DEPARTMENT: Enterprise Finance and Information Services Administration
FILE TYPE: Regular Action
TITLE
title
Public Hearing On A Resolution Approving A Project by Farmington Health Services And Consenting To Issuance Of Tax-Exempt Obligations By City Of Morris, Minnesota And Approving Cooperation Agreement
end
PURPOSE/ACTION REQUESTED
Conduct a public hearing at 9:00 a.m. on March 26, 2024 to approve a resolution on a project by Farmington Health Services and consenting to issuance of tax-exempt obligations by the City of Morris, Minnesota and approving a cooperation agreement with the City of Morris, Minnesota.
SUMMARY
In 2019, Dakota County (County) acted as the host for financing for a project in Farmington owned by St. Francis Services of Morris and Farmington Health Services. The project included improvements to a health care and senior living campus.
St. Francis has approached the County about serving as the host for the next phase of their project. The project includes the demolition of two wings, reconstruction of 20 private rooms, reconstruction of the connecting walkway to the memory care building and associated infrastructure improvements to a health care facility. The host government entity, in this case the City of Farmington or Dakota County, must hold a public hearing on the project and adopt a resolution of support. In discussions with St. Francis bond counsel for the project, it was shared that is easier to continue the host relationship with the County since we served as host in 2019 as opposed to asking the City of Farmington to become the host for the next phase.
The project will be funded by bonds issued by the City of Morris, Minnesota (City of Morris) where St. Francis is located. Morris will be responsible for the repayment of the bonds. An addition to this process compared to the work that was done in 2019 is the need of a cooperation agreement, which is a joint powers agreement under Minn. Stat. § 471.59, with the City of Morris. This agreement is necessary under state statute for the City of Morris to be able to issue financing related to the project.
Staff have discussed this issue with the Farmington Mayor and City Administrator, and they had no concerns with the County serving as the host on this project.
RECOMMENDATION
recommendation
Staff recommends that the County Board conduct the public hearing to receive comments on Dakota County serving as the host on the issuance of tax-exempt obligations by the City of Morris, Minnesota and adopt the resolution approving a project by Farmington Health Services and consenting to the issuance of tax-exempt obligations by the City of Morris, Minnesota which includes approving a cooperation agreement between the City of Morris, Minnesota and Dakota County.
end
EXPLANATION OF FISCAL/FTE IMPACTS
Dakota County is not financially participating in the issuance of the bonds. There is no fiscal impact on Dakota County from conducting the public hearing and approving the issuance of the bonds as the host government entity.
☒ None ☐ Current budget ☐ Other
☐ Amendment Requested ☐ New FTE(s) requested
RESOLUTION
body
WHEREAS, Farmington Health Services, a Minnesota nonprofit corporation and an affiliate of St. Francis Health Services of Morris, Minnesota, Incorporated wishes to finance the cost of the construction and improvements of a health care facility (Project); and
WHEREAS, in 2019, Dakota County (County) acted as the host government for a similar project for St. Francis Health Services; and
WHEREAS, the Project is located within the jurisdictional limits of the County and the City of Farmington; and
WHEREAS, the City of Morris proposes to finance the 2024 project through an issuance of tax-exempt revenue obligations in the amount not to exceed $11,000,000 designated Health Care Facilities Revenue Bonds (Obligations); and
WHEREAS, the County can and is willing to fulfill the role of host government for Internal Revenue Service compliance since the project is located within Dakota County; and
WHEREAS, the Notice of Public Hearing was published in the Hastings Journal, the County’s official newspaper and a newspaper of general circulation on March 7 and 14, 2024, calling a public hearing on the proposed issuance of the Obligations, and the proposal to undertake and finance the Project; and
WHEREAS, on March 26, 2024, at 9:00 a.m., the Dakota County Board of Commissioners convened a public hearing on the proposed issuance of the Obligations and to undertake and finance the Project.
NOW, THEREFORE, BE IT RESOLVED, That the capitalized terms used in this Resolution have the meanings assigned:
Act: Sections 469.152 through 469.1655, as amended.
Authorized Officers: the Chair and County Manager of the County.
