HomeMy WebLinkAboutResolution No. 208-18 - ConduitDebtFinancing.RochesterSTEMAcademy
RESOLUTION NO.
CITY OF ROCHESTER
COUNTY OF OLMSTED
STATE OF MINNESOTA
RESOLUTION AUTHORIZING THE ISSUANCE OF CONDUIT CHARTER
SCHOOL LEASE REVENUE BONDS FOR THE ROCHESTER MATH &
SCIENCE ACADEMY AND ROCHESTER STEM ACADEMY PROJECT
UNDER MINNESOTA STATUTES, SECTIONS 469.152 THROUGH 469.1655
AND APPROVING RELATED DOCUMENTS
WHEREAS, the City of Rochester, Minnesota (the “City”) is duly organized and existing under
the Constitution and laws of the State of Minnesota; and
WHEREAS, under the Minnesota Municipal Industrial Development Act, Minnesota Statutes,
Sections 469.152-469.1655, as amended (the “Act”), each City is authorized to issue revenue bonds to
finance, in whole or in part, the costs of the acquisition, construction, improvement, or extension of
revenue producing enterprises, whether or not operated for profit; and
WHEREAS, Rochester MSA Building Company, a Minnesota nonprofit corporation (the
“Borrower”), has represented to the City that it is proposing to assist Rochester Math & Science
Academy, a Minnesota nonprofit corporation and public charter school (“MSA”), and Rochester STEM
Academy Inc., a Minnesota nonprofit corporation and public charter school (“STEM” and, together with
MSA, the “Schools”), in the acquisition, construction, renovation, expansion and equipping of certain
existing school facilities located at 415 16th Street Southwest in the City, including the acquisition,
construction and equipping of an approximately 25,000 square foot addition thereto, for use as a
kindergarten through 8th grade school facility by MSA and as a 9th through 12th grade school facility by
STEM (the “Facility”); and
WHEREAS, the Borrower has requested that the City issue one or more series of revenue bonds
to be designated Charter School Lease Revenue Bonds (Rochester Math and Science Academy Project) in
an original aggregate principal amount not to exceed $16,000,000 (the “Bonds”) and loan the proceeds
derived from the sale of the Bonds to the Borrower, pursuant to the terms of a Loan Agreement, dated on
or after July 1, 2018 (the “Loan Agreement”), between the City and the Borrower to finance costs related
to: (i) the acquisition, construction, renovation, expansion and equipping of the Facility; (ii) funding
certain reserve funds; (iii) paying a portion of the interest on the Bonds; and (iv) paying the costs of
issuing the Bonds (collectively, the “Project”); and
WHEREAS, the Bonds proposed to be issued by the City to finance the Project will constitute
revenue obligations secured solely by: (i) the revenues derived from the Loan Agreement; (ii) a pledge
and assignment of the Schools’ revenues, as more specifically set forth in the Financing Documents
defined below, including money due to the Schools from the State of Minnesota Lease Aid Payment
Program (the “Program”); (iii) an agreement to pay the money due to the Schools from the Program to a
dedicated account subject to a monthly transfer to the accounts held by the Trustee for the benefit of the
holders of the Bonds; (iv) other revenues pledged to or otherwise received by the Borrower, except for
those revenues necessary for ordinary operational expenses and required under Minnesota law; (v) a debt
service reserve fund to be held by a trustee for the benefit of the holders of the Bonds; (vi) a first
mortgage and security agreement granted by the Borrower with respect to the Project; (vii) an operating
reserve fund; and (viii) other security provided or arranged by the Borrower or the Schools; and
523706v1 JSB RC110-97
WHEREAS, under the terms of Section 147(f) of the Internal Revenue Code of 1986, as amended
(the “Code”), the Bonds may not be issued as tax-exempt bonds unless the Common Council of the City
(the “Council”) approves the Bonds after a public hearing following publication of a notice published in
accordance with the requirements of the Code and the applicable Treasury Regulations; and
WHEREAS, following the publication of a notice of a public hearing as required by the Act and
the Code, the Council conducted a public hearing at which a reasonable opportunity was provided for
interested individuals to express their views on the proposal to undertake and finance the Project and the
proposed issuance of the Bonds (the “Public Hearing”); and
WHEREAS, following the Public Hearing on the date hereof the Council considered the
following Resolution; and
NOW THEREFORE BE IT RESOLVED by the Common Council of the City of Rochester,
Minnesota, as follows:
1. For the purposes set forth above, there is hereby authorized the issuance, sale, and
delivery of the Bonds in one or more series in an aggregate principal amount not to exceed $16,000,000.
