Resolution 4364 - Immanuel Lutheran Home Bondsowe
RESOLUTION NO. 4364
RESOLUTION RELATING HOUSING FACILITIES REVENUE
BONDS (IMMANUEL LUTHERAN CORPORATION PROJECT),
SERIES 1997A, AND HEALTH CARE FACILITIES REVENUE
BONDS (IMMANUEL LUTHERAN CORPORATION PROJECT),
SERIES 1997B; MAKING FINDINGS, CONFIRMING THE SALE
AND ISSUANCE OF THE BONDS, ESTABLISHING THE
SECURITY THEREFOR AND AUTHORIZING THE EXECUTION
OF DOCUMENTS
BE IT RESOLVED by the City Council of the 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, long-term care facilities and senior housing facilities, or
to refund revenue bonds previously issued under the Act. 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.
im. Pursuant to resolutions duly adopted on July 21,1997 and August 18,
1997, this Board granted and ratified, respectively, preliminary approval to the -
issuance of its revenue bonds in the approximate principal amount of $8,500,000
(the `Bonds"), the proceeds of which would be loaned by the City to Immanuel
Lutheran Corporation of Kalispell, Montana, a Montana nonprofit corporation (the
"Corporation"), to finance all or a portion of the costs of:
(a) refunding the City's Housing Facilities Refunding Revenue
Bonds (Buffalo Hills Terrace Project), Series 1992 (the "Series 1992 Bonds")
issued for the purpose of financing the acquisition and construction of a
senior retirement apartment facility, owned and operated by the
Corporation, commonly known as Buffalo Hills Terrace (the "Housing
Facility");
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(b) refinancing loans from Norwest Bank Montana, N.A. (the
"Bank Loans") borrowed for the purpose of financing capital improvements
to the Housing Facility and the 149-bed nursing home facility, owned and
operated by the Corporation, commonly known as Immanuel Lutheran
Home (the "Nursing Facility");
(c) constructing certain improvements to the Nursing Facility and
acquiring and installing certain equipment therein (the "Project");
(d) funding a debt service reserve fund for the Bonds;
(e) paying costs relating to the issuance of the Bonds.
The refunding of the Series 1992 Bonds and the refinancing of the Bank Loans are
referred to collectively herein as the "Refunding." The Housing Facility and the
Nursing Facility are referred to collectively herein as the "Facilities."
1.03. Representatives of the Corporation have proposed that the City, acting
under and pursuant to the Act, issue and sell to Norwest Investment Services, Inc.,
in Minneapolis, Minnesota and D. A. Davidson & Co., in Great Falls, Montana (the
"Underwriters"), the Bonds in two series to be designated "Housing Facilities
Revenue Bonds (Immanuel Lutheran Corporation Project), Series 1997A" and
"Health Care Facilities Revenue Bonds (Immanuel Lutheran Corporation Project),
Series 1997B," for the purpose of providing funds which, with other funds of the
Corporation, will be used to finance the Project and the Refunding. The Series
1997A Bonds and the Series 1997E Bonds are referred to collectively herein as the
"Bonds." Pursuant to the proposal, the proceeds of the Bonds would be loaned to
the Corporation pursuant to a Loan Agreement, between the City and the
Corporation (the "Loan Agreement"); the Corporation would agree to apply the
proceeds with other funds available to it to undertake the Project and the
Refunding, fund a debt service reserve and pay the costs of issuance of the Bonds,
and repay the loan of such proceeds at such times and in such amounts sufficient in
the aggregate to provide for the prompt payment of the principal of, premium, if -
any, and interest on the Bonds when due; the City would pledge and assign to
Norwest Bank Minnesota, National Association, in Minneapolis, Minnesota, as
trustee (the "Trustee"), pursuant to an Indenture of Trust (the "Indenture"), certain
of the City's interests in and to the Loan Agreement including all loan repayments
thereunder (but excluding the rights of the City to reimbursement of expenses and
to indemnification), to secure the full and prompt payment of the principal of,
premium, if any, and interest on the Bonds; and the payment of the principal of,
premium, if any, and interest on the Bonds would be further secured by a mortgage
lien on and security interest in the real property and certain personal property
comprising the Facilities pursuant to a Trust Indenture and Security Agreement (the
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"Trust Indenture") from the Corporation to Alliance Title & Escrow Corp., a title
insurance company authorized to do business in the State of Montana under the
laws of the State of Montana, as beneficiary.
The Bonds would be special, limited obligations of the City payable solely
from and secured by the payments to be made by the Corporation under the Loan
Agreement and by the Trust Indenture and would not constitute or give rise to a
pecuniary liability of the City or a charge against its general credit or taxing powers.
1.04. Draft forms of the following documents relating to the Bonds have
been prepared and submitted to this Council, and have been filed with the Finance
Director:
(a) the Loan Agreement;
(b) the Indenture;
(c) the Trust Indenture;
(d) an Official Statement (the "Official Statement"), in the form of a
Preliminary Official Statement (the "Preliminary Official Statement"), to be
used in connection with the offer and sale of the Bonds by the Underwriters;
(f) a Bond Purchase Agreement (the "Bond Purchase Agreement"), to
be entered into between the City, the Corporation and the Underwriters; and
(g) a Continuing Disclosure Agreement (the "Continuing
Disclosure Agreement"), to be entered into between the Corporation
and the Trustee.
