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HomeMy WebLinkAbout6.e. St. Joseph School Project – Approve the Second Amendment � ROSEMOLINT EXECUTIVE SUMMARY CITY COUNCIL City Council Meeting Date: September 16, 2014 AGENDA ITEM: St. Joseph School Project —Approve the AGENDA SECTION: Second Amendment to an Educational Consent Facilities Revenue Note PREPARED BY: Jeff May, Finance Director AGENDA NO. .e . ATTACHMENTS: Resolution, Amendment to Original Note, APPROVED BY: 2014 Loan A reement RECOMMENDED ACTION: Motion to adopt a Resolution Approving the Second Amendment to an Educational Facilities Revenue Note and Authorizing the Execution of Documents Related Thereto (St. Joseph School Project). ISSUE Take the necessary action to complete the restructuring of the financing (refinancing) for the St.Joseph school project. BACKGROUND This item is on the agenda for Council to approve the final resolurion and authorize the execution of the necessary documents to complete the restructuring of the fmancing for the St.Joseph school project. The original note was issued in 2008 and was amended in 2011. This is the only step involving the financing foY this project for the City. As was the case when the original note was issued in 2008 based on the City's Private Activity Tax-Exempt Financing Policy, the City is under no financial obligation for these notes. We assisted St.Joseph's in the issuance of their note by allowing the use of the City's name in the pYOCess based on the City's policy. SUMMARY Recommend approval of the motion listed under the Recommended r�ction. CITY OF ROSEMOUNT DAKOTA COUNTY, MINNESOTA RESOLUTION 2014- RESOLUTION APPROVING THE SECOND AMENDMENT TO AN EDUCATIONAL FACILITIES REVENUE NOTE AND AUTHORIZING THE EXECUTION OF DOCUMENTS RELATED THERETO (ST. JOSEPH SCHOOL PROJECT) BE IT RESOLVED by the Ciry Council of the Ciry of Rosemount, Minnesota (the "City"), as follows: SECTION 1 LEGr,L AUTHORIZ�TION r,ND FINDINGS. 1.1 Finclings. The City hereby finds, deteYmines and declares as follows: (1) The City, pursuant to Resolution 2008-87 adopted on October 21, 2008, has previously issued, and pursuant to Resolution 2012-09 adopted on February 6, 2012 (collectively, the "Note Resolution"), has previously amended, its revenue note in an original aggregate principal amount of $4,775,000 to provide funds that were loaned to The Church of St. Joseph of Rosemount, Minnesota, a Minnesota religious corporation (the `Borrower"), to finance a portion of the costs of the construction and equipping of an approxirriately 46,000 square foot K-8 school to be located at 13900 Biscayne Avenue in the City, which facilities are owned and operated by the Borrower (the "Project"). (2) The City issued the Educational Facilities Revenue Note, Series 2008A (St.Joseph School Project) dated November 21, 2008, as amended by the First r�mendment to Educational Facilities Revenue Note, Series 2008A (St.Joseph School PYOject) dated February 21, 2012 (collectively the "Note"), pursuant to Minnesota Statutes, Section 469.152 to 469.165, as amended (the "Act"), and sold the Note to Anchor Bank Saint Paul, National r'�ssociation, now known as Anchor Bank, N.A., a national banking association (the "Lender"). (3) Pursuant to a Loan r�greement (the "Loan �greement") dated November 21, 2008 between the City, the BoYrower, and the Lender, the Borrower agreed to repay the Note in specified amounts and at specified times sufficient to pay in full when due the principal of, premium, if any, and interest on the Note. In addition, the Loan Agreement contains provisions xelating to the expenditure of proceeds of the Note, the maintenance and operation of the Project, indemnificauon, insurance, and otheY agreements and covenants which are Yequired or permitted by the Act and which the City, the Borrower and Lender deem necessary or desirable for the fmancing of the Project. (4) Pursuant to a Pledge Agreement (the "Pledge rlgreement") dated NovembeY 21, 2008 between the City and the Lender, the City pledged and granted a security interest in all of its rights, title, and interest in the Loan Agreement to the Lender (except for certain xights of indemnification and to reunbursement foY certain costs and expenses). (5) In order to secure it obligations under the Loan Agreement, the Borrower mortgaged and granted a security interest in certain of its real and personal property pursuant to a Mortgage and 6492624v2 RESOLUTION 2014— Security Agreement and FiYture Financing Statement and r�ssignment of Leases and Rents dated November 21, 2008 in favor of the Lender. (6) The Lender and the BorroweY have informed the City that