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STAFF REPORT

TO: Mayor Keis and Members of City Council

FROM: Brenda Malinowski, Finance Director

Chris Heineman, City Administrator

DATE: April 8, 2020

RE: Call Public Hearing on the Issuance of Conduit Debt for Presbyterian Homes ACTION REQUESTED:

Approve the resolution to call for the Public Hearing for the issuance and sale of Senior Housing and Health Care Facilities Revenue Bonds (Langton Shores Project), Series 2020.

BACKGROUND:

The City was approached by a representative of Presbyterian Homes to inquire if the City of Little of Canada would provide conduit financing to construct Langton Place, Phase 2 located in

Roseville. This phase of the Langton Place project will include the construction of a town center and adjacent 80-unit senior housing facility. Our bond attorney, from Taft Stettinius & Hollister LLP (formerly Briggs & Morgan) has included a memo outlining the project.

The City acted a conduit issuer for Presbyterian Homes most recently in 2014 and 2018. The 2018 bonds will be refinanced with this 2020 issue. Therefore, there has been a request by Presbyterian Homes to reduce the issuer fee that the City will receive by the 2018 issuer fee ($29,000). In the recent past, the City has collected .25% issuer fee, based on the par amount of the bonds. If the bonds are issued for $47,000,000, the City would collect $88,500 (117,500-29,000). In the past, these issuer fees have been placed in the EDA Fund.

Minnesota cities have a $10 million annual bank qualified limit that can be utilized for issuing bonds. The same limit would apply to any tax-exempt financing that the City may undertake, including this issue. The City has not utilized any of its annual bank qualified limit in 2020. Given that Little Canada does not usually issue debt and that we have $10 million of Bank Qualified Debt still available, staff feels that is a good opportunity to generate some additional revenue with minimal risk and recommends approval of this resolution.

Staff has contacted the City of Roseville to verify that their City is not interested in acting as the conduit of this debt. They are not interested in acting at the conduit of this debt.

Given the country’s current public health crisis, the attached resolution has been drafted with

flexibility for setting the public hearing date and to allow for it to be other means, such as by mail or email.

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STAFF RECOMMENDATION:

Approve the resolution to call for the Public Hearing for the issuance and sale of Senior Housing and Health Care Facilities Revenue Bonds (Langton Shores Project), Series 2020.

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12492647v1

Taft Stettinius & Hollister LLP

Chicago / Cincinnati / Cleveland / Columbus / Dayton / Delaware / Denver / Indianapolis / Minneapolis / Northern Kentucky / Phoenix

MEMORANDUM BY EMAIL

TO: Chris Heineman, City of Little Canada City Administrator

FROM: Catherine J. Courtney

DATE: March 31, 2020

RE: Request from Presbyterian Homes for the City to Act as Conduit Issuer

for Phase II of Langton Place

The City of Little Canada previously received a request from Presbyterian Homes (the “Borrower”) that the City act as the conduit issuer for two bond issuances – one in 2018 and one originally anticipated to be in 2019 – for a project located in the City of Roseville. In 2018, the City issued the first series of bonds in a principal amount of $11,970,000 and the proceeds were used to demolish the Langton Place care center in Roseville and construct a new 50-bed care center in its place. Presbyterian Homes is ready to proceed with Phase II of the project, which will require bonds to be issued in an amount not to exceed $50,000,000 for the purpose of refinancing the 2018 issue and to construct a town center and adjacent 80-unit senior housing facility. This expanded Langton Place campus is located on County Road D in Roseville. The new facility will be known as Langton Shores. (The new care center has been completed and residents have been moved into it. The old care center has not yet been demolished as, for the time being, Presbyterian Homes is offering it as overflow space for hospitals for the current health crisis.)

The issuance of the 2020 Bonds would mean that the issuer could not issue its own bank-qualified bonds (although it could still issue non-bank-bank-qualified bonds). As Little Canada was the issuer in 2018, Presbyterian Homes prefers that it also act as the issuer for the 2020 Bonds. Although Roseville does not expect to issue bonds for its own purposes in 2020 that it wants to designate as bank-qualified and, therefore, could act as the conduit issuer in this transaction, it is willing to give host approval and allow Little Canada to again act as issuer.

It is my understanding that the City has not issued any governmental or other 501(c)(3) bonds in 2020 and that the City currently does not have plans to issue any such bonds in 2020, although it could issue bonds that do not necessitate designation as bank-qualified.

In addition to the 2018 transaction, the City has acted as conduit issuer for the Borrower in other transactions in the past. Most recently in 2014.

