HomeMy WebLinkAboutItem 2E: Resolution Authorizing Bonds for Cascade Manor
ECC
UGENE ITY OUNCIL
AIS
GENDA TEM UMMARY
Adoption of Resolution 4874 Authorizing the Issuance and Sale of Revenue Bonds in an
Aggregate Principal Amount Not to Exceed $20 Million for the Cascade Manor Project
by the Hospital Facilities Authority of the City of Medford, Oregon
Meeting Date: May 22, 2006 Agenda Item Number: 2E
Department: Central Services Staff Contact: Sue Cutsogeorge
www.eugene-or.gov Contact Telephone Number: 682-5589
ISSUE STATEMENT
Pacific Retirement Services, Inc. (“PRS”) and its affiliate, Cascade Manor, Inc., are requesting the
authority to proceed with the issuance of conduit or pass-through revenue bonds by the Hospital
Facilities Authority of the City of Medford in an amount not to exceed $20 million for the benefit of
Cascade Manor. The City of Eugene’s roles in this bond issue are determined by the IRS and by Oregon
statutes, and include the following actions: (1) to provide an opportunity for citizens to comment on the
issuance of tax-exempt debt, (2) to indicate its approval for the transaction, as required by the IRS, for
the proposed financing, and (3) to approve intergovernmental cooperation provision under ORS for the
issuance of the bonds. If the council agrees to this financing, Cascade Manor will be able to use less
expensive tax-exempt financing for its projects.
BACKGROUND
Pacific Retirement Services, Inc., on behalf of its affiliate, Cascade Manor, Inc., each an Oregon non-
profit 501(c)(3) corporation, is requesting that The Hospital Facilities Authority of the City of Medford,
Oregon (the “Authority”) issue non-recourse revenue bonds for and on behalf of Cascade Manor in an
aggregate principal amount not exceeding $20 million.
Cascade Manor owns a continuing care retirement community located at 65 West 30th Avenue. The
facility currently consists of 110 independent living units, 11 residential assisted living units and 22
health center beds. The original facility was built in the mid-1960s by a community-based, non-profit
corporation formed by a number of local churches. In 1996, the Board of Directors of Cascade Manor,
Inc., voted to merge into the Pacific Retirement Services, Inc. group of companies.
In August 2005, Cascade Manor completed construction of 50 garden apartments to meet the demands
of the market and to achieve greater economies of scale. In 2006, Cascade Manor will be undertaking
renovations to its health center and will be moving its residential living units. The entire garden
apartments project and a portion of the health center project will be financed and/or refinanced with the
proceeds of the proposed tax-exempt bond offering.
L:\CMO\2006 Council Agendas\M060522\S0605222E.doc
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
SUGGESTED MOTION
Move to approve Resolution 4874 authorizing the issuance and sale of revenue bonds in an aggregate
principal amount not to exceed $20 million for the Cascade Manor Project by the Hospital Facilities
Authority of the City of Medford, Oregon.
ATTACHMENTS
A.Public Hearing Report dated May 15, 2006 (including Notice of Public Hearing held May 15, 2006;
published in the Register-Guard, Eugene, Oregon on May 1, 2006)
B.Proposed Resolution
C.Form of Intergovernmental Agreement between the City of Eugene and the Hospital Facilities
Authority of the City of Medford
FOR MORE INFORMATION
Staff Contact: Sue Cutsogeorge
Telephone: 682-5589
Staff E-Mail: Sue.L.Cutsogeorge@ci.eugene.or.us
L:\CMO\2006 Council Agendas\M060522\S0605222E.doc
߬¬¿½¸³»²¬ ß
NOTICE OF PUBLIC HEARING
Monday, May 15, 2006
2:00 p.m.
Lane Council of Governments
Siuslaw Conference Room
rd
Wells Fargo Building, 3 Floor
99 East Broadway
Eugene, Oregon 97401-3111
NOTICE IS HEREBY GIVEN
that a public hearing will be held on Monday,
May 15, 2006, at 2:00 p.m. in the Lane Council of Governments’ Siuslaw Conference Room
rd
located at the Wells Fargo Building, 3 Floor, 99 East Broadway, Eugene, Oregon 97401-
3111 for the purpose of hearing public comments on a request by Pacific Retirement Services,
Inc. (“PRS”) and its affiliate, Cascade Manor, Inc. (the “Borrower”), to The Hospital
Facilities Authority of the City of Medford, Oregon (the “Authority”) with respect to the
authorization, execution, sale and delivery of Variable Rate Demand Revenue Bonds, Series
2006 (Cascade Manor Project) (the “Bonds”), in one or more series, in an aggregate principal
amount not exceeding $20,000,000.