they have agreed to cextain changes in the terms of the Note. (7) The form of Second Amendment to Note between the City, the Borrower, and the Lender, proposed to be entered into in order to document changes in the terms of the Note has been submitted to the City Council and is on file in the office of the City Clerk (the "Note r�mendment"). (8) The form of First Amendment to Loan Agreement between the City and the BoYrower and consented to by the Lender, proposed to be entered into in order to document changes in the terms of the Loan r�greement has been submitted to the City Council and is on file in the office of the City Clerk (the "Loan Agreement Amendment"). SECTION 2 r1UTHORIZATION OF NOTE AMENDMENT. 2.1 Approval and Execution of Note Amendment and Loan Agreement Amendment. (1) The Note �mendment and Loan �greement �mendment are made a part of this Resolution as though fully set foxth herein and is hereby approved in substantially the form presented to the City Council. The Mayor and the Clerk are authorized and directed to execute, acknowledge, and deliver the Note Amendment and Loan rlgreement rlmendment on behalf of the City with such changes, inseYtions, and omissions therein as the attorney to the City may hereafter deem appropriate, such execution to be conclusive evidence of approval of such documents in accordance with the terms hereof. (2) The Mayor and the Clerk are authorized and directed to execute and deliver all otheY documents which may be required under the texms of the Note Amendment and Loan Agreement Amendment or by bond counsel, and to take such other action as may be required or deemed appYOpriate for the performance of the duties imposed thereby to carry out the purposes thereof. (3) The Mayor and Clerk and other officers of the City are authorized to furnish to the Lender, the BorYOwer, and bond counsel certified copies of all proceedings and records of the City relating to the Note Amendment and Loan Agreement Amendment, and such other affidavits and certificates as may be required to show the facts relating to the legality and marketability of the Note 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 contained therein. (4) In the event that for any reason the Mayor or the Clexk are unable to carry out the execurion of any of the documents or other acts provided herein, any other officer of the City oY member of its City Council as in the opinion of the City's attorney, are authorized to act in that capaciry and undertake such execution or acts on behalf of the City, shall without further act or authorization execute and deliver the Note Amendment and Loan r�greement Amendment and do all things and execute all instruments and documents required to be done or executed by such officers,with full force and effect, which executions or acts shall be valid and binding on the City. 2 6492624v2 RESOLUTION 2014— 2.2 No Liability of Cit�. Nothing in this resolurion or in the documents prepared pursuant hereto shall authorize the expenditute of any municipal funds on the PYOject other than the revenues derived from the Project or othenvise granted to the City for this purpose. The Note, as amended, 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 thexeon. The holders of the Note shall never have the right to compel any exercise of the taxing power of the Ciry to pay the outstancling principal on the Note oY the interest thereon, or to enforce payment theYeof against any property of the City. The Note recites in substance that the Note, inclucling interest thereon, are payable solely from the revenue and proceeds pledged to the payment thereo£ The Note shall not constitute a debt of the City within the meaning of any constitutional or statutory limitation. SECTION 3 BANK QUALIFIED. 3.1 Deemed Bank Oualified. The Note, as amended is deemed designated as a "qualified tax- exempt obligauon" within the meaning and pursuant to the requirements of Section 265(b)(3)(D)(ii) of the Code. Adopted by the City Council of the City of Rosemount, i�linnesota this 16th day of September, 2014. William H. Droste, Mayor �1TTEST: Clarissa Hadler, Ciry Clerk 3 6492624v2 CERTIFIC�TE STr1TE OF MINNESOT� ) COUNTY OF DAKOTA ) CITY OF ROSEMOUNT ) I, Clarissa Hadler, duly appointed, acting and qualified Clerk of the City of Rosemount, do hereby certify that I have examined the City of Rosemount records and the Minute Book of said Authority for the meeting of the 16th of September, 2014 and that the attached copy of the RESOLUTION r1PPROVING THE SECOND 1�1�1ENDMENT TO AN EDUCATIONr�L Fr�CILITIES REVENUE NOTE AND AUTHORIZING THE EXECUTION OF DOCUMENTS RELATED THERETO (ST. JOSEPH