ADDENDUM AGENDA REGULAR CITY COUNCIL MEETING New Ulm, Minnesota City Hall Council Chambers May 20, 2014 5: 00 P. M. Motion to suspend the rules for action on the addendum. NEW BUSINESS: a. Consider resolution to set a public hearing date for a financing program and the issuance of Housing Facility Revenue bonds by the Economic Development Authority of the City of New Ulm, Minnesota in an aggregate principal amount not to exceed $ 11, 500, 000, at the request of HADC Ridgeway.
City of New Ulm Request for Council Action Meeting Date: May 20, 2014 Agenda Item Number: 1 a Addendum Agenda Section: New Business Originating Department: Administration Resolution: Ordinance: YES NO Prepared By: City Manager Number of Attachments: One ( 1) Presented By: City Manager Item ' Consider resolution to set a public hearing date for a financing program and the issuance of Housing Facility Revenue bonds by the Economic Development Authority of the City of New Ulm, Minnesota in an aggregate principal amount not to exceed $ 11, 500, 000, at the request of 1 ADC Ridgeway. City Manager' s Proposed Action: Moved by Second by to offer the resolution and waive the reading to set a public hearing date for purposes of issuing Housing Facility Revenue bonds by the Economic Development Authority of the City ofnew Ulm, Minnesota in an aggregate principal amount not to exceed $ 11, 500, 000, at the request of HADC Ridgeway for Tuesday, June 17, 2014 at 5: 00 p.m. in the New Ulm City Council Chambers, City Hall, 100 North Broadway, New Ulm, MN. Board /Commission Recommendation: The New Ulm EDA will be addressing the bond sale request on June 10, 2014. Overview: This is the same process used when HADC refinanced their projects in 2006. HADC paid the City the estimated $ 30, 000-35, 000 in additional interest cost resulting from the bank qualified sale of city bonds. Primary Issues /Alternatives to Consider: The two projects were refinanced in May of 2006 through the same process. The amount will result in " bank qualification" of City issued bonds. Whenever private revenue bonds are sold with the name of the City of New Ulm on them, should a default occur, even though the City is not responsible for repayment, our name is on the bonds. Budgetary/Fiscal Issues: This will likely result in the City bond offering later this year needing to be " bank qualified ", resulting in the potential for higher interest rates for the City of New Ulm. The City will use a financial calculation to determine what the extra cost to the City is, and HADC will be billed the additional cost amount. Attachments: Preliminary Resolution with Exhibits
Extract of Minutes of Meeting of the City Council of the City of New Ulm, Minnesota Pursuant to due call and notice thereof, a regular meeting of the City Council of the City of New Ulm, Minnesota ( the " City "), was duly held at City Hall in the City of New Ulm, Minnesota on Tuesday, May 20, 2014 at o' clock _. m. The following members of the City Council were present: and the following were absent: Councilmember introduced the following written resolution, the reading of which was waived by unanimous consent of the City Council, and moved its adoption: RESOLUTION CALLING FOR PUBLIC HEARING ON A FINANCING PROGRAM AND THE ISSUANCE OF HOUSING FACILITY REVENUE BONDS BY THE ECONOMIC DEVELOPMENT AUTHORITY OF THE CITY OF NEW ULM, MINNESOTA IN AN AGGREGATE PRINCIPAL AMOUNT NOT TO EXCEED $ 11, 500,000, AT THE REQUEST OF HADC RIDGEWAY The motion for the adoption of the foregoing resolution was duly seconded by Councilmember and upon vote being taken thereon the following voted in favor thereof: and the following abstained from voting on the same: and the following voted against the same: whereupon said resolution was declared duly passed and adopted.
