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HomeMy WebLinkAboutAuthorizing the Issuance and Sale not Exceeding $4,000,000.00 Revenue Bonds - Health Quest Realty VORDINANCE No. 6954 -si Passed by the Common Council of the City of South Bend, Indiana Clerk IRENE K. GAMMON Of Common Council Presented by me to the Mayor of the City of South Bend, A�t�� City Clerk 1RENE K. GAMMON Approved and signed by me i� (� %� c �, �' a S IQ Cg/ ORDINANCE NO. (�QSy -8 AN ORDINANCE AUTHORIZING THE ISSUANCE AND SALE NOT EXCEEDING $4,000,000.00 OF REVENUE BONDS OF THE CITY OF SOUTH BEND, INDIANA, FOR THE PURPOSE OF MAKING A LOAN TO HEALTH QUEST REALTY V, IN ORDER TO FINANCE THE ACQUISITION AND CONSTRUCTION OF CERTAIN ECONOMIC DEVELOP- MENT FACILITIES LOCATED IN ST. JOSEPH COUNTY, INDIANA, TO BE USED AND OCCUPIED BY FOUNTAINVIEW PLACE CORPORATION OF SOUTH BEND; AUTHORIZING EXECUTION OF A TRUST INDENTURE AND FINANCING AGREEMENT; PROVIDING FOR THE DELIVERY OF AN FHA - INSURED MORTGAGE NOTE AS SECURITY FOR SAID BONDS; AND AUTHORIZING THE TERMS AND SALE OF SAID BONDS. The City of South Bend, Indiana, (hereinafter called the "City ") is a municipal corporation and political subdivision of the State of Indiana, and by virtue of IC 18 -6 -4.5 as amended (hereinafter called the "Act ") is authorized and empowered to adopt this ordinance (the "Bond Ordinance ") to carry out its provisions; and Health Quest Realty V, an Indiana general partnership (the "Developer ") has applied for financing of a project (the "Project "), consisting of the ac- quisition of approximately 12.17 acres of land on the East side of Ironwood approximately 1,500 feet North of the intersection of Cleveland and Ironwood, St. Joseph County, Indiana, and the construction thereon and equipment of a building for use as a nursing home, containing 144 skilled nursing and inter- mediate care beds; and The Developer intends to lease the Project to Fountainview Place Corporation of South Bend, and Indiana corporation (the "User "), pursuant to a lease agreement between the Developer and the User (the "Lease "); and certain management services for the Project will be provided by Health Quest Corporation, an Indiana corporation ( "Health Quest ") pursuant to a Management Agreement between the User and Health Quest (the "Management Agreement "); and The Project will provide additional employment opportunities and di- versification of economic development facilities in St. Joseph County and South Bend, Indiana; and The plan of financing proposed by the Developer contemplates that the City of South Bend would provide financing for the Project through the issuance of its bonds designated "City of South Bend, Indiana, Health Care Facilities Revenue Bonds, Fountainview Place of South Bend, Issue (FHA Insured Project), Series A" in an aggregate principal amount not exceeding $4,000,000.00, and at an interest rate not exceeding twelve percent (12 %) per annum (the "Bonds "); and The Bonds are to be issued under a Trust Indenture (the "Indenture ") between the City and St. Joseph Bank and Trust Company, as trustee (the "Trustee "); and the proceeds of the Bonds are to be loaned to the Developer for payment of costs of the Project pursuant to a Financing Agreement between the Town and the Developer (the "Financing Agreement "); and The Project is to be constructed by Health Quest Development Corporation, an Indiana corporation (the "Contractor ") pursuant to a Construction Contract - Cost Plus with the Developer, in accordance with the plans and specifications prepared by, and construction of the Project is to be supervised by, Korbuly- Graf, Inc. Architects, of South Bend, Indiana, pursuant to an agreement with the Developer; and The loan to be made to the Developer pursuant to the Financing Agree- ment is to be effected by the disbursement of funds from the proceeds of the Bonds by the Trustee and such funds are to be advanced to the Developer pursuant to a Building Loan Agreement between the Developer and the Trustee (the "Building Loan Agreement "); and a Construction Loan Disbursement Agreement (the "Disburse- ment Agreement ") among the Trustee, the Developer, the Contractor, Blyth, Eastman, Paine Webber Health Care Funding, Inc. (the "Servicer ") and Pioneer Title In- surance Company; and In order to provide the source of repayment of the loan to be made pursuant to the Financing Agreement, the Developer will deliver to the Trustee a Mortgage Note in the principal amount of approximately $3,600,000.00 (the "Note "), and a Mortgage securing the Note constituting a first lien on the Project (the "Mortgage ") and as further security for such loan, the Developer will execute and deliver to the Trustee, an assignment of all the Developer's right, title and interest in and to the Lease (the "Assignment