The maximum dollar amount of Bonds to be issued to finance and/or refinance all of
the projects below is $20,000,000. The actual amount of Bonds issued for any specific
Project may be less than the maximum amount indicated. The proceeds of the Bonds shall be
used for the following purposes (collectively, the "Project"):
(i)to reimburse costs of the construction, furnishing and equipping of
approximately 50 new units, a fitness center and remodeling to the main
building at Cascade Manor, Inc. (the “Refunded Loan”) in the approximate
amount of $18,500,000; and
(ii)to construct additions, renovations, improvements or enlargements to the
health center at Cascade Manor, Inc. in the approximate amount of
$1,500,000.
All of the above assets composing the Project are located at 65 West 30th Avenue,
Eugene, Oregon 97403. The Borrower will be the initial owner of the Project.
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 City of Eugene, Oregon, as the
governmental unit having jurisdiction over the area in which the Project is located, will cause
a public hearing to be held regarding the issuance of the Bonds by the Authority. Separately,
the City Council of the City of Medford, Oregon, as the applicable elected representatives of
DOCSPO1:101628.2
42909-6 LAH
the Authority, will consider a Resolution approving the issuance of the Bonds by the
Authority.
The principal of 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, Oregon
nor any other political subdivision of the State of Oregon. The Bonds will be payable only
from the revenues and resources of the Borrower pledged to the payment of the Bonds and
any credit enhancement arranged for by the Borrower.
The purpose of the public hearing will be to provide a reasonable opportunity for
members of the public to express their views, orally or in writing, regarding the issuance of
the Bonds and the uses and purposes of the proceeds of the Bonds. The hearing will be
conducted in a manner that provides a reasonable opportunity for persons with differing views
to be heard on the question of the issuance of the Bonds. Written comments may be delivered
at the public hearing or mailed to the Lane Council of Governments, 99 East Broadway, Suite
400, Eugene, Oregon 97401-3111, Attention: Gary Darnielle.
This notice is published pursuant to the public approval requirements of Section 147(f)
of the Internal Revenue Code of 1986, as amended and the regulations and rulings issued
thereunder.
CITY OF EUGENE, OREGON
Published: May 1, 2006.
(Published in The Register-Guard, Eugene, Oregon14 days prior to meeting date).
DOCSPO1:101628.2
42909-6 LAH
ATTACHMENT B
RESOLUTION NO. _______
A RESOLUTION AUTHORIZING THE ISSUANCE AND SALE OF
REVENUE BONDS IN AN AGGREGATE PRINCIPAL AMOUNT NOT
TO EXCEED $20 MILLION FOR THE CASCADE MANOR PROJECT BY
THE HOSPITAL FACILITIES AUTHORITY OF THE CITY OF
MEDFORD, OREGON
The City Council of the City of Eugene, Oregon, finds as follows:
A.
Cascade Manor, a nonprofit 501(c)(3) corporation that is an affiliate of Pacific
Retirement Services, Inc., owns a continuing care retirement community located at 65 West 30th
Avenue, Eugene, Oregon. In August 2005, Cascade Manor completed construction of 50 garden
apartments to meet the demands of the market and to achieve greater economies of scale. In
2006, Cascade Manor will be undertaking renovations to its health center and will be moving its
residential living units. The entire garden apartments project and a portion of the health center
project will be financed and/or refinanced with the proceeds of the proposed tax-exempt bond
offering.
B.
The Hospital Facilities Authority of the City of Medford, Oregon will consider
providing tax-exempt conduit bond issuance authority of up to $20 million for the Cascade Manor
project (the “Bonds”). Under Section 147(f) of the Internal Revenue Code of 1986, as amended,
qualified 501(c)(3) bonds must 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).
C.
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.
D.
On May 1, 2006, a notice of public hearing was published in the Register-Guard, a
newspaper of general circulation within the City of Eugene. A Hearings Officer conducted a
public hearing on Monday, May 15, 2006 at 2:00 p.m. with respect to the proposed issuance by
The Hospital Facilities Authority of the City of Medford, Oregon of the Bonds. The Hearings
Officer produced a Public Hearing Report setting out the results of the public hearing. No
testimony was received at the Public Hearing.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of
Eugene, a municipal corporation of the State of Oregon, as follows:
Section 1.Bonds authorized.
The City Council of the City of Eugene hereby approves the
authorization, execution, sale and delivery by The Hospital Facilities Authority of the City of
Medford, Oregon of bonds the Bonds in an amount not to exceed $20,000,000.
US_WEST:260014460.1
42909-6
Section 2.Delegation.
The City Manager or the person designated by the City Manager to act on behalf of the City
pursuant to this Resolution (the “City Official”) is hereby authorized and directed, on behalf of the
City and without further action by the Council, to enter into an Intergovernmental Agreement for
the purpose of authorizing the Bonds and to execute and deliver any agreements or certificates
and take any other action in connection with each series of Bonds which the City Official finds is
desirable to permit the sale and issuance of that series of Bonds in accordance with this
Resolution.
