCH At Ramsey County Project HOPE Ruth-Edgebrook Housing Support Taylor House Chemical Dependencv People, Incorporated's Anoka CD Case Management program provides case management services to individuals who are recovering from dependency on alcohol or from other mood-altering drugs. Develoumental Disabilities People, Incorporated's People II program offers an ICF/MR facility for developmentally disabled deaf adults; and People, Incorporated's SEARCH program provides services for adults with epilepsy. Oreanizationai Milestones: 1969 People, Incorporated is formally organized. 1977 Array East opens; the first residential program in the United States for individuals who are Deaf or Hard of Hearing and mentally ill. 1986 Array West opens; the first, and only continuing, residentiai program in the state for individuals who are Deaf or Hard of Hearing, mentally ill, and have histories of behavioral problems. r� � � a`( -10�13 1988 SEARCH opens; the first, and only continuing, apartment tranung program in the state for individuals with epilepsy, many of whom have mental illness. People II opens; the first residential program in the state for individuals who are Deaf or Hard of Hearing and have both developmental disabilities and challenging behaviors. 1941 Home Health Agency opens; the first home health service in the state designed specifically to serve individuals with mental illness. 1993 Hewitt Crisis Residence opens; residential service begun in 1970 was converted to the first residential crisis program in the state for individuals with mental illness. 1994 Joblink's Grow Program opens; the first horticulture-training program in the state for individuals with mental illness. 1995 Homeless Outreach Program opens; division of Northside Community Support Program: the only outreach program in the state for the unsheltered homeless individuals with mental illness. 1996 Array Midway opens; the state's first drop-in center for people who aze Deaf or Hard of Heazing and Mentally ill. 1997 Project Hope opens; the first program in the state to provide long-term, safe, affordable housing to African Americans with mental illness and chemical dependency. Senior Mana¢ement: Tim Burkett, Ph.D., Executive Director. Psychologist with over 20 years of experience directing community-based programs for the mentally ill and developmentally disabled. He warked at Community Involvement Programs for 16 years, flie last five as Executive Directar. In his current position at People, Incorporated, he is responsible far more than 20 programs with a total budget of more than $6 million. The director of Program Operations for People, Incorporated is Mary Kay McJilton, OTR. She has a degree in occupational therapy from the College of St. Catherine and 3E yeazs of human service experience. She has warked with children with developmental disabilities and complex medical conditions and adults with mental illness and chemical dependency issues. At People, Incorparated, she served as Program Director far five years and for the past 15 years as the Director of Operations supervising the Program Directors who run the 22 programs within the corporation. The director of finance is Lynn G. Lindsay. He has a finance degree from Columbia University and 20 years of experience in financing and banking that ranges from the non- profit sector to Vice-President and Manager of international banking at American National Bank. He has served as a financial advisor and business analyst for several corporations, including the Bush Foundation. Board of Directors Name• Diane Al�rens Senator Ellen Anderson Ernest E. Bethe III Richard L. Breitman Galen Cadle Lee Carlson Pat Hart Robert Hennesy Janice Hogan Louise Klas Sidney Lange Nancy McKillips Rolf Schubert Scott Sponheim Beth Waterman Mary S. White � , c{,`l - Lo23 Occupation Raznsey County Commissioner (retired) Minnesota State Legislator Senior Risk Management, Cargill Attorney-at-Law Senior Vice President, St. Anthony Pazk State Bank Executive Director, Risk Management, NRG Energy, Inc. Community affairs volunteer Public relations, 3M Company (retired) Chair, Social Science Dept., U of M Community affairs volunteer Program coordinator, Wilder Research Center Director, Metropolitan State University VP, Corporate R&D, H.B. Fuller Company Psychologist, VA Medical Center Vice President, Health Partners Community affairs volunteer council File # �l`1- �oR� Resolution # Green sheet # J E� \ � �, � 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 OF SAINT Presented By Referred To . DdtO RESOLUTION GIVING APPROVAL TO A PROJECT BY PEOPLE, INCORPORATED Ut3DPsR MINNESOTA STATUTES, SECTIONS 469.152 THROUGH 469.165; RSFERRING THE PROPOSAL TO THE MINNESOTA DEPARTMENT OF TRADE AND ECONOMIC DEVELOPMENT FOR APPROVAL, AND APPROVI23G A 30INT POWERS AGREEMENT a� BE IT RESOLVED, by the City Council (the "Council��) of the City of Saint Paul, Ramsey County, Minnesota (the "City") as follows: Section 1. General Recitals a. The purpose of Minnesota Statutes, Sections 469.152 through 469.165 as amended, relating to municipal industrial development (the "Act"), as found and determined by the legislature, is to promote the welfare of the State of Minnesota (the "State") by the active promotion, attraction, encouragement and development of economically sound industry and commerce through governmental action to prevent, so far as possible, the emergence of blighted and marginal lands and areas of chronic unemployment. b. Factors necessitating the active promotion and development of economically sound industry and commerce are the increasing concentration of population in the metropolitan areas and the rapidly rising increase in the amount and cost of governmental services required to meet the needs of the increased population and the need for development of land uses which will provide an adequate tax base to finance these increased costs and access to employment opportunities for such population. Section 2. Describtion of the Project. a. People Incorporated, a Minnesota nonprofit corporation and organization described in Section 501tc)(3) of the Internal Revenue Code of 1986, as amended (the "Corporation") has proposed the issuance of revenue obligations under the Act, in one or more series, in an amount not to exceed $2,000,000 (the "Obligations") to finance the costs of a project fully described in Exhibit B attached hereto (the "Project"), a portion of which is located in the City, as described in Exhibit A attached hereto. � The Project will be owned and operated by the Corporation. 