of Lease "), and a Security Agreement granting a first lien on all fixtures and equipment in the Project (the "Security Agreement "); and The Developer expects that, in accordance with the terms of a commit- ment to be issued to the Servicer, and a Regulatory Agreement with the Developer (the "Regulatory Agreement "), the United States Secretary of Housing and Urban Development, acting through the Federal Housing Commissioner ("FHA ") will agree to insure the advances of funds secured by the Mortgage, and that the Note will be endorsed for insurance by FHA pursuant to Section 232 of the National Housing Act, as amended, and the regulations thereunder; and Pursuant to a Servicing Agreement between the Servicer and the Trustee (the "Servicing Agreement "), the payments required to be made by the Developer pursuant to the Note, Mortgage and Regulatory Agreement are to be collected by the Servicer and the Servicer will forward to the Trustee the payments of princi- pal and interest on the Note, such payments to be applied to pay the principal of and interest on the Bonds; and Following a duly held public hearing, the South Bend Economic Develop- ment Commission has adopted a resolution finding that the proposed financing of the Project complies with the purposes and provisions of the Act, and approving the documents referred to above, and the St. Joseph County Council has adopted a resolution consenting to the issuance of the Bonds and the content of the Bonds and related documents; NOW, THEREFORE, BE IT ORDAINED by the Common Council of the City of South Bend, Indiana, as follows: Section 1. Findings; Public Benefits. The Common Council of the City hereby finds and determines that the Project to be acquired and constructed with the proceeds of the Bonds herein authorized are "economic development facilities" as that phrase is used in the Act; that acquisition and contruction of the Project by the Developer, and the operation of the Project by the User will increase employment opportunities and increase diversification of economic development facilities in and near the City, will improve and promote the health, economic stability, development and welfare in and near the City, will promote the ex- pansion of industry, trade and commerce in the area in and near the City; and that the public benefits to be accomplished by this Bond Ordinance, intending to overcome insufficient employment opportunities, are greater than the cost of public services (as that phrase is defined in the Act) which will be required by the Project; and will not have an adverse competitive effect on similar faci- lities already constructed or operating in the City and County. Section 2. In order to pay a portion of the costs of acquiring and constructing the Project, there are hereby authorized to be issued, sold and delivered the Bonds in an aggregate principal amount not exceeding $4,000,000.00. The Bonds will be sold at a price not less than the par amount thereof, plus accrued interest, to such purchasers as may be satisfactory to the City, as recommended by Blyth, Eastman, Paine Webber Health Care Funding, Inc. and Herbert J. Sims & Co., Inc., as placement agents for the City (the "Placement Agents "). The Bonds shall bear interest at a rate not in excess of twelve percent (12 %) per annum, and shall have a maturity date not later than 30 years from the date thereof. Any costs of the Project which cannot be paid from the proceeds of the Bonds will be paid for by the Developer, unless paid for from the proceeds of additional parity bonds, as authorized by the Indenture. Section 3. Approval of Indenture and Financing Agreement. The forms of Indenture and Financing Agreement presented to this meeting are hereby approved, and the Mayor is hereby authorized and directed to execute and deliver, and the clerk is hereby authorized to affix and attest the corporate seal of the City to an Indenture and Financing Agreement in substantially such form with such changes therein as counsel may advise and the officers executing the same may approve, such approval to be evidenced by their execution thereof. -2- Buildinq Loan Agreement and Other Documents. The City agrees and consents to the Developer's execution oT and delivery to the Trustee of the Note as the source of repayment of the loan made by the City to the Developer pursuant to the Financing Agreement, the Mortgage, Assignment of Lease and Security Agreement as security for the Note, and the Building Loan Agreement with respect to construction of the Project. The City further agrees and consents to the execution by the Trustee of: (a) the Disbursement Agreement providing for the procedure for making disbursements for costs of the Project; and (b) the Servicing Agreement providing for the collection by the Servicer of