SCHOOL PROJECT� was approved and is a true and correct copy of the City Proceeciirigs relating to said Resoluuon. IN WITNESS WHEREOF, I have hereunto set my hand this day of SeptembeY, 2014. Clarissa Hadler, City Clerk City of Rosemount 6492624v2 UNITED STATES OF AMERICA STATE OF MINNESOTA COUNTY OF DAKOTA CITY OF ROSEMOUNT SECOND AMENDMENT TO EDUCATIONAL FACILITIES REVENUE NOTE, SERIES 2008A (ST. JOSEPH SCHOOL PROJECT) WHEREAS, on November 21, 2008, the City of Rosemount, Minnesota (the "Issuer") issued its $4,775,000 Educational Facilities Revenue Note, Series 2008A (St. Joseph School Project), which was amended on February 21, 2012 by a First Amendment to $4,775,000 Educational Facilities Revenue Note, Series 2008A (St. Joseph School Project) (collectively, the "Current Note") promising to pay Anchor Bank Saint Paul, National Association, now known as Anchor Bank,N.A. (the "Lender"); and WHEREAS, Anchor Bank Saint Paul, National Association changed its name to Anchor Bank, N.A. as a result of inerger, consolidation, amendment to charter or articles of incorporation or association, or conversion of articles of incorporation or charter from federal to state, state to federal, or from one form of entity to another; and WHEREAS, pursuant to a Loan Agreement as amended by a First Amendment to Loan Agreement of even date herewith (collectively, the "Loan Agreement") dated November 21, 2008 between the Issuer, The Church of St. Joseph of Rosemount, Minnesota, a Minnesota religious corporation (the "Borrower"), and the Lender, the Borrower agreed to repay the Current Note in specified amounts and at specified times sufficient to pay in full when due the principal of, premium, if any, and interest on the Current Note; and WHEREAS, pursuant to a Pledge Agreement (the "Pledge Agreement") dated November 21, 2008 between the Issuer and the Lender, the Issuer pledged and granted a security interest in all of its rights, title, and interest in the Loan Agreement to the Lender (except for certain rights of indemnification and to reimbursement for certain costs and expenses); and WHEREAS, the Lender and the Borrower have informed the Issuer that they have agreed to certain changes in the terms of the Current Note; and WHEREAS, pursuant to a resolution of the Issuer adopted on September 16, 2014 (the "Resolution"), the Issuer has agreed to the requested changes to the terms of the Current Note; and WHEREAS, this Second Amendment is autharized to be attached to the Current Note to evidence the amendments made hereby. 1. The Current Note is hereby amended by deleting paragraph 1(a) in its entirety and replacing it with the following: (a) From the date of issuance until and through February 21, 2012, this Note shall bear interest at the rate of four and twenty-six hundredths percent (4.26%) per 6491608v2 annum; from February 21, 2012 until and through September 23, 2014, this Note shall bear interest at the rate of three and one-quarter percent (3.25%) per annum; and from September 24, 2014 through September 23, 2021, this Note shall bear interest at the rate of percent (_%) per annum. 2. The Current Note is hereby amended by deleting, paragraph 1(b) of the Current Note in its entirety and replacing it with the following: (b) The rate of interest payable under this Note shall be adjusted on September 24, 2021 and September 24, 2028 (each such date referred to herein as an "Interest Adjustment Date") to be equal to the Federal Home Loan Bank Board of Des Moines Fixed Rate Advance Index Rate - 7 Years (the "FHLB Index-7 Years") plus 185 basis points (1.85%), multiplied by .67, and in effect on the applicable Interest Adjustment Date (such rate of interest is referred to herein as the "Term Rate"); provided however, if a scheduled Interest Adjustment Date occurs on a day which is not a Business Day (as hereinafter defined), then such interest rate adjustment shall be made on the next Business Day following the scheduled Interest Adjustment Date and such date shall be the Interest Adjustment Date for such interest rate adjustment. As used herein, the term "Business Day" means any day on which national banks are open for business in the State of Minnesota. If the FHLB Index-7 Years is no longer published, then Lender shall select a new comparable index rate upon notice to the Issuer. The Lender shall send notice to the Issuer and the Borrower of the adjusted Term Rate following each such Interest Adjustment Date. 3. Section 5(a) of the Current Note is hereby amended by replacing all references to "FHLB Index-5 Years" with "FHLB Index—7 Years." 