Loading...
12. Resolution 4247 - Refinance/Loan Agreement Sponsorship for Immanuel Lutheran HomeAgenda -July 21, 1997 AGENDA ITEM 12 - Resolution 4247-Lutheran Home -Health Care Facilities Revenue Bonds I have enclosed the cover pages of an agreement to allow the Immanuel Lutheran Home to issue an $8 million loan for refunding and refinancing the 1987 Series bonds and begin construction of additional improvements for the nursing facility. The City is the "conduit" for this type of bonding and have no liability or changes upon our general credit or taxing powers. The only effect is the "use" of an annual $10 million bonding limitations imposed upon us by federal law. RECOMMENDATION: The attorneys are currently reviewing the bonds documents and will have a conference on July 15th. It is our belief that all documents are basically in order. I recommend approval of this process to allow the refinancing for the Lutheran Home. ACTION REQUIRED: A resolution will be necessary to process this financing alternative for the Lutheran Home. 07i15/97 TCE 13:29 FU 16123402644 DORSEY WHITtiEY Z003 RESOLUTION NO. 4247 RESOLUTION RELATING TO A PROJECT AND REFINANCING ON BEHALF OF IMMANUEL LUTHERAN HOME AND THE ISSUANCE OF REVENUE BONDS TO FINANCE THE COSTS THEREOF UNDER MONTANA CODE ANNOTATED, TITLE 90, CHAPTER 5, PART 1, AS AMENDED; GRANTING PRELIMINARY APPROVAL THERETO AND CALLING A PUBLIC HEARING THEREON AND ESTABLISHING COMPLIANCE WITH CERTAIN REIMBURSEMENT REGULATIONS UNDER THE INTERNAL REVENUE CODE BE IT RESOLVED by the City Council of City of Kalispell, Montana (the "City"), as follows: Section 1. Recil& 1.01. Pursuant to Montana Code Annotated, Title 90, Chapter 5, Part 1, as amended (the "Act"), the City is authorized to enter into agreements upon terms the governing body considers advantageous and not in conflict with the provisions of the Act to issue its revenue bonds and sell such bonds at public or private sale in such manner and. at such times as may be determined by this body to be most advantageous; and to Loan the proceeds of its revenue bonds for the purpose of defraying the cost of acquiring or improving real and personal properties suitable for use for, among other things, for long-term care facilities. Such revenue bonds may be secured by a pledge of the revenues to be derived by the City from a loan agreement with the borrower, by a mortgage on the project and by such other security devices as may be deemed advantageous. Under the provisions of the Act, any bonds so issued by the City shall be special, limited obligations of the City and the bonds shall not constitute nor give rise to a pecuniary liability of the City or a charge against its general credit or taxing powers. 1,02. Immanuel Lutheran Home, a Montana nonprofit corporation (the "Corporation") owns and operates a 144-bed skilled nursing facility commonly known as Immanuel Lutheran Horne, located at 185 Crestline Avenue in the City (the "Nursing Facility"), and an assisted living/senior housing facility commonly known as Buffalo Hills Terrace (the "Housing Facility") located adjacent to the Nursing Facility in the City. 1.03. The City has heretofore issued its First Mortgage Housing Revenue Bonds (Immanuel Lutheran Home Project), Series 1987 (the "Series 1987 Bonds") under the provisions of the Act, and lent the proceeds thereof to the Corporation for the purpose of financing the acquisition and construction of the Housing Facility. 07/15/97 117E 13:30 FAX 16123402644 DORSEI 91ITNEY 11004 1.04. The Corporation has borrowed from Norwest Bank the aggregate sum of $250,000, pursuant to two mortgage notes dated and . respectively (the "Norwest Bank Loans"), for the purpose of financing capital improvements to the Nursing Facility. 1..05. The Corporation proposes to refund the Series 1987 Bonds and refinance the Norwest Bank Loans (such refunding and refinancing being referred to herein as the "Refunding") and undertake the construction of certain improvements to the Nursing Facility and acquire and install certain equipment therein (the "Project"). 1.06. The Corporation has requested that the City, pursuant to the Act, issue its revenue bonds in the approximate aggregate principal amount of $8,000,000, in one or more series at one time or from time to time (the "Bonds"), the proceeds of which will be loaned by the City to the Corporation for the purpose of (a) financing all or a portion of (i) the Refunding, (ii) the costs of the Project, (iii) the costs of issuing the Bonds, and (b) funding a debt service reserve fund for the Bonds. 