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City of Mountain Iron, Minnesota



Resolution 19-99 DRCC Agreement

RESOLUTION NUMBER 19-99

GIVING APPROVAL TO A PROJECT BY DULUTH REGIONAL CARE CENTER, INC. UNDER MINNESOTA STATUTES, SECTIONS 469.152 THROUGH 469.165, REFERRING THE PROPOSAL TO THE MINNESOTA DEPARTMENT OF TRADE AND ECONOMIC DEVELOPMENT FOR APPROVAL, AND APPROVING A JOINT POWERS AGREEMENT

BE IT RESOLVED, by the City Council (the “Council”) of the City of Mountain Iron, St. Louis County, Minnesota (the “City”) as follows:

Section 24590. Recitals.

The purpose of Minnesota Statutes, Sections 469.152 through 469.165 as amended, relating to municipal industrial development (the “Act”), as found and determined by the legislature, is to promote the welfare of the State of Minnesota (the “State”) by the active promotion, attraction, encouragement and development of economically sound industry and commerce through governmental action to prevent, so far as possible, the emergence of blighted and marginal lands and areas of chronic unemployment.

Factors necessitating the active promotion and development of economically sound industry and commerce are the increasing concentration of population in the metropolitan areas and the rapidly rising increase in the amount and cost of governmental services required to meet the needs of the increased population and the need for development of land uses which will provide an adequate tax base to finance these increased costs and access to employment opportunities for such population.

Under the Act, the City is authorized and empowered to issue revenue bonds or a revenue note to finance or refinance all or any part of the costs of a project consisting of the refinancing of debt incurred with respect to, or acquisition and betterment of, health care facilities and to refund bonds previously issued under the Act.

As required by the Act and Section 147(f) of the Internal Revenue Code of 1986, as amended (the “Code”), an initial resolution was adopted on May 3, 1999, scheduling a public hearing on the proposed issuance of a revenue note, in one or more series, in an amount not to exceed $1,926,000 (the “Note”) to finance the costs of a project (the “Project”), a portion of which is located in the City, as described in Exhibit A hereto, all with respect to The Duluth Regional Care Center, Inc., a Minnesota nonprofit corporation (the “Corporation”).

The Project will be owned and operated by the Corporation.

As more fully described in Exhibit A, portions of the Project are located in the City, the City of Two Harbors (the “Issuer”), and the Cities of Aurora, Duluth, and Virginia, Minnesota (collectively, the “Host Cities”).

The Corporation has requested that the City, the Issuer, and the Host Cities cooperate through a joint powers agreement to finance the Project through the issuance of the Note by the Issuer pursuant to the Act. A draft copy of the Joint Powers Agreement among the City, the Issuer and the Host Cities (the “Joint Powers Agreement”) has been submitted to the Council and is on file in the office of the City Administrator.

The City has been advised by representatives of the Corporation that: (i) conventional financing is available only on a limited basis and at such high costs of borrowing that the economic feasibility of operating the Project would be significantly reduced; (ii) on the basis of information submitted to the Corporation and their discussions with representatives of area financial institutions and potential buyers of tax-exempt bonds, the Note could be issued and sold upon favorable rates and terms to finance the Project; (iii) the Corporation will experience a significant debt service cost savings as a result of the Project; and (iv) the Project would not be undertaken but for the availability of financing under the Act.

As required by the Act and Section 147(f) of the Internal Revenue Code of 1986, as amended (the “Code”), the Issuer and the Host Cities have held or will hold public hearings; and the City has on June 7, 1999, held a public hearing on the issuance of the Note to finance the Project, at which all those appearing who desired to speak were heard and written comments were accepted.

Section 24591. Findings. It is hereby found, determined, and declared as follows:

a. The welfare of the State and the City requires the provision of necessary health care facilities so that adequate health care services are available to residents of the State and the City at reasonable cost.

b. The City desires to facilitate the selective development of the community, retain and improve the tax base and help to provide the range of services and employment opportunities required by the population. The portion of the Project located in the City will assist the City in achieving those objectives; help to stabilize market valuation of the City; help maintain a positive relationship between assessed valuation and debt; and enhance the image and reputation of the community.

c. On the basis of information made available to this Council by the Corporation it appears, and this Council hereby finds, that: (1) the Project constitutes properties, real and personal, used or useful in connection with a revenue producing enterprise engaged in providing health care services within the meaning of Subdivision 2(d) of Section 469.153 of the Act; (2) the Project furthers the purposes stated in Section 469.152 of the Act; (3) the Project would not be undertaken but for the availability of financing under the Act and the willingness of the Issuer to furnish such financing; and (4) the effect of the Project, if undertaken, will be to: (i) encourage the development of economically sound industry and commerce, (ii) assist in the prevention of the emergence of blighted and marginal land, (iii) help prevent chronic unemployment, (d) help the City retain and improve the tax base, (iv) provide the range of service and employment opportunities required by the population, (vi) help prevent the movement of talented and educated persons out of the State and to areas within the State where their services may not be as effectively used, (vii) promote more intensive development and appropriate use of land within the City, eventually to increase the tax base of the community, and (viii) provide adequate health care services to residents of the City at a reasonable cost.

d. The Corporation has represented to the City that no public official of the City has either a direct or indirect financial interest in the Project nor will any public official either directly or indirectly benefit financially from the Project.

e. The City acknowledges, finds, determines and declares that the provision of necessary health care facilities so that adequate health care services are available to residents of the State at a reasonable cost is a public purpose.