Resolution No.: RESOLUTION CALLING FOR PUBLIC HEARING ON A FINANCING PROGRAM AND THE ISSUANCE OF HOUSING FACILITY REVENUE BONDS BY THE ECONOMIC DEVELOPMENT AUTHORITY OF THE CITY OF NEW ULM, MINNESOTA IN AN AGGREGATE PRINCIPAL AMOUNT NOT TO EXCEED $ 11, 500,000, AT THE REQUEST OF HADC RIDGEWAY WHEREAS, the City of New Ulm, Minnesota (the " City ") is a municipal corporation and city duly organized and existing under its charter and the laws of the State of Minnesota; and WHEREAS, the Economic Development Authority of the City of New Ulm, Minnesota the " Issuer ") issued its $ 9,260,000 Housing Facilities Revenue Refunding Bonds ( HADC Ridgeway Project), Series 2006A and its $ 280, 000 Taxable Housing Facilities Revenue Refunding Bonds ( HADC Ridgeway Project), Series 2006B both dated as of September 1, 2006 the " Series 2006 Bonds "), which were issued to refund the outstanding principal balance of the previously issued City of New Ulm, Minnesota $4, 600,000 Multifamily Housing Revenue Bonds HADC Ridgeway Project) Series 1998, the proceeds of which was used to finance the acquisition, construction and equipping of a 52 -unit assisted living rental housing facility for senior citizens known as Ridgeway on German and located at 715 South German Street in the City of New Ulm, Minnesota ( the " Ridgeway on German Project ") and to provide permanent financing for the acquisition, construction and equipping of a 58 -unit assisted living rental facility for seniors located at the intersection of 23rd Street North and Boundary Street in the City (the " Ridgeway on 23rd Project ") undertaken by the Corporation; and WHEREAS, a proposal has been made to the Issuer by HADC Ridgeway, a Minnesota nonprofit corporation and an organization described in Section 501( c)( 3) of the Internal Revenue Code of 1986, as amended ( the " Corporation "), that the Issuer ( i) currently refund the Outstanding Series 2006 Bonds to refinance the Corporation' s senior assisted living facilities, ( ii) refinance certain corporate indebtedness of the Corporation which was used to finance certain capital improvements to the Ridgeway on German Project and the Ridgeway on 23rd Project, and ( iii) provide financing for the acquisition, construction and equipping of certain capital improvements to the Corporation' s senior assisted living facilities and related properties located in the City ( the " Project ") pursuant to Minnesota Statutes, Chapter 462C and Sections 469. 090 through 469. 108, as amended (the " Act "); and WHEREAS, the Project is more particularly described in the Housing Program developed pursuant to the Act with respect thereto, a copy of which Housing Program is attached hereto as Exhibit B ( the " Housing Program "); and WHEREAS, the funds to provide financing for the Project would be obtained through the issuance by the Issuer of its housing facility revenue bonds or notes, in one or more series, in a principal amount not to exceed $ 11, 500, 000 ( the " Bonds "), which Bonds are to be repaid solely and only through payments to be made by the Corporation pursuant to a loan or similar agreement to be entered into between the Issuer and the Corporation; and
WHEREAS, the Bonds shall be a limited obligation of the Issuer, and shall not constitute nor give rise to a pecuniary liability of the Issuer or the City or a charge against its general credit or taxing powers, and the principal of, interest and premium, if any, on the Bonds shall be payable solely out of the revenues derived from the loan agreement between the Issuer and the Corporation and security provided therefor; and WHEREAS, pursuant to the Act and Section 147( f) of the Internal Revenue Code of 1986, as amended, as a condition to the issuance of the Bonds, it is necessary for the City, as the next higher governmental unit with an applicable elected representative above the Issuer, to conduct a public hearing on the issuance of the Bonds and on the Housing Program and to publish notice of said public hearing not less than 15 days prior to the date fixed for the hearing; and BE IT RESOLVED by the City Council of the City of New Ulm, Minnesota as follows: 1. A public hearing shall be conducted by the City Council on the issuance of said Bonds and on the Housing Program, such hearing to be held at a regular meeting of the City Council on June 17, 2014, beginning at o' clock _. m. at City Hall in the City of New Ulm, at which hearing all parties who appear shall be given an opportunity to express their views with respect to the issuance of the Bonds and the Housing Program. 2. Notice of such public hearing, in substantially the form attached hereto as Exhibit A, shall be published at least once not less than 15 days prior to the date fixed for the hearing, in a newspaper having a general circulation in the City of New Ulm, Minnesota. 3. Prior to publication of said notice the Corporation shall cause a copy of the Housing Program to be submitted to the Region Nine Development Commission for review and comments. 4. Any prior resolutions or orders adopted by the City Council, or parts thereof, in conflict herewith are to the extent of such conflict, hereby repealed, and this Resolution shall be in full force and effect immediately upon its adoption. Adopted on May 20, 2014 by the City Council. Attest: LZA Its Mayor City Clerk/Treasurer 2-
