ADMINISTRATION - Joe Huss, Finance Director
Title
PRELIMINARY APPROVAL TO ISSUE HOUSING FACILITY REVENUE BONDS RELATING TO CREST VIEW SENIOR HOUSING PROJECT
Background
On January 8, 2015, the City Council approved a proposal from Crest View Sr. Housing Community at Blaine, LLC to issue up to $40 million in conduit revenue bonds pursuant to IRS regulations and State of Minnesota statutes, chapter 462C. The bond proceeds are to be used to finance the construction of a senior facility consisting of 24 memory care units, 51 assisted living units and 66 independent living units in a PBD (Planned Business District) Zoning District at the southwest corner of Ulysses Street and Paul Parkway.
Crest View is now requesting authorization to increase the bond issue to $64,900,000 in order to both refinance existing debt on a facility in Columbia Heights as well as to finance the Blaine project, with approximately $24,900,000 being issued for the refunding of the existing debt and up to $40 million in Multifamily Housing Revenue Bonds to fund the Blaine project. The bonds issued by the City are commonly referred to as Conduit Debt Bonds and would not constitute a charge, lien, or encumbrance upon any property of the City, and would be repaid only with the revenues derived from the project itself. As such, the bonds are not considered an obligation of the City, and would not be a charge against the City's general credit or taxing powers. The bonds would be issued pursuant to IRS regulations and State of Minnesota statutes, chapter 462C, and would affect neither the City's credit rating, nor the City's debt limit.
As part of the process and contingent on Council approval, a public hearing providing for the issuance of the debt will be scheduled for the May 7, 2015 Council Meeting at 8:00 p.m. In conjunction with that public hearing, Crestview has asked that the City declare its intent to issue up to $64,900,000 in bonds to fund both the construction of the new facility in Blaine as well as refinance current debt that was used to finance its Columbia Heights facility. The following resolution provides for that.
Schedule of Actions
April 16, 2015 - Adopt resolution declaring intent to issue conduit revenue bonds
May 7, 2015 - Conduct public hearing and adopt resolution providing for bond issuance
Recommendation
Adopt the following resolution.
Body
BE IT RESOLVED by the City Council of the City of Blaine, Minnesota (the "City"), as follows:
Section 1. Recitals.
1.01. The City is a home rule charter city duly organized and existing under the Constitution and laws of the State of Minnesota and its charter.
1.02. Pursuant to Minnesota Statutes, Chapter 462C, as amended (the "Act"), the City is authorized to carry out the public purposes described in the Act by providing for the issuance of revenue bonds to provide funds to finance or refinance multifamily housing developments located within the City.
1.03. Crest View Senior Community at Blaine LLC, a Colorado limited liability company (the "Company"), whose sole member is Crest View Corporation, a Minnesota nonprofit corporation (the "Sole Member" and, together with the Company, the "Borrower"), has proposed that the City, pursuant to the Act, issue its revenue bonds in an aggregate principal amount not to exceed $64,900,000, in one or more series at one time (the "Bonds"), the proceeds of which will be loaned by the City to the Borrower to be applied by the Borrower to (i) finance the acquisition, construction, and equipping, by the Company, of an approximately 152-unit multifamily senior rental housing facility, consisting of 66 senior independent living units, 51 assisted living units, 11 enhanced assisted living units and 24 memory care units and related parking and public improvements to be located at 12016 Ulysses St. NE in the City (the "Blaine Facilities"); (ii) refinance the Sole Member's facilities consisting of Royce Place, a 50-unit assisted living facility located at 1575 44th Ave. NE, The Boulevard, a 74-unit senior housing facility located at 4458 Reservoir Blvd. NE, Crest View Lutheran Home, a 122-unit licensed nursing facility located at 4444 Reservoir Boulevard, and Crest View on 42nd, a 50-unit assisted living and memory care facility located at 900 - 42nd Avenue NE in the City of Columbia Heights, Minnesota ("Columbia Heights") which were previously financed with the proceeds of the Multifamily and Health Care Facilities Revenue Refunding Bonds (Crest View Corporation Projects), Series 2007A (the "2007 Bonds"), issued by Columbia Heights (the "Columbia Heights Facilities" and, together with the Blaine Facilities, the "Facilities"); (iii) fund necessary reserve funds; (iv) fund capitalized interest and certain working capital expenses; and (v) and pay a portion of the costs of issuance related to the Bonds (collectively, the "Project"). The Blaine Facilities will be owned and operated by the Company and the Columbia Heights Facilities will be owned and operated by the Sole Member.
1.04. On January 8, 2015, in accordance with the Act, the City held a public hearing and adopted a housing program with respect to financing the Blaine Facilities (the "Housing Program"). In addition, a public hearing must be held in accordance with the requirements of Section 147(f) of the Internal Revenue Code of 1986, as amended (the "Code"), with respect to refunding the 2007 Bonds and refinancing the Columbia Heights Facilities.
Section 2. Preliminary Findings. Based on representations made by the Borrower to the City to date, the City Council of the City hereby makes the following preliminary findings, determinations, and declarations:
(a) The Facilities consists of multifamily senior rental housing facilities designed and intended to be used for rental occupancy by seniors.
(b) The proceeds of the Bonds will be loaned to the Borrower and the proceeds of the loan will be applied as described in Section 1.03. The City will enter into a loan agreement (or other revenue agreement) with the Borrower requiring loan repayments from the Borrower in amounts sufficient to repay the loan when due and requiring the Borrower to pay all costs of maintaining and insuring the Facilities, including taxes thereon.
(c) In preliminarily authorizing the issuance of the Bonds and the financing or refinancing of the acquisition, construction, and equipping of the Facilities and related costs, the City's purpose is to further the policies of the Act.
(d) The Bonds will be special, limited obligations of the City payable solely from the revenues pledged to the payment thereof, and will not be a general or moral obligation of the City and will not be secured by or payable from revenues derived from any exercise of the taxing powers of the City.
Section 4. Public Hearing. The City will conduct a public hearing on Thursday, May 7, 2015 or such other date as determined by the City Manager or the Finance Director as provided below, on the Project, and the issuance of the Bonds by the City. Notice of which hearing (the "Public Notice") will be published as required by Minnesota Statutes, Section 462C.04, subdivision 2, of the Act and Section 147(f) of the Internal Revenue Code of 1986, as amended. The City Manager or the Finance Director is hereby authorized to establish an alternative date for the public hearing, if necessary, and to cause the publication of the Public Notice in accordance with applicable law. At the public hearing reasonable opportunity will be provided for interested individuals to express their views, both orally and in writing, on the Project and the proposed issuance of such revenue obligations.
Section 6. Preliminary Approval. The City Council hereby provides preliminary approval to the issuance of the Bonds in an approximate aggregate principal amount not to exceed $64,900,000 to finance or refinance all or a portion of the costs of the Project pursuant to the Housing Program of the City, subject to: (i) a public hearing as required by the Act and Section 147(f) of the Code; (ii) final approval following the preparation of bond documents; and (iii) final determination by the City Council that the financing of the Project and the issuance of the Bonds are in the best interests of the City.
Section 7. Costs. The Borrower will pay the administrative fees of the City and pay, or, upon demand, reimburse the City for payment of, any and all costs incurred by the City in connection with the Project and the issuance of the Bonds, 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 Borrower. If, as a result of information made available to or obtained by the City during its review of the Project, it appears that the Project or the issuance of Bonds to finance or refinance the costs thereof is not in the public interest or is inconsistent with the purposes of the Act, the City reserves the right to decline 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 City 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 be in full force and effect from and after its passage.
PASSED by the Blaine City Council on April 16, 2015.