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I1. Reso 6247 - Imm Lutheran BondCity of Kalispell Johnna Preble Office of City Attorney City Aftomey 201 First Avenue East P.O. Box 1997 Kalispell, MT 59903-1997 TO: FROM: SUBJECT: MEETING DATE: MEMORANDUM Doug Russell, City Manager Johnna Preble, City Attorney Tel 406.758.7709 Fax 406.758.7758 jpreble(j�kalispellxom Resolution No. 6427 — Resolution of Issuance of Revenue Bonds for Immanuel Lutheran Corporation April 7, 2025 — Regular Council Meeting BACKGROUND: Immanuel Living at Buffalo Hill has requested the assistance from the City of Kalispell that it provide its statutory bond issuance capacity to issue a conduit bond package in the sum of up to $ 100,000,000 for the purposes of refinancing the existing debt for which the City issued a conduit bond and to borrow additional funds for further capital improvements to its health care campus on Buffalo Hill in Kalispell. As with the existing bond, this proposed issuance would be a conduit bond that would not be a general or moral obligation of the City and the full faith and credit and taxing power of the City will not be pledged to the payment of the debt. A private bank will provide the funds, and the general administration of the financing will occur between the bank, a trustee and Immanuel Living at Buffalo Hill, the borrower. A duly noticed public hearing will be held during the meeting prior to this issue coming before Council so that the public and any other interested parties may give comment and provide evidence to the Council. Bond counsel has provided a more extensive memorandum which is attached to this agenda item and further explains any restrictions this issuance may cause the City in borrowing for the calendar year 2025. RECOMMENDATION: It is recommended that the Council consider and pass the offered resolution to issue the bonds to provide the financing for this project. ALTERNATIVES: Upon consideration of the proposal the Council may reject the resolution. ATTACHMENT: Resolution 6247 Baflard Spahr 1111P 2000 IDS Center So South 9 rh Street Minneapolis, MN 55402-21 19 TEL 612.3 71.3 2 t t FAx 612 371 3207 www.ballardspahr.com Memorandum To: Mr. Mark Johnson, Mayor Members of the City Council Mr. Doug Russell, City Manager From: Ben Johnson, Ballard Spahr LLP Date: Wednesday, April 2,2025 Re: Resolution for the Benefit of Immanuel Living at Buffalo Hill We are delivering this memorandum (the "Memo") in our role as bond counsel ("Bond Counsel") to the City of Kalispell, Montana (the "City") on the proposed transaction described below. Enclosed with this Memo is a draft resolution (the "Final Bond Resolution") for consideration by the City Council of the City at its regularly scheduled meeting on Monday, April 7, 2025 that will authonize the issuance of one or more series of conduit revenue bonds (the "Senies 2025 Bonds") after a public hearing. I will be in attendance at the April 7,2025 City Council meeting and public hearing and will be able to answer questions relating to the Series 2025 Bonds, the financing documents and the transaction. Immanuel Living at Buffalo Hill, formerly known as Immanuel Lutheran Corporation of Kalispell, Montana, a Montana nonprofit corporation (the "Borrower"), the sole member/parent of which is Immanuel Living, a Montana nonprofit corporation ("Immanuel Living") is the proposed borrower of the funds raised by issuance of the Series 2025 Bonds. Over the last 33 years, the City has participated in multiple issuances of conduit revenue bonds for the benefit of the Borrower or Immanuel Living to build, expand, and renovate and improve an integrated senior living continuum of care campus (the "Immanuel Living at Buffalo Hill Campus") in the City in and around 185 Crestline Avenue and 40 Claremont Street. The proposed Series 2025 Bonds will primarily be issued as tax-exempt bonds (there may be one taxable series) under the provisions of the Internal Revenue Code of 1986, as amended (the "Code"). Please note that, under the requirements of the Code, a 50 1 (c)(3) nonprofit such as the Borrower/Immanuel Living may only borrow funds on a tax-exempt basis by issuing bonds through a state or local unit of government such as the City. The Borrower cannot borrow directly on a tax-exempt basis. Under the provisions of Montana Code Annotated, Title 90 Chapter 5 Part I (the "Act"), the City has the authority to issue the Series 2025 Bonds if certain provisions are complied with and it is ourjob as Bond Counsel to the City to review and advise on such compliance. We have determined