Section 2. Findings,
It is hereby found, determined and declared that:
(a) The Project, as proposed, will be suitable for use as a long-term care
facility eligible for financing under the Act.
(b) The Refunding, the financing of the Project, the issuance and sale of the
Bonds, the execution and delivery of the Loan Agreement, the Indenture and the
Bond Purchase Agreement and the performance of all covenants and agreements of
the City contained in the Loan Agreement, the Indenture and the Bond Purchase
Agreement and all other acts and things required under the Constitution and laws
of the State of Montana to make the Loan Agreement, the Indenture, the Bond
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Purchase Agreement and the Bonds valid and binding special, limited obligations of
the City in accordance with their terms, are authorized by the Act.
(c) The Refunding, the undertaking of the Project and the issuance of the
Bonds to finance a portion of the costs thereof are in the public interest.
(d) it is desirable that the Bonds be issued by the City upon the terms set
forth in this resolution and the Indenture, under the provisions of which certain of
the City`s interests in the Loan Agreement and its interests in all loan repayments
thereunder will be assigned and pledged to the Trustee as security for the payment
of principal of, interest and redemption premiums on the Bonds.
(e) The loan repayments and other amounts to be paid by the Corporation
under the Loan Agreement are calculated to be sufficient: (1) to pay the total
principal of, premium, if any, and interest on the Bonds when due, (2) to pay the
taxes on the Facilities, if any, which Facilities during the term of the Loan
Agreement are to be subject to taxation to the same extent, in the same manner, and
under the same procedures as privately owned property in similar circumstances,
and (3) to pay all other costs and expenses of the City in connection with the
Facilities and the issuance of the Bonds; and the Loan Agreement also provides that
the Corporation is required to pay or cause to be paid all expenses of maintenance of
the Facilities, including, but without limitation, adequate insurance thereon and
insurance against all liability for injury to persons or property arising from the
operation thereof, and special assessments levied upon or with respect to the
Facilities and payable during the term of the Loan Agreement.
(f) Based on representations of the Underwriters, no reserves are deemed
advisable in connection with the Facilities or the Bonds, except for the Reserve
Fund to be established under the Indenture.
(g) Under the provisions of Montana Code Annotated, Sections 90-5-103
and 90-5-105, and as provided in the Loan Agreement, the Indenture and the Bonds,
the Bonds are special, limited obligations of the City payable solely from loan -
repayments made by the Corporation (except to the extent payable from proceeds of
the Bonds or amounts realized from enforcement of the Trust Indenture) and do
not constitute a pecuniary liability of the City or a charge against its general credit or
taxing powers.
Section 3. Authorization an AV12roval of the Loan Agreement the
Indenture. the Bond Purchase Agreement. the Trust Indenture and the Continuing
Disclosure Agreement. The City is hereby authorized to finance the Refunding and
a portion of the costs of the Project and to pledge and assign the Loan Agreement
and the loan repayments due thereunder, all as provided in the Loan Agreement
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and the Indenture. It is acknowledged that the purchase price of the Bonds, the
principal amount of the Bonds, the maturity schedule of the Bonds, the provisions
for redemption of the Bonds and the interest rates on the Bonds have not been
determined as of the date of adoption of this resolution and are not reflected in the
Indenture, the Loan Agreement, the Trust Indenture or the Bond Purchase
Agreement. The Mayor or the City Manager is hereby authorized to approve: (1)
the purchase price of the Bonds; provided that the Underwriters` discount from the
principal amount of the Bonds does not exceed 1.80% of the principal amount of the
Bonds; (2) the principal amount of the Bonds; provided that such principal amount
does not exceed $8,500,000; (3) the maturity schedule of the Bonds; provided that the
Bonds mature at any time or times in such amount or amounts no later than
October 1, 2017; (4) the provisions for redemption of the Bonds; and (5) the interest
rates of the Bonds; provided that average interest rate on the Bonds shall not exceed
6.50% per annum. The approval of such officer of the terms of the Bonds shall be
conclusively presumed by the execution of the Bond Purchase Agreement by
authorized officers of the City.
The forms of the Loan Agreement, the Indenture, Trust Indenture, the
Continuing Disclosure Agreement, the Bond Purchase Agreement and the Bonds
referred to in Section 1.04 are hereby approved, subject to such modifications as are
deemed appropriate and approved by the City Attorney and the Mayor, which
approval shall be conclusively evidenced by execution of the Loan Agreement, the
Indenture and the Bond Purchase Agreement by the officers of the City authorized
to sign such documents. The Loan Agreement as so approved is directed to be
executed in the name and on behalf of the City by the Mayor, the City Manager and
the Finance Director and delivered to the Trustee upon execution thereof by the
Corporation. The Indenture as so approved is directed to be executed in the name
and on behalf of the City by the Mayor, the City Manager and the Finance Director
and delivered to the Trustee. The Bond Purchase Agreement as so approved is
directed to be executed in the name and on behalf of the City by the Mayor, City
Manager and the Finance Director following the execution thereof by the
Corporation and the Underwriters. Copies of all the documents shall be delivered,
filed or recorded as provided therein. The Mayor, the City Manager and the Finance
Director are also authorized and directed to execute such other instruments as may
be required to give effect to the transactions herein contemplated.