Section 24592. State Approval.

a. That portion of the Project located in the City but outside of the jurisdictional limits of the Issuer and the Host Cities, and the portion of the Note relating thereto, are hereby given approval by the City subject to the approval of the Project by the Department of Trade and Economic Development of the State (“DTED”).

b. In accordance with Subdivision 3 of Section 469.154 of the Act, the officers of the City or their designees, are authorized and directed to cooperate with the Issuer in submitting the proposal for the Project to DTED requesting approval, and other officers, employees and agents of the City are hereby authorized to provide DTED with such information as it may require.

Section 24593. Limited Obligations. The Note, when and if issued for the Project, shall not constitute a charge, lien or encumbrance, legal or equitable, upon any property of the City. (There will, however, be a charge, lien or encumbrance on the Project, which is not an asset of the City.) The Note, when and if issued, shall recite in substance that the Note and the interest thereon, are payable solely from revenues received from the Project and property pledged for payment thereof, and shall not constitute a debt of the City.

Section 24594. Approval and Execution of Joint Powers Agreement.

a. The Joint Powers Agreement is hereby made a part of this Resolution as though fully set forth herein and is hereby approved in substantially the form presented to the City Council. The Mayor and the City Administrator are authorized and directed to execute, acknowledge, and/or deliver the Joint Powers Agreement on behalf of the City with such changes, insertions, and omissions therein as the City Attorney may hereafter deem appropriate, such execution to be conclusive evidence of approval of such document in accordance with the terms hereof.

b. The Mayor and City Administrator are authorized and directed to execute and deliver such other documents or certificates needed from the City for the sale of the Note.

c. The approvals in this Section 5 are specifically subject to approval of the Joint Powers Agreement by the Issuer and the Host Cities and approval of the Project by DTED.

Duly Adopted this 7th day of June, 1999. 

EXHIBIT A

PROJECT DESCRIPTION

Finance the costs of a project (the “Project”) on behalf of the owner, The Duluth Regional Care Center, Inc., a Minnesota nonprofit corporation (the “Corporation”) consisting of (a) the acquisition of a new facility; (b) refinancing debt incurred by the Corporation with respect to real and personal property; and (c) financing real property improvements, all as described below: 

Name; Location
Facility Description
Facility Refinancing
Acquisition
Improvements
Max. Amount to be Issued (City Totals)

Aurora

417 Main Street South

Aurora, MN
6-bed intermediate care
$107,950

AURORA TOTAL

$111,000

Daniels

4824 Daniels Road

Duluth, MN
3-bed supervised living services for the developmentally disabled
74,077

Endion

5729 West 8th Street

Duluth, MN
8-bed semi-independent living situation for the developmentally disabled
161,032

$50,000

Galere

4357 Martin Road

Duluth, MN
4-bed supervised living services for the developmentally disabled
87,708

Jitney

1819 Melrose Avenue

Duluth, MN 
4-bed supervised living services for the developmentally disabled
16,286

Merritt

4130 West 8th Street

Duluth, MN
3-bed supervised living services for the developmentally disabled
48,845

New Facility

101 W. Mankato St.

Duluth, MN
3-bed supervised living services for the developmentally disabled

$119,900
30,000

Noumenon

552 Anderson Road

Duluth, MN
4-bed supervised living services for the developmentally disabled
29,849

Office Building

728 Garfield Avenue

Duluth, MN
3,200 square feet, 1-story administrative office building
207,487

Rockridge

1410 Brainerd Avenue

Duluth, MN
4-bed supervised living services for the developmentally disabled
77,566

Triggs

2812 Triggs Avenue

Duluth, MN 
3-bed supervised living services for the developmentally disabled
50,616

Triplex

420 E. McCuen Street

Duluth, MN 
9-bed intermediate care
298,210

Woodland

430 W. Faribault St.

Duluth, MN
4-bed supervised living services for the developmentally disabled
124,895

DULUTH TOTAL

1,405,000

South Grove

15 Arbor Lane

Mountain Iron, MN
4-bed intermediate care
100,638

MOUNTAIN IRON TOTAL

103,000

Caromin

832 15th Avenue

Two Harbors, MN
4-bed supervised living services for the developmentally disabled
108,500

14,000

Thalassic

1815 Highway 61

Two Harbors, MN
6-bed intermediate care
37,008

40,000

TWO HARBORS TOTAL

204,000

North Side

220 Fifth Street North

Virginia, MN 
4-bed supervised living services for the developmentally disabled
100,138

VIRGINIA TOTAL

103,000

TOTAL

1,630,805
119,900
134,000
1,926,000

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