If the Bonds are issued in more than one series, the separate series shall be separately designated in such
manner as is deemed appropriate by the Mayor and Clerk of the City (collectively, the “City Officials”),
in their discretion. The Bonds shall be issued under the terms of an Indenture of Trust, dated on or after
July 1, 2018 (the “Indenture”), between the City and UMB Bank, N.A., as trustee (the “Trustee”). The
Bonds shall bear interest at fixed rates established by the terms of the Indenture. The Bonds shall be
designated, shall be numbered, shall be dated, shall mature, shall be subject to redemption prior to
maturity, shall be in such form, and shall have such other terms, details, and provisions as are prescribed
in the Indenture, in substantially the form on file with the City, with the amendments referenced herein.
The City hereby authorizes the Bonds to be issued as “tax-exempt bonds” the interest on which is
excluded from gross income for federal and State of Minnesota income tax purposes. Any separate series
of Bonds may be issued as “taxable bonds” if deemed necessary and appropriate by the City Officials and
bond counsel. The Bonds will be purchased by Dougherty & Company LLC (the “Underwriter”) pursuant
to a Bond Purchase Agreement, dated on or after July 1, 2018 among the City, the Underwriter, the
Borrower, and the Schools (the “Bond Purchase Agreement”).
All of the provisions of the Bonds, when executed as authorized herein, shall be deemed to be a
part of this resolution as fully and to the same extent as if incorporated verbatim herein and shall be in full
force and effect from the date of execution and delivery thereof. The Bonds shall be substantially in the
forms in the Indenture on file with the City, which forms are hereby approved, with such necessary and
appropriate variations, omissions, and insertions (including changes to the aggregate principal amount of
each series of the Bonds, the stated maturities of each series of the Bonds, the principal amount of Bonds
maturing on each maturity date, the interest rates on the Bonds, and the terms of redemption of the Bonds)
as the City Officials, in their discretion, shall determine. The execution of the Bonds with the manual or
facsimile signatures of the City Officials and the delivery of the Bonds by the City shall be conclusive
evidence of such determination.
2. The Bonds shall be special limited obligations of the City payable solely from the
revenues provided by the Borrower pursuant to the Loan Agreement and from the revenues and security
pledged, assigned, and granted pursuant to the following documents: (i) the Mortgage, Security
Agreement and Assignment of Rents, to be dated on or after July 1, 2018 (the “Mortgage”), from the
Borrower, as mortgagor, to the Trustee, as mortgagee; (ii) the Assignment of Lease, dated on or after July
1, 2018 (the “Assignment”), from the Borrower, as assignor, to the Trustee, as assignee; and (iii) the
Pledge and Covenant Agreements, dated on or after July 1, 2018 (the “Pledge Agreements”), from each of
523706v1 JSB RC110-97
2
the Schools to the Trustee. The proceeds of the Bonds will be disbursed pursuant to a Disbursing
Agreement, dated on or after July 1, 2018 (the “Disbursing Agreement”), among the Borrower, the
Trustee, and a disbursing agent to be selected by the Borrower, and will be subject to the provisions of a
Tax Regulatory Agreement, dated on or after July 1, 2018 (the “Tax Regulatory Agreement”), among the
Borrower, the Schools, and the Trustee. The Council hereby authorizes and directs the City Officials to
execute and deliver the Indenture to the Trustee, and hereby authorizes and directs the execution of the
Bonds in accordance with the terms of the Indenture, and hereby provides that the Indenture shall provide
the terms and conditions, covenants, rights, obligations, duties, and agreements of the owners of the
Bonds, the City, and the Trustee as set forth therein. The Borrower and the Schools will provide certain
ongoing reports to the holders of the Bonds pursuant to the Continuing Disclosure Agreement, dated on or
after July 1, 2018 (the “Continuing Disclosure Agreement”), among the Borrower, the Schools, and the
Trustee.
3. The loan repayments to be made by the Borrower under the Loan Agreement are fixed to
produce revenues sufficient to provide for the prompt payment of principal of, premium, if any, and
interest on the Bonds issued under this resolution when due, and the Loan Agreement also provides that
the Borrower is required to pay all expenses of the operation and maintenance of the Project, including,
but without limitation, adequate insurance thereon and insurance against all liability for injury to persons
or property arising from the operation thereof, and all lawfully imposed taxes and special assessments
levied upon or with respect to the Project and payable during the term of the Loan Agreement.
4. As provided in the Loan Agreement, the Bonds shall not be payable from nor charged
upon any funds other than the revenue pledged to their payment, nor shall the City or the City be subject
to any liability thereon, except as otherwise provided in this paragraph. No holder of the Bonds shall ever
have the right to compel any exercise by the City or the City of any taxing powers to pay the Bonds or the
interest or premium thereon, or to enforce payment thereof against any property of the City or the City
except the interests of the City in the Loan Agreement and the revenues and assets thereunder, which will
be assigned to the Trustee under the terms of the Indenture. The Bonds shall recite that the Bonds are
issued pursuant to the Act, and that the Bonds, including interest and premium, if any, thereon, are
payable solely from the revenues and assets pledged to the payment thereof, and the Bonds shall not
constitute a debt of the City or the City within the meaning of any constitutional, statutory or charter
limitations.
