Minutes - 2010/12/13 - Laserfiche WebLink

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Mounds View City Council December 13, 2010 Regular Meeting Page 5 H. Resolution 7717, Relating to Issuance of the City's Multifamily Housing Revenue Bonds (Select Senior Living of Mounds View Project), Series 2010 as Temporary Bonds and Authorizing the Issuance of Multifamily Housing Revenue Refunding Bonds (Select Senior Living of Mounds View Project), Series 2011 and the Execution of Various Related Documents. Finance Director Beer explained the Council began the bonding process with Select Senior Living in July by passing Resolution 7672 which authorized the issuance of housing revenue bonds. At this time, Select Senior Living was requesting temporary bonds which would allow the market place to clear the over abundance of revenue bonds. Staff recommended approval of the resolution as submitted. Scott McLendan, Oppenheimer, explained Select Senior Living was facing several concerns with the timing of this bond issuance. The market was flooded with housing revenue bonds at this time due to the Build America Program. These excess bonds have created a glut in the market which needed to clear before a favorable bond rate could be guaranteed. The temporary issuance of the $14 million in bonds was a positive option for the developer to continue with the project. He indicated the bonds would then be refunded at a more favorable rate in the near future. Mr. McLendan further reviewed bond market specifications with the Council. Council Member Mueller questioned if the stock market had any bearing on the bond rating. Mr. McLendan stated the stock market had no effect on the bond rating but when there was more confidence on the stock market, funds moved from bonds to stocks. Council Member Mueller asked what impact an extension of the Build America bonds would have on the proposed housing revenue bonds. Mr. McLendan indicated he did not anticipate an extension of the program. However, there was always a chance and if extended more issuers would be moving to the bond market during third and fourth quarter of 2011. Council Member Mueller questioned if the City was at any additional risk by issuing temporary bonds that would then need to be refunded in the future. Mr. McLendan stated there was no more risk than the original request to issue bonds as Mounds View was acting as the conduit and was not fiduciarily responsible for these bonds. Jenny Bolton, Kennedy Graven, agreed there was no difference in this bond issuance as the borrower was responsible for the payments on these bonds. Council Member Hull asked why the request was before the Council and if the project was still on schedule. Joe Larson, Select Senior Living developer, explained the bond allocation was due tomorrow at noon and if not completed the project would be done. Mayor Flaherty questioned if Oppenheimer was underwriting the temporary bonds. Mr. McLendan stated a private purchaser was funding the entire $14 million in temporary bonds. Mayor Flaherty commended Mr. Larson for working so diligently on this project. He felt the project would greatly benefit the City of Mounds View.