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HomeMy WebLinkAboutInducement Resolution for Issuance of $7.8 Million South Bend Economic Development Revenue Bonds for Brethren Care of South Bend, Inc. Project RESOLUTION NO. 1048-83 Passed by the Common Council of the City of South Bend, Indiana, May 9, 1983 Attest: City Clerk Attest: A4 1 President of Common Council. Presented by me to the Mayor of the City of South Bend, Indiana May 10 , 19 83 City Clerk Approved and signed by me ±42741 �v I°Y . Mayor 1 RESOLUTION NO. 1048-83 INDUCEMENT RESOLUTION OF THE SOUTH BEND COMMON COUNCIL FOR THE ISSUANCE OF $7.8 MILLION SOUTH BEND ECONOMIC DEVELOPMENT REVENUE BONDS FOR BRETHREN CARE OF SOUTH BEND, INC. PROJECT, TO REFINANCE A PORTION OF THE EXISTING DEBT STRUCTURE WHEREAS, the City of South Bend, Indiana (the "City"), pursuant to the approval and recommendation of the South Bend Economic Development Commission (the "Commission"), has heretofore issued City of South Bend, Indiana, Economic Development Revenue Bonds, Series A (Brethren Care of South Bend, Inc. Project) in the aggregate principal amount of eight million dollars (the "Series A Bonds") , the proceeds of which were loaned to Brethren Care of South Bend, Inc. ("Brethren Care"), to finance the costs of acquisition, construction and equipping of the retirement village consisting of 254 apartment units and an 80 bed health care facility (the "Project"); and WHEREAS, the Series A Bonds were issued pursuant to the terms of a Loan Agreement dated as of October 1, 1978 (the "Original Agreement"), between the City and Brethren Care and an Indenture of Trust dated as of October 1, 1978 (the "Original Indenture") , between the City and The National Bank and Trust Company of South Bend, as Trustee (the "Trustee"), which Original Agreement and Original Indenture were approved by the Commission and the Common Council (the "Original Resolution"); and WHEREAS, the Original Resolution contemplates the issuance of tax—exempt obligations for the purpose of providing the Project at an estimated Project cost of approximately thirteen million dollars; and 2 WHEREAS, Brethren Care has incurred certain indebtedness to pay the cost of acquisition and construction of the Project (the "Construction Indebtedness") which was not financed from the proceeds of the Series A Bonds, and now desire to refinance the Construction Indebtedness through the issuance of addi- tional tax exempt obligations of the City; and WHEREAS, the Trustee has declared a default on the Series A Bonds and the Project is presently experiencing other financial difficulties and such refi- nancing of the Construction Indebtedness will improve the financial condition of Brethren Care and help alleviate its' financial deficiencies; and WHEREAS, Brethren Care proposes to refinance the Construction Indebtedness with proceeds from the issuance of tax—exempt notes in an amount not to exceed Seven Million Eight Hundred Thousand Dollars ($7,800,000) to be issued by the City pursuant to the terms of a Loan Agreement and an Indenture of Trust; and WHEREAS, the issuance of such tax—exempt notes will contribute substantially to the revitalization of the Project, together with the preservation of job opportunities and industrial diversification in the City, resulting in a benefit to the welfare of the City; and WHEREAS, in relation to the issuance of the Series A bonds, the Commission and the Common Council of the City (the "Council") found that a need existed in 3 the City for the Project and the jobs which it would create; and WHEREAS, the Commission has heretofore investigated, studied, surveyed and reported to the Mayor and the Common Council, that a need exists in the com- munity for the preservation of existing jobs within the City, and to achieve that goal the Construction Indebtedness should be refinanced; and WHEREAS, to induce Brethren Care to refinance the Construction Indebtedness, the Commission on May 9, 1983 approved the application of Brethren Care for the issuance of up to Seven Million Eight Hundred Thousand Dollars of Economic Development Revenue Bonds and also passed an Inducement Resolution relating thereto; and WHEREAS, to induce Brethren Care to refinance the Construction Indebtedness and thereby contribute to the revitalization of the Project and the preservation of jobs, the Council desires to adopt this resolution; NOW, THEREFORE, BE IT RESOLVED, that in order to encourage, induce and soli- cit the application by Brethren Care for an amount not exceeding Seven Million Eight Hundred Thousand Dollars of Economic Development Revenue Bonds to be issued by the City of South Bend, Indiana, for the refinancing of the Construction Indebtedness relating to the Project in South Bend, Indiana, the City of South Bend shall proceed to cooperate with and take any action as may be necessary in drafting of documents or the performance of such other acts as will 4 facilitate the issuance of such Economic Development Revenue Bonds by the City of South Bend, Indiana, to provide funds to be used for the refinancing of the Construction Indebtedness; and BE IT FURTHER RESOLVED that any expenses incurred in connection with said proceedings shall be included in the Project cost and reimbursed from the pro- ceeds of said notes. BE IT FURTHER RESOLVED that the liability and obligation of the Commission and the City shall be limited solely to the good faith efforts to consumate said proceeds and issue the notes, and neither the Commission, the City, its officers or agents shall incur any liability whatsoever if, for any reason, the proposed issuance of the notes is not consumated. This Inducement Resolution shall be in full force and effect from and after its adoption by the Common Council. 411if Member of the Commo f%ouncil FILED IN CLEATS OFFICE PRESENTED Jr"9-IS MAY C, 1983 :rt; NOT APPROVED ADOPTED j.— Irene Gammon CITY CLERK,SOUTH BEND,IND. oerner ATTORNEYS AT LAW Mintz1400 St.Joseph Bank Building South Bend,Indiana 46601 Charles Roemer 1 1 in z [219)234-1234 Richard L Mintz May 6, 1983 - Mrs. Irene K. Gammon City Clerk County-City Building South Bend, Indiana Re: The Inducement Resolution Economic Development Bond Issue Brethren Care of South Bend, Inc. Dear Mrs. Gammon: Enclosed is a proposed inducement resolution by which the Common Council induces Brethren Care of South Bend, Inc. to submit an application for the issuance of up to 7.8 million dollars of economic development reve- nue bonds. The purpose of this bond is to refinance a portion of the construction indebtedness incurred when Brethren Care of South Bend, Inc. constructed a residential retirement facility in South Bend, Indiana. The retirement facility, known as St. Paul's Retirement Community, pre- sently employs approximately 85 persons with an approximate annual pay- roll of $715,000 in addition to normal fringe benefits. Due to the downturn in the economy and the depressed state of the local real estate market, occupancy levels at St. Paul's have been far lower than expected. As a result, St. Paul's is in default in its obligation to repay the $8,000,000 of economic development revenue bonds previously issued by the city as well as bank loans and other debt incurred in the construc- tion of the facility. The proposed financing appears to be the only present viable alternative for curing the project's financial problem and assuring the preservation of the existing jobs. Enclosed is a copy of our proposed inducement resolution as well as nine copies of this letter for the council members. Thank you very much for your cooperation in this matter. Sincerely, WI/9 Richard L. Mintz RLM/fn