44 c. As more fully described in E�ibit B, portions of the Project are located in the Ciry, the City 45 of Taylors Falls (the "Issuer"), and the City of Minneapolis, Minnesota (the "Host City"). 46 �g-1��1� 47 Section 3. Recitals Relatine to Joint Exercise of Powers. 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 100 101 102 a. Under the Act, the City, the Issuer and the Host City are each authorized and empowered to issue revenue bonds or a revenue note to finance or refinance all or any part of the costs of a project consisting of the refinancing of debt incurred with respect to, or acquisition and betterment of, health care facilities or facilities of organizations described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended (the "Code") and to refund bonds previously issued under the Act. b. The Corporation has requested that the City, the Issuer, and the Host City cooperate (as pernutted by Minnesota Statutes, Section 471.59) through a joint powers agreement in authorizing the financing of the Project through the issuance of the Obligations by the Issuer pursuant to the Act. c. A draft copy of the Joint Powers Agreement among the City, the Issuer and the Host City (the "Joint Powers Agreement") has been submitted to the Council and is on file in the offices of the City Clerk. Section 4. Recital of Representations Made by the Corporation. a. The City has been advised by representatives of the Corporation that: (i) conventional financing is available only on a limited basis and at such high costs of borrowing that the economic feasibility of operating the Project would be significantly reduced; (ii) on the basis of information submitted to the Corporation and their discussions with representatives of area financial institutions and potential buyers of tax-exempt bonds, the Obligations could be issued and sold upon favorable rates and terms to finance the Project; (iii) the Corporation will experience a significant debt service cost savings as a result of the Project; and (iv) the Project would not be undertaken but for the availability of financing under the Act. b. The Corporation has agreed to pay any and all costs incurred by the City in connection with the issuance of the Obligations, whether or not such issuance is carried to completion. c. The Corporation has represented to the City that no public official of the City has either a direct or indirect financial interest in the Project nor will any public official either directly or indirectly benefit financially from the Project. Section 5. Public Hearina. a. As required by the Act and Section 147(f) o£ the Code a Notice of Public Hearing was published in Pioneer Press, the City's official newspaper, and newspaper of general circulation, calling a public hearing on the proposed issuance of the Obligations and the proposal to undertake and finance the Project. b. As required by the Act and Section 147(f) of the Code: i. the Issuer has held or will hold a public hearing on the 103 104 105 106 107 108 109 110 111 112 113 114 115 116 117 118Section 6 119 120 121 a. 122 123 124 125 126 b. 127 128 129 130 131 132 133 134 135 c. 136 137 138 139 140 141 142 143 144 145 146 147 148 149 150 151 152 153 154 155 156 157 158 159 d. 160 161 162 163 �t,`� - l�'t3 issuance of the Obligations and the proposal to undertake and finance the Project; ii. the Host City has held or will hold a public hearing on the issuance of the Obligations and the proposal to undertake and finance the portion of the Project located within the jurisdictional limits of the Host City; and iii. the City Council has on November 3, 1999, held a public hearing on the issuance of the Obligations and the proposal to undertake and finance the portion of the Project located within the jurisdictional limits of the City, at which all those appearing who desired to speak were heard and written comments were accepted. Findinas. It is hereby found, determined, and declared as follows: The welfare of the State and the City requires the provision of necessary health care facilities so that adequate health care services are available to residents of the State and the City at reasonable cost. The City desires to facilitate the selective development of the community, retain and improve the tax base and help to provide the range of services and employment opportunities required by the population. The portion of the Project located in the City will assist the City in achieving those objectives; help to stabilize market valuation of the City; help maintain a positive relationship between assessed valuation and debt; and enhance the image and reputation of the community. On the basis of information made available to this Council by the Corporation it appears, and this Council hereby finds, that: (1) the Project constitutes properties, real and personal, used or useful in connection with a revenue producing enterprise engaged in providing health care services within the meaning of Subdivision 2(d) of Section 469.153 of the Act; (2) the Project furthers the purposes stated in Section 469.152 0£ the