Item 2E: Resolution Authorizing Bonds for Cascade Manor

Home Browse Search

Section 147(f) of the Internal Revenue Code of 1986, as amended, requires that qualified 501(c)(3) bonds be approved by the applicable elected representatives of (1) the governmental unit issuing such bonds (The Hospital Facilities Authority of the City of Medford, Oregon) and (2) the governmental unit having jurisdiction over the area in which the project is located (the City of Eugene, Oregon). The principal and interest on the bonds will not constitute a debt of the City of Eugene, Oregon, the City of Medford, Oregon or the Authority, nor shall the bonds be payable from a tax of any nature levied upon any property within the City of Eugene nor any other political subdivision of the State of Oregon. The bonds will be payable only from the revenues and resources of Cascade Manor pledged to the payment of the bonds and any credit enhancement arranged for by Cascade Manor. The proposed tentative sale date for this financing is June 26, 2006, with a proposed financial closing on July 12, 2006. On Monday, May 15, a public hearing was held in Eugene pursuant to the provisions Section 147(f) of the Internal Revenue Code of 1986, as amended, for the purpose of hearing public comments on the request by Pacific Retirement Services and its affiliate, Cascade Manor, Inc. to The Hospital Facilities Authority of the City of Medford, Oregon with respect to the authorization, execution, sale and delivery of the bonds, in one or more series, in an aggregate principal amount not exceeding $20 million. No testimony was received at the hearing. A report on the hearing is included as Attachment A. The report also includes the text of the notice of public hearing that was published in the Register-Guard newspaper. The resolution authorizing this financing does two things. First, it fulfils the IRS requirement for approval of tax-exempt financing from the jurisdiction over the area in which the bonds are being issued. Second, it fulfils the ORS provision for intergovernmental cooperation in the issuance of the bonds. If the council approves the resolution, the City and the Authority will enter into an Intergovernmental Agreement pursuant to ORS 190.010 and ORS 441.550, 441.555 and 441.575 that will set forth the parties respective roles in any transaction and when the City agrees that the Authority will be the issuer of the bonds. The proposed form of the Intergovernmental Agreement is included as Attachment C. RELATED CITY POLICIES There are no City policies related to this item. COUNCIL OPTIONS The council can approve or not approve this bond financing. If the council does not approve the financing, Cascade Manor will not be able to proceed with issuance of the bonds and will not be able to take advantage of the cost savings from issuing tax-exempt bonds. The estimated savings to Cascade Manor from issuing tax-exempt bonds is $360,000 per year, or $5.4 million over 20 years. CITY MANAGER’S RECOMMENDATION The City Manager recommends approval of this motion. L:\CMO\2006 Council Agendas\M060522\S0605222E.doc