5. The City Officials are hereby authorized and directed to execute and deliver the Loan
Agreement, the Indenture, the Bond Purchase Agreement, and such other documents as the City’s bond
counsel to the City considers appropriate in connection with the issuance of the Bonds (collectively, the
“City Documents”). The forms of the City Documents and all other documents listed in Sections 1 and 2
hereof and exhibits thereto, and any consents and such other documents as are necessary or appropriate in
connection with the issuance, sale, and delivery of the Bonds, including without limitation various
certificates of the City, the Information Return for Tax-Exempt Private Activity Bond Issues, Form 8038,
a certificate as to arbitrage and rebate, and similar documents (collectively, the “Financing Documents”)
are approved substantially in the forms on file with the City Finance Director. Subject to the provisions
of Section 14 hereof, the City Documents, in substantially the forms submitted, are directed to be
executed in the name and on behalf of the City by the City Officials. Subject to the provisions of Section
14 hereof, the Bonds are to be in executed the name of and on behalf of the City by the City Officials, and
are to be delivered to the Trustee for authentication and delivery to the Underwriter. Any other Financing
Documents and certificates necessary to the transaction described above may be executed by one or more
appropriate officers of the City.
523706v1 JSB RC110-97
3
All of the provisions of the Financing Documents, when executed as authorized herein, shall be
deemed to be a part of this resolution as fully and to the same extent as if incorporated verbatim herein
and shall be in full force and effect from the date of execution and delivery thereof.
6. The City hereby authorizes Kennedy & Graven, Chartered, as bond counsel to the City,
to prepare, execute, and deliver its approving legal opinion with respect to the Bonds.
7. The City has not participated in the preparation of the Preliminary Official Statement or
the Official Statement relating to the offer and sale of the Bonds (collectively, the “Official Statement”),
and has made no independent investigation with respect to the information contained therein (other than
with respect to information provided under the captions “THE ISSUER” and “LITIGATION – Issuer,” as
it relates to the City), including the appendices thereto, and the City assumes no responsibility for the
sufficiency, accuracy, or completeness of such information. Subject to the foregoing, the City hereby
consents to the distribution and the use by the Underwriter of the Official Statement in connection with
the offer and sale of the Bonds. The Official Statement is the sole material consented to by the City for
use in connection with the offer and sale of the Bonds.
8. Except as otherwise provided in this resolution, all rights, powers, and privileges
conferred and duties and liabilities imposed upon the City or the Council by the provisions of this
resolution or of the aforementioned documents shall be exercised or performed by the City or by such
members of the Council, or such officers, board, body, or agency thereof as may be required or authorized
by law to exercise such powers and to perform such duties.
No covenant, stipulation, obligation, or agreement herein contained or contained in the
aforementioned documents shall be deemed to be a covenant, stipulation, obligation, or agreement of any
member of the Council of the City, or any officer, agent, or employee of the City in that person’s
individual capacity, and neither the Council of the City nor any officer or employee executing the Bonds
shall be liable personally on the Bonds or be subject to any personal liability or accountability by reason
of the issuance thereof.
No provision, covenant, or agreement contained in the aforementioned documents, the Bonds or
in any other document relating to the Bonds, and no obligation therein or herein imposed upon the City or
the breach thereof, shall constitute or give rise to any pecuniary liability of the City or any charge upon its
general credit or taxing powers. In making the agreements, provisions, covenants, and representations set
forth in such documents, the City has not obligated itself to pay or remit any funds or revenues, other than
funds and revenues derived from the Loan Agreement which are to be applied to the payment of the
Bonds, as provided therein and in the Indenture.
9. Except as herein otherwise expressly provided, nothing in this resolution or in the
aforementioned documents expressed or implied, is intended or shall be construed to confer upon any
person or firm or corporation, other than the City or any holder of the Bonds issued under the provisions
of this resolution, any right, remedy, or claim, legal or equitable, under and by reason of this resolution or
any provisions hereof, this resolution, the aforementioned documents and all of their provisions being
intended to be and being for the sole and exclusive benefit of the City and any holder from time to time of
the Bonds issued under the provisions of this resolution.
10. In case any one or more of the provisions of this resolution, other than the provisions
contained in Section 4 hereof, or of the aforementioned documents, or of the Bonds issued hereunder shall
for any reason be held to be illegal or invalid, such illegality or invalidity shall not affect any other
provision of this resolution, or of the aforementioned documents, or of the Bonds, but this resolution, the
523706v1 JSB RC110-97
4
aforementioned documents, and the Bonds shall be construed and endorsed as if such illegal or invalid
provisions had not been contained therein.