Act; (3) the Project would not be undertaken but for the availability of financing under the Act and the willingness of the Issuer to furnish such financing; and (4) the effect of the Project, if undertaken, will be to: (i) encourage the development of economically sound industry and commerce, (ii) assist in the prevention of the emergence of blighted and marginal land, (iii) help prevent chronic unemployment, (d) help the City retain and improve the tax base, (iv) provide the range of service and employment opportunities required by the population, (vi) help prevent the movement of talented and educated persons out o£ the State and to areas within the State where their services may not be as effectively used, (vii) promote more intensive development and appropriate use of land within the City, eventually to increase the tax base of the community, and (viii) provide adequate health care services to residents of the City at a reasonable cost. The City acknowledges, £inds, determines and declares that the provision of necessary health care facilities so that adequate health care services are available to residents of the State at a reasonable cost is a public purpose. 164 Section '7 165 166 a. 167 16S 169 170 171 172 173 b. 174 175 176 177 178 179 180Section 8 181 182 1S3 184 185 186 187 188 189 190 191 Section 9 192 193 a. 194 195 196 197 198 199 200 201 202 203 204 b. 205 206 207 208 209 c. 210 211 212 State Approval a Precondition. � el — ��rt3 The proposal to undertake and finance that portion of the Project located in the City but outside o£ the jurisdictional limits of the Issuer and the Host City, and the issuance of the Obligations, are hereby given approval by the City subject to the approval of the Project by the Department of Trade and Economic Development o£ the State ("DTED"). In accordance with Subdivision 3 of Section 469.154 of the Act, the officers of the City or their designees, are authorized and directed to cooperate with the Issuer in submitting the proposal for the Project to DTED requesting approval, and other officers, employees and agents of the City are hereby authorized to provide DTED with such information as it may require. Limited Oblicrations. The Obligations, when and if issued for the Project, shall not constitute a charge, lien or encumbrance, legal or equitable, upon any property of the City. (There will, however, be a charge, lien or encumbrance on the Project, which is not an asset of the City.) The Obligations, when and if issued, shall recite in substance that the Obligations and the interest thereon, are payable solely from revenues received from the Project and property pledged for payment thereof, and shall not constitute a debt of the City. Approval and Execution of Joint Powers Agreement. The Joint Powers Agreement is hereby made a part of this Resolution as though fully set forth herein and is hereby approved in substantially the form presented to the City Council. The Mayor and the Clerk, or the authorized designee of either of the foregoing, are authorized and directed to execute, acknowledge, and deliver the Joint Powers Agreement on behalf of the City with such changes, insertions, and omissions therein as the City Attorney may hereafter deem appropriate, such execution to be conclusive evidence of approval of such document in accordance with the terms hereof. The Mayor and the C1erk, or the authorized designee of either of the foregoing, are authorized and directed to execute and deliver such other documents or certificates needed from the City for the sale of the Obligations. The approvals in this Section are specifically subject to approval of the Joint Powers Agreement by the Issuer and the Host City and approval of the Project by DTED. 213Section 10 214 215 216 217 Ratification. The actions of the Clerk taken with respect to causing the Notice of Public Hearing, in the form attached hereto as Ezchibit A, to be published in the official newspaper of the City and a newspaper of general circulation in the City not less than 14 days prior to the hearing are ratified and confnmed in all respects. c�q, - �o�i3 Requested by Department of: Adoption Certified by Council Secretasy B � \ c�- ' �� .� - r Approved by Mayor: Date � ✓ �� Sy: Plannina & Economic Development By' ` '�� Form Approved by C' y ttomey By: Approved by M ar �ubm'ss on Council Y Adopted by Council: Date '� \c-�'1 , � �� EXf�IT A �q — l�`�3 NOTICE OF PUBLIC HEARING ON PROPOSED PROJECT AND THE ISSUANCE OF PRIVATE ACTIVITY BONDS TO FINANCE HEALTH CARE FACII.ITIES CITY OF SAINT PAUL, RAMSEY COUNTY, MINNESOTA I30TICE IS HEREBY GNEN that the Ciry Council of the Ciry of Saint Paul Minnesota will meet on November 3, 1999, at 5:30 p.m. in the Ciry Council Chambers in the Saint Paul City Hall, third floor, located at 15 West Kellogg Boulevard, Saint Paul, Minnesota for the purpose of conducting a public hearing on a proposal by People Incorporated, a Minnesota nonprofit corporation (the "Corporation"), that the City approve the issuance by the City of Taylors Falls, Minnesota, of health care facilities revenue obligations, in one or more series (the "Obligations"), to finance a project more fiilly described below, pursuant to Minnesota Statutes, Sections 469.152 through 469.165 (the "Act"). The project (the "Project") will consist of (a) refinancing debt incurred by the Corporation with respect to real and personal property; (b) financing real property unprovements; and (c) acquiring fiuniture and equipment, all on behalf of the Corporation which is the owner and operator, in the masimum amount of $862,503, more fully described below: Furniturc Facility I�uptcave- & �quiP- Faei�iTy 1�Iamc & f.ocation RaciTity DescripC�n Refinauciag men�s ment Toiale Administrative Offices 12,000 sq. fr., 1-story, 145,596 9,805 16,800 172,201 317 York