EXHIBIT A NOTICE OF PUBLIC HEARING ON THE ADPOPTION OF A FINANCING PROGRAM AND THE ISSUANCE OF HOUSING FACILITY REVENUE BONDS BY THE ECONOMIC DEVELOPMENT AUTHORITY OF THE CITY OF NEW ULM, MINNESOTA IN AN AGGREGATE PRINCIPAL AMOUNT NOT TO EXCEED $ 11, 500,000, AT THE REQUEST OF HADC RIDGEWAY NOTICE IS HEREBY GIVEN that a public hearing shall be conducted by the City Council of the City of New Ulm, Minnesota ( the " City ") on a proposal that the Economic Development Authority of the City of New Ulm, Minnesota ( the " Issuer ") issue its housing facility revenue bonds or notes, in an aggregate principal amount of not to exceed $ 11, 500,0000, in one or more series ( the `Bonds "), and on the related Housing Program developed pursuant to Minnesota Statutes, Chapter 462C and Sections 469. 090 through 469. 108, as amended ( the Act "), all at the request of HADC Ridgeway, a Minnesota nonprofit corporation and 501( c)( 3) organization ( the " Corporation "). The hearing will be held at City Hall, located at 100 North Broadway, New Ulm, Minnesota, at a meeting of the City Council to be held on Tuesday, June 17, 2014, beginning at o' clock. m. The proposed project to be financed by the Bonds consists of ( i) the refinancing, by a current refunding, of the current outstanding principal balance of the $ 9,260,000 Housing Facilities Revenue Refunding Bonds ( HADC Ridgeway Project), Series 2006A to refinance the Corporation' s senior assisted living facilities located at 715 South German Street in New Ulm and the intersection of 23rd Street North and Boundary Street in New Ulm ( the " Senior Assisted Living Facilities "), ( ii) refinance certain corporate indebtedness of the Corporation which was used to finance certain capital improvements to the Corporation' s Senior Assisted Living Facilities, and ( iii) provide financing for the acquisition, construction and equipping of certain capital improvements to the Corporation' s Senior Assisted Living Facilities and related properties located in the City ( the " Project ") and all as further described in the Housing Program developed pursuant to the Act with respect thereto, a copy of which is on file with the City. All of the facilities to be included in the Project are owned and operated by the Corporation. The proceeds of the Bonds will be loaned by the Issuer to the Corporation to provide financing for the Project, and the Corporation will agree to repay the loan at times and in amounts sufficient to provide for payment in full of the Bonds when due. At said time and place the City Council shall give all parties who appear an opportunity to express their views with respect to the Housing Program and the issuance of the Bonds. Written comments will be accepted at City Council until the time of hearing. Date: May 20, 2014 BY ORDER OF THE CITY COUNCIL s/ City Clerk/Treasurer A -1
EXHIBIT B HOUSING PROGRAM PURSUANT TO MINNESOTA STATUES, CHAPTER 462C HADC RIDGEWAY This Housing Program describes a multifamily housing project initiative proposed to be undertaken in the Economic Development Authority of the City of New Ulm, Minnesota ( the Issuer ") in the City of New Ulm, Minnesota ( the " City "), pursuant to Minnesota Statutes, Chapter 462C and Sections 469.090 through 469. 108, as amended ( the " Act "), at the request of HADC Ridgeway, a Minnesota nonprofit corporation and 501( c)( 3) organization ( the Corporation "), in connection with ( i) the refinancing, by a current refunding, of the current outstanding principal balance of the $ 9,260, 000 Housing Facilities Revenue Refunding Bonds HADC Ridgeway Project), Series 2006A to refinance the Corporation' s senior assisted living facilities located at 715 South German Street in the City and the intersection of 23rd Street North and Boundary Street in the City (the " Senior Assisted Living Facilities "), ( ii) refinance certain corporate indebtedness of the Corporation which was used to finance certain capital improvements to the Corporation' s Senior Assisted Living Facilities, and ( iii) provide financing for the acquisition, construction and equipping of certain capital improvements to the Corporation' s Senior Assisted Living Facilities and related properties located in the City ( the Project "). The representations herein