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March 31, 2020 Page 2

The City would receive an issuer’s fee of ¼ of 1% of that portion of the 2020 Bonds that represents the construction of Phase II. Based on a $50,000,000 par amount (current expectation is that it would be between $47,000,000 and $49,000,000), that works out to approximately $38,000,000, for a total of approximately $87,500 to $95,000. The City previously received a fee for the issuance of the 2018 Bonds.

The 2020 Bonds are currently anticipated to be issued in early June.

The Bonds, as issued, shall not constitute a charge, lien, or encumbrance, legal or equitable, upon any property or funds of the City except the revenues and proceeds pledged to the payment thereof, nor shall the City be subject to any liability thereon. The holders of the Bonds shall never have the right to compel any exercise of the taxing power of the City to pay the outstanding principal on the Bonds or the interest thereon, or to enforce payment thereof against any property of the City. The Bonds will recite in substance that the Bonds, including interest thereon, are payable solely from the revenue and proceeds pledged to the payment thereof. The Bonds shall not constitute a debt of the City within the meaning of any constitutional or statutory limitation.

Taft Stettinius & Hollister LLP (formerly known as Briggs and Morgan) will act as the City’s bond counsel and Northland Securities will act as the underwriter.

I have provided to you a resolution to be considered at the City’s Council meeting on April 8th, which grants authority to the City Administrator to set the date for the necessary public

hearing. We anticipate that public hearing and the final approving resolution would occur at the City’s May 13th meeting. Given the country’s current public health crisis, I have drafted the resolution to provide for flexibility is setting that public hearing date and to allow for it to be held electronically or telephonically.

Following adoption of the resolution on April 8th, we will take care of submission of the public hearing notice to the St. Paul Pioneer Press and will provide you with a copy of the housing program that will be maintained on file for inspection by the public. If City Hall is closed, the housing program may need to be made available by other means, such as by mail or email upon request or posting it on the City’s website.

Please feel free to contact me if you have additional questions or comments. I can be reached at 612-977-8765 or ccourtney@taftlaw.com.

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12378325v2

Extract of Minutes of a Meeting of the City Council of the

City of Little Canada, Minnesota

Pursuant to due call and notice thereof, a regular or special meeting of the City Council of the City of Little Canada, Minnesota, was duly held at the City Hall in such City on Wednesday, the 8th day of April, 2020 at 7:30 o'clock p.m.

The following Council members were present:

and the following Council members were absent:

Member _____________ introduced the following resolution and moved its adoption: RESOLUTION NO. ____________

RESOLUTION CALLING FOR A PUBLIC HEARING

ON THE PROPOSAL OF A HOUSING PROGRAM FOR, AND THE ISSUANCE OF, SENIOR HOUSING AND HEALTH CARE FACILITIES REVENUE BONDS

(LANGTON SHORES PROJECT) SERIES 2020

PURSUANT TO MINNESOTA STATUTES, CHAPTER 462C,

AND AUTHORIZING THE PUBLICATION OF A NOTICE OF THE HEARING

WHEREAS, Minnesota Statutes, Chapter 462C (the "Act") confers upon cities the power to issue revenue bonds to finance or refinance a program for the purposes of planning, administering, making, or purchasing loans with respect to one or more multifamily housing developments within the boundaries of a city; and

WHEREAS, the City Council of the City of Little Canada, Minnesota (the "City"), has received a request from Presbyterian Homes Care Centers, Inc., a Minnesota nonprofit corporation (the "Company"), that the City issue revenue obligations, pursuant to the Act in one or more series of taxable or tax-exempt, short or long term obligations, in an amount not to exceed $50,000,000 (the "Bonds") to (i) finance, in part, the acquisition, construction, and equipping of an approximately 83-unit independent living senior housing facility (the "2020 Project"); (ii) refinance the acquisition, construction, and equipping of a 50-unit replacement skilled nursing facility (the "2018 Project") located, with the 2020 Project, at 1910 County Road D, in the City of Roseville, Minnesota (collectively, the "Facility") by refunding and prepaying the City of Little Canada, Minnesota $11,970,000 Health Care Facilities Revenue Note (Langton Place Project) Series 2018 (the "Prior Note"); (iii) fund capitalized interest on the Bonds; (iv) fund required reserve funds; and (v) pay all or a portion of the costs of issuance (collectively, the "Project"); and

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12378325v2

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WHEREAS, before proceeding with consideration of the request of the Company, it is necessary for the City to hold a public hearing on the proposal pursuant to the Act and Section 147(f) of the Internal Revenue Code of 1986, as amended;

NOW THEREFORE, BE IT RESOLVED by the City Council of the City of Little Canada, Minnesota, as follows:

1. A public hearing on the proposal of the Company will be held at the time and place as determined by the City Administrator, which shall be set forth in the Notice of Public Hearing substantially in the form attached hereto as Exhibit A (the "Notice").

