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Resolution 4347 - Refinance - Loan Agreement Sponsorship for Immanuel Lutheran Home1650 RESOLUTION NO. 4347 RESOLUTION RELATING TO A PROJECT AND REFINANCING ON BEHALF OF IMMANUEL LUTHERAN CORPORATION OF KALISPELL, MONTANA 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. Recitals. 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 Corporation of Kalispell, Montana, a Montana nonprofit corporation (the "Corporation") owns and operates a 149-bed nursing facility commonly known as Immanuel Lutheran Home, located at 185 Crestline Avenue in the City (the "Nursing Facility"), and an senior retirement apartment 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 Housing Facilities Refunding Revenue Bonds (Buffalo Hills Terrace Project), Series 1992 (the "Series 1992 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. 16- 5 171 1.04. The Corporation has borrowed from Norwest Bank Montana, N. A. the aggregate sum of $175,000, pursuant to two mortgage notes dated October 1, 1987, and September 22, 1992, respectively (the "Norwest Bank Loans"), for the purpose of financing capital improvements to the Nursing Facility and the Housing Facility. 1.05. The Corporation proposes to refund the Series 1992 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 $8,500,000, 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, and (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. Preliminary. Findings. 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 care 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 loan 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 at times sufficient to pay all principal of, premium, if any, and interest on the Bonds when due. !►a 1'652 (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 $8,500,000 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. I!ublic 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 18, 1997, at 7:00 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: fl -3- -,�,� .., �7, r t . 16 -3 1 1 I1 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 18, 1997, at 7 : 0 0 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 Corporation of Kalispell, Montana, a Montana nonprofit corporation (the "Corporation"). The Corporation owns and operates a 149-bed nursing facility commonly known as Immanuel Lutheran Home (the "Nursing Facility"), located at 185 Crestline Avenue in the City, and an senior retirement apartment 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 and the Housing 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 $8,500,000. 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- 1 1654 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 Hall, 312 First Avenue East, Kalispell, Montana 59903, telephone: (406) 758-7703. Dated: July 21,1997. PUBLISH DATES: July 31, 1997 August 7, 1997 August 14, 1997 BY ORDER OF THE CITY COUNCIL -5- Clerk of Council 1 1 165 1 1 L, Section 6. Rei.Tnburwm?_ni of Costs under thg 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 $1,300,000 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 1.150-2(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. M 1656 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 Bonds are issued. Section 8. 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 Date. 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. Mayor Attest: Om C-- Cler cil (SEAL) -7-