Ave. multi-use St. Paul, MN 55101 adminisuative office building Apollo 6,400 sq.ft. 2-story 104,362 45,500 149,862 25 N. Dale 5treet building for the St. Paul, MN 55102 community support program drop-in center (serves 11,000 clients/yeaz) Array East 10-bed residential cue 25,500 3,000 28,500 700 E. 8`" Street facIlity St. Paul, MN 55106 Array Midway Program community support 2,500 2,500 1919 Univeisity Ave. pTOgram dcop-in centeL Suite 112 (serves 100 St. Paul, MN 55104 clierns/yeaz) Edgebrook 4-bed residential caze 94,279 6,500 100,779 2250 Ecigebrook facility St. Paul, MN 55119 Hewitt Crisis Residence 16-bed crisis residence 12,400 6,050 18,450 1593 Hewitt Avenue St. Paul, MN 55104 Maghakian 16-bed residential caze 198,100 78,400 276,500 1100 Hancock Sueet facility St. Paul, MN 55106 Fumihue Facility Impcove- &_E4uig- Facilixy Aiame &.LocaYiou Facility Descr�pdon - 3tefinaaei�g menfs - meut Totais -- Ruth House 5-bed residential caze 105,211 8,500 113,711 246 Ruth Street facility St. Paul, MN 55119 ST. PAiIL TOTAL 862,503 � _ �0`�3 The Corporation has proposed combining the financing for the Project with the financing of other projects under the Act which are located in the Cities of Minneapolis and Taylors Falls, Minnesota, with the total amount of the Obligations to be issued by the City of Taylars Falls presently being estimated at not to eYCeed $2,000,000. The obligations and interest thereon shall not be payable from nor charged against any funds of the City other than revenue pledged for the payment thereof, nor shall the City be subject to any liability thereon. No holders of the obligations shall ever have the right to compel any exercise of the tu�ing power of the City to pay the obligations or the interest thereon, nor to enforce payment against any properry of the City. 5uch obligations shall not constitute a charge, lien or encumbrance, legal or equitable, upon any properry of the City, nor shall the same constitute a debt of the Ciry within the meaning of any constitutional or statutory lunitations. All persons interested may appear and be heard at the tune and place set forth above or may submit written comments in advance of the hearing. A draft copy of the proposed Application to the Minnesota Department of Trade and Economic Development for approval of the project, together with all attachments and e7chibits thereto, is available for public inspection in the offices of the Department of Planning and Economic Development, 1300 City Hall Annex, 25 West Fourth Street, Saint Paul, Minnesota 55102 between the hours of 8:00 a.m. to 4:30 p.m. Monday through Friday, except legal holidays, to and including the date of the hearing. All written comments or questions should be addressed to the Ciry of Saint Paul, Department of Planning and Economic Development, 1300 Ciry Hall Annex, 25 West 4th Street, Saint Paul, Minnesota 55102, attn. Allen Carlson EXfIIBIT B PROJECT DESCRIPTION a �_�o't� Finance the costs of a project (the "Project") on behalf of the owner and operator, People, Incorporated, a Minnesota nonprofit corporauon (the "Corporation") consisting of (a) refinancing debt incurred by the Corporation with respect to real and personal property; (b) financing real properry unprovements; and (c) acquiring furniture and equipment, all as described below: Fumimra Faeility - - Improve- & Equig- Faci}iiy Name & I.ocativn Paei�ity DescripYion Refinaneiug - meats ment Totals _ Anchor House 13-bed residential caze 67,861 30,700 4,500 103,061 1622 Hillside Ave. N. facIlity Minneapolis, MN 55411 Array West 6-bed residential care 61,806 1,500 13,800 77,106 1800 Penn Avenue N. facIlity Minneapolis, MN 55411 Nancy Page 16-bed residentialcare 132,913 197,260 5,500 335,673 245 S. Clifron Ave. faclliry Minneapolis, MN 55403 People House II 8-bed residential caze 265,522 30,240 295,762 1380 W. Minnehaha facility Parkway Minneapolis, MN 55409 Project Hope Program community housing 2,000 2,000 3210 Lyndale Ave. N. support program Suite 105 Minneapolis, MN 55412 NortUside Communiry community support 33,000 33,000 Support Program program drop-in center 1501 W. Broadway (serves 750 Minneapolis, MN 55411 clients/year) Seazch Program community support 1,295 1,295 630 Cedaz Avenue f{204 program Minneapolis, MN 55454 MIlVNEAPOLIS TOTAL 847,897 Administrative Offices 12,000 sq. ft., 1-story, 145,596 9,805 16,800 172,201 317 York Ave. multi-use St. Paul, MN 55101 administrative office building Apollo 6,400 sq.ft. 2-story 104,362 45,500 149,862 25 N. Dale Sueet building for the St. Paul, MN 55102 community support program drop-in center (serves 11,000 clients/yeaz) Array East 10-bed residential caze 25,500 3,000 28,500 700 E. 8`" Street facIlity St. Paul, MN 55106 Furnimre FacIlity Improve- & Equip- _ Faciliry Name &#,ucatiok FaeifiLy Description Refmaneing menfs ment Tatais Array Midway Program community support 2,500 2,500 1919 University Ave. program drop-in center Suite 112 (serves 100 St. Paul, MN 55104 clients/yeaz) Edgebrook 4-bed residential care 94,279 6,500 100,779 2250 Edgebrook facility St. Paul, MN 55119 Hewitt Crisis Residence 16-bed crisis residence 12,400 6,050 18,450 1593 Hewirt Avenue St. Paul, MN 55104 MagUakian 16-bed residential caze 198,100 78,400 276,500 1100 Hancock Street facility St. Paul, MN 55106 Ruth House 5-bed residential caze 105,211 8,500 113,711 246 Ruth Sueet facility St. Paul, MN 55119 ST. PAUL TOTAL 862,503 Taylor Aouse 5-bed residemial caze 118,?A8 11,700 129,948 455 Center Street facility Taylors Falls, MN 55084 TAYLORSFALLS TOTAL 129,948 Subtotal(rounded) 1,294,000 458,005 88,445 1,840,450 Issuance Costs pess than 26,300 11,100 37,400 2%) TOTAL 1,320,000 557,550 1,877,550 (rounded) Q`l - L°�t3 � Q,R - �0�,3 -��tt� TOTAL # OF SIGNATURE PAGES �� /d �o�q9 GREEN SHEET No 101679 � � oe..,�.