the amounts payable by the Developer under the Note and Mortgage, and the remittance to the Trustee, as mortgagee, of all remaining funds not deposited in the funds and accounts held by the Servicer pursuant to the Ser- vicing Agreement, after payment to the Servicer of its servicing fee. (c) the Lease Agreement pursuant to which the Developer will lease the Project to Fountainview Place Corporation of South Bend. The City further agrees and consents to the execution and delivery by the Developer to the Regulatory Agreement with FHA. Section 5. The Placement Agents are hereby authorized to prepare and disseminate, in connection with arranging for the placement of the Bonds, of a Private Placement Memorandum describing the proposed financing of the Project, the Developer, the User, the City, and the security for the Bonds. Section 6. Incidental Action. The Mayor and Clerk be and they are each hereby authorized and directed, in the name and on behalf of the City, to execute any and all instruments, perform any and all acts, approve any and all matters, and do any and all things deemed by them, or any of them, to be necessary or desirable in order to carry out the purposes of this Bond Ordinance (including the preambles hereto), the acquisition and construction of the Project by the Developer, the issuance and sale of the Bonds, and the securing of the Bonds under the Indenture. Section 7. Effective Date. This Bond Ordinance shall be in full force and effect from and after its passage by the Common Council and approval by the Mayor. MEMBER OF THE CITY COUNCIL Passed, as amended, August 24, 1981 -3- TRANSMITTAL OF ADOPTED COMMISSION RESOLUTION AND PROPOSED ORDINANCE FOR ADOPTION BY THE SOUTH BEND COMMON COUNCIL WE APPROVAL BY THE MAYOR PERTAINING TO THE FINANCING OF FACILITIES FOR HEALTH QUEST REALTY V BY THE ISSUANCE BY THE CITY OF SOUTH BEND, INDIANA OF ITS INDUSTRIAL DEVELOPMENT REVENUE BONDS TO: Irene K. Gammon City Clerk City of South Bend County -City Building South Bend, IN 46601 The South Bend Economic Development Commission (Commission) hereby transmits to you in accordance with the Public Law No. 182 of the Acts of the General Assembly of Indiana for 1973, as such may be amended from time to time, including but not limited to IC 18- 6 -4.5 -1 through IC 1?- 6- 4.5 -30, hereinafter referred to as the "Act ": 1. A resolution adopted by the Commission on August 14, 1981, as called for by the Act; 2. Proposed ordinance for adoption by the Comm Council of the City of South Bend, Indiana, as called for by the Act. You will note from a perusal of the body of these documents that the purpose thereof is to finance the acquisition of real estate and the construction of an economic facility [a one- hundred and fifty (150) bed nursing home] to be located on 12.17 acres of land, located approximately 1500 feet north of the intersection of Ironwood and Cleveland, St. Joseph County, Indiana, pursuant to the terms of a Trust Indenture and Financing Agreement and other related documents, and the issuance by the City of South Bend, Indiana, of Industrial Development Bonds in a total amount of Four Million ($4,000,000.00) Dollars, repayable with interest thereon at the rate of twelve (12%) percent per annum over a period not to exceed thirty (30) years, in accordance with the terms of such Trust Indenture and Financing Agreement . Submitted this day of August, 1981. SOUTH BEND ECONOMIC DEVELOR= Ca+!ISSION SOUTH BEND ECONOMIC DEVELOPMENT COMMISSION RESOLUTION NO. / 'p WHEREAS, the South Bend Economic Development Commission (the "Commission ") was created to investigate, study and survey the need for and to recommend action to improve or promote job opportunities, industrial diversification and pollution control facilities in South Bend, Indiana, and in certain other geographic areas within the State of Indiana; and WHEREAS, HEALTH QUEST REALTY V, an Indiana general partnership, as Developer (the "Developer "), has advised the Commission that it has under consideration a program for the acquisition of approximately 12.17 acres of land located on the east side of Ironwood, approximately one thousand five hundred (1,500) feet North of the intersection of Ironwood and Cleveland, St. Joseph County, Indiana, and the construction thereon and equipment of a building for use as a nursing home, containing 144 skilled nursing and intermediate care beds (the "Project "), and WHEREAS, the Developer intends to lease the Project to Fountainview Place Corporation of South Bend, an Indiana corporation (the "User ") pursuant to a Lease Agreement between the Developer and the User (the "Lease "); and certain management services for the Project will be provided by Health Quest Corporation, an Indiana corporation ( "Health Quest "). pursuant to a Management Agreement