4. The Current Note is hereby amended by deleting paragraph 10 in its entirety and replacing it with the following: 10. This Note may be prepaid in whole or in part at any time, without a prepayment fee if the prepayment is made from a source other than financing proceeds received from a lender or creditor other than the Lender. In the event of a prepayment with proceeds received from a financing with a lender or creditor other than the Lender, the Borrower shall pay a prepayment fee equal to an amount expressed as a percentage of the principal amount to be prepaid as follows: Prepayment Date Fee September 24, 2014 through September 23, 2015 10% September 24, 2015 through September 23, 2016 9% September 24, 2016 through September 23, 2017 8% September 24, 2017 through September 23, 2018 7% September 24, 2018 through September 23, 2019 6% September 24, 2019 through September 23, 2020 5% September 24, 2020 through September 23, 2021 4% September 24, 2021 through September 23, 2022 3% September 24, 2022 through September 23, 2023 2% 2 6491608v2 September 24, 2023 through September 23, 2024 1% September 24, 2024 and thereafter 0% In the event of prepayment of this Note, the Lender shall apply any such prepayment against the accrued interest on the Principal Balance of this Note then outstanding and then to the Principal Balance of this Note. 5. All other terms and provisions of the Current Note remain in full force and effect. 3 6491608v2 IN WITNESS WHEREOF, the City of Rosemount, Minnesota, The Church of St. Joseph of Rosemount, Minnesota, and Anchor Bank, N.A. have caused this Second Amendment to Note to be duly executed in their names and have caused this Second Amendment to Note to be dated as of September_, 2014. CITY OF ROSEMOUNT, MINNESOTA By Its Mayor By Its Clerk S-1 6491608v2 CONSENT OF: THE CHURCH OF ST. JOSEPH OF ROSEMOUNT, MINNESOTA By Its Vice President By Its Secretary S-2 6491608v2 CONSENT OF: ANCHOR BANK,N.A. By Its Assistant Vice President S-3 6491608v2 FIRST AMENDMENT TO LOAN AGREEMENT Between CITY OF ROSEMOUNT, MINNESOTA AND THE CHURCH OF ST. JOSEPH OF ROSEMOUNT, MINNESOTA Dated September 24, 2014 Relating To $4,775,000 City of Rosemount, Minnesota Educational Facilities Revenue Note, Series 2008A (St. Joseph School Project) The interests of the City of Rosemount, Minnesota in the Loan Agreement dated November 21, 2008, as amended by this First Amendment to Loan Agreement (the "Loan Agreement"), have been assigned (except for the City's certain reserved rights under the Loan Agreement) pursuant to the Pledge Agreement dated November 21, 2008, between the City of Rosemount, Minnesota and Anchor Bank, N.A. (the "Lender"), and is subject to the security interest of the Lender. 6512559v1 FIRST AMENDMENT TO LOAN AGREEMENT THIS FIRST AMENDMENT TO LOAN AGREEMENT is dated September 24, 2014 (this "Amendment"), between the CITY OF ROSEMOUNT, MINNESOTA (the "City"), a municipal corporation under the Constitution and laws of the State of Minnesota, and THE CHURCH OF ST. JOSEPH OF ROSEMOLINT, MINNESOTA (the `Borrower"), a Minnesota religious corporation. WHEREAS, on November 21, 2008, the City of Rosemount, Minnesota (the "City") issued its $4,775,000 Educational Facilities Revenue Note, Series 2008A (St. Joseph School Project), which was amended on February 21, 2012 by a First Amendment to $4,775,000 Educational Facilities Revenue Note, Series 2008A (St. Joseph School Project) (collectively, the "Current Note") promising to pay Anchor Bank Saint Paul, National Association, now known as Anchor Bank, N.A. (the "Lender"); and WHEREAS, Anchor Bank Saint Paul, National Association changed its name to Anchor Bank, N.A. as a result of inerger, consolidation, amendment to charter or articles of incorporation or association, or conversion of articles of incorporation or charter from federal to state, state to federal, or from one form of entity to another; and WHEREAS, pursuant to a Loan Agreement (the "Loan Agreement") dated November 21, 2008 between the City, The Church of St. Joseph of Rosemount, Minnesota, a Minnesota religious corporation (the `Borrower"), and the Lender, the Borrower agreed to repay the Current Note in specified amounts and at specified times sufficient to pay in full when due the principal of, premium, if any, and interest on the Current Note; and WHEREAS, pursuant to a Pledge Agreement (the "Pledge Agreement") dated November 21, 2008 between the City and the Lender, the City pledged and granted a security interest in all of its rights, title, and interest in the Loan Agreement to the Lender (except for certain rights of indemnification and to reimbursement for certain costs and expenses); and WHEREAS, the Lender and the Borrower