� � �� arcwnowEr/ CQ/ I 1 lsll ane�art � �F� ❑ wuwy�auntrsort ❑ n��xtuLLaaviKei¢ � � WYORI� � / �• L j`°/ "� 1' (CLJP ALL OCATIONS FOR SIGNATURE) � � T �� ,, ��`iL f�eoy�l�g �a ��oG.� f-esP/sfi`�+-, g%vi' � l�yy o�f J��,7� i �/v � a.0 0� 0� l�a c; /if J'Pve�'rve ,� . S�- Cc �J�"�� J6- ��/� Z'� c� r��r; �ro��.0 �/1t�,b$� o,� Tv�,a�� /� v e��!?��ati-r� a�J/'roF��i y 4� o�?�.F �a u,�-s �pr�r o-cur�- � �re �, � c� r � C`�e, 0 �Q,c� �w /�2�� .ECaMMENDATION Aowove A1 or Reiect (Rl PERSONALSERVICE CONiRACiS MUSTANSWER TNE FOLLOWING QUESTIONS: PLANNING COMMISSION q6 COMMITfEE CIVII SERVICE COMMISSION �IMTI PRO M ISSUE, OPPI e �`P, .L6dG �,`l, ��e� � �� o�' �, i�h� fa /�ut'sV r�,,7� - f� 7"�/�-r� � �eo / ��S � � Has tliis P��m ever wdked uMer a contract torfhis departmenl7 YES NO Flas this D��m ever been a dly empWyeeT � vES no Doec thic P�um D� a sk� not nomWry�p�s�se0 bY �Y arrerR WY emPbyee4 YES NO I8 Mia pnaorJfirm a terpetetl oendoYt . YES NO �'E''f/�/i1C$�LG2 `/��°� � / � i' e�llY�L�Q ��✓ S�� 4�6? �s z- 5�� 9, /� S s �%/� ��/ ,YS�� 6� a� _ s{ /,�� yr e eds �-u,�a �O cd�� rv� IF �ovm r , ��SV �iJ2 GL., B ` � � L'B��- .S l� /�� ('��%`� ,7`'�c�r �i7'e � cLf'-� �d G �z�c� !�P �6 � / �� , � /'�N� .�T�.dW9hC/ � i°� � �Ct� �'/G'f �f✓ r � /��C9�Z'2�f/ �'r.ers A.�. ��'I��, ffl', l8�'CR. COET/REVplUE BU�GETED (GRCLE ON� SOURCE ACTNITY NUMBER Lu�.��'��5 �'�!'�'�„ti �4r z: ��r� YEE �� ,� �� -�� Interdepartmental Memorandum �.�r�.�� .r�n� TO: Council President Bostrom Council member Benanav Council member Blakey Council member Coleman f�l.�u SUBJECT: DATE: Council member Harris Council member Lantry Council member Reiter Brian Sweeney Allen Carison RESOLUTION GIVING HOST CITY APPROVAL TO THE ISSUANCE OF HEALTH FACILITIES REVENUE OBLIGATIONS FOR A PROJECT BY PEOPLE, INCORPORATED, UNDER MINNESOTA STATUTES, SECTIONS 469.152 THROUGH 469165; REFERRING THE PROPOSAL TO THE MINNESOTA DEPARTMENT OF TRADE AND ECONOMIC DEVELOPMENT FOR APPROVAL, AND APPROVING A JOINT POWERS AGREEMENT October 20, 1999 I. EXECUTIVE SUMMARY People, Inc. is seeking from the City of Saint Paul to approve the issuance of $1,320,000 of the 501(c)(3) tax exempt revenue bonds and $557,550 of tasable revenue bonds to (a) refinance existing debt incurred by the corparation with respect to real and personal property; (b) finance real properiy improvements; and acquire furniture and equipment. Because People, Inc. owns several properties in the metropolitan area, the City of Taylor Falls will acriaaliy issue the bonds as a small pool issuer. For the City of Saint Paul's part, it needs only to conduct a public hearing and approve a joint powers agreement. Suminary of the fmancing is as follows: Sources Tax exempt bonds Tasable Bonds $1,320,OQ0 557.550 Uses Refinaucing Improvements Equipment Cost of Issuance $1,294,QOQ 458,005 88,445 37.400 $1,887,550 Totals $1,877,550 �q- �c��3 Saint Paul's portion of the issue is $862,503. II. BACKGROUND People, Inc. is a non-profit human services agency that provides program and residenfial facilities in a five-county metropolitan azea around the Twin Cities. People, Inc. promotes independence and community integrarion for people with mental illness and other disabilities, many of whom have complex and neglected needs. Services include residential programs, residential crisis services, drop-in centers with psycho-social rehabilitation, case management, pre-vocational training, supportive services to assist individuals in maintaining independent living, and counseling and education for families of persons with mental illness. People, Inc. also provides programs for developmentally disabled deaf adults and adults with epilepsy. In Anoka, People, Inc. provides case management to individuals who are recovering from dependency on alcohol or other mood-altering drugs. Attached is a listing and map of the residential homes People, Inc. owns in Saint Paul. Basically, homes are single family residences occupied by up to four individuals. This arrangement meets the zoning code definition of a family for single faanily residence's purposes. The homes pursuant to the zoning code do not by definition constitute group homes. IIL FINANCING Attached is a suminary of the fmancial structure of the bond financing. The attractiveness of this bond transaction is that it is bank-qualified. Pursuant to the 1986 Tax Code banks are generally denied deductions for their interest expense allocable to the purchase of t�-exempt bonds. In the case of bank-qualified bonds however, banks may deduct up to 80% of their canying costs of borrowing funds to lend. The result is that the purchaser of the bonds (banks) obtains a much higher rate of return on the transaction, thus the interest rate on the bonds is much lower to the borrower (approximately 25 to 50 basis points lower ). The interest rate on the bonds will be 5.8%, whereas, the lender will realize a taxable return of 8.65%. The interest rate on the bonds will be adjustable based on changes in the Five-Year U.S. Treasury Constant Maturity Index. The term of the bonds will be 16.5 years. Attached aze the audited financial statements of People, Inc. The annual debt service requirement on the bonds will be approximately $124,000. Based upon People, Inc.'s revenue statement debt coverage on the bonds will be at least 2.31. The loan to value ratio on the assets is less than 80% and is a requirement of the bonds. The obligafions and interest on the bonds shall not be payable from nor charged against any funds of the City of Saint Paul other than the revenue pledged from the projects, nor shall the City be subject to any liability. The joint powers agreement that the City is being requested to execute approves the City of Taylor Fa11s to issue the bonds as a sma11 pool issuer and to issue bonds for facilities within the �la - to�1� jurisdiction of the City. III. RECOMI��NDATION Based upon the low loan to value ratio, high debt coverage ratio and fmancial stability of People, Inc. staff assigns a risk rating of acceptable. Staff recommends that the attached resolution be considered for approval to issue the revenue bonds, refer the application to DTED, and execute the joint powers agreement subject to review and approval by the Assistant City Attomey. IV. ATTACHIVIENTS 1. City Council Resolution 2. Executive sunmiary of the project K:�Shazed�CARLSOAP\people im\CTTY COiJNCII..RP'C.wpd FROM � FRX N0. : 6514558484 07 1999 01:08PM P2 OCT-67-19'39 11�51 6512283251 P.