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Re: Presbyterian Homes of Arden Hills, Inc. Project
<br />The City of Arden Hills (the "Arden Hills ") entered into a Contract for Private Development,
<br />dated December 20, 2010 (the "Development Contract "), with Presbyterian Homes of Arden Hills, Inc., a
<br />Minnesota nonprofit corporation (the "Borrower "), with respect to the proposed development by the
<br />Borrower of a senior housing facility comprising independent living units, assisted living units, and
<br />memory -care units (a combined total of approximately 166 dwelling units) to be located at 3120 and 3220
<br />Lake Johanna Boulevard in Arden Hills (the "Project "). The Project will replace an existing senior
<br />housing facility of the Borrower located at the same address, Pursuant to the terms of Article VII of the
<br />Development Contract, Arden Hills agreed to issue housing revenue bonds under the Municipal Housing
<br />Act, Minnesota Statutes, Chapter 462C, as amended (the "Housing Act "), to make a loan to the Borrower
<br />to finance the construction and equipping of the Project and related costs.
<br />At the request of the Borrower, the City Council of Arden Hills held a public hearing on the
<br />proposed issuance of housing revenue bonds to finance the Project and, following the public hearing,
<br />adopted Resolution No. 2011 -039 which: (i) approved a housing program prepared in accordance with
<br />the requirements of the Housing Act; (ii) granted preliminary approval to the issuance of housing revenue
<br />bonds to finance the Project; and (iii) authorized certain other actions to be taken by the Mayor, the
<br />Administrator, and Kennedy & Graven, Chartered, as bond counsel to Arden Hills
<br />Additionally, at the request of the Borrower the City Council of Arden Hills adopted a resolution
<br />(the "Final Resolution ") authorizing the issuance of: (1) a Senior Housing Revenue Note (Presbyterian
<br />Homes of Arden Hills, Inc. Project), Series 201 IA (the "Series 2011A Note "), in the original aggregate
<br />principal amount of $10,000,000; and (ii) a Senior Housing Revenue Note (Presbyterian Homes of Arden
<br />Hills, Inc. Project), Series 2012A (the "Series 2012A Note "), in the original aggregate principal amount
<br />of $10,000,000. The Final Resolution also approved certain documents referred to therein which
<br />authorize a loan of the proceeds derived from the sale of the Series 2011A Note and the Series 2012A
<br />Note (collectively, the "Notes ") to the Borrower and which provide security for the Notes. The proceeds
<br />derived from such loans will be applied by the Borrower to the financing of the Project.
<br />Under current federal tax law, Arden Hills cannot fund the total amount of financing sought by
<br />the Borrower for the Project.
<br />Because the total financing for the Project sought by the Borrower is $32,000,000, $12,000,000
<br />more than the 201 IA Note (issued on September 9, 2011) and the 2012A Note (to be issued in January
<br />2012), the Borrower has requested that the City of Little Canada issue a Senior Housing Revenue Note
<br />2011B (the "20118 Note ") in the original aggregate principal amount of $10,000,000 and a Senior
<br />Housing Revenue Note 2012B (the "20128 Note ") in the original aggregate principal amount of
<br />$2,000,000 to complete the financing package. The 2011B Note is expected to be issued on September
<br />30, 2011 and the 20128 Note is expected to be issued in January 2012, at least 15 days following issuance
<br />of the 2012A Note. The proceeds of sale of 2011B Note and the 2012B Note will fund loans to the
<br />Borrower that will be applied to the financing of the Project. Such loans will have the same terms and
<br />conditions as the loans funded with the proceeds of the 2011A Note and 2012A Note.
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