11. The Bonds, when executed and delivered, shall contain a recital that they are issued
pursuant to the Act, and such recital shall be conclusive evidence of the validity of the Bonds and the
regularity of the issuance thereof, and that all acts, conditions, and things required by the laws of the State
of Minnesota relating to the adoption of this resolution, to the issuance of the Bonds, and to the execution
of the aforementioned documents to happen, exist, and be performed precedent to the execution of the
aforementioned documents have happened, exist, and have been performed as so required by law.
12. The officers of the City, bond counsel, other attorneys, engineers, and other agents or
employees of the City are hereby authorized to do all acts and things required of them by or in connection
with this resolution, the aforementioned documents, and the Bonds for the full, punctual, and complete
performance of all the terms, covenants, and agreements contained in the Bonds, the aforementioned
documents, and this Resolution. In the event that for any reason either of the City Officials is unable to
carry out the execution of any of the documents or other acts provided herein, such documents may be
executed and such actions may be taken by any official or employee of the City delegated the duties of
any such City Official with the same force and effect as if such documents were executed and delivered
by such City Official.
13. The Borrower has agreed and it is hereby determined that any and all costs incurred by
the City in connection with the financing of the Project will be paid by the Borrower. It is understood and
agreed that the Borrower shall indemnify, defend and hold harmless the City against all liabilities, losses,
damages, costs and expenses (including attorney’s fees and expenses incurred by the City) arising with
respect to the Project or the Bonds, as provided for and agreed to by and between the Borrower and the
City in the Loan Agreement.
14. The approval hereby given to the various Financing 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 bond counsel to the City, the appropriate City 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 City. The execution of
any instrument by the appropriate officer or officers of the City 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 either City Official, any of the documents authorized by this Resolution to be executed by
the City may be executed without further act or authorization of the Council by any member of the
Council or any duly designated acting official, or by such other officer or officers of the City as, in the
opinion of the City Attorney, may act in their behalf.
The authority to approve, execute and deliver future amendments to Financing Documents
entered into by the City in connection with the issuance of the Bonds and consents required under the
financing documents is hereby delegated to the City Officials, subject to the following conditions: (a)
such amendments or consents do not require the consent of the respective holders of the Bonds or such
consent has been obtained; (b) such amendments or consents to not materially adversely affect the
interests of the City; (c) such amendments or consents do not contravene or violate any policy of the City,
and (d) such amendments or consents are acceptable in form and substance to the counsel retained by the
City 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 City Officials shall be conclusive evidence of the approval of such
523706v1 JSB RC110-97
5
instruments in accordance with the terms hereof. In the absence of the City Officials any instrument
authorized by this paragraph to be executed and delivered may be executed by the officer of the City
authorized to act in his/her place and stead.
15. The HRA has established a governmental program of acquiring purpose investments for
qualified 501(c)(3) organizations’ 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.
16. This resolution shall be in full force and effect from and after its passage.
523706v1 JSB RC110-97
6
PASSED AND ADOPTED BY THE COMMON COUNCIL OF THE CITY OF ROCHESTER,
MINNESOTA, THIS _________ DAY OF ________, 2018.
PRESIDENT OF SAID COMMON COUNCIL
ATTEST:
CITY CLERK
Approved this day of , 2018.
(Seal of the City of
Rochester, Minnesota) MAYOR OF SAID CITY
523706v1 JSB RC110-97
7
C E R T I F I C A T I O N
I, the undersigned City Clerk of the City of Rochester, Minnesota, do hereby certify the
following:
The foregoing is true and correct and a copy of the Resolution is on file and of record in the
offices of the City, which Resolution relates to authorizing the issuance, sale, and delivery of revenue
bonds relating to the Samaritan Bethany Inc. project; and approving the form of and authorizing the
execution and delivery of certain documents relating to the revenue bonds and said Resolution was duly
adopted by the Rochester Common Council at a regular or special meeting of the Council held on the date
therein indicated. Said meeting was duly called and regularly held and was open to the public and was
held at the place at which meetings of the Council are regularly held, a quorum of the Council being
present and acting throughout. Councilmember moved the adoption of the
Resolution, which motion was seconded by Councilmember . A vote
being taken on the motion, the following members of the Council voted in favor of the Resolution:
and the following voted against the same:
Whereupon said Resolution was declared duly passed and adopted. The Resolution is in full
force and effect and no action has been taken by the Council which would in any way alter or amend the
Resolution.
WITNESS MY HAND officially as the City Clerk of the City of Rochester, Minnesota, this
day of , 2018.
City Clerk
523706v1 JSB RC110-97