are based entirely on representations or information provided by or on behalf of the Corporation. The facilities comprising the Project are and are to be owned and operated by the Corporation. The Corporation covenants that the Project will be operated as one or more multifamily housing developments, within the meaning of the Act; that the use of the Project will be carried out in accordance with applicable land use and Project restrictions; that the Project will be subject to applicable state and local building codes; and that the Project will be operated in accordance with state and local anti - discrimination laws and ordinances. In connection with the undertaking of the financing of the Project by the Issuer, the City has determined that the undertaking the Project by the Issuer is in the best interest of the public health, safety and welfare of the people of the City of New Ulm, Brown County, Minnesota. Section A. Program for Financing the Project. The City and the Issuer are establishing this Program to provide financing for the Project at such cost and upon such other terms and conditions as may be determined by the Issuer in accordance with the Act and other authorizing statutes. The Issuer expects to issue up to $ 11, 500,000 of Bonds in one or more series to finance the Project under the Program. The proceeds of the Bonds will be loaned by the Issuer and applied by the Corporation to finance the costs of the Project. It is anticipated that any tax - exempt Bonds issued under this Program shall have a maturity of approximately thirty -six ( 36) years or less and will bear interest at a maximum annual interest rate that is no more than 10% per annum; however, the Bonds will be priced to the market at the time of issuance. I1
Section B. Local Contributions to the Program. Other than certain tax increment financing assistance previously granted by the City to the Project, the Issuer will not make any contribution to the Project or to the Bonds. The City expects to receive certain payments from the Corporation in connection with the issuance of the Bonds. The City has entered into a development agreement with the Corporation to provide tax increment assistance to the Project. The development agreement does not provide any pledge by the City of general tax revenues to the payment of Bonds. Future tax increment revenues to be received by the Corporation under the development agreement will be included in the revenues pledged by the Corporation to secure payment of the Bonds. It is expected that a portion of the tenants will receive housing and living service assistance from the Brown County Family Services' Elderly Waiver, Alternative Care and Community Alternatives to Disabled Individuals programs. Section C. Standards and Requirements Relating to the Financing of the Project Pursuant to the Program. The following standards and requirements shall apply with respect to the operation of the Project by the City, the Issuer and the Corporation: 1) The Corporation will not arbitrarily reject an application from a proposed tenant because of race, color, creed, religion, national origin, gender, marital status, or status with regard to public assistance or disability. 2) The Project has been constructed and will be operated in accordance with applicable zoning ordinances or other applicable land use regulations, including the State Building Code as set forth under Minnesota Statutes, Section 16. 83, et Lm. 3) All of the housing units in the Project will be occupied or held for occupancy primarily by the elderly and disabled. Section D. Issuance of Bonds. To finance the Project pursuant to this Program, the City expects to issue its Bonds in one or more series in a principal amount not to exceed 11, 500,000 in the aggregate, in any calendar year, secured by the Project and other moneys pledged to the payment of such Bonds. The cost of the Project is presently expected not to exceed $ 11, 500,000. The cost of the Project may change between the date of preparation of this Program and the date of issuance of Bonds for such Project. Section E. Severability. The provisions of this Program are severable and if any of its provisions, sentences, clauses or paragraphs shall be held unconstitutional, contrary to statute, exceeding the authority of the City or the Issuer or otherwise illegal or inoperative by any court A -3
of competent jurisdiction, the decision of such court shall not affect or impair any of the remaining provisions. Section F. Amendment. Neither the City nor the Issuer shall amend this Program, while Bonds authorized hereby are outstanding, to the detriment of the holders of such Bonds. Section G. applied for with respect to the Bonds. State Ceiling. None of the state ceiling for private activity bonds will be 009355/ 202355/ 1845388_ 1 A