05-172Council File # ' �1Z
Green Sheet # ;3 a53�g
RESOLUTION
CITY OF SAINT PAUL, MfNNESOTA 15
Presented by
Referred To
City Council Resolution
[New Harmony Caze Center, Inc. Project)
��.�f.1:S7D7•6'SI
Connnittee Date
3 1. The Port Authority of the City of Saint Paul (the "Port Authority") has given its approval
4 to the issuance of its tax-exempt "bank qualified" revenue bonds (the "Bonds"), in an amount not to
5 exceed $S,OU0,000 to provide funds to New Hannony Caze Center, Inc. ("New Hannony") for the
6 renovation and equipping of its 76-bed skilled nursing care facility located at 135 Geranium Avenue East
7 in the City of Saint Paul (the "Project"); and
8
9 2. Minnesota Statutes, Secfion 469.084, Subd. 11, provides that any issue ofrevenue Bonds
10 authorized by the Port Authority shall be issued only with the consent of the City Council of the City of
11 Saint Paul, by resolurion adopted in accordance with law; and
12
13 3. Approval of the issuance of the proposed Bonds by the City Council is also required by
14 Section 147(� of the Intemal Revenue Code of 1986, as amended; and
IS
16 4. To meet the requirements of both state and federal law, the Port Authority has requested
17 that the City Council gives its requisite approval to the issuance of the proposed Bonds by the Port
18 Authority, subject to final approval of the issuance and details of said Bonds by the Port Authority.
19
20 NOW, THEREFORE, BE TT RESOLVED by the Council of the Ciry of Saint Paul that, in
21 accordance with the requirements of Section 141( fl of the Intemal Revenue Code of 1986, as amended,
22 and in accordance with Minnesota Statutes, Section 469.0$4, Subd. 11, the City Council hereby approves
23 the issuance of the aforesaid Bonds by the Port Authority for the ptuposes described in the Port Authority
24 resolution adopted February 22, 2005, the exact details of which, including but not lunited to, provisions
25 relating to principal amount, mahuifies, interest rates, discount, redemprion, and the issuance of
26 addirional Bonds are to be detem�ined by the Port Authority, New Harmony and the pwchaser of the
27 Bonds, and the City Council hereby authorizes the issuance of any additional Bonds (including refunding
28 Bonds) by the Port Authority found by the Port Authority to be necessary for carryiug out the purposes
29 for which the aforedescnbed Bonds are issued.
30
31 Adopted: March 2, 2005
32
33561.vt
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Yeas Nays Absent
Benanav ,/
Bostrom ✓
Harris ,/
Helgen ,/
I,anhy ✓
Montgomery �
Thnne, i
Ado�
Ado�
By:
Appt
By:
Requested by Department of:
B �e�b���� A
Form Approved by Ciry Attomey
33561.v1
� Green Sheet Green Sheet Green Sheet Green Sheet Green Sheet Green Sheet �
DepaRmeMtofFice/counciL � Datelnitiated: � ���,`
PA - P�Au�horiry !�-��5 ! Green Sheet NO: 3025328
� CoMact Person & Phone: 1 1 ueoarunenc aenc �o re�son � cn��avu_aie�
! Petei M Klein � ` 0 � lannine & Economic Develon
� 22`t-5686 j A55ign � 1 9Ylavor's Office MavoNASSistant '
; Must Be on Council qgenda by (Date): , Number � Z ouncil '
� 02-MAR-0S For i
. Routing ' 3 ��h' Clerk Citv Clerk
�
Order
� I
�
1 i
r Total # of Signature Pages _(Clip All Loptions for Signature)
Action Requested:
Approval of the issuance of approlcimately $5,000,000 of conduit taY exempt 501 (C) (3) revenue bonds for New Harmony Caze Center,
Inc. to refurbish and improve its facility located at 135 East Geranium.
�dations: Approve (A) or R
Plannmg Commission
CIB Committee
Civil Service Commission
1. Has this person/firm ever worked under a contract for this departmenY?
Yes No
2. Has tbis personffrm ever been a city employee?
Yes No
3. Does this person/firm possess a skiil not normally passessed by any
current city employee?
Yes No
Explain all yes answers on separate sheet and attach to green sheet
Initiating Problem, Issues, Opportunity (Who, What, When, Where, Why):
The New Hannony facility xequues su6stantial rehabilitation so that it can provide enhanced nLUSing services to the elderly xesidents
of Saint Paul.
AdvantapeslfApproved:
The issuance of the bonds will allow New Harmony to improve its nursing and rehabilitafive seroices to Saint Paul residents.
Disadvantaqc;s If Apnroved:
None
Disadvarrta9es if Not Approvetl:
The n�smg care of Saint Paul xesidents would be dimiuished and the New Hatmony facility might close.
