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Resolution Authorizing the Issuance of and Sale of Conduit Senior Housing and Health Care Revenue Refunding Bonds and Subordinate Senior Housing and Health Care Revenue Refunding Bonds for the Carondelet Village Project, 525 Fairview Avenue South, and Approving Related Documents District 15, Ward 3
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(a) Minnesota Statutes, Chapter 462C (the “Act”), confers upon cities, or housing and redevelopment authorities authorized by ordinance to exercise on behalf of a city the powers conferred by the Act, which include 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 combination multifamily housing and health care developments within the boundaries of the city; and
(b) CV Senior Housing, LLC a Minnesota limited liability company, (the “Borrower”) whose only member is Carondelet Village, Inc., a Minnesota nonprofit corporation (the “Sole Member”) has requested that the Housing and Redevelopment Authority of the City of Saint Paul, Minnesota (the “HRA”) issue conduit revenue bonds to (i) advance refund in whole or in part the HRA’s Senior Housing and Health Care Revenue Bonds, Series 2010A (Carondelet Village Project) (the “Series 2010A Bonds”) and current refund in whole or in part the HRA’s Subordinate Senior Housing and Health Care Revenue Bonds, Series 2010B and 2010C (Carondelet Village) (the “Prior Subordinate Bonds” and, together with the Series 2010A Bonds, the “Prior Bonds”) the proceeds of which previously financed the acquisition, construction and equipping of a combination housing and health care facility, consisting of approximately 149 independent housing units, 46 assisted living units, 19 memory care units and 45 skilled nursing care beds, (collectively, the “Project”) located at 525 Fairview Avenue South in the City of Saint Paul, Minnesota (the “City”); (ii) fund any necessary reserves and (iii) pay a portion of the costs of issuing the Series 2016 Bonds, as defined below; and
(c) A public hearing on refinancing the Project was held by the Board of Commissioners of the HRA this same date following duly published notice; and
(d) The revenue bonds will be issued in one or more series in an aggregate principal amount not to exceed $50,000,000, and will include a pledge of, among other things, revenues of the Project; and
(e) The Borrower has requested that the HRA issue its Senior Housing and Health Care Revenue Refunding Bonds (Carondelet Village Project), Series 2016A (the “Series 2016A Bonds”) pursuant to an Indenture of Trust between the HRA and Wells Fargo Bank, National Association (the “Trustee”), dated on or after November 1, 2016 (the “Indenture”); and
(f) The Borrower has requested that the HRA issue and sell its Subordinate Senior Housing and Health Care Revenue Refunding Bond (Carondelet Village Project), Series 2016B (the “Subordinate Bond” and, together with the Series 2016A Bonds, the “Series 2016 Bonds”), on a basis subordinate to the payment and security of the Series 2016A Bonds, directly to the Sisters of St. Joseph of Carondelet, St. Paul Province (the “Subordinate Lender”); and
(g) The HRA and the Borrower entered into the Development Agreement dated June 23, 2010 between the Borrower and the HRA (the “Development Agreement”) in connection with the construction of the Project related to certain tax increment assistance and the Borrower has requested that the HRA amend the Development Agreement pursuant to a First Amendment to Development Agreement, between the Borrower and the HRA, to be dated on or after November 1, 2016 (the “TIF Amendment”) to, among other things, clarify the references to the revenue bonds therein to refer to the Series 2016 Bonds, as may be further refunded; and
(h) The HRA, the Borrower, the Subordinate Lender and Piper Jaffray & Co. (the “Underwriter”) have agreed upon sufficient details of the Series 2016 Bonds to enable the HRA to adopt this bond resolution (the “Resolution”) on this date.
