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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"); i -, 1 1 (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 -2- 1692 "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 W11 1.693 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 1 1694 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 -5- 169 J 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. 1 11696 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. -7- 1 1 1 169'7� I I !1 PASSED AND APPROVED by the City Council of the City of Kalispell, Montana, on this 15Lhday of September, 1997. Attest: Finance Director (SEAL) -8-