Section 4. Preliminary Official Statement. The City hereby consents to the
use of the Preliminary Official Statement by the Underwriters in connection with
the offer and sale of the Bonds to potential investors, and consents to the
preparation and use of a final Official Statement, in substantially the form of the
Preliminary Official Statement; provided, however, that the City has not reviewed
the Preliminary Official Statement and takes no responsibility for, and makes no
representations or warranties as to the accuracy or completeness of the information
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contained therein, or in the final Official Statement. The Finance Director is hereby
authorized and directed to determine that the Preliminary Official Statement is
deemed "final" as of its date for purposes of SEC Rule 15c2-12.
Section 5. The Bonds: Terms an�Execution.
5.01. In anticipation of the receipt of the loan repayments from the
Corporation, the City shall proceed forthwith to issue its Bonds, dated, as originally
issued, as of September 15, 1997, in the aggregate principal amount approved by the
Mayor or the City Manager, in the form and upon the terms set forth in the
Indenture and this resolution.
5.02. The Mayor, the City Manager and the Finance Director are authorized
and directed to prepare and execute the Bonds as prescribed herein and in the
Indenture and to deliver them to the Trustee, together with a certified copy of this
resolution, the other documents required in the Indenture, and such other
certificates, documents and instruments as may be appropriate to effect the
transactions herein contemplated.
Section b. Modifications. Absence of Officers. The approval hereby given to
the various documents referred to above includes an approval of such
modifications thereto, deletions therefrom and additions thereto as may be
necessary and appropriate and approved by the Mayor or the City Manager and the
City Attorney. The execution of any instrument by the appropriate officer or officers
of the City herein authorized shall be conclusive evidence of the approval of such
documents in accordance with the terms hereof. In the absence or disability of the
Mayor, the City Manager or the Finance Director, the documents may be executed by
such officers of the City who, in the opinion of the City Attorney, may execute such
documents.
Section 7.-Authentication of Proceedings. The Mayor, the City Manager, the
Finance Director and the Clerk of Councl and other officers of the City are
authorized and directed to furnish to the Trustee, the Underwriters and 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 and marketability 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 of fact contained therein.
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Section 8. Tax Matters.
8.1. The City recognizes the obligation to comply with the provisions of
Section 148(f) of .the Internal Revenue Code of 1986, as amended (the "Code"),
relating to the rebate of certain amounts to the United States, and has caused the
Corporation to covenant in the Loan Agreement that it will take or refrain from any
actions, the result of which would be to cause the interest on the Bonds to become
includable in gross income for purposes of federal income taxation as a result of the
failure to comply with Section 148(f) of the Code and applicable Treasury
Regulations. The City, by the Loan Agreement, has obligated the Corporation to
take all actions necessary to comply with the rebate requirement, including making
or causing to be made the computations of rebate or penalty amounts and paying the
costs of computing any such rebate or penalty amounts.
8.2. Pursuant to Section 265(b)(3)(B)(i)(Hl) of the Code, the City hereby
designates the Bonds as "qualified tax-exempt obligations" for purposes of Section
265(b)(3) of the Code. The City has not designated any obligations in 1997 other than
the Bonds under Section 265(b)(3) and no subordinate entity has designated any such
bonds. The City hereby represents that it does not anticipate that obligations bearing
interest not includable in gross income for purposes of federal income taxation
under Section 103 of the Code (including refunding obligations as provided in
Section 265(b)(3) of the Code and including "qualified 501(c)(3) bonds" but excluding
other "private activity bonds," as defined in Sections 141(a) and 145(a) of the Code)
will be issued by or on behalf of the City and all "subordinate entities" of the City in
1997 in an amount greater than $10,000,000.
8.3. The Mayor, the City Manager and the Finance Director, being the
officers of the City charged with the responsibility for issuing the Bonds pursuant to
this resolution, are authorized and directed to execute and deliver to the
Underwriters a certificate, based on representations to be made by the Corporation,
in accordance with the provisions of Section 148 of the Code, and Section 1.148-2(b)
of the Regulations, stating that on the basis of facts, estimates and circumstances in
existence on the date of issue and delivery of the Bonds, it is reasonably expected -
that the proceeds of the Bonds will be used in a manner that would not cause the
Bonds to be "arbitrage bonds" within the meaning of Section 148 of the Code and the
Regulations.
Section 9. Effective Date. This resolution shall become effective
immediately upon its passage and approval.
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PASSED
AND APPROVED by the City Council of the City of Kalispell,
Montana, on this 15Lhday of September, 1997.
Attest:
Finance Director
(SEAL)
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