1.07. Under the provisions of the Act, the Bonds shall be special, limited obligations of the Authority payable solely from loan repayments from the Corporation, and shall not constitute nor give rise to a pecuniary liability of the State or a charge against its general credit or taxing powers. Section 2. Pte_liminary Findinga. Based on representations made by the Corporation to the City to date, the Council hereby makes preliminary findings, determinations and declarations, subject to final findings, determinations and declarations following the public hearing called pursuant to Section 4, as follows: (a) The Project, as proposed, is undertaken with respect to a long-term cue facility eligible for financing under the Act and the City is authorized to issue revenue bonds to defray the costs of making a loan to the Corporation, the proceeds of which will be used to finance a portion or all of the costs of acquiring, constructing, equipping and improving the Project, . accomplishing the Refunding, funding a debt service reserve fund for the Bonds and paying certain costs and expenses incident to the issuance and sale of the Bonds, including any security for the Bonds, and to enter into a Loan Agreement with the Corporation requiring loan repayments from the Corporation in amounts sufficient to repay the loam when due and requiring the Corporation to pay all costs of maintaining and insuring the Project, including taxes thereon. (b) The loan repayments to be made by the Corporation under the Loan Agreement, shall be established at a level and payable in installments -2- 07/15.97 ME 13:31 FAX 16123402644 DORSEY WHITNEY Z 005 at times sufficient to pay all principal of, premium, if any, and interest on the Bonds when due. (c) In preliminarily authorizing the Refunding and the acquisition, construction, furnishing, equipping and improvement of the Project and the issuance of the Bonds, the City's purpose is and the effect thereof will be to promote the public welfare of the City and its residents by retaining and expanding the location of a revenue -producing enterprise within the City thereby promoting and stimulating economic activity within the City, improving employment opportunities for present and future residents and otherwise furthering the purposes and policies of the Act. (d) The undertaking of the Refunding and the Project and the issuance of the Bonds to finance all or a portion of the costs thereof are in the public interest. Section 3. Preliminary Approval. This Council hereby gives preliminary approval to the Refunding and the Project and the issuance of the Bonds in the approximate aggregate principal amount of $8,000,000 to finance all or a portion of the costs thereof, subject to final approval following the public hearing provided for in Section 4, and subject to final determination by this Council that the financing of the Refunding and the Project and the issuance of the Bonds are in the best interest of the City. Section 4. Public Hearing. Section 90-5-104 of the Act and Section 147(f) of the Internal Revenue Code of 1986, as amended (the "Code'% require that, prior to the issuance of the Bonds a public hearing duly noticed shall be held by this Council on the proposed Refunding and Project and the issuance of the Bonds to finance the costs thereof. Pursuant to such authority, a public hearing on the proposed Project and the issuance of the Bonds to finance the costs thereof shall be called and held by this Council on August 1997, at p.m., in the City Council Chamber, in the City Hall. Section 5. Notice of Hearing. The Finance Officer is hereby authorized and directed to cause notice of the public hearing to be published in a newspaper of general circulation in the City, once a week for three consecutive weeks before the date of the hearing, as required by Section 90-5-104(1) of the Act. The notice shall be published in substantially the following form: -3- 07/15/97 TUE 13:31 FAX 16123402644 DORSEF WHITNEYZ006 NOTICE OF PUBLIC HEARING ON A PROPOSED REFUNDING AND PROJECT AND THE ISSUANCE OF REVENUE BONDS UNDER MONTANA CODE ANNOTATED, TITLE 90, CHAPTER 5, PART 1, AS AMENDED, TO FINANCE THE COSTS THEREOF CITY OF KALISPELL, MONTANA NOTICE IS HEREBY GIVEN that the City Council of City of Kalispell, Montana (the "City"), will meet on Monday, August _ _, 1997, at _ p.m., in the City Council Chamber Room, City Hall, 312 First Avenue East, Kalispell, Montana, for the purpose of conducting a public hearing pursuant to the requirements of Section 147(f) of the Internal Revenue Code of 1986, as amended, on a proposal that the City issue its revenue bonds, in one or more series (the "Bonds"), under Montana Code Annotated, Title 90, Chapter 5, Part 1, as amended (the "Act"). The proceeds of the Bonds, if issued, will be loaned by the City to Immanuel Lutheran Home, a Montana nonprofit corporation (the "Corporation"). The Corporation owns and operates a 144-bed skilled nursing, facility commonly known as Immanuel Lutheran Home (the "Nursing Facility"), located at 185 Crestline Avenue in the City, and an assisted living/senior housing facility commonly known as Buffalo Hills Terrace (the "Housing Facility") located adjacent to the Nursing Facility. The proceeds of the Bonds, If issued, will be used by the Corporation for the following purposes: (i) to refund outstanding revenue bonds of the City, the proceeds of which were used to finance the acquisition and construction of the Housing Facility, (ii) to prepay two mortgage notes, the proceeds of which were used to finance capital improvements to the Nursing Facility, (iii) to finance the construction of certain