�72.�92 � to�t3 �Tp! °.02 Midwest Healthcare Capital has been retained to arrange a tax-exempt financing/refinancing on behalf of People, Incorporated located in St. Paul, Minnesota. Please keep this request for financing confidential. �q-�oZ3 Purpose: The Obligor desires to refinance outstanding notes for a variety of residential properties as listed below. In addition, the Obligor is financing needed remodeling and renovation on its buildings also described below: People, Incorporated Egecutive Summary Dated August 5,1999 Refinancin�• Facility Administrative Apollo People House II People House II People House II Balloon Anchor Anchor ARRAY West ARRAY West Nancy Page Edgebrook Ruth Taylor Maghakian � � MIDWEST HEALTHCARE CAPITAL Healthcaze Tac-Exempt Finance Specialists 161 EAST MARIE AVE. WEST ST. PAUL, MINNESOTA Si118 (651) 455-8300 FAX (651) 45i-8484 Email: mhealihcap@aoLcom Location Monthly Payment Estimated Balance as of 6/30199 St. Paul St. Paul Minneapolis Minneapolis Minneapolis Minneapotis Minneapolis Minneapolis Minneapolis Minneapolis St. Paul St. Paul Taylor Falls St Paul $2,200 1,450 1,922 254 0 612 915 565 688 1,458 729 814 856 1 107* $145,596 104,362 204,788 14,858 45,876 61,828 6,033 57,604 4,202 132,913 94,279 105,211 118,248 198,100 otals $13 570 $1294 000 � This amount represents montt�ly interest only payments. . The weighted average interest rate for all existing loans listed above is 8.22% ' � �4,- �o�� New Proiect• Maghakian Renovation: Three-Yeaz Renovation of existing residences: Total New Project Amount: Total Refinancin� and New Proiect Amounts: Parties to the Transaction $78,400 468,065 $546,450 $1,840,450 Obli or: People, Incorporated, a Minnesota non-profit (501(c)(3)) corporation. Issuer: Because the properties included in the proposed transaction are located in several municipalities, we will work with the Obligor to select a municipality which is willing and able to issue the financing as bank-qualified. Transaction Manaeer Steve Fenlon Midwest Healthcare Capital West St. Paul, Minnesota Bond Counsel: Mary Frances Skala Fryberger, Buchanan, Smith & Frederick Duluth, Minnesota Transaction Details Note A Amount Amourtt to be financed Issuance Costs (2% limit) $1,294,000 26,300 Note A Tax-Exempt Total: $1,320,000 Term: This note is a consolidation of all existing long-term debt into a single note, which when combined, results in a weighted average term of 198 months (16.5 years). The ta�c-exempt note will be amortized over a sixteen and one-half vear term. Level payments of principle and interest will be due monthly in arreazs. 2 � � a�-i�23 Tax-Eaempt Note A Amount: $1,320,000 Interest Rate: 5.$0% Monthly Payment: $10,372 *Annual Debt Service: $124,474 * Subject to interest rate adjushnents on the 60�' month and on each fifth anniversary thereafter, as described below. Interest Rate: The initial interest rate is 5.80% based upon a 365/365-day accrual method. Please bear in mid that the Issuer will represent that this transaction is bank-qualified, which allows the lender to deduct 80% of its carrying costs. Thus, the taxable equivalent is 8.65% assuming that you avoid Federal taxes at a rate of 34%, that you pay state taxes at a rate of 9.5%, and that your melded cost of funds is 3.75%. This ta;cable equivalent rate is 284 basis points over the yield of Treasury securities on August 3, 1999 with remaining maturities of five years. Payment: The first 60 monthly payxnents of principal and interest will be $10,372.80 each. Subsequent payments will be in an amount sufficient to fully amortize the remaining principal over the remaining term at the adjusted rate, determined as described below. Interest Rate Adjustment: Note B Amount On each fifth anniversary the interest rate will be adjusted based on changes in the Five-Year U.S. Treasury Constant Maturity Index. The maximum increase to the initial tax-exempt rate will be 250 basis points. If Treasury yields at the time of the rate adjustment warrant it, the maximum increase would result in a tax-exempt rate of 330%, with a taxable equivalent rate of 12.58%. Amount to be financed Issuance Costs (2% limit) Note B Tag-Exemut Total: $546,450 11 100 $557,550 Term: This note will be structured to permit People, Inc. to draw-down funds over a three year period as it rennovates its existing residences as described in the attached three-year capital budget. During this three-yeaz draw phase, People, Inc. will make monthiy payments of interest only. On the third anniversary of this loan, the outstanding principal amount will be amortized over a fifteen-year ' ` �l0. — �o�t 3 term based upon level monthly payments of princvipal and interest and subject to an interest rate adjustment on each fifth year anniversary. Tag-Egempt Note B Amount: $557,550 Interest Rate: 5.80% Monthly Payment: $4,644 "Annual Debt Service: $55,738 * Subject to interest rate adjustments on the 60�' month and on each fifth anniversary thereafter, as described below. Interest Rate: The initial interest rate is 5.80% based upon a 365/365-day accrual method. Please beaz in mid that the Issuer will represent that this transaction is bank-qualified, which allows the lender to deduct 80% of its carrying