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-