between the User and Health Quest (the "Management Agreement "); and WHEREAS, the Developer has submitted a letter of application dated July 15, 1981, for the financing of the Project under Indiana Code 18- 6- 4.5 -1, et seq. which was duly considered by the Commission on July 31, 1981, and set for public hearing on August 14, 1981; and WHEREAS, the Commission issued its Report and forwarded the same to the South Bend Community School Corporation and the Area Plan Commission pursuant to I.0 18- 6- 4.5 -16 for comment; and WHEREAS, notice has been given to the public for a hearing on the proposed financing of the Project by the publication of a notice thereof in the South Bend Tribune on Au4 N7, � �/ 1981, and by the posting of appropriate notice thereof at public places; and WHEREAS, a public hearing was held on August 14, 1981, at which the taxpayers, residents and other interested persons of the City of South Bend, Indiana, and St. Joseph County, Indiana, were afforded an oppor- tunity to be heard relative to the proposed financing of the Project; and WHEREAS, the Project will provide additional employment opportuni- ties and diversification of economic development facilities in St. Joseph County and the City of South Bend; and will not.have an adverse competitive effect on similar facilities already constructed or operating in the City and County; and WHEREAS, the plan of financing proposed by the Developer contemplates that the City of South Bend would provide financing for the Project through the issuance of its bonds designated "City of South Bend, Indiana, Health Care Facilities Revenue Bonds, Fountainview Place of South Bend Issue (FHA Insured Project), Series A" in an aggregate principal amount not exceeding twelve percent (12 %) per annum (the "Bonds "); and WHEREAS, the Bonds are to be issued under a Trust Indenture (the "Indenture ") between the City and St. Joseph Bank & Trust Company, as Trustee (the "Trustee "); and the proceeds of the Bonds are to be loaned to the Developer for payment of costs of the Project pursuant to a Financing Agreement between the City and the Developer (the "Financing Agreement "); and WHEREAS, the Project is to be constructed by Health Quest Develop- ment Corporation, an Indiana corporation (the "Contractor ") pursuant to a Construction Contract -Cost Plus with the Developer, in accordance with the plans and specifications prepared by, and construction of the Project is to be supervised by, Korbuly -Graf, Inc. Architects, of South Bend, Indiana pursuant to an Agreement with the Developer; and WHEREAS, the loan to be made to the Developer pursuant to the Financing Agreement is to be effected by the disbursement of funds from the proceeds of the Bonds by the Trustee, and such funds are to be advanced to the Developer pursuant to a Building Loan Agreement between the Developer and the Trustee (the "Building Loan Agreement ") and a Construction Loan Disbursement Agreement (the "Disbursement Agreement ") among the Trustee, the Developer the Contractor, Blyth Eastman Paine Webber Health Care Funding, In., (the "Servicer ") and Pioneer Title Insurance Company; and WHEREAS, to provide the source of repayment of the loan to be made to it pursuant to the Financing Agreement, the Developer will deliver to the Trustee a Mortgage Note in the principal amount of approximately Three Million Six Hundred Thousand Dollars ($3,600,000.00) (the "Note "), and a Mortgage securing the Note constituting a first lien on the Project (the "Mortgage "), and as further security for such loan, the Developer will execute and deliver to the Trustee, an Assignment of all the Developer's right, title and interest in and to the Lease (the "Assignment of Lease ") and a Security Agreement granting a first lien on all fixtures and equipment in the Project (the "Security Agreement "); and WHEREAS, the Developer expects that, in accordance with the terms of a commitment to be issued to the Servicer, and a Regulatory Agreement with the Developer (the "Regulatory Agreement "), the United States Secretary of Housing and Urban Development, acting through the Federal Housing Commissioner ( "FHA "), will agree to insure the advance of funds secured by the Mortgage, and the Note will be endorsed for insurance by FHA pursuant to,Section 232 of the Natibnal Housing Act, as amended, and the regulations thereunder; and WHEREAS, pursuant to a Servicing Agreement between the Servicer and the Trustee (the "Servicing Agreement "), the payments required to be made by the Developer pursuant to the Note, Mortgage and Regulatory Agree- ment are to be collected by the Servicer and the Servicer will forward to the Trustee the payments of principal and interest on the Note, such payments to be applied to pay the principal of and interest on the Bonds; and