Bond Counsel: Fryberger, Buchanan, Smith & Frederick, P.A.
Borrower: Farmington Health Services, a Minnesota nonprofit corporation and organization described in Section 501(c)(3) of the Code.
City: the City of Farmington, Minnesota.
Code: the Internal Revenue Code of 1986, as amended.
Cooperation Agreement: means the Cooperation Agreement between the County and the Issuer relating to the exercise of joint powers pursuant to the Extraterritorial Projects Act.
Corporations: collectively, the Borrower and St. Francis Health Services of Morris, Inc.
County: means Dakota County, Minnesota.
Extraterritorial Projects Act: means Minn. Statutes, Section 471.656.
Governing Body: the Board of Commissioners of the County.
Issuer: the City of Morris, the issuer of the Obligations.
Obligations: the Issuer’s Health Care Facilities Revenue Bonds (Farmington Health Services), Series 2024.
Project: the construction, demolition, reconstruction, improving, renovating, furnishing and equipping of the health care facilities located at 905 Elm Street, in Farmington, Minnesota, including the demolition of two original wings, reconstruction of 20 private rooms, reconstruction of the connecting walkway to the memory care building, and associated HVAC infrastructure improvements.
Qualified Services and Activities: health care facilities and services or revenue-producing facilities and services of organizations described in Section 501(c)(3) of the Code and activities for mentally or physically disabled persons or providing social services, such as providing assistance to the poor, distressed or underprivileged.
; and
BE IT FURTHER RESOLVED, That Representatives of the Corporations have represented to the County that each Corporation is a Minnesota nonprofit corporation and organization described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended, engaged directly or through one or more of its affiliated organizations in providing Qualified Services and Activities. The Corporations’ affiliated organization involved with the operation of the Project is the Borrower; and
BE IT FURTHER RESOLVED, That Representatives of the Corporations have further advised the County that the Corporations desire to finance, on a tax-exempt basis, the cost of the Project. A portion of the proceeds of the Obligations will be used to fund a debt service reserve fund, pay capitalized interest and costs of issuance of the Obligations; and
BE IT FURTHER RESOLVED, That at the request of the Corporations, the Issuer has expressed its intent to finance the Project through the issuance of tax-exempt revenue obligations in an amount not to exceed $11,000,000 (the Obligations); and
BE IT FURTHER RESOLVED, That Bond Counsel has informed representatives of the Corporations that in order for the Obligations to be issued on a tax exempt basis, and in order to comply with Minnesota laws restricting the issuance of obligations by one municipality, the County must (i) conduct a public hearing on the proposal of the Corporations to undertake the Project and (ii) consent to the issuance of the Obligations by the Issuer as described in the Cooperation Agreement; and
BE IT FURTHER RESOLVED, That the Obligations, when, as and if issued, shall not constitute a charge, lien or encumbrance, legal or equitable, upon any property of the County or the Issuer, and the Obligations, when, as and if issued, shall recite in substance that the Obligations, including interest thereon, are payable solely from the revenues received from the Corporations and the property pledged to the payment thereof, and shall not constitute a debt of the County or the Issuer within the meaning of any constitutional or statutory limitation; and
BE IT FURTHER RESOLVED, That the Board of Commissioners has, on March 26, 2024, held a public hearing on the proposal to undertake and finance the Project, through the issuance of the Obligations by the Issuer, at which all those appearing who desired to speak were heard and written comments were accepted, if submitted; and
BE IT FURTHER RESOLVED, That the Dakota County Board of Commissioners has approved the proposal of the Corporations to undertake and finance the Project and for the issuance of the Obligations by the Issuer; and
BE IT FURTHER RESOLVED, That the Dakota County Board of Commissioners hereby authorizes the County Manager, or their designee, to execute a Cooperation Agreement with the City of Morris, Minnesota to fulfill the role of host government for Internal Revenue Service compliance, subject to approval by the County Attorney’s Office as to form; and
BE IT FURTHER RESOLVED, That the Dakota County Board of Commissioners hereby authorized the County Manager, or their designee, to execute and deliver any other documents or certificates needed from the County for the issuance of the Obligations.