Section 3.Effective Date.
This resolution shall take effect immediately upon adoption.
The foregoing Resolution adopted this ___ day of May 2006.
______________________________________
City Recorder
US_WEST:260014460.1
42909-6
ATTACHMENT C
INTERGOVERNMENTALAGREEMENT
BETWEEN THE HOSPITAL FACILITIES AUTHORITY OF THE CITY OF
MEDFORD, OREGON AND THE CITY OF EUGENE, OREGON RELATING
TO THE ISSUANCE BY THE HOSPITAL FACILITIES AUTHORITY OF
THE CITY OF MEDFORD, OREGON OF VARIABLE RATE DEMAND
REVENUE BONDS, SERIES 2006 (CASCADE MANOR PROJECT), IN ONE
OR MORE SERIES.
This Intergovernmental Agreement (the “Agreement”) is made and entered into between
The Hospital Facilities Authority of the City of Medford, Oregon (the “Authority”) and the City of
Eugene, Oregon (the “City of Eugene”) for the benefit of Cascade Manor, Inc. (the “Borrower”), a
nonprofit adult congregate care facility located in the City of Eugene, Oregon. The Authority
proposes to issue Variable Rate Demand Revenue Bonds, Series 2006 (Cascade Manor Project) (the
“Series 2006 Bonds”), in one or more series, in an aggregate principal amount not exceeding
$20,000,000, for and on behalf of the Borrower to finance and/or refinance the costs of the
following projects (collectively, the “Projects”):
(i)to refinance a loan between the Borrower and PremierWest Bank, which financed
the construction, furnishing and equipping of approximately 50 units at Cascade
Manor, Inc. (the “Refunded Loan”);
(ii)to construct additions, renovations, improvements or enlargements to the health
center at Cascade Manor, Inc.;
(iii)to provide working capital or capitalized interest; and
(iv)to pay certain costs of issuance of the Bonds.
RECITALS
A.The Authority and the City of Eugene desire to enter into this Agreement to provide
cost savings to the Cascade Manor, Inc., an adult congregate care facility located in the City of
Eugene and hereby agree that the Authority shall act as the issuer of the Series 2006 Bonds for the
Projects.
B.The Authority and the City of Eugene acknowledge that they have authority to
execute and deliver this Agreement pursuant to ORS 190.010 and ORS 441.575.
C.The Project is located at the follow addresses:
Cascade Manor, Inc.
th
65 West 30 Street
Eugene, Oregon 97403
NOW, THEREFORE, it is agreed by and between the Authority and the City of Eugene, as
follows:
1.Issuance by Authority. Pursuant to ORS 441.550(6) and 441.555, which provide that
an authority may issue revenue bonds to accomplish its purposes, and ORS 190.010, which provides
Intergovernmental Cooperation Agreement – Page 1
that units of local government (including any authority or city) may enter into intergovernmental
agreements and may agree to designate one of the parties to an intergovernmental agreement to
perform any or all functions and activities that a party to the agreement has the authority to perform,
the Authority and the City of Eugene agree that the Authority will be the issuer of the Series 2006
Bonds for the Projects.
2.Further Authority. This Agreement is executed by the parties hereto to clearly
identify the Authority as the issuer of the Series 2006 Bonds for the Projects and to further
supplement the existing authority of the Authority to issue the Series 2006 Bonds for the Projects
pursuant to ORS 441.550(8), which provides that an authority has the power to loan money for the
construction of and improvements to hospital facilities or adult congregate care facilities, and ORS
441.550(2), which provides that an authority has the power to improve and equip hospital facilities
or adult congregate care facilities within or without the corporate limits of the municipality by
which it was created.
3.Severability. If any provision of this Agreement shall be held to be invalid, illegal or
unenforceable, such invalidity, illegality or unenforceability shall not affect any other provisions of
this Agreement, but this Agreement shall be construed as if such invalid, illegal or unenforceable
provisions had never been contained herein.
4.No Liability on the Series 2006 Bonds. The parties to this Agreement shall not incur
any liability on the Series 2006 Bonds by reason of executing this Agreement. The Series 2006
Bonds are special nonrecourse obligations of the Authority payable solely from revenues or
resources provided by Cascade Manor, Inc. or its affiliates.
5.Counterparts. This Agreement may be executed in one or more counterparts each of
which shall constitute an original.
6.Governing Law. This Agreement shall be construed in accordance with and
governed by the laws of the State of Oregon.
IN WITNESS WHEREOF, the parties have set their hands as of this ___ day of ______,
2006.
THE HOSPITAL FACILITIES CITY OF EUGENE, OREGON
AUTHORITY OF THE CITY OF
MEDFORD, OREGON
By: ________________________________ By: ________________________________
Title: ______________________________ Title: _____________________________ _
Intergovernmental Cooperation Agreement – Page 2