that the anticipated use of the proceeds of the Series 2025 Bonds by the Borrower to refinance prior tax-exempt bonds and to finance improvements to the Immanuel Living at Buffalo Hill Campus is eligible for financing under the Act. The Final Bond Resolution generally describes the anticipated uses of the proceeds of the Series 2025 Bonds. As Bond Counsel, we will be in attendance at the public hearing to answer any questions that the City Council or the public may have on the Series 2025 Bonds and the proposed project. The Final Bond Resolution provides approval, after the public hearing to issuance of the Series 2025 Bonds for the State law purposes. The Final Bond Resolution also approves the form of the financing documents and authon*zes City staff to take all necessary actions for the issuance of the Series 2025 Bonds. Importantly, conduit revenue bonds, such as the proposed Series 2025 Bonds, issued under the terms of the Act are special, limited obligations of the proposed issuer (the City) and do not constitute general obligations or a debt, liability, or pledge of the full faith and credit of the issuer (the City), the State of Montana (the "State"), or of any political subdivision or agency thereof. Such conduit revenue bonds are payable from loan payments to be made by a borrower under the terms of a loan or revenue agreement and other financial documents with a lender or financial institution acting as bond trustee. The taxing power of the City is not pledged to the payment of the Series 2025 Bonds and the credit and taxing power of the City is not available to make payments on conduit revenue bonds issued under the Act. The Borrower is solely responsible for repaying the Series 2025 Bonds. A nonpayment by a borrower (the Borrower) of bonds (the Series 2025 Bonds) issued under the Act will not adversely affect the credit rating of the issuer (the City). When the City borrows funds for its own uses, the City use provisions of the Montana Code Annotated that are separate and distinct from the Act. The Final Bond Resolution also acknowledges and sets out that the Borrower is responsible for paying all costs associated with the issuance of the Series 2025 Bonds. In our role as Bond Counsel we ensure that the proper steps are being taken in such process in order to deliver our legal opinion letter that the Series 2025 Bonds are validly issued. Please do not hesitate to contact me at johnsonbwgballardspahr.com or (612) 371-6223 if you have any questions regarding the draft Final Bond Resolution or this Memo. CERTIFICATE AS TO RESOLUTION AND ADOPTING VOTE 1, the undersigned, being the duly qualified and acting recording officer of the City of Kalispell, Montana (the "City"), hereby certify that the attached resolution is a true copy of a Resolution entitled: "RESOLUTION AUTHORIZING THE ISSUANCE AND SALE OF ONE OR MORE SERIES OF TAXABLE OR TAX-EXEMPT CONDUIT REVENUE BONDS IN THE TOTAL ORIGINAL AGGREGATE PRINCIPAL AMOUNT NOT TO EXCEED $100,000,000; AND APPROVING THE FORM OF AND AUTHORIZING THE EXECUTION AND DELIVERY OF CERTAIN DOCUMENTS RELATING TO THE REVENUE BONDS" (the "Resolution"), on file in the original records of the City in my legal custody; that the Resolution was duly adopted by the City Council of the City at a meeting on April 7, 2025, and that the meeting was duly held by the City Council and was attended throughout by a quorm, pursuant to call and notice of such meeting given as required by law; and that the Resolution has not as of the date hereof been amended or repealed. I further certify that, upon vote being taken on the Resolution at said meeting, the following City Council members voted in favor thereof voted against the same: abstained from voting thereon: or were absent: WITNESS my hand officially this _ day of April, 2025. City Clerk CITY OF KALISPELL, MONTANA RESOLUTION NO. 6247 RESOLUTION AUTHORIZING THE ISSUANCE AND SALE OF ONE OR MORE SERIES OF TAXABLE OR TAX-EXEMPT CONDUIT REVENUE BONDS IN THE TOTAL ORIGINAL AGGREGATE PRINCIPAL AMOUNT NOT TO EXCEED $100,000,000; AND APPROVING THE FORM OF AND AUTHORIZING THE EXECUTION AND DELIVERY OF CERTAIN DOCUMENTS RELATING TO THE REVENUE BONDS The City of Kalispell, Montana (the "City") is a City and political subdivision of the State of Montana (the "State"). Pursuant to the Constitution and laws of the State, particularly Montana Code Annotated, Title 90, Chapter 5, Part 1, as amended (the "Act"), the Act authorizes the City to issue revenue bonds that are special, limited obligations of the City for the purpose of defraying the cost of