NOW THEREFORE BE IT RESOLVED by the Board of Commissioners of the Housing and Redevelopment Authority of the City of Saint Paul, Minnesota, as follows:
1. Proposal for Issuance of Series 2016 Bonds. For the purpose of providing funds to refinance the acquisition, construction and equipping of the Project there is hereby authorized the issuance, sale and delivery of the Series 2016 Bonds, in multiple series, in an aggregate principal amount not to exceed $50,000,000, the proceeds of which, together with funds provided by the Borrower, shall be used to refinance the Project. The Series 2016 Bonds shall be special, limited obligations of the HRA payable solely from the funds pledged therein. The Series 2016 Bonds are not to be payable from nor charged upon any funds of the HRA or the City other than the revenues pledged to their payment, nor is the HRA or the City subject to any liability thereon; no holders of the Series 2016 Bonds shall ever have the right to compel any exercise of the taxing power of the HRA or the City to pay any of the principal of, premium, if any, or interest on the Series 2016 Bonds; the Series 2016 Bonds shall not constitute a charge, lien or encumbrance, legal or equitable, upon any property of the HRA or the City, and each Series 2016 Bond shall recite that the Series 2016 Bonds, including interest thereon, are payable solely from the revenues pledged to the payment thereof and that no Series 2016 Bond shall constitute a debt of the HRA or the City within the meaning of any constitutional or statutory limitation. The Series 2016 Bonds shall contain a recital that they are issued pursuant to the Act and such recital shall be conclusive evidence of the validity and regularity of the issuance thereof.
2. Series 2016A Bond Structure. Pursuant to a Loan Agreement, to be dated on or after November 1, 2016 (the “Series 2016A Loan Agreement”) the HRA will loan the proceeds of the Series 2016A Bonds to the Borrower to refund all or a portion of the Series 2010A Bonds and a portion of the Prior Subordinate Bonds. The payments to be made by the Borrower under the Series 2016A Loan Agreement are fixed so as to produce revenue sufficient to pay the principal of, premium, if any, and interest on the Series 2016A Bonds when due. When executed, the right, title and interest of the HRA in, to and under, among other things, the Series 2016A Loan Agreement (except as therein provided) will be assigned to the Trustee pursuant to the Indenture between the HRA and the Trustee. The proceeds of the Series 2016A Bonds will be disbursed pursuant to the Series 2016A Loan Agreement, the Indenture and an Escrow Agreement between the Borrower and the Wells Fargo Bank, National Association, as escrow agent (the “Escrow Agreement”). It is further proposed that the Borrower will execute a Combination Mortgage, Security Agreement and Fixture Financing Statement and Assignment of Leases and Rents in favor of the HRA which the HRA will assign to the Trustee pursuant to an Assignment of Mortgage (the “Senior Assignment”) as security for payment of the Series 2016A Bonds (the “Series 2016A Mortgage”) and a Collateral Assignment of Development Agreement (the “TIF Assignment”) which assigns the Borrower’s interest in the Development Agreement as amended by the TIF Amendment. The Series 2016A Bonds will be purchased by the Underwriter pursuant to a Bond Purchase Agreement among the HRA, the Underwriter and the Borrower (the “Bond Purchase Agreement”). The Series 2016A Bonds shall be in denominations of at least $100,000 in such principal amounts, shall bear interest at the rates, shall be numbered, shall be dated, shall mature, shall be subject to redemption prior to maturity, and shall be in such form and have such other details and provisions as may be prescribed in the Indenture, as executed in accordance with this Resolution; provided that the average coupon on the Series 2016A Bond shall not exceed 5.25% per annum. In accordance with the policy of the HRA, the initial purchasers of the Series 2016A Bonds will be required to execute and deliver an investor letter to the HRA, confirming that each initial purchaser of the Series 2016A Bonds is either (a) a “qualified institutional buyer” as defined in Rule 144A promulgated under the Securities Act of 1933, as amended (the “1933 Act”), that purchases for its own account or for the account of a qualified institutional buyer, or (b) an “accredited investor” as defined in Regulation D promulgated under the 1933 Act, that purchases for its own account and without registration under state or other securities laws, pursuant to an exemption for such issuance.