Total Amount of
Transaction: 5000000 Cost/Revenue Budgeted:
Funding Source: poft Authofity COndUlt Activity Number:
Financial Information: teX-2X2nlpt 501 (C) (3}.
(Explain)
SAINT PAUL
PORT AUTHORITY
MEMORANDUM
TO:
FROM:
BOARD MEETING
(Meeting of February 22, 20�5)
Peter M. Klein s��
Laurie J. Hansen '
Kenneth R. John o
OS-i'12
DATE: February 16, 2005
SUBJECT: NEW HARMONY CARE CENTER, INC. / ELfM CARE, INC.
PUBLIC HEARING - SALE OF BONDS
1) Authorization of the Issuance of Conduit Tax-Exempt Bonds in the
Approximate Amount of $5,000,000
2) Approval of the Joint Powers Agreement with the City of
LitEle Canada
RESOLUTION NO. 4114
Action Repuested:
Provide approval for the Port Authority to issue approximafely $5,000,000 of conduit tax-
exempt bonds to be used for the renovation, including equipment, of the New Harmony
fiacility located at 135 East Geranium in Saint Paul, Minnesota. Additionalfy, approve the
Joint Powers Agreement with the City of Little Canada. (Because of the benefits that this
project will bring to residents of Little Canada, Little Canada will transfer a portion of its
ability to designate bonds as "bank qua4i�ed" to the Port Authority, so thaf the bonds wifl
be a bank qualified investment for Bremer Bank).
Public Purpose:
The financing will al(ow New Harmony to provide enhanced care to the elderly residents
of Saint Paul and surrounding communities in a modernized facility.
Business Subsidy:
Not Applicable.
Backqround:
New Harmony Care Center, Inc. is a 501(c)(3) organization with the primary purpose of
providing quality ski!!ed nursing and rehabilitative services to Saint Pau! and surrounding
communities. New Harmony Care Center, Inc. is a subsidiary of E{im Care, inc. Elim
Care owns and operates eight skilled nursing care facilities, three independent senior
housing complexes, three assisted living facilities, a home health agency, a therapy
agency, aduft and child day care at various sites, and medical supplies sales and
distribution to its own facilities as well as unrelated parties. New Harmony and Elim are
affiliated with the IVorth Centraf District of the Evangefical Free Church.
335I9.v1
Board ofCOmmissioners — Febmary 22, 2005
New Harmony Care Center
Page 2
Current Statas:
The Project is located at 135 East Geranium, Saint Paui, Minnesota. it is near the
Mary(and exit from Highway 35E, just north of downtown Saint Paul. The Project is a
three-story brick, steei and block structure with several courtyards. The building was
originally constructed as a 91-bed facility in 1966. An addition was constructed in 1982 to
increase the beds to 150. S+nce 199&, the facility delicensed 74 beds to eliminate rooms
wifh more than two beds and to vacate the �ower Ievel resident rooms. Currently, fhe
facility has one private room with its own bathroom, 29 single-bed rooms that share a
bathroom and 23 double-bed rooms for a total of 76 beds.
Proposal:
The renovation approved by the State will create 56 private rooms and 10 double-bed
rooms, address waivers related to fire and life safety, modify toilst rooms to become
handicap accessible, create additional dining and activity spaces, relocate therapy
services to a more accessible area in the facilify, repface fhe emergency nurse calf
system and a complete upgrade of the building's HVAC and fire alarm systems. The
renovation also includes estabiishing "Neighborhoods" for residents who have similar
types of care needs, such as rehabilitative therapy. Exterior improvements include the
replacement of windows, a remodeied entry area, and various siding upgrades.
Type of Bonds: Under the Joint Powers Agreement with Little Canada, the
tax-exempt revenue bonds will be "bank qualified" under
Section 265 of the Code. This will allow the bank to hold
these bonds and reafize the full investment yield and not
reduce the related interest expense.
Rate:
lnitially, approximately 4.75%. The rate wil! be adjusfed every
five years at a percentage of the LlBOR Swap Rate.
Security: First secured interest and mortgage on the Project, including
Yhe land, building and persona! property associated with the
Project. Unlimited guarantee from EGm Care, lnc.
Term:
Borrower:
Issuer:
Bank:
Bank Counsei:
Bond Counsel:
Borrowe�'s Counsel
335i9.v1
20 years
New Harmony Care Center, Inc.
Sainf Pau( Port Authorify
Bremer Bank National Association
Christoffer & Elliott, P.A.
Leonard, Street and Deinard
Lindquist & Vennum
Board of Commissioners — February 22, 2005
New Harmony Gare Center
Page 3
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Conduit Financina:
The bonds will be a conduit financing of the Authority and wifl not constitute or give rise to
a liability of the Authority, the City of Little Canada, the City of Saint Paul or fhe State of
Minnesota or a charge against their general credit or taxing powers. The 4enders will not
have the right to demand payment on the bonds out of any funds to be raised from
taxation or from any revenue sources other than those expressly pledged to payment of
the bonds pursuant to the fiunding agreement.