acquiring or improving any land, building, other improvement, and real or personal property considered necessary in connection with an improvement that is suitable for: commercial, manufacturing, agricultural, or industrial enterprises; recreation or tourist facilities; local, state, and federal governmental facilities; multifamily housing; hospitals; long-term care facilities; community -based facilities for individuals who are persons with developmental disabilities as defined in Montana Code Annotated Title 53, Chapter 20, Part 102, as amended; medical facilities; higher education facilities; electric energy generation facilities; family service provider facilities; the production of energy using an alternative renewable energy source as defined in Montana Code Annotated, Title 90, Chapter 4, Part 102, as amended; and any combination of these projects. The City has received a proposal from Immanuel Living at Buffalo Hill, a Montana nonprofit corporation (the "Corporation"), that the City issue one or more series of tax-exempt or taxable bonds (the "Bonds") in a total aggregate principal amount not to exceed $ 100,000,000. The City will loan the proceeds of the Bonds to the Corporation for: (1) refinancing all or a portion of the outstanding City's Housing and Healthcare Facilities Revenue Bonds (Immanuel Lutheran Corporation Project), Series 2017A (the "Senies 2017A Bonds"); (11) financing of the acquisition, construction and equipping of an additional building on the Immanuel Living at Buffalo Hill Campus specifically for independent senior living, which includes approximately 39 loft -style apartments and the related capital improvements, including, but not limited to, parking improvements, a sky bridge connection and dining hall renovations (the "Lofts Project"); (111) financing capital renovations and improvements to the Immanuel Living at Buffalo Hill Campus; (iv) financing and installing of Wi-Fi improvements to the facilities on the Immanuel Living at Buffalo Hill Campus ((10 through (iv) are referred to herein as the "2025 Project"); (v) funding of certain reserves and capitalized interest for the Bonds; and (vi) financing of all or a portion of the costs of issuing the Bonds (including the City's administrative fee related to the original issuance of the Bonds). The debt service on the Bonds is payable solely from revenues and resources of the Corporation and the members of the obligated group which all are affiliates of the Corporation. The portion of the proceeds of the City of Kalispell, Montana Revenue and Refunding Bonds (Immanuel Living at Buffalo Hill Project), Series 2025A (the "Senies 2025A Bonds") and the City of Kalispell, Montana Revenue and Refunding Bonds Tax -Exempt Mandatory Paydown Securities (Immanuel Living at Buffalo Hill Project), Series 2025B (TEMPS-80sm) (the "Senies 2025B Bonds" and together with the Series 2025A Bonds, the "Tax -Exempt Bonds"), applied to the payment of costs of issuance of the Bonds may not exceed two percent of the principal amount of the Tax -Exempt Bonds. Pursuant to the Act and Section 147(f) of the Internal Revenue Code of 1986, as amended (the "Code"), the City Council (the "City Council") conducted a public hearing on the 2025 Project, the refinancing of the Series 2017A Bonds and the issuance of the Bonds on the date of this resolution prior to consideration. Notice of the public hearing (the "Public Notice") was published by the City as required by Section 147(f) of the Code and the Act. The Public Notice provided a general, functional description of the 2025 Project, as well as the maximum aggregate principal amount of the Bonds and the location of the 2025 Project. The Public Notice was published in the Daily Inter Lake, a newspaper circulating generally in the City, for three consecutive weeks before the April 7, 2025 meeting of the City Council. At the public hearing a reasonable opportunity was provided for interested individuals to express their views, both orally and in writing, on the 2025 Project and the proposed issuance of such revenue obligations. It is proposed, pursuant to the Loan Agreement, to be dated on or after May 1, 2025 (the "2025 Loan Agreement"), by and between the City and the Corporation, that the City lend the proceeds derived from the sale of the Bonds to the Corporation to finance: (1) the refinancing of all or a portion of the Series 2017A Bonds; (11) the 2025 Project; (111) the funding of certain reserves and capitalized interest for the Bonds; and (iv) financing of all or a portion of the costs of issuing the Bonds (including the City's administrative fee related to the original issuance of the Bonds). The loan repayments to be made by the Corporation under the 2025 Loan Agreement are fixed so as to produce revenues sufficient to pay the principal of, premium, if any, and interest on the Bonds when due. As further security for the repayment of the principal and interest of the Bonds, the Corporation, as grantor, will also execute a Second Amendment to Combination Trust Indenture, Security Agreement and Fixture Financing Statement, to be dated on or after May 1, 2025 (the "Mortgage Amendment") which amends the Combination Trust Indenture, Security Agreement and Fixture Financing Statement, dated as of April 1, 2016, as previously amended (the "Oniginal Mortgage" and together with the Mortgage Amendment, the "Mortgage") for the benefit of a title company, as trustee, and Zions Bancorporation, National Association, as master trustee and beneficiary (the "Master Trustee"), under a Master Trust Indenture, dated as of May 1, 2017, by and between the Corporation, as the obligated group representative, Growing Roots Early Learning Center, LLC and Immanuel Living at Home, LLC, and the Master Trustee. The City will enter into a Bond Purchase Contract (the "Bond Purchase Agreement") with B.C. Ziegler and the Corporation (the "UnderWrliter") and the Corporation, whereby the Underwriter will purchase the Bonds. BE IT RESOLVED by the City Council of the City as follows: 1. The issuance of the Bonds is hereby approved (i) in one or more series of taxable or tax- exempt bonds, (11) in a combined principal amount not to exceed $100,000,000, and (111) with a final maturity date which is not longer than 40 years from the date of issuance of the Bonds. The sale of the Bonds to the Underwriter and the execution of the Bond Purchase Agreement is hereby authorized for the purposes described in the recitals of this resolution which are hereby approved. 2. All of the provisions of the Bonds, when executed as authorized herein, shall be deemed to be a part of this resolution as fully and to the same extent as if incorporated verbatim herein and shall be in full force and effect from the date of execution and delivery thereof. The Bonds shall bear interest at such rates, shall be in such denominations, shall be numbered, shall be dated, shall mature, shall be subject to tender and redemption prior to maturity, shall be in such forms, and shall have such other details and provisions as are prescribed by the Bond Purchase Agreement and the Bond Indenture, to be dated on or after May 1, 2025 (the "2025 Bond Indenture") by and between the City and Zions Bancorporation, National Association, as bond trustee (the "Bond Trustee"), on file with the City, which form is hereby approved, with such necessary and appropriate variations, omissions, and insertions (including changes to the aggregate principal amount of the Bonds, the stated maturities of the Bonds, the interest rates on the Bonds, mandatory put dates, and the terms of redemption of the Bonds) as the Mayor of the City (the "Mayor") and the City Manager of the City (the "City Manager") (collectively, the "City Officials"), in their discretion, shall determine. The execution of the Bonds with the manual or facsimile signatures of the Mayor, the City Manager, and the City Clerk of the City and the delivery of the Bonds by the City shall be conclusive evidence of such determination. The City hereby authorizes and directs the City Officials to execute and deliver the Bonds to the Undervm*ter in accordance with their terms and the terms of this resolution and the 2025 Bond Indenture; provided that the final maturity date for the Bonds shall not be later than 40 years. 3. The proceeds derived from the sale of the Bonds shall be loaned by the City to the Corporation pursuant to the 2025 Loan Agreement. The loan repayments to be made by the Corporation under the 2025 Loan Agreement are to be fixed so as to produce revenues sufficient to pay the principal of, premium, if any, and interest on the Bonds when due. The Bonds, the Bond Purchase Agreement, the 2025 Bond Indenture and the 2025 Loan Agreement shall be substantially in the forms on file with the City, and are hereby approved, with such necessary and appropriate variations, omissions and insertions as do not materially change the substance thereof, or as the City Officials, in their discretion, shall determine, and the execution and delivery thereof by the City Officials shall be conclusive evidence of such determination. The 2025 Bond Indenture, the 2025 