WHEREAS, pursuant to the plan of financing described above, the principal of, interest on, and all other expenses necessary in providing the debt service on the Bonds will be made by payments by the Developer to the City of South Bend or a Trustee and will not require any expenditures of the City of South Bend's funds; and WHEREAS, subject to all required approvals under the statutes, the Commission intends to use its best efforts to cooperate with the Developer in the issuance of the Bonds to provide financing for the costs of the Project; and NOW, THEREFORE, BE IT RESOLVED by the City of South Bend Economic Development Commission: g 1. That the Commission does hereby find that the proposed financing of the Project through- the issuance of the Bonds will be of benefit to the welfare of the City of South Bend and St. Joseph County, and will not have an adverse competitive effect on similar facilities already constructed or operating in the City and County, and that it complies with the purposes and provision of I.C. 16- 6 -4.5 -1 et seq. 2. The Commission approves the proposed financing and the proposed form and terms of: (a) The Bonds, proposed to be issued by the City in an aggregate principal amount not exceeding Four Million Dollars ($4,000,000.00) at an interest rate not exceeding twelve percent (12 %) per annum for the purpose of paying a portion of the costs of the Project, and the Indenture securing the Bonds, and (b) The Financing Agreement whereby the City will lend the proceeds of the Bonds to the Developer for payment of the costs of acquiring and constructing the Project, and providing for the repayment of such loan through the delivery to the Trustee of the Note, and the Building Loan Agreement, and Disbursement Agreement pursuant to which disbursements of such loan will be made by the Trustee to the Developer; and (c) The Note given by the Developer as the source of repayment of the loan made by the City pursuant to the Financing Agreement, and the Mortgage, Assignment of Lease, and Security Agreement given to secure the Note; and the Lease Agreement pursuant to which the Developer will lease the project to Fountainview Place Corporation of South Bend; and (d) The Regulatory Agreement with FHA which is required in connection with FHA's insurance of the Note and Mortgage, and the Servicing Agreement, pursuant to which the Service will collect payments required by the Developer under the Note, Mortgage and Regulatory Agreement; and (e) The Bond Ordinance to be adopted by the Common Council of the City of South Bend, Indiana, and the approval and consent to the same by the St. Joseph County Council, St. Jospeh County, Indiana, authorizing the issuance of the Bonds and approving the documents referred to above. 3. That it is hereby recognized that the issuance and sale of the Bonds by the City of South Bend, Indiana, under the statutes for the purposes set forth herein, shall be subject to the Developer and the City of South Bend, Indiana, obtaining any and all approvals as may be required Under the statues. 4- 4. That the obligations of the Commission and the City of South Bend, Indiana, shall be limited solely to the good faith efforts to con- summate said proceedings and issue the Bonds, and neither the Commission, St. Joseph County, Indiana, nor the City of South Bend, Indiana, their officers or agents shall incur any liability whatsoever if for any reason the proposed issuance of the Bonds is not consummated. 5. The President or the Secretary of the Commission is hereby authorized and directed to transmit this resolution and all other instru- ments and information pertaining to the proposed financing of the Project to the Common Council of the City and the County Council of St. Joseph County. PASSED AND ADOPTED by the South Bend Economic Development Commission of the City of South Bend, Indiana, on 1.41 day of August 1981. SOUTH BEND ECONOMIC DEVELOPMENT COMMISSION By: President By: '�) �tA _.M A&2 Secretary r B .yfi � • Vice President -5- Lf1JIE&EUM QU[E�U R[EL%LU ll 315 West Jefferson Boulevard South Send, Indiana 06601 21 9­236-0000 August 6, 1981 Common Council City of South Bend County -City Building South Bend, IN 46601 Dear Members: The proceeds of the sale of Economic Development Revenue Bonds in the principal amount of Four Million Dollars ($4,000,000.00) will be used to acquire and develop the site, construct and equip a 150 -bed nursing home know as Fountainview Place and pay certain project development costs. The health care facility will create 93 new jobs with an annual payroll of $800,000.00. We will provide further details of this project and our organization at the Common Council meeting of August 10. TJF /cjd Theodore J. Foti Vice President Corporate Planning & Development REAL ESTATE DEVELOPMENT