2. The general nature of the proposal and an estimate of the principal amount of obligations to be issued to finance the proposal are described in the Notice.

3. The City staff is hereby authorized and directed to cause notice of the hearing to be given one publication in the official newspaper of the City and also in a newspaper of general circulation available in the City, not less than 15 days nor more than 30 days prior to the date fixed for the hearing, substantially in the form of the attached Notice.

4. Subject to final approval of the Project by the City and in anticipation of the approval by all necessary entities of the housing program, the Project, and the issuance of the Bonds to finance all or a portion of the Project, and in order that completion of the Project will not be unduly delayed when approved, the Borrower is hereby authorized to make such expenditures and advances toward payment of that portion of the costs of the Project to be financed from the proceeds of the Bonds, as the Borrower considers necessary, including the use of interim, short term financing, subject to reimbursement from the proceeds of the Bonds, if any, when delivered but otherwise without liability on the part of the City.

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12378325v2

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Adopted by the City Council of the City of Little Canada, Minnesota, this ______ day of ____________, 2020. _________________________________ Mayor ATTEST: ______________________________ City Administrator

The motion for the adoption of the foregoing resolution was duly seconded by member ____________________, and after full discussion thereof and upon vote being taken thereon, the following voted in favor thereof:

and the following voted against the same:

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12378325v2

A-1 EXHIBIT A

NOTICE OF PUBLIC HEARING ON A PROPOSAL OF A HOUSING PROGRAM FOR, AND THE ISSUANCE OF, REVENUE BONDS FOR A SENIOR HOUSING AND HEALTH

CARE PROJECT (LANGTON SHORES PROJECT)

Notice is hereby given that the City Council of the City of Little Canada, Minnesota (the "City") will meet at the City Hall, 515 Little Canada Road E, in the City, at ______ p.m. on ____________, ____________, 2020 to consider the proposal of Presbyterian Homes Care Centers, Inc., a Minnesota nonprofit corporation (the "Borrower"), that the City adopt a housing program to finance, in part, a project hereinafter described pursuant to Minnesota Statutes, Chapter 462C, by the issuance of revenue bonds or other obligations (the "Bonds").

The proceeds of the Bonds will be used to (i) finance, in part, the acquisition, construction, and equipping of an approximately 83-unit independent living senior housing facility (the "2020 Project"); (ii) refinance the acquisition, construction, and equipping of a 50-unit replacement skilled nursing facility (the "2018 Project") located, with the 2020 Project, at 1910 County Road D, in the City of Roseville, Minnesota (collectively, the "Facility") by refunding and prepaying the City of Little Canada, Minnesota $11,970,000 Health Care Facilities Revenue Note (Langton Place Project) Series 2018 (the "Prior Note"); (iii) capitalized interest on the Bonds; (iv) fund required reserve funds; and (v) pay all or a portion of the costs of issuance (collectively, the "Project"). Remaining proceeds of the Prior Note may also be used for the 2020 Project. The Facility is and will be owned and operated by the Borrower.

The aggregate estimated principal amount of the Bonds to finance and refinance the Project and related costs will be an amount not to exceed $50,000,000.

Said Bonds, as and when issued, will not constitute a charge, lien, or encumbrance upon any property of the City except the Facility and the revenues to be derived from the Project. Such Bonds will not be a charge against the City's general credit or taxing powers but are payable from sums to be paid by the Borrower pursuant to a revenue agreement.

A draft copy of the proposed housing finance program is available for inspection at City Hall during normal business hours.

At the time and place fixed for the public hearing, the City Council of the City will give all persons who appear at the hearing an opportunity to express their views with respect to the proposal for the housing program and the Bonds. Written comments will be considered if submitted to the City Administrator at the above City office on or before the date of the hearing.

[PLEASE NOTE: Due to COVID-19, the public hearing will be conducted via telephone or other electronic means as allowed under Minnesota Statutes, Section 13D.021. Please refer to the City of Little Canada's website at www.littlecanadamn.org or call City Hall at 651-766-4029 to learn how to attend the public hearing via telephone or electronically.]

By:

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12378325v2

STATE OF MINNESOTA COUNTY OF RAMSEY CITY OF LITTLE CANADA

I, the undersigned, being the duly qualified and acting City Administrator of the City of Little Canada, Minnesota, DO HEREBY CERTIFY that I have compared the attached and foregoing extract of minutes with the original thereof on file in my office, and that the same is a full, true and complete transcript of the minutes of a meeting of the City Council of said City duly called and held on the date therein indicated, insofar as such minutes relate to calling for a public hearing on the Langton Shores Project.

WITNESS my hand and the seal of said City this _____ day of ____________, 2020.

_______________________________________ City Administrator

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