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07/24/2001 - City Council Finance CommitteeAGENDA FINANCE COMMITTEE MEETING 8:00 A.M. TUESDAY JULY 24 2001 CONFERENCE ROOMS A & B EAGAN MUNICIPAL CENTER I. CONSIDER REQUEST OF CATHOLIC FINANCE CORPORATION FOR TAX-EXEMPT FINANCING FOR FAITHFUL SHEPHERD CATHOLIC CHURCH II. OTHER BUSINESS III. ADJOURNMENT MEMO city of eagan TO: FINANCE COMMITTEE MEMBERS AWADA AND TILLEY FROM: CITY ADMINISTRATOR HEDGES DATE: JULY 20, 2001 SUBJECT: FINANCE COMMITTEE MEETING/JULY 24, 2001 A Finance Committee meeting has been scheduled for 8:00 a.m. Tuesday, July 24, 2001 for the purpose of reviewing the most recent application from Catholic Finance Corporation for tax-exempt financing for Faithful Shepherd Catholic Church. The Following documents are enclosed for your use: Cover letter from Catholic Finance Corporation on pages oZ through. Resolution calling for a public hearing on pages through. Public Hearing Notice on page Re olution giving preliminary approval to the project on pages through �. The City Attorney, City staff and members of Catholic Finance Corporation will be in attendance at the meeting to answer questions. The applicant is proposing to have the City Council take action on August 7, 2001 to set a public hearing for the first meeting in September for consideration of the application. A preliminary resolution and perhaps a final resolution adopted at the same meeting are required after the public hearing, if the project is to proceed. If any member of the Finance Committee would like any additional information in advance of the meeting, please contact the City Administrator's Office. City Administrator AL_ Catholic Finance ,irCORPO OR Promoting the growth of Catholic Institutions July 16, 2001 Mr. Gene Vaii0verbeke Finance Director City of Eagan, Minnesota 3830 Pilot Ivnob Road Eagan, MN 55122-1810 2545 62"a Street East Inver Grove Heights, MN 55076 Re: Proposal for "fax -Exempt Financing of Faithful Shepherd Catholic Church Dear Mr. VainOverbeke: Catholic Finance Corporation ("CFC") requests that the City of Eagan issue its tax-exempt conduit bonds and loath the proceeds to CFC to finance the non-sectarian portions of Faithful Shepherd Catholic School. The bonds would be payable solely from loan repayments to be made by CFC and would be furdier secured by a letter of credit. The bonds would not be payable from any funds of the City, or ii any way be secured by or payable from taxes or any other revenues of the City, including state aids. CFC is a Section 501(c)(3) nonprofit corporation formed to assist in the financing of facilities of die Archdiocese of Saint Paul and Miiuleapolis (the "Archdiocese"), including schools. The Faithful Shepherd School project is the permanent financing of die construction of an entirely new kindergarten through 8d, grade school that opened in the fall of 2000. Bond proceeds would be used, together with other funds, to refinance the existing short term construction financing. It is currently anticipated drat die total bonds required for the non-sectarian portion of this project would not exceed -- - --- --- $9,500000. Federal and state law permit the financing of non-sectarian costs with tax-exempt bonds. Only qualified educational costs would be financed with tax-exempt bond proceeds. No church or religious facilities would be or can be financed on a tax-exempt basis. CFC will secure taxable financing for non-qualified costs which will not involve the City. The cities of Woodbury, Victoria, Saint Louis Park and Stillwater are a few of die Minnesota cities that have recently issued tax-exempt bonds for Catholic school financings. CFC is working with Paine Webber on the planned tax-exempt and taxable financing and currently desires to close the transactions ii September 2001. CFC requests that the City consider adoption of the enclosed Resolution calling for a Public Hearing at the next available meeting. The public hearing would be set for early September at which time the City would also consider giving final approval to issuance of the bonds. The bonds would be issued subsequent to the September meeting. The enclosedresolution and notice of public hearing have been prepared' by Paul Tietz of Briggs and Morgan. The City will not be liable on the bonds and CFC will agree to pay all out-of-pocket expenses of die City, such as professional fees, so that the issuance would be without cost to the City. iass72svi Me Mr. Gene VanOverbeke July 16, 2001 Page 2 Representatives of CFC and Faithful Shepherd School will attend die City Council meetings when scheduled. If you have any questions regarding die projects, please call me at 651-247-2288. Mr. Tietz can be reached at 612-334-8420. Sincerely Michael P. Schaefer, Executive Director Cc: Paul H. Tietz, Esq., Briggs and Morgan David MacGillivray, Springsted 1253725vi 3 Extract of Minutes of a Meeting of the City Council of the City of Eagan, Minnesota Pursuant to due call and notice thereof, a regular meeting of the City Council of the City of Eagan, Minnesota, was duly held at the City Hall in such City on Tuesday, the 7th day of August, 2001 at O'clock P.M. - The following members were present: and the following were absent: Member introduced the following resolution and moved its adoption: RESOLUTION CALLING FOR A PUBLIC HEARING ON THE ISSUANCE OF REVENUE BONDS TO FINANCE A COMMERCIAL FACILITIES DEVELOPMENT PROJECT (CATHOLIC FINANCE CORPORATION PROJECT) 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: — - ------------- whereupon said resolution was declared duly passed and adopted. 