3. Subordinate Bond Structure. Pursuant to a Loan Agreement, to be dated on or after November 1, 2016 (the “Subordinate Loan Agreement”) the HRA will loan the proceeds of the Subordinate Bond to the Borrower to refund all or a portion of the outstanding principal balance of the Prior Subordinate Bonds. The payments to be made by the Borrower under the Subordinate Loan Agreement are fixed so as to produce revenue sufficient to pay the principal of, premium, if any, and interest on the Subordinate Bond when due. When executed, the right, title and interest of the HRA in, to and under, among other things, the Subordinate Loan Agreement (except as therein provided) will be assigned to the Subordinate Lender pursuant to a Pledge Agreement between the HRA and the Subordinate Lender (the “Pledge Agreement”). It is further proposed that the Borrower will execute a Subordinate Combination Mortgage, Security Agreement and Fixture Financing Statement and Assignment of Leases and Rents in favor of the HRA which the HRA will assign to the Subordinate Lender pursuant to an Assignment of Mortgage (the “Subordinate Assignment”) as security for payment of the Subordinate Bond (the “Subordinate Mortgage”). The Subordinate Bond will be paid and secured on a basis subordinate to the Series 2016A Bonds pursuant to a Subordination Agreement among the Borrower, the Trustee and the Subordinate Lender (the “Subordination Agreement”). The Subordinate Bond will be purchased by the Subordinate Lender who will be required to certify that it is an “accredited investor” as defined in Regulation D promulgated under the 1933 Act, that is purchasing the Subordinate Bond for its own account and without registration under state or other securities laws. The Subordinate Bond shall be issued in a single denomination equal to the entire principal amount thereof and shall be in such principal amount, shall bear interest at the rate, shall be numbered, shall be dated, shall mature, shall be subject to redemption prior to maturity, and shall be in such form and have such other details and provisions as may be set forth therein, the form of which is on file with the Executive Director of the HRA.
4. Additional Provisions Relating to Subordinate Bond.
(a) Registration of Transfer. The HRA will cause to be kept at the office of the Executive Director of the HRA a Subordinate Bond Register in which, subject to such reasonable regulations as it may prescribe, the HRA shall provide for the registration of transfers of ownership of the Subordinate Bond. The Subordinate Bond shall be initially registered in the name of the Subordinate Lender and shall be transferable upon the Subordinate Bond Register by the Subordinate Lender in person or by its agent duly authorized in writing, upon surrender of the Subordinate Bond together with a written instrument of transfer satisfactory to the Executive Director of the HRA, duly executed by the Lender or its duly authorized agent. The HRA may require, as a precondition to any transfer, that the transferee provide to the HRA an investor letter in a form satisfactory to the HRA and other evidence satisfactory to the HRA that the transferee is a financial institution or other accredited investor under the securities laws. The following form of assignment shall be sufficient for purposes of assigning the Subordinate Bond.
For value received ___________ hereby sells, assigns and transfers unto ________________ the attached Bond of the Housing and Redevelopment Authority of the City of Saint Paul, Minnesota, and does hereby irrevocably constitute and appoint ___________________ attorney to transfer said Bond on the books of said HRA with full power of substitution in the premises. The undersigned certifies that the transfer is made in accordance with the provisions of Section 4(d) of the Resolution authorizing the issuance of the Bond.
Dated:
Registered Owner
Upon such transfer the Executive Director of the HRA shall note the date of registration and the name and address of the new Subordinate Lender in the Subordinate Bond Register and in the registration blank appearing on the Subordinate Bond.
(b) Mutilated, Lost or Destroyed Subordinate Bond. In case the Subordinate Bond issued hereunder shall become mutilated or be destroyed or lost, the HRA shall, if not then prohibited by law, cause to be executed and delivered, a new Subordinate Bond of like outstanding principal amount, number and tenor in exchange and substitution for and upon cancellation of such mutilated Subordinate Bond, or in lieu of and in substitution for such Subordinate Bond destroyed or lost, upon the Subordinate Lender’s paying the reasonable expenses and charges of the HRA in connection therewith, and in the case of a Subordinate Bond destroyed or lost, the filing with the HRA of evidence satisfactory to the HRA with indemnity satisfactory to it. If the mutilated, destroyed or lost Subordinate Bond has already matured or been called for redemption in accordance with its terms it shall not be necessary to issue a new Subordinate Bond prior to payment.