costs. Thus, the taYable equivalent is 8.65% assuming that you avoid Federal taaces at a rate of 34%, that you pay state taaces at a rate of 9.5%, and that your melded cost of funds is 3.75%. This t�able equivalent rate is 284 basis points over the yield of Treasury securities on August 3, 1999 with remaining maturities of five years. Payment: The first 60 monthly payments of principle and interest will be $4,644.89 each. Subsequent payments will be in an amount sufficient to fully amortize the remaining principle over the remaimng term at the adjusted rate, determined as described below. Interest Rate Adjustment: On each fifth anniversary the interest rate will be adjusted based on changes in the Five-Year U. S. Treasury Constant Maturity Index. The maximum increase to the initial tax-exempt rate will be 250 basis points. If Treasury yields at the time of the rate adjustment warrant it, the maximum increase would result in a tax-exempt rate of 830%,_with a taxable equivalent rate of 12.58%. Security: The Obligor will promise unconditionally to repay, and cross- collateralize the notes with a mortgage on all properties being refinanced and an appraised collateral value sufficient to provide a ratio of loan to appraised value of 80% or less. Prepayment: The Obligor would have the right to prepay the note(s) in full or in part on any payment date, subject to thiriy days' notice, without penalty or service charge. If the Obligor desires, we would also seek the right to reamortize the note in the event of a material partial payment, thereby reducing the annual debt service. More �� a a- �23 precisely, in the event that one of the affected facilities is closed or sold and a proportionate loan payment is made, the Lender will agree to reamortize the note and release the affected property from the mortgage, provided that the loan to value ratio will be 75% or less after the proportionate prepayment and release of property. Schedule: We would appreciate an indication of your interest in this financing in one week, as we intend to close in September, 1999. ' Peoule, Incorporated Financial I�iEhliehts Current Assets: Current Liabilities: Working Capital: Fixed Assets: Long-Term Liabilities: Net Worth: Revenues: Net Income: Non-Cash Charges: Interest Expense: Cash Flow Available For Debt Service: Annual Debt Service Unaudited 6-30-99 $1,391,281 674,700 716,581 2,386,750 1.203,520 $1,899.811 $3,102,067 $69,107 90,888 48,714 $208,709 $180,213 Debt Service Coverage: 231x (Annualized) Notes ' Audited 12-31-98 $1,086,391 70, ll9 1,016,272 2,129,225 1.058,424 $2,087.073 $6,046,344 $118,953 182,351 95,869 $397,173 2.20x Audited 12-31-97 $1,032,574 96.799 935,775 2,031,965 1,016,122 $1,951,618 $6,315,130 $545,758 188,999 131 494 $866,251 4.81x a q - t��t 3 Audited 12-31-96 $842,681 152,411 690,270 2,141,266 1,354.315 $1,477,221 $5,562,287 $120,067 179,693 133,559 $433319 2.40x 1) Fixed assets include a fund designated by People, Incorporated's Board for capital improvements. The balance of this fund has been as follows: 12-31-98 12-31-97 12-31-96 $141,935 $139,442 $137,131 2) The 12-31-97 net income was extraordinazily high due to a non-recurring capital gain of $453,426 on sale of property. 0 ' � °[q- to�t� People,Incorporated Or�anizational Profile People, Incorporated is a nonprofit, human services agency that provides programs and residential facilities in the five-county metropolitan azea. People, Incorporated promotes independence and community integration for people with mental illness and other disabilities, many of whom have complex and neglected needs. People, Incorporated provides services to clients through the following programs: Administration Office Lynn Lindsay, Director of Finance (lglindsavna juno.com) 317 York Avenue Saint Paul, Minnesota 55101 Chemical Dependencv Program Chemical Dependenc�e Mana�ement-Anoka Co. Joan White, Director 2665-4�' Avenue North Anoka, Minnesota 55303 Development Disabilities Proerams People II Sue Hajiani, Director 1380 West Minnehaha Parkway Minneapolis, Minnesota 55409 SEARCH Anne Barnwell, Director 630 Cedar Avenue #204 Minneapolis, Minnesota 55454 Home Health A¢ency Jack Ruth, Director 317 Yark Avenue Saint Paul, Minnesota 55101 Mental Health Pro¢rams A.R.C.H. Joan White, Director 2665 — 4�' Avenue North Anoka, Minnesota 55303 (651) 774-0011 voice (651) 774-6535 tty (651) 774-0606 fax Anchor House Frances Slagle, Director 1622 Hillside Avenue North Minneapolis, Minnesota 55411 APOLLO Leonard Weiss, Director 25 North Dale Street Saint Paul, Minnesota 55102 Edgebrook House Mary Zasada, Director 2250 Edgebrook Saint Paul, Minnesota 55119 Hewitt Crisis Residence Sue Kruger, Director 1593 Hewitt Avenue Saint Paul, Minnesota 55104 People's Joblink Laurie Janssen, Director 317 York Avenue Saint Paul, Minnesota 55101 Nancv Pa�e Pro�ram Mary Zasada, director 245 South Clifton Avenue Minneapolis, Minnesota 55403 � Northside Communit�port Program Joan White, Director 1501 West Broadway Minneapolis, Minnesota 55411 People's Network Pro�ram/SCH Jack Ruth, Director 317 York Avenue Saint Paul, Minnesota 55101 Project Hope Joan White, Director 3210 Lyndale Avenue N., Ste. 105 Minneapolis, Minnesota 55412 Ruth House Mary Zasada, Director 246 Ruth Street Saint Paul, Minnesota 55119 Tavlor House Sue Kruger, Director 455 Center St. Taylor Falls, Minnesota 55084 Maghakian 1100 Hancock Street St. Paul, MN 55106 � � - to23 Mental Health/HearinE Impairment Pro¢rams Arrav East Tom Houlton, Director 700 East 8�' Street Saint Paul, Minnesota 55106 Arrav Midway/Communitv Livin� Linda Eckhardt, Director I919 University Avenue, Suite 112 Saint Paul, Minnesota 55104 Arrav West Tom Houlton, Director 1800 Penn Avenue North Minneapolis, Minnesota 55411 Deaf and Hard of Hearin� Services at Ramsev County Linda Eckhardt, Director 160 East