Loan Agreement and the Bond Purchase Agreement are directed to be executed in the name and on behalf of the City by the City Officials. The Bonds shall be a special, limited obligation of the City payable solely from the revenue of the Corporation pledged therefor. In all events, it is understood, however, that the Bonds shall not constitute a charge, lien or encumbrance, legal or equitable, upon any property of the City except the City's interest in the 2025 Loan Agreement with respect to the Bonds, the 2025 Project, and the Bonds, when, as, and if issued, shall recite in substance that the Bonds, including interest thereon, are payable solely from the revenues received from the 2025 Project, the property pledged to the payment thereof and other sources of security for the Bonds, and shall not constitute a pecuniary liability of, or a general or moral obligation of the City, within the meaning of any constitutional or statutory limitation. The full faith, credit and taxing power of the City are not pledged to the payment of the Bonds. 4. The City Officials and other officers of the City are authorized and directed to prepare and furnish to the Undervm*ter and to Ballard Spahr LLP, bond counsel to the City ("Bond Counsel") certified copies of all proceedings and records of the City relating to the Bonds, and such other affidavits and certificates as may be required to show the facts relating to the legality of the Bonds as such facts appear from the books and records in the officers' custody and control or as otherwise known to them; and all such certified copies, certificates and affidavits, including any heretofore furnished, shall constitute representations of the City as to the truth of all statements contained therein. 5. The approval hereby given to the various documents referred to above includes approval of such additional details therein as may be necessary and appropriate and such modifications thereof, deletions therefrom and additions thereto as may be necessary and appropriate and approved by the officials authorized herein to execute said documents, which approval shall be conclusively evidenced by the execution thereof. The City Officials and other officers of the City are hereby authorized to execute and deliver, on behalf of the City, all other certificates, instruments, and other written documents that may be requested by Bond Counsel, the Bond Trustee, the Master Trustee, the Undervmiter, or other persons or entities in conjunction with the issuance of the Bonds and the expenditure of the proceeds of the Bonds. Without imposing any limitations on the scope of the preceding sentence, such officers are specifically authorized to execute and deliver a certificate relating to federal tax matters including matters relating to arbitrage and arbitrage rebate, a receipt for the proceeds derived from the sale of the Bonds, a general certificate of the City, and an Information Return for Tax -Exempt Private Activity Bonds Issues, Form 8038 (Rev. February 2022). 6. All covenants, stipulations, obligations, representations, and agreements of the City contained in this resolution or contained in the 2025 Bond Indenture or the 2025 Loan Agreement or other documents referred to above shall be deemed to be the covenants, stipulations, obligations, representations, and agreements of the City to the full extent authorized or permitted by law, and all such covenants, stipulations, obligations, representations, and agreements shall be binding upon the City. Except as otherwise provided in this resolution, all rights, powers, and privileges conferred, and duties and liabilities imposed, upon the City by the provisions of this resolution, the 2025 Bond Indenture, the 2025 Loan Agreement or other documents referred to above shall be exercised or performed by the City, or by such officers, board, body, or agency as may be required or authorized by law to exercise such powers and to perform such duties. No covenant, stipulation, obligation, representation, or agreement herein contained or contained in the 2025 Bond Indenture, the 2025 Loan Agreement or other documents referred to above shall be deemed to be a covenant, stipulation, obligation, representation, or agreement of any elected official, officer, agent, or employee of the City in that person's individual capacity, and neither the members of the City Council nor any officer or employee executing the Bonds shall be liable personally on the Bonds or be subject to any personal liability or accountability by reason of the issuance thereof. 