1253761v2 RESOLUTION CALLING FOR A PUBLIC HEARING ON THE ISSUANCE OF REVENUE BONDS TO FINANCE A COMMERCIAL FACILITIES DEVELOPMENT PROJECT (CATHOLIC FINANCE CORPORATION PROJECT) (a) WHEREAS, Minnesota Statutes, Sections 469.152 to 469.165 (the "Act") confers upon cities, the power to issue revenue bonds to finance commercial and industrial developments within the boundaries of the City; and (b) WHEREAS, the City Council of the City of Eagan, Minnesota (the "City"), has received from Catholic Finance Corporation, a Minnesota nonprofit corporation (the "Company"), a proposal that the City undertake a program to assist in financing a Project described on the attached Notice of Public Hearing, through the issuance of revenue bonds or obligations (in one or more series) (the "Bonds") pursuant to the Act; and (c) WHEREAS, in connection 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; NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Eagan, Minnesota, as follows: 1. A public hearing on the proposal of the Company will be held at the time and place set forth in the Notice of Public Hearing hereto attached or any later regularly scheduled meeting of the City Council. 2. The general nature of the proposal and an estimate of the principal amount of Bonds to be issued to finance the proposal are described in the attached form of Notice of Public Hearing. 3. A draft copy of proposed forms of application to the Commissioner of Trade and Economic Development, State of Minnesota, for approval of the Project together with, all attachments and exhibits will be on file in the office of the Administrator on or before the date the Notice of Public Hearing is published. 4. The Administrator is hereby authorized to cause notice of the hearing to be given one publication in the official newspaper of the City not less than 15 days prior to the date fixed for the hearing, substantially in the form of the attached Notice of Public Hearing. 1253761v2 Adopted by the City Council of the City of Eagan, Minnesota, this 7t' day of August, 2001. Mayor ATTEST: Administrator 1253761v2 STATE OF MINNESOTA COUNTY OF DAKOTA CITY OF EAGAN I, the undersigned, being the duly qualified and acting Deputy Clerk of the City of Eagan, 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 issuance of revenue obligations. WITNESS my hand this day of 2001. Deputy Clerk 1253761v2 NOTICE OF PUBLIC HEARING ON A PROPOSAL FOR A COMMERCIAL FACILITIES DEVELOPMENT PROJECT Notice is hereby given that the City Council of the City of Eagan, Minnesota (the "City"), will meet at the Council Chambers of City Hall, 3830 Pilot Knob Road in the City at p.m. on Tuesday, September 4, 2001, to consider the proposal of Catholic Finance Corporation, a Minnesota nonprofit corporation (the "Company"), that the City assist in financing the non -religious portions of the acquisition of land and equipment and construction and equipping of an approximately 90,000 sq. ft. school for grades Kindergarten through 81h grade owned and operated by Faithful Shepherd Catholic School, a Minnesota nonprofit corporation (the "Operator") and located at 3355 Columbia Drive in the City (the "Project") through the issuance of revenue bonds, the proceeds of which will be loaned to the Company to pay a portion of the existing construction loan for the Project. The maximum aggregate estimated principal amount of bonds or other obligations to be issued to finance the Projects is $10,500,000. The bonds or other obligations if and when issued will not constitute a charge, lien or encumbrance upon any property of the City and such bonds or obligations will not be a charge against the City's general credit or taxing powers but will be payable from sums to be paid by the Company pursuant to a revenue agreement. A draft copy of the proposed application to the Commissioner of the Department of Trade and Economic Development, State of Minnesota, for approval of the projects, together with all attachments and exhibits thereto, is available for public inspection from 8:00 a.m. to 4:30 p.m., Monday through Friday, at the City Hall in the City. 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.-_Irr_addition,__interested persons_ may_ file written comments_ respecting the proposal with the Administrator at or prior to said public Bearing. Dated this 7h day of August, 2001. (BY ORDER OF THE CITY COUNCIL) By /s/ Thomas Hedges Administrator 1253761v2 Draft 7/13/01 RESOLUTION NO. 01 - RESOLUTION GIVING PRELIMINARY APPROVAL TO A PROJECT AND ITS FINANCING UNDER THE MUNICIPAL INDUSTRIAL DEVELOPMENT ACT; REFERRING THE PROPOSAL TO THE MINNESOTA DEPARTMENT OF TRADE AND ECONOMIC DEVELOPMENT FOR APPROVAL; AND AUTHORIZING PREPARATION OF NECESSARY DOCUMENTS BE IT RESOLVED by the City Council (the "Council") of the City of Eagan, Minnesota (the "City"), as follows: SECTION 1 RECITALS AND FINDINGS 1.1 This Council has received a proposal that the City issue its revenue bonds to refinance a portion of the cost of a project (collectively, the "Project") under Minnesota Statutes, Sections 469.152 through 169.165, as amended (the "Act"), on behalf of Catholic Finance Corporation, a Minnesota nonprofit corporation (the 'Borrower"), consisting of the issuance of up to $9,500,000 revenue bonds on behalf of the Borrower (the "Bonds"). 