Kellogg Boulevard #6200 Saint Paul, Minnesota 55101 Note: The following facilities have multiple programs and accordingly are listed more than once: 317 York Avenue Saint Paul, Minnesota 55101 Services Provided Mental Health 2665-4�' Avenue North Anoka, Minnesota 55303 People, Incorporated provides a variety of inental health services to adults with serious and persistent mental illness, some of whom aze also deaf or hazd of hearing. Services include: � Residential programs Drop-in centers with psycho-social rehabilitation Supportive services to assist individuals in maintaining independent living Teaching clients to work with their medical physician Counseling and education for families of persons with mental illness Short-term crisis stabilization Housing search Bus training ' c�q - lo'i3 Residential crisis service Pre-vocational training Case management Housing support Social and recreational activities in a drop-in setting Independent living/social skills trauung Home health aid and nurse visits Medication monitoring Money management People, Incorporated provided services in 1998 in the following facilities: APOLLO Center Home Health Agency (HHA) Joblink Vocational Services Northside Community Support Hewitt Crisis Residence ARRAY East ARRAY West ARRAY Midway ARRAY Community Living Deaf and Hard of Hearing Services Nancy Page Anchor People's Family Services People's Network Program Supported Community Housing ARCH At Ramsey County Project HOPE Ruth-Edgebrook Housing Support Taylor House Chemical Dependencv People, Incorporated's Anoka CD Case Management program provides case management services to individuals who are recovering from dependency on alcohol or from other mood-altering drugs. Develoumental Disabilities People, Incorporated's People II program offers an ICF/MR facility for developmentally disabled deaf adults; and People, Incorporated's SEARCH program provides services for adults with epilepsy. Oreanizationai Milestones: 1969 People, Incorporated is formally organized. 1977 Array East opens; the first residential program in the United States for individuals who are Deaf or Hard of Hearing and mentally ill. 1986 Array West opens; the first, and only continuing, residentiai program in the state for individuals who are Deaf or Hard of Hearing, mentally ill, and have histories of behavioral problems. r� � � a`( -10�13 1988 SEARCH opens; the first, and only continuing, apartment tranung program in the state for individuals with epilepsy, many of whom have mental illness. People II opens; the first residential program in the state for individuals who are Deaf or Hard of Hearing and have both developmental disabilities and challenging behaviors. 1941 Home Health Agency opens; the first home health service in the state designed specifically to serve individuals with mental illness. 1993 Hewitt Crisis Residence opens; residential service begun in 1970 was converted to the first residential crisis program in the state for individuals with mental illness. 1994 Joblink's Grow Program opens; the first horticulture-training program in the state for individuals with mental illness. 1995 Homeless Outreach Program opens; division of Northside Community Support Program: the only outreach program in the state for the unsheltered homeless individuals with mental illness. 1996 Array Midway opens; the state's first drop-in center for people who aze Deaf or Hard of Heazing and Mentally ill. 1997 Project Hope opens; the first program in the state to provide long-term, safe, affordable housing to African Americans with mental illness and chemical dependency. Senior Mana¢ement: Tim Burkett, Ph.D., Executive Director. Psychologist with over 20 years of experience directing community-based programs for the mentally ill and developmentally disabled. He warked at Community Involvement Programs for 16 years, flie last five as Executive Directar. In his current position at People, Incorporated, he is responsible far more than 20 programs with a total budget of more than $6 million. The director of Program Operations for People, Incorporated is Mary Kay McJilton, OTR. She has a degree in occupational therapy from the College of St. Catherine and 3E yeazs of human service experience. She has warked with children with developmental disabilities and complex medical conditions and adults with mental illness and chemical dependency issues. At People, Incorparated, she served as Program Director far five years and for the past 15 years as the Director of Operations supervising the Program Directors who run the 22 programs within the corporation. The director of finance is Lynn G. Lindsay. He has a finance degree from Columbia University and 20 years of experience in financing and banking that ranges from the non- profit sector to Vice-President and Manager of international banking at American National Bank. He has served as a financial advisor and business analyst for several corporations, including the Bush Foundation. Board of Directors Name• Diane Al�rens Senator Ellen Anderson Ernest E. Bethe III Richard L. Breitman Galen Cadle Lee Carlson Pat Hart Robert Hennesy Janice Hogan Louise Klas Sidney Lange Nancy McKillips Rolf Schubert Scott Sponheim Beth Waterman Mary S. White � , c{,`l - Lo23 Occupation Raznsey County Commissioner (retired) Minnesota State Legislator Senior Risk Management, Cargill Attorney-at-Law Senior Vice President, St. Anthony Pazk State Bank Executive Director, Risk Management, NRG Energy, Inc. Community affairs volunteer Public relations, 3M Company (retired) Chair, Social Science Dept., U of M Community affairs volunteer Program coordinator, Wilder Research Center Director, Metropolitan State University VP, Corporate R&D, H.B. Fuller Company Psychologist, VA Medical Center Vice President, Health Partners Community affairs volunteer