7. Except as herein otherwise expressly provided, nothing in this resolution, the 2025 Bond Indenture, the Bonds or the 2025 Loan Agreement, expressed or implied, is intended or shall be construed to confer upon any person, firm, or corporation other than the City and the registered and beneficial owners of the Bonds, any right, remedy, or claim, legal or equitable, under and by reason of this resolution or any provision hereof or of the 2025 Loan Agreement or any provision thereof, this resolution, the 2025 Loan Agreement and all of their provisions being intended to be, and being for the sole and exclusive benefit of the City and the registered and beneficial owners of the Bonds issued under the provisions of this resolution, the 2025 Bond Indenture and the 2025 Loan Agreement, and the Corporation to the extent expressly provided in the 2025 Loan Agreement. 8. The use and distribution of the Corporation's Preliminary Official Statement and Official Statement (together, the "Official Statement") in connection with the sale of the Bonds by the Underwriter is hereby approved. The City hereby approves the information in the Official Statement relating to the City under the headings "INTRODUCTION —The Issuer," "THE ISSUER," and "LITIGATION — The Issuer." 9. In case any one or more of the provisions of this resolution, or of the documents mentioned herein, or of the Bonds issued hereunder shall for any reason be held to be illegal or invalid, such illegality or invalidity shall not affect any other provision of this resolution, or of the aforementioned documents, or of the Bonds, but this resolution, the aforementioned documents, and the Bonds shall be construed and endorsed as if such illegal or invalid provisions had not been contained therein. 10. All acts, conditions, and things required by the laws of the State, relating to the adoption of this resolution, to the issuance of the Bonds, and to the execution of the 2025 Bond Indenture, the 2025 Loan Agreement and the other documents referred to above to happen, exist, and be performed precedent to and in the enactment of this resolution, and precedent to the issuance of the Bonds, and precedent to the execution of the 2025 Bond Indenture or the 2025 Loan Agreement and the other documents referred to above have happened, exist, and have been performed as so required by law. 11. The City Officials, members of the City Council, officers of the City, and attorneys and other agents or employees of the City are hereby authorized to do all acts and things required by them by or in connection with this resolution, the 2025 Bond Indenture and the 2025 Loan Agreement, the Bond Purchase Agreement and the other documents referred to above for the full, punctual, and complete performance of all the terms, covenants, and agreements contained in the Bonds, the 2025 Bond Indenture, 4 the 2025 Loan Agreement, the Bond Purchase Agreement and the other documents referred to above, and this resolution. 12. If for any reason the Mayor is unable to execute and deliver those documents referred to in this resolution, any other member of the City Council, or any officer of the City duly delegated to act on behalf of the Mayor, may execute and deliver such documents with the same force and effect as if such documents were executed by the Mayor. If for any reason the City Manager or the City Clerk is unable to execute and deliver the documents referred to in this resolution, such documents may be executed and delivered by the City Clerk, any member of the City Council, or any officer of the City duly delegated to act on behalf of the City Manager or the City Clerk, with the same force and effect as if such documents were executed and delivered by the City Manager or the City Clerk, respectively. 13. All commitments of the City expressed herein to issue the Bonds are subject to the condition that by December 31, 2025, the City, the Corporation and the Underwriter will have agreed to mutually acceptable terms and conditions of the 2025 Loan Agreement, the Bonds and of the other instruments and proceedings relating to the Bonds and its issuance and sale. If the events set forth herein do not take place within the time set forth above, or any extension thereof, and the Bonds is not sold within such time, this Resolution will expire and be of no ftirther effect. 14. This resolution shall be in full force and effect from and after its passage. PASSED AND APPROVED BY THE CITY COUNCIL AND SIGNED BY THE MAYOR OF THE CITY OF KALISPELL, THIS 7TH DAY OF APRIL, 2025. Mark Johnson Mayor ATTEST: Aimee Brunckhorst, CMC City Clerk