The Port Authority wiil receive fees in the amount of 118th of a point annuafiy, on the
outstanding balance for the life of the bonds, beg+nn+ng with the first anniversary of the
closing.
Workforce lmplications;
New Harmony employs approximate{y 1d5 individuais at its faciiity.
Policv Exceptions:
None. Although not an exception, this is the first time that the Port Authority fias issued
bonds using another community's bank qualified ability,
in addition, since New Harmony Care Center, Inc. is affiliated with the North Central
District of the Evangelical Free Church, fhe Boards recent{y adopted policy with respect to
financing organizafions with religious affiliations will be followed.
Disclosure:
The Port Authority Commissioners by 5EC rules are obiigated to disclose any risks or
facfs you may be aware o4 thaf would affect the probability of repayment on these bo�ds.
Recommendation:
We recommend the approval of the Joint Powers Agreement with the City of Little
Canada and the authorization to issue approximatefy $5,000,000 of conduit tax-exempt
bonds.
PMK:ah
33519.v1
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Resolution No. 4114
RESOLUTION OF
THE PORT AUTHORITY OF `I'HE CITY OF SAINT PAUL
(New Harmony Caze Center, Inc. Project}
WHEREAS, the purpose of Miniiesota Statutes, Sections 4b9.152 through 469.1651, l�own
as the IvlimZesota Municipal Indusirial Development Act (the "Act"�, as found and deternuned by
the legislature, is to promote the welfare of the state by the active attraction, encouragement, and
development of economically sound industry and commerce to prevent so faz as possible the
emergence of blighted and marginallands and areas of chronic unemployment;
WF�REAS, factors necessitating the active promotion and development of economically
sound industry and commerce are the increasing concentration of population in the metropolitan
azeas, the rapidly rising increase in the amount and cost of governmental services required to meet
the needs of the increased population, the need for development of land use which wi11 provide an
adequate taY base to finance these increased costs, and access to empioyment opportwiiries for such
population;
WHEREAS, the Port Authority of the City of Saint Pau1 (the "Authorit}�') has received a
request from New Harmony Care Center, Inc. (the "Boirower'� that the Authority consider the
issuance of tax-exempt revenue bonds (which may be in the form of one or more bonds or series) in
an amount not to exceed $5,000,000 (the "Bonds") to provide funds for the renovation and
equipping of its 76-bed skilled nursing care facility located at 135 Geranium Avenue East in the
City of Sa3nt Paui (the "Project");
WFIEREAS, the Authority and the Borrower will enter into a loan agreement (the "Revenue
Agreement") in which the Bonower will agree to make all payments due on account of the Bonds;
WHBREAS, the CiCy of Little Canada, Minnesota has adopted a resolution in which it
recates the substantial benefit that the City of Little Canada will receive from tt�e Pro}ect, and
agrees to designate up to $S,OOp,000 of the Bonds to be issued by the Authority for the Project as
"quali$ed tas-exempt obligations" for purposes of Secfion 265(b) of the Intemal Revenue Code
of 1986, as amended (the "Code");
WHEREAS, the Authority and the Czty of Little Canada wi11, in connection with the
issuance of the Bonds, entered into a 3oinY Powers and Aliocation Agreement reflecting tlais
authorization;
WHEREAS, the Authority des9res to facilitate the selective development of the community
and to help provide the range of services and employment opportunities required by the popularion,
and the Project will assist the Authority in achieving those objecrives;
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WHEREAS, the Credit Committee has given its approval to the proposed issuance of the
Bonds, and together with management recommends Board approval; and
Wf�EREAS, pursuant to notice published an advance as required by state and federallaw,
a public hearing was held before the Authority on the proposal of the Borrower to finance the
Project, at which hearing all those who desired to speak were heard, and in connection with
which written comments were taken in advance.
NOW, T`HEREFORE, BE TI' RESOLVED by the Authority of the City of Saint Paul, as
follows:
1. On the basis of informarion available to the Authority, the Authority hereby finds
that the Project constitute properties used or useful in connection with one or more revenue
producing enterprises engaged in any business wathin the meaning of the Act; the Project furthers
the purposes stated in ttae Act; and it is in the best interests of the port district and the people of the
City of Saint Pau1 and in furtherance of the general plan of development to assist the Bonower in
financing the Project.
2. For the putpose of financing the Project, and pa}�ing certain costs of issuance and
other expenses in connecrion with the issuance of the Bonds, and provided that the Project and its
financing receive approval by the Department of Employment and Economic Development
("DEED"), the Authority hereby authorizes the issuance, sale and delivery of the Bonds in an
aggregate principal amount of up to $5,000,000. The Bonds shall bear interest at such rates, shall be
numbered, shall be dated, shail mature, shall be subject to redemption prior to mariu and shall be
in such form and have such other details and provisions as may be approved by the President and
Chief Financial Officer of the Authority, the Borrower and the purchaser of the $onds, currently
anticipated to be Bremer Bank, National Assocaation.