1.2 The Project consists of a new pre-school, elementary and middle school facility providing educational services to the general public located in the City at 4030 Pilot Knob Road in the City owned and operated by the Faithful Shepherd Catholic School, a Minnesota nonprofit corporation (the "Operator"), The Borrower will loan the proceeds of the Bonds to the Archdiocese of St. Paul and Minneapolis (the "Guarantor") which will in turn use such proceeds to repay the existing construction loan for the Project on behalf of the Operator. 1.3 This Council has been advised by representatives of the Borrower that (i) conventional commercial financing to refinance the cost of the Project is available only on a limited basis and at such high costs of borrowing that, with the aid of municipal borrowing and its resulting Power borrowing cost, the Project is economically more feasible, and (ii) the refinancing of the Project is necessary for the continued operations of the Project. 1.4 This Council has also been advised by UBS PaineWebber Incorporated that, on the basis of their discussions with potential buyers of tax-exempt bonds, the Bonds could be issued and sold upon favorable rates and terms to refinance a portion of the Project. 1.5 This Council hereby finds and determines that the Project furthers the purposes set forth in Section 469.152 of the Act. 13080640 a 1 SECTION 2 DETERMINATION TO PROCEED WITH THE PROJECT AND ITS FINANCING 2.1 On the basis of the information given the City to date, it appears that it would be desirable of the City to issue the Bonds under the provisions of the Act to refinance a portion of the Project in the maximum aggregate principal amount of $9,500,000. 2.2 It is hereby determined to proceed with the Project and its refinancing and this Council hereby declares its present intent to have the City issue the Bonds under the Act to refinance the Project provided that no proceeds are used to finance facilities used for religious purposes. Notwithstanding the foregoing, however, the adoption of this resolution shall not be deemed to establish a legal obligation on the part of the City or its City Council to issue the Bonds. All details of the Bonds and the provisions for payment thereof shall be subject to final approval of the Project by the Minnesota Department of Trade and Economic Development and may be subject to such further conditions as the City may specify. The Bonds, if issued, shall not constitute a charge, lien or encumbrance, legal or equitable, upon any property of the City, except the revenues specifically pledged to the payment thereof, and each Bond, when, as and if issued, shall recite in substance that the Bonds, including interest thereon, is payable solely from the revenues and property specifically pledged to the payment thereof, and shall not constitute a debt of the City within the meaning of any constitutional, statutory or charter limitation. 2.3 The Application to the Minnesota Department of Trade and Economic Development in substantially the form on file with the City (the "Application"), with all attachments and exhibits, is hereby approved, and [the Mayor, City Administrator and City Clerk] are authorized to execute said documents on behalf of the City, with such changes, additions or deletions as the Mayor, City Administrator and the City Clerk deem appropriate, 2.4 In accordance with Section 469.154, Subd. 3 of the Act, [the Mayor, City Administrator and City Clerk] are hereby authorized and directed to cause the Application to be -.-----------------.Submitted- to=the Minnesota- Department=of–T=rade-and=Economic-Development--for approval--of=the— ------ -- --- Project. The [Mayor, City Adnunistrator, City Clerk, City Attorney] and other officers, employees and agents of the City are hereby authorized and directed to provide the Minnesota Department of Trade and Economic Development with any preliminary information needed for this purpose. The City Attorney and/or Bond Counsel for the City is authorized to initiate and assist in the preparation of such documents as may be appropriate with respect to the issuance of the Bonds, if approved by the Department. 2.5 Briggs and Morgan, Professional Association is hereby designated as Bond Counsel and is authorized to proceed with the preparation of documents as directed by the Borrower. 13080640 2 !a SECTION 3 GENERAL 3.1 If the Bonds are issued and sold, the City will enter into a loan agreement or similar agreement satisfying the requirements of the Act (the "Revenue Agreement") with the Borrower. The loan payments or other amounts payable by the Borrower to the City under the Revenue Agreement shall be sufficient to pay the principal of, and interest and redemption premium, if any, on the bonds as and when the same become due and payable. 3.2 . [The Mayor, City Administrator and City Clerk] are directed, if the bonds are issued and sold, thereafter to comply with the provisions of Section 469.154; Subdivisions 5 and 7 of the Act. 3.3 This resolution shall become effective immediately upon adoption. Executed this day of 52001. ATTEST: City Clerk Reviewed for administration: Mayor Approved as to form and execution: City Administrator City Attorney 13080641 3 II