(c) Ownership of Subordinate Bond. The HRA may deem and treat the person in whose name the Subordinate Bond is last registered in the Subordinate Bond Register and by notation on the Subordinate Bond whether or not such Subordinate Bond shall be overdue, as the absolute owner of such Subordinate Bond for the purpose of receiving payment of or on account of the principal thereof, redemption price or interest and for all other purposes whatsoever, and the HRA shall not be affected by any notice to the contrary.
(d) Limitation on Subordinate Bond Transfers. The Subordinate Bond will be issued to either (a) a “qualified institutional buyer” as defined in Rule 144A promulgated under the 1933 Act, that purchases for its own account or for the account of a qualified institutional buyer, or (b) an “accredited investor” as defined in Regulation D promulgated under the 1933 Act, that purchases for its own account and without registration under state or other securities laws, pursuant to an exemption for such issuance; and accordingly the Subordinate Bond may not be assigned or transferred in whole or part, nor may a participation interest in the Subordinate Bond be given pursuant to any participation agreement, except to another “qualified institutional buyer” or “accredited investor” in accordance with an applicable exemption from such registration requirements and with full and accurate disclosure of all material facts to the prospective purchaser(s) or transferee(s) and in a single denomination equal to the entire outstanding principal balance thereof and in accordance with Section 4(a) hereof.
(e) Issuance of New Subordinate Bond. Subject to the provisions of 4(d), the HRA shall, at the request and expense of the Lender, issue a new Subordinate Bond, in aggregate outstanding principal amount equal to that of the Subordinate Bond surrendered, and of like tenor except as to number, principal amount, and the amount of the periodic installments payable thereunder, and registered in the name of the Lender or such transferee as may be designated by the Lender.
5. Findings. It is hereby found, determined and declared that:
(a) the Project furthers the policies of the Act;
(b) the Project promotes the public welfare by providing necessary multifamily rental housing and health care facilities, so that adequate multifamily rental housing and health care facilities are available to residents of the City at a reasonable cost;
(c) the Act authorizes refinancing the Project, the issuance and sale of the Series 2016 Bonds, the execution and delivery of the Series 2016 Bonds, the Bond Purchase Agreement, the Series 2016A Loan Agreement, the Subordinate Loan Agreement, the Escrow Agreement, the Series 2016A Mortgage, the Senior Assignment, the Subordinate Mortgage, the Subordinate Assignment, the Subordination Agreement, the TIF Amendment, the TIF Assignment, the Indenture, and the Pledge Agreement, and such other documents as Bond Counsel considers appropriate in connection with the issuance of the Series 2016 Bonds (collectively, the “Financing Documents”), the performance of all covenants and agreements of the HRA contained in the Financing Documents to which it is a party, and the performance of all other acts and things required under the constitution and laws of the State of Minnesota to make the Financing Documents to which it is a party and Series 2016 Bonds valid and binding obligations of the HRA in accordance with their terms;
(d) it is desirable that the Series 2016A Bonds be issued by the HRA upon the terms set forth in the Indenture and that the Subordinate Bond be issued by the HRA upon the terms set forth herein;
(e) the payments under the Series 2016A Loan Agreement are fixed to produce revenue sufficient to provide for the prompt payment of principal of, premium, if any, and interest on the Series 2016A Bonds issued under the Indenture when due, and the Series 2016A Loan Agreement and Indenture also provide that the Borrower is required to pay all expenses of the operation and maintenance of the facilities to be refinanced by the Series 2016 Bonds, including, but without limitation, adequate insurance thereon and insurance against all liability for injury to persons or property arising from the operation thereof, and any taxes and special assessments levied upon or with respect to the premises of said facilities and payable during the term of the Series 2016A Loan Agreement and Indenture;
(f) the payments under the Subordinate Loan Agreement are fixed to produce revenue sufficient to provide for the prompt payment of principal of, premium, if any, and interest on the Subordinate Bond when due, and the Subordinate Loan Agreement also provides that the Borrower is required to pay all expenses of the operation and maintenance of the facilities to be refinanced by the Series 2016 Bonds, including, but without limitation, adequate insurance thereon and insurance against all liability for injury to persons or property arising from the operation thereof, and any taxes and special assessments levied upon or with respect to the premises of said facilities and payable during the term of the Subordinate Loan Agreement;