improvements to the Nursing Facility and acquire and install certain equipment therein (the "Project"), (iv) to fund a debt service reserve fund for the Bonds and (v) to pay costs .and expenses incidental to the issuance of the Bonds. The Housing Facility, the Nursing Facility and the Project are owned and operated by the Corporation. The maximum aggregate principal amount of the proposed bond issue is $8,000,000. The Bonds may be secured by a pledge of the revenues to be derived by the City from a loan agreement with the Corporation and by such other security devices, if any, as may be deemed advantageous. The Bonds will be special, limited obligations of the City, and the Bonds and interest thereon will be payable solely from the revenues pledged to the payment thereof. No holder of any Bonds will ever have the right to compel any exercise of the taxing power of the City to pay the Bonds or the interest thereon, nor to enforce payment thereof against any property of the City except money payable by the Corporation to the City and pledged to the payment of the Bonds. -4- 07i15,197 TUB 13:32 FAX 16123402644 DORSEY WHInEY Q 007 All persons interested may appear and be heard at the time and place set forth above, or may file written comments with the Finance Officer prior to the date of the hearing set forth above. Further information may be obtained from the City Manager of the City, City Hail, 312 First Avenue East, Kalispell, Montana 59903, telephone: (406) 758-7703. Dated: July 21,1997. BY ORDER OF THE CITY COUNCIL -5- Clerk of Council 07/15/ 97 WE 13:32 FAX 16123402644 DORSEY µHI'T`EY [zoos Section 6. 12eiburseme t of Costs under the Code. 6.1. The United States Department of Treasury has promulgated final regulations governing the use of proceeds of tax-exempt bonds, all or a portion of which are to be used to reimburse the City or a borrower from the City for project expenditures paid prior to the date of issuance of such bonds, Those regulations (Treasury Regulations, Section 1.150-2) (the "Regulations") require that the City adopt a statement of official intent to reimburse an original expenditure not later than 60 days after payment of the original expenditure. The Regulations also generally require that the bonds be issued and the reimbursement allocation made from the proceeds of the bonds occur within 18 months after the later of (i) the date the expenditure is paid or (ii) the date the project is placed in service or abandoned, but in no event more than three years after the date the expenditure is paid. The Regulations generally permit reimbursement of capital expenditures and costs of issuance of the bonds. 6.2. The City reasonably expects to reimburse the Corporation for the expenditures made for costs of the Project from the proceeds of the Bonds in an estimated maximum aggregate principal amount of $1,500,000 after the date of payment of all or a portion of the costs of the Project. All reimbursed expenditures shall be capital expenditures, a cost of issuance of the Bonds or other expenditures eligible for reimbursement under Section 1.150r2(d)(3) of the Regulations and also qualifying expenditures under the Act. Based on representations by the Corporation, other than (i) expenditures to be paid or reimbursed from sources other than the Bonds, (ii) expenditures permitted to be reimbursed under prior regulations pursuant to the transitional provision contained in Section 1.150-2(j)(2)(i)(B) of the Regulations, (iii) expenditures constituting preliminary expenditures within the meaning of Section 1.150-2(f)(2) of the Regulations, or (iv) expenditures in a "de minimus" amount (as defined in Section 1.150-2(f)(1) of the Regulations), no expenditures for the Project have been made by the Corporation more than 60 days before the date of adoption of this resolution. 6.3. Based on representations by the Corporation, as of the date hereof, there are no funds of the Corporation reserved, allocated on a long term -basis or otherwise set aside (or reasonably expected to be reserved, allocated on a long-term basis or otherwise set aside) to provide permanent financing for the expenditures related to the Project to be financed from proceeds of the Bonds, other than pursuant to the issuance of the Bonds. This resolution, therefore, is determined to be consistent with the budgetary and financial circumstances of the Corporation as they exist or are reasonably foreseeable on the date hereof. 