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1. Resolution 5458 - Immanuel Lutheran HomeCharles A. Harball Office of City Attorney City Attorney 201 First Avenue East P.O. Box 1997 Kalispell, MT 59903-1997 kylLei 104 411 k1k r1i Iffl TO: Mayor Tammi Fisher and Kalispell City Council FROM: Charles Harball, City Attorney Jane Howington, City Manager Tel 406.758.7977 Fax 406.758.7979 charball@kalispell.com SUBJECT: Resolution No. 5458 - Approval of the Issuance of Revenue Bonds for the Financing Improvements to Immanuel Lutheran Corporation Properties Located in the City of Kalispell MEETING ATE: Monday, September 20, 2010 — Regular Council Meeting BACKGROUND: The City has received a proposal from Immanuel Lutheran Corporation that the City issue a Housing and Healthcare Facilities Revenue Bond in a principal amount not to exceed $14,000,000 and loan the proceeds of the Bonds to Immanuel Lutheran Corporation to finance: (i) the redemption and prepayment of certain outstanding bonds and (ii) financing the costs of the installation, renovation, rehabilitation, and equipping of certain capital improvements to the 100-unit senior retirement apartment facility (currently comprised of approximately 70 senior independent living units and 30 senior assisted living units) and155-bed nursing home facility known as Immanuel Lutheran Home; (iii) the funding of certain reserves and capitalized interest for the Bonds; and (iv) the financing of 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 Borrower. On September 20, 2010 Council will hear evidence from the public regarding the City's consideration to issue revenue bonds, and will consider Resolution No. 5458 approving the issuance of such bonds. Montana law authorizes the City to issue revenue bonds for the purpose of defraying the cost of acquiring or improving any land, building or other improvement, that is suitable for, among other things, hospitals, long-term care facilities, and community -based facilities for individuals who are persons with developmental disabilities. As a condition to the issuance of such revenue bonds, the City is holding a public hearing in accordance with the requirements of the Internal Revenue Code. Memorandum for Resolution 5458 September 15, 2010 Page - 2 The principal, premium, if any, and interest on the Bonds shall be payable solely from the revenue pledged and the Bonds shall not constitute a debt of the City within the meaning of any constitutional or statutory limitation nor give rise to a pecuniary liability of the City or a charge against the City's general credit or assets and shall not constitute a charge, lien, or encumbrance, legal or equitable, upon any property of the City other than the City's interest in the Loan Agreement. The Bonds are not general or moral obligations of the City and are not secured by any taxing power of the City. ECO E ATI N: That Council consider and pass Resolution No. 5458 making the final determination by this City Council that the financing of the Project and the issuance of the Bonds are in the best interest of the City and giving approval to the issuance of the Bonds. FISCAL EFFECTS: The City will receive an administrative fee for its part in the administration of this loan. The City acts as a conduit for the loan itself, with Wells Fargo Bank providing the funds with the revenues of the project and the property acting as security for the loan. The City's exposure is therefore extremely limited. An agreement regarding a payment in lieu of taxes will be negotiated with Immanuel Lutheran Corporation and will be brought forward to Council for its consideration. Respectfully submitted, Charles Rarball, City Attorney Office of City Attorney City of Kalispell RESOLUTION AUTHORIZING THE ISSUANCE AND SALE OF HOUSING AND HEALTHCARE FACILITIES REVENUE BONDS (IMMANUEL LUTHERAN CORPORATION PROJECT), SERIES 2010, IN THE ORIGINAL AGGREGATE PRINCIPAL AMOUNT NOT TO EXCEED $14,000,000; 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 Lutheran Corporation, a Montana corporation (the "Borrower"), that the City issue its Housing and Healthcare Facilities Revenue Bonds (Immanuel Lutheran Corporation Project), Series 2010, in a principal amount not to exceed $14,000,000 (the "Bonds"), and loan the proceeds of the Bonds to the Borrower to finance: (i) the redemption and prepayment of the Issuer's (a) Housing Facilities Revenue Bonds (Immanuel Lutheran Corporation Project), Series 1997A (the 1997A Bonds") originally issued in the original principal amount of $6,745,00 and (b) Health Care Facilities Revenue Bonds (Immanuel Lutheran Corporation Project), Series 1997B (the "1997B Bonds and together with the Series 1997A Bonds, the "Prior Bonds") originally issued in the original principal amount of $1,400,000; (ii) financing the costs of the installation, renovation, rehabilitation, and equipping of certain capital improvements to the 100-unit senior retirement apartment facility (currently comprised of approximately 70 senior independent living units and 30 senior assisted living units) (the "Housing Facility") and155-bed nursing home facility known as Immanuel Lutheran Home (the "Nursing Facility") (collectively, the "2010 Project"); (iii) the funding of certain reserves and capitalized interest for the Bonds; and (iv) the financing of 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 Borrower. The portion of the proceeds of the Bonds applied to the payment of costs of issuance of the Bonds may not exceed two percent of the principal amount of the 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 Project and the issuance of the Bonds on September 20, 2010. Notice of the public hearing (the "Public Notice"), was published as required by Section 147(f) of the Code and the Act. The Public Notice provided a general, functional description of the Project, as well as the maximum aggregate face amount of the Bonds and the location of the Project. The Public Notice was published in the Daily Inter Lake, a newspaper circulating generally in the City, for three consecutive weeks before the September 20, 2010 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 Project and the proposed issuance of such revenue obligations. At the public hearing, no public spoke with respect to or expressed an opinion in opposition of the issuance of the Bonds by the City. 