(g) as provided therein and in the Series 2016A Loan Agreement, the Subordinate Loan Agreement and Indenture, the Series 2016 Bonds are not to be payable from or charged upon any funds other than the revenue pledged to the payment thereof; neither the HRA nor the City is subject to any liability thereon; no holder of any Bond shall ever have the right to compel any exercise by the HRA or the City of any taxing powers to pay any of the Series 2016 Bonds or the interest or premium thereon, or to enforce payment thereof against any property of the HRA or the City, except the interests of the HRA in the Series 2016A Loan Agreement which has been assigned to the Trustee under the Indenture and the interests of the HRA in the Subordinate Loan Agreement which has been assigned to the Subordinate Lender under the Pledge Agreement; the Series 2016 Bonds shall not constitute a charge, lien or encumbrance, legal or equitable, upon any property of the HRA except the interests of the HRA in the Series 2016A Loan Agreement as assigned and the interests of the HRA in the Subordinate Loan Agreement as assigned; the Series 2016 Bonds shall recite that the Series 2016 Bonds do not constitute or give rise to a pecuniary liability or moral obligation of the HRA, the City, the State of Minnesota or any political subdivision, and that the Series 2016 Bonds, including interest thereon, are payable solely from the revenues pledged to the payment thereof; and the Series 2016 Bonds shall not constitute a debt of the HRA or the City within the meaning of any constitutional or statutory limitation.
6. Approval of Forms; Execution. Subject to the approval of the Saint Paul City Attorney, and the provisions of Sections 10 and 11 hereof, the forms of the Financing Documents and exhibits thereto and all other documents listed in Sections 2 and 3 hereof are approved substantially in the forms on file with the Executive Director of the HRA. The Financing Documents to which the HRA is a party are authorized and directed to be executed in the name and on behalf of the HRA by the Chair or Commissioner and Executive Director of the HRA and by the Director, Office of Financial Services of the City (collectively, the “Authorized Officials”); provided that the Bond Purchase Agreement may be executed on behalf of the HRA solely by the Executive Director of the HRA. The Series 2016A Bonds are to be in executed the name of and on behalf of the HRA by the Authorized Officials, and are to be delivered to the Trustee for authentication and delivery to the Underwriter or the Purchaser. The Subordinate Bond is to be executed in the name of and on behalf of the HRA by the Authorized Officials, and is to be delivered to the Subordinate Lender. Any other HRA documents and certificates necessary to the transaction described above may be executed by one or more appropriate officers of the HRA, including but not limited to the Executive Director. Copies of all of the documents necessary to the transaction herein described shall be delivered, filed and recorded as provided herein and in the Series 2016A Loan Agreement, the Subordinate Loan Agreement and Indenture.
7. Official Statement. The HRA hereby consents to the preparation and distribution of the Official Statement for the Series 2016A Bonds; provided that it is understood that the HRA has relied upon the Borrower and the Underwriter and legal counsel retained by them to assure the accuracy and completeness of the information set forth in the Official Statement and that therefore the HRA has not made, and will not make, any representations or warranties with respect to the information contained therein, except under the heading “The Issuer”. The drafts of the Official Statement on file with the Executive Director of the HRA are hereby designated as “near final” offering memoranda for purposes of Rule 15-c2-12 of the Securities Exchange Commission.
8. Issuance. The HRA shall proceed forthwith to issue the Series 2016 Bonds, in the forms and upon the terms set forth in the Indenture and this Resolution. The Series 2016 Bonds shall be payable or prepayable at such time or times, shall bear interest at such rates and shall be subject to such other terms and conditions as set forth therein which the Underwriter or the Subordinate Lender, the Borrower and the HRA shall agree to, which agreement shall be deemed to have been made upon execution and delivery of the Series 2016 Bonds by the Authorized Officials. The Authorized Officials are authorized and directed to execute and deliver the Series 2016 Bonds as prescribed in the Indenture and this Resolution.
