CC PACKET 02061996 - Laserfiche WebLink

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01/30/96 TUE 16:25 FAX 16123402644 DORSEY WHITNEY zoo0 34 . MEMORANDUM TO: Michael Mornson FROM: Jerry Gilligan DATE: January 30, 1996 RE: Chandler Place I have reviewed the January 26, 1996 letter from Joe Guertin of the Sage Company to you concerning the proposed refunding of the bonds issued by the City in 1985 to finance the Chandler Place project and have the following comments: 1. The City is under no obligation to issue the refunding bonds. 2. The 1985 bonds are callable on each June 1 and December 1 and because • of federal tax law restrictions the refunding bonds may not be issued more than 90 days prior to the redemption date. This means that there is a 90-day "window" to issue the refunding bonds ending on June 1, and if the refunding bonds are not issued during this period the next "window" to issue the refunding bonds is in the 90-day period ending on December 1. 3. The expansion of the nursing home referred to in Mr. Guertin's letter can only proceed if the request for an exception from the state moratorium on nursing home expansion and improvements is granted by the State. At our meeting last week the representatives from the nursing home indicated that they do not expect the State to rule on its request until April. If the motatoriiim exception is approved the nursing home will then need to arrange financing for the expansion and make the other necessary construction arrangements. If the City were to issue the refunding bonds this Spring and the basis for agreeing to issue the refunding bonds is the expansion of the nursing home the City will need assurances that the expansion will be completed. The City could require that the owner of Chandler Place agree that it will not apply for the lower tax classification until the niitsing home expansion is completed, or, provide for the delivery to the City of a letter of credit or other form of security to secure the obligation to complete the nursing home expansion. If the nursing home expansion is not completed the City could draw on the letter of credit to cover the lost tax revenue. In additibn, the City may wish to require an assessment agreement providing a minimum market value for the nursing home. DORSEY & WHITNEY P.L.L.P.