1-1 07;13/97 TtE 13:33 FA.Y 16123402844 DORSEY WHInEY 009 Section 7. Costs. The Corporation will pay, or upon demand reimburse the City for payment of, any and all costs incurred by the City in connection with the Refunding and the Project and the issuance of the Bonds, whether or not the Project is carried to completion and whether or not the Ponds are issued. Section S. Commitment Conditional. The adoption of this resolution does not constitute a guarantee or a firm commitment that the City will issue the Bonds as requested by the Corporation. If, based on comments received at the public hearing to be held pursuant to this resolution, or other information made available to or obtained by the City during its review of the Refunding and the Project, it appears that the Refunding and the Project or the issuance of Bonds to finance the costs thereof is not in the public interest or inconsistent with the purposes of the Act, the City reserves the right not to give final approval to the issuance of the Bonds. The City also retains the right, in its sole discretion, to withdraw from participation and accordingly not issue the Bonds should the Council, at any time prior to the issuance thereof, determine that it is in the best interests of the City not to issue the Bonds or should the parties to the transaction be unable to reach agreement as to the terms and conditions of any of the documents for the transaction. Section 9. Effective bate. This resolution shall become effective upon passage. Passed by the City Council of the City of Kalispell, Montana, on this 21st day of July,1997. Attest: Clerk of Council (SEAL) -7- Mayor THIS TRUST INDENTURE AND SECURITY AGREEMENT, dated as of September 15, 1997 (the "Trust Indenture"), between IMMANUEL LUTHERAN HOME, a Montana nonprofit corporation (the "Grantor"), and , a national banking association organized and existing under the laws of the United States, with its principal corporate trust office in , , as Trustee under the Indenture of Trust hereinafter described (the `Beneficiary"), and COUNTY GUARANTY TITLE COMPANY; a title insurance company authorized to do business in the State of Montana under the laws of the State of Montana, with its mailing address at , Kalispell, Montana (with its successors hereunder, the "Trustee"). WITNESSETH: WHEREAS, the City of Kalispell, Montana (the "City"), will issue and deliver its Health Care Facilities Revenue Bonds (Immanuel Lutheran Home Project), Series 1997 (the "Series 1997 Bonds"), in the aggregate principal amount of $8,000,000, maturing and payable in full on or before April 1, 2017, under and pursuant to Montana Code Annotated, Title 90, Chapter 5, Part 1, as amended (the "Act"), and an Indenture of Trust, dated as of the date hereof (the "Indenture"), between the City and the Beneficiary; and WHEREAS, the Corporation owns and operates a 144-bed skilled nursing facility commonly known as Immanuel Lutheran Home (the "Nursing Facility"), and an assisted living/senior housing facility commonly known as Buffalo Hills Terrace (the "Housing Facility") in the City (the Nursing Facility and the Housing Facility are referred to together herein as the "Existing Facilities"); and WHEREAS, the City has heretofor issued its revenue bonds (the "Series 1987 Bonds") under the provisions of the Act, and lent the proceeds thereof to the Corporation for the purpose of financing the acquisition and construction of the Housing Facility ; and WHEREAS, the Corporation has borrowed from Norwest Bank the aggregate sum of $250,000, pursuant to two mortgage notes dated , and , respectively (the "Norwest Bank Loans"), for the purpose of financing capital improvements to the Nursing Facility; and WHEREAS, the Corporation wishes to refund the Series 1987 Bonds and refinance the Norwest Bank Loans (such refunding and refinancing being referred to herein as the "Refunding") at a cost of $6,000,000 (as defined herein, the "Refunding Cost") and undertake the construction of certain improvements to the Nursing Facility and acquire and install certain equipment therein (the "1997 Project"); and WHEREAS, the City will lend the proceeds of the Series 1997 Bonds to the Grantor pursuant to a Loan Agreement, dated as of the date hereof (the "Loan Agreement"), between the City and the Grantor, for the purposes of providing funds to finance part of the costs of undertaking a project within the corporate limits of the City consisting of the acquisition and improvement of an existing 98-bed skilled nursing home facility in the City (as hereinafter defined, the "Facilities") which is of the character and accomplishes the purposes provided by the Act; and WHEREAS, pursuant to the Loan Agreement, the Grantor has covenanted, among other things, to make Loan Repayments sufficient to pay the principal of, premium, if any, and interest on the Series 1997 Bonds and any Additional Bonds (as defined in the Indenture) issued under the Indenture when due (collectively, the "Bonds") when due; and WHEREAS, the City has, by the Indenture, pledged and assigned to the Beneficiary all of its rights, title and interests in the Loan Agreement (except for certain rights for payment of administrative expenses and indemnification), including, but not limited to, such Loan Repayments, in order to secure the full and prompt payment of the principal of, premium, if any, and interest on the Bonds; and WHEREAS, the Original Purchaser (as defined in the Indenture) of the Series 1997 Bonds has required, as a condition for its purchase of the Series 1997 Bonds, that the Grantor secure the Series 1997 Bonds and the obligations of the Grantor under the Loan Agreement by this Trust Indenture. NOW, THEREFORE, THIS TRUST INDENTURE FURTHER WITNESSETH: -iv-