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 redemption prior to maturity, shall be in such forms, and shall have such other details and provisions as are prescribed by the Indenture of Trust, dated as of October 1, 2010 (the "Indenture") by and between the City and Wells Fargo Bank, National Association (the "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, 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 and the City Manager and the delivery of the Bonds by the City shall be conclusive evidence of such determination. The principal of, premium, if any, and interest on the Bonds shall be payable solely from the revenue pledged therefor and the Bonds shall not constitute a debt of the City within the meaning of any constitutional or statutory limitation nor give rise to a pecuniary liability of the City or a charge against the City's general credit or assets and shall not constitute a charge, lien, or encumbrance, legal or equitable, upon any property of the City other than the City's interest in the Loan Agreement. The Bonds are not general or moral obligations of the City and are not secured by any taxing power of the City. It is proposed, pursuant to a Loan Agreement, dated on or after October 1, 2010 (the "Loan Agreement"), between the City and the Borrower, that the City lend the proceeds derived from the sale of the Bonds to the Borrower to finance (i) the refunding of the Prior Bonds, (ii) the Project, (iii) certain reserves for the Bonds, and (iv) certain costs related to the issuance of the Bonds (including the City's administrative fee related to the original issuance of the Bonds). The loan repayments to be made by the Borrower under the 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 Borrower will also execute a Deed of Trust, dated on or after October 1, 2010 (the "Mortgage"), for the benefit of the Trustee. BE IT RESOLVED by the City Council of the City as follows: 1. The issuance and sale of the Bonds to Wells Fargo Bank, National Association (the "Purchaser") is hereby authorized for the purposes of financing (i) the refunding of the Prior Bonds; (ii) the Project, (iii) certain reserves for the Bonds, and (iv) certain costs related to the issuance of the Bonds (including the City's administrative fee related to the original issuance of the Bonds). The Bonds shall bear interest at such rate, shall be in such denomination, shall be numbered, shall be dated, shall mature, shall be subject to redemption prior to maturity, shall be in such form, and shall have such other details and provisions as are prescribed by the form of the Bonds on file with the City. The Bonds shall be a special, limited obligation of the City payable solely from revenues of the Project, in the manner provided in this resolution, the Indenture and the Loan Agreement. The Bonds does not constitute an indebtedness, liability, general or moral obligation, or a pledge of the faith and credit or any taxing power of the City, the State, or any political subdivision thereof. The City hereby authorizes and directs the City Officials to execute and deliver the Bonds to the Purchaser in accordance with their terms and the terms of this resolution and the Indenture. 2. The proceeds derived from the sale of the Bonds shall be loaned by the City to the Borrower pursuant to the Loan Agreement. The loan repayments to be made by the Borrower under the 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 Indenture and the 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 Indenture and the Loan Agreement are directed to be executed in the name and on behalf of the City by the City Officials. 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 loan or revenue agreement with respect to the Bonds and the 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 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. 3. The City Officials are authorized and directed to prepare and execute the Bonds and deliver the Bonds to the Purchaser. The City Manager is hereby authorized to approve the initial interest rate on the Bonds, approve changes to the maturity schedules, optional and mandatory redemption terms, mandatory sinking fund payment schedules, and other terms and provisions of the Bonds; provided that the maturity date for the Bonds shall not be later than 30 years. The debt service on the Bonds is payable solely from revenues and resources of the Borrower. 4. The City Officials and other officers of the City are authorized and directed to prepare and furnish to the Purchaser and to Kennedy & Graven, Chartered, P.C., 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 Purchaser, 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. June 2010). 3 6. All covenants, stipulations, obligations, representations, and agreements of the City contained in this resolution or contained in the Indenture or the Loan Agreement or other documents referred to above shall be deemed to be the covenants, stipulations, obligations, representatives, 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 Indenture, the 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 Indenture, the 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 Indenture, the Bonds or the 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 Loan Agreement or any provision thereof; this resolution, the 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 Indenture and the Loan Agreement, and the Borrower to the extent expressly provided in the Loan Agreement. 8. 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. 9. 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 Indenture, the 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 Indenture or the Loan Agreement and the other documents referred to above have happened, exist, and have been performed as so required by law. 10. 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 Indenture and the Loan 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 Indenture, the Loan Agreement, and the other documents referred to above, and this resolution. 11. 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 is unable to execute rd 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, with the same force and effect as if such documents were executed and delivered by the City Manager. 12. All commitments of the City expressed herein to issue the Bonds are subject to the condition that by December 31, 2010, the City, the Borrower and the Purchaser will have agreed to mutually acceptable terms and conditions of the 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 further effect. 13. This resolution shall be in full force and effect from and after its passage. PASSED by the City Council of the City of Kalispell, Montana, this 20th day of September, 2010. Attest: Theresa White City Clerk Tammi Fisher Mayor 5