have informed the City that they have agreed to certain changes in the terms of the Current Note and the Loan Agreement; and WHEREAS, pursuant to a resolution of the City adopted on September 16, 2014 (the "Resolution"), the City has agreed to the requested changes to the terms of the Current Note and the Loan Agreement; and WHEREAS, the parties hereto wish to amend the Loan Agreement to reflect the certain amendments as set forth herein. NOW, THEREFORE, in consideration of $1.00 and other good and valuable consideration and the premises contained herein, the parties hereto agree as follows: 6512559v1 1. Capitalized terms not otherwise defined herein shall have the meanings given such terms in the Resolution or the Loan Agreement. 2. The name of the Lender in the Loan Agreement is hereby amended to read "Anchor Bank, N.A." in all instances where it may appear. 3. Section l.l of the Loan Agreement is hereby amended by deleting the following definition in its entirety and replacing it with the following: Note: the City of Rosemount, Minnesota Educational Facilities Revenue Note, Series 2008A Note (St. Joseph School Project), as the same may from time to time be amended or supplemented; 4. Section 4.5(1) of the Loan Agreement is hereby amended by adding a new subparagraph (o)thereto as follows: (o) The Borrower shall maintain such written procedures as appropriate and applicable to ensure the Borrower's principal responsibility for compliance with the post- issuance requirements necessary to maintain the tax-exempt status of the interest on the Note, including requirements that must be continually monitored, including (i) monitoring the investment (pending expenditure) of Note proceeds (and keep detailed records thereo� in order to assure compliance with the arbitrage requirements applicable to the Note, (ii) monitoring the expenditure of Note proceeds (and keep detailed records thereo�, (iii) monitoring the use of the Project in order to ensure that the Note continues to qualify as a qualified 501(c)(3) bond within the meaning of Section 145 of the Code, (iv) periodically consulting with Bond Counsel with respect to arbitrage issues and compliance, and (v) consulting with Bond Counsel as necessary to determine whether, and to what extent, any change in the use or purpose of the financed facility will require any remedial action under the relevant Treasury Regulations. 5. Section 5.1 of the Loan Agreement is hereby amended by deleting it in its entirety and replacing it with the following: 5.1 Prepavment at Option of Borrower. The Borrower may at its option prepay the Loan, in whole or in part, at par plus accrued interest, plus a premium, if any, as set forth in the Note. Any partial prepayment shall be applied first against the interest accrued on the Note and shall be applied against the principal portion of the installments due under this Agreement in inverse order of maturity. In the event the Borrower elects to prepay the Loan, the Borrower shall cause to be given due notice of redemption or prepayment of the Note as required by the Note, and shall pay the prepayment price when due to the Lender. The Issuer hereby authorizes the Borrower to give mailed notice of prepayment and, if required by law, published notice of prepayment of the Note, from time to time. 6. Except as herein amended or supplemented all other provisions of the Loan Agreement shall remain in full force and effect. 2 6512559v1 7. In the event any provision of this Amendment shall be held invalid or unenforceable by any court of competent jurisdiction, such holding shall not invalidate or render unenforceable any other provision hereof. 8. This Amendment may be simultaneously executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. 9. This Amendment shall be governed by and construed in accordance with the laws of the State of Minnesota. 3 6s�2ss9�� IN WITNESS WHEREOF, the City has caused this Amendment to be executed in its corporate name attested by its duly authorized officials. The Borrower has caused this Amendment to be executed in its corporate name attested by its duly authorized officers. All of the above occurred as of the date first above written. CITY OF ROSEMOUNT, MINNESOTA By: Mayor By: Clerk First Amendment to Loan Agreement dated as of September 24, 2014. S-1 6512559v1 THE CHURCH OF ST. JOSEPH OF ROSEMOUNT, MINNESOTA By: Its Vice President By: Its Secretary First Amendment to Loan Agreement dated as of September 24, 2014. S-2 6512559v1 Consented to by: ANCHOR BANK, N.A., as Lender By Its Assistant Vice President First Amendment to Loan Agreement dated as of September 24, 2014. S-3 6512559v1