9. Records and Certificates. The Authorized Officials and other officers of the HRA are authorized and directed to prepare and furnish to the Underwriter certified copies of all proceedings and records of the HRA and the City relating to the Series 2016 Bonds, and such other affidavits and certificates as may be required to show the facts relating to the legality of the Series 2016 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 HRA as to the truth of all statements contained therein.
10. Changes in Forms Approved; Absent and Disabled Officers. The approval hereby given to the various documents referred to above includes approval of such additional details therein as may be necessary and appropriate and such modifications thereof, deletions therefrom and additions thereto as may be necessary and appropriate and approved by the Saint Paul City Attorney to the HRA, the appropriate HRA staff person or by the officers authorized herein to execute or accept, as the case may be, said documents prior to their execution; and said officers or staff members are hereby authorized to approve said changes on behalf of the HRA. The execution of any instrument by the appropriate officer or officers of the HRA herein authorized shall be conclusive evidence of the approval of such document in accordance with the terms hereof. In the event of absence or disability of the officers, any of the documents authorized by this Resolution to be executed may be executed without further act or authorization of the Board by any member of the Board or any duly designated acting official, or by such other officer or officers of the Board as, in the opinion of the Saint Paul City Attorney to the HRA, may act in their behalf.
11. Future Amendments. The authority to approve, execute and deliver future amendments to Financing Documents entered into by the HRA in connection with the issuance of the Series 2016 Bonds and consents required under the Financing Documents is hereby delegated to the Executive Director, subject to the following conditions: (a) such amendments or consents do not require the consent of the respective holders of the Series 2016 Bonds or such consent has been obtained; (b) such amendments or consents to not materially adversely affect the interests of the HRA; (c) such amendments or consents do not contravene or violate any policy of the HRA, and (d) such amendments or consents are acceptable in form and substance to the counsel retained by the HRA to review such amendments. The authorization hereby given shall be further construed as authorization for the execution and delivery of such certificates and related items as may be required to demonstrate compliance with the agreements being amended and the terms of this Resolution. The execution of any instrument by the Executive Director shall be conclusive evidence of the approval of such instruments in accordance with the terms hereof. In the absence of the Executive Director, any instrument authorized by this paragraph to be executed and delivered may be executed by the officer of the HRA or the City of Saint Paul authorized to act in his or her place and stead.
12. Indemnification by Borrower. It is understood and agreed that the Borrower shall indemnify the HRA against all liabilities, losses, damages, costs and expenses (including attorney’s fees and expenses incurred by the HRA) arising with respect to the Project or the Series 2016 Bonds, as provided for and agreed to by and between the Borrower and the HRA in the Series 2016A Loan Agreement and the Subordinate Loan Agreement.
13. Program. The HRA has established a governmental program of acquiring purpose investments for qualified residential rental projects. The governmental program is one in which the following requirements of §1.148-1(b) of the federal regulations relating to tax-exempt obligations shall be met:
(a) the program involves the origination or acquisition of purpose investments;
(b) at least 95% of the cost of the purpose investments acquired under the program represents one or more loans to a substantial number of persons representing the general public, states or political subdivisions, 501(c)(3) organizations, persons who provide housing and related facilities, or any combination of the foregoing;
(c) at least 95% of the receipts from the purpose investments are used to pay principal, interest, or redemption prices on issues that financed the program, to pay or reimburse administrative costs of those issues or of the program, to pay or reimburse anticipated future losses directly related to the program, to finance additional purpose investments for the same general purposes of the program, or to redeem and retire governmental obligations at the next earliest possible date of redemption;
(d) the program documents prohibit any obligor on a purpose investment financed by the program or any related party to that obligor from purchasing bonds of an issue that finances the program in an amount related to the amount of the purpose investment acquired from that obligor; and
(e) the HRA shall not waive the right to treat the investment as a program investment.
14. Headings; Terms. Paragraph headings in this Resolution are for convenience of reference only and are not a part hereof, and shall not limit or define the meaning of any provision hereof. Capitalized terms used but not defined herein shall have the meanings given them in the Financing Documents.