3. The Bonds and interest thereon shall not constitute an indebtedness of the Authority
ar the City of Saint Paul within the meaning of any constitutional or statutory limitarion and sha11
not constitute or give rise to a pecuniary liability of the Anthority ar the City of Saint Paul or a
charge against their general credit or taacing powers and neither the full faith and credit nor the
taxing powers of the Authority or the City of Saint Paul is pledged for the payment of the Bonds or
interestthereon.
4. It is hereby found, deteuuiiied and declared that:
uszaszvi 2
a. The issuance and sale of tke Bonds, the execution aud delivery by the
Authority of the documents which in fhe opinion of fhe President and Chief
Financial Officer of the Authority and Bond Counsel are reasonably required in
connecrion with the issuance of the Bonds, including speci&cally the Revenue
Agreement, the Joint Powers and Allocation Agreement and one or more revenue
bonds (the "Documents'�, and the performance of all covenants and agreements of
the Authority contained in such documents, and of all otlter acts and things requirefl
under the Constitution and laws of the State of Minnesota to make the Documettts
and the Bonds valid and binding obligafions of the Authoriry in accordance with
their terms, aze authorized by Mirniesota Statutes, Sections 469.152 through
469.I65, as amended (the "AcY'}.
b. It is desirable that the Bonds be issuec3 by the Authority.
5. The Chair and the Secretary of the Authority, or such other officer as may be
appropriate in the absence of the Chair or Secretary, are hereby authorized to execute Yhe $onds.
The President of fhe Authority, or such other officer as may be appropriate in the absence of the
President, is hereby authorized to execute all of the other pocuments (to the extent the Authority is
a party thereto). The execution of any the Bonds by the Chair and Secretary, and the execution of
any Document by the President of the Authority shall be conclusive evidence of the approvai of
such Document in accordance with the terms hereof.
6. The President and other officers of the Authority are authorized and directed to
prepare and fiunish to Bond Counsel certified copies of proceedings and records of the Authority
relating to the issuance of the Bonds and other transactions herein contemplated, and sucb other
affidavits and certificates as may be required to show the facts relating to the legatity of the Bonds
and the other transactions herein contemplated as such facts appeaz from the books and records in
the officers' custody and control or as otherwise lmown to them; and all such ceztified copies,
certificates and affidavits, including any heretafore fizrnished, shall constitute representarions of tke
Authority as to the truth of all statements contained therein.
7. The approvat hereby given to includes approval of such details as may be necessary
and appropriate and approved by the Authority's President and Chief Financial Officer; and
includes approva] of, among other things:
a. establishutent of the final principal amount of the Bonds and the interest rate
to be bome thereby; provided that the masunum aggregate prineipal amount of the
Bonds shall not exceed $5,000,000;
b. the establishment of the maturity schedule and call provisions to be
applicable to the Bonds; and
2582452v1
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c. such related instnunents as may be required to satisfy the conditions of any
purchaser of the Bonds.
8. The authority to approve, execute and deliver futute amendments to Documents
entered into by the Authority in connecrion with the issuance of the Bonds and the other
transactions herein contemplated,is hereby delenated to the President of the Authority, provided
that: (a) such amendments either do not require the consent of the holders of the Bonds or, if
required, the consent of the requn percentage of the holders of the Bonds has been obtained ��ith
respect to such amendment; (b) such amendments do not materially adversely affect the interests of
the Authority as the issuer of the Bonds; (c) such amendments do not contravene or violate any
policy of the Authority; and (d) such amendments are acceptable in form and substance to Bond
Counsel. The execution of any instrument by the President of the Authority shall be conclusive
evidence of the approval of such instruments in accordance with the terms hereof.
9. No covenant, stipulation, obligarion or agreement contained herein or in the
Documents shall be deemed to be a covenant, stipulation, obligarion or agreement of any member of
the Board of Commissioners of the Authority, or any officer, agent or employee of the Authority in
that persons individual capacity, and neither the Boazd of Commissioners nor any officer executing
the Bonds shall be liable personally on the Bonds or be subject to any personal liability ar
accountability by reason of the issuance thereof.
10. Pursuant to the authorization provided by the City of Little Canada, the Authority
hereby designates the Bonds as "qualified tax-exempt obligations" within the meaning of Section
265(b)(3)(B) of the Code, using the authority available to Little Canada under Section 265(b) of
the Code.
Adopted: February 22, 2005.
ATTEST:
Its Secretary
PORT AUTHORITY OF THE CITY
OF SAfNT PAUL
Its Vice Chair
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