Discussion:
Benedictine Health System, a Minnesota nonprofit corporation and an organization described in Section 501(c)3 of the Internal Revenue Code of 1986, as amended, will construct approximately 116 independent living apartments, 43 assisted living units and 24 memory care units at Windermere west of Marystown Road and south of 17th Avenue in Shakopee. They are requesting that the City of Shakopee issue its revenue obligation in one or more series in the maximum amount of $62 million for the development.
The Bonds will be secured solely by the revenues derived from a loan agreement to be executed by the city and the borrower and from other security provided by the borrower. The Bonds will not be a general or moral obligation of the city and will not be secured by or payable from any property or assets of the city and will not be secured by any taxing power of the city. The Bonds are not subject to any debt limitation imposed on the city and issuance will have no impact on the credit rating of the city.
Because the principal amount of the bonds exceeds $10 million, the city will be unable to designate the Bonds or any other bonds to be issued by the City in 2018 as bank qualified. The city at this time has no plans to issue any debt in 2018.
The borrower has agreed to pay the city's out of pocket expenses with respect to this transaction as wells as the city's administrative fee.