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HomeMy WebLinkAboutRes2007-050 L L L Sponsored by: Oates CITY OF SEWARD, ALASKA RESOLUTION 2007-050 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SEWARD, ALASKA, AMENDING RESOLUTION 2006-28 REGARDING AUTHORIZATION TO ISSUE LONG TERM CARE FACILITY REVENUE BONDS OF THE CITY IN THE PRINCIPAL AMOUNT OF NOT TO EXCEED $27,000,000 WHEREAS, the City of Seward, Alaska (the "City") adopted Resolution 2006-28 authorizing long term care facility revenue bonds of the City in the principal amount of not to exceed $27,000,000 for the purpose of providing amounts to finance, design, acquire, construct and equip a long term care facility in the City; and WHEREAS, since that time the City has diligently pursued a certificate of need from the State of Alaska and such certificate of need has been acquired; and WHEREAS, the City submitted an application to the Alaska Municipal Bond Bank for the purpose of issuing bonds through the Bond Bank at additional cost savings to the City; and WHEREAS, in April 2007 the Bond Bank authorized a loan to the City subject to certain conditions. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SEWARD, ALASKA, that: Section I. The City Council recognizes that there are hospital bonds outstanding related to the construction of the Seward Providence Hospital and that such bonds will mature in 2013. Each year the City Council has appropriated I % of the City's sales tax revenues for payment of annual interest and principal on those hospital bonds. With the understanding that the City Council cannot bind future City Councils, we wish to state our intent that, following the maturity of the existing bonds in 2013, the City staff will include in its annual budget for approval by Council a request that the I % sales tax historically allocated for hospital purposes continue to be appropriated for hospital purposes, including, but not limited to, potential payment of debt service payments on the long term care facility revenue bonds. This is understood to be a moral, but not a legal, obligation of the City. Section 2. Following the issuance of long term care facility revenue bonds pursuant to Resolution 2006-28, if any future Parity Bonds (as defined in Resolution 2006-28) are issued such Parity Bonds shall not be issued without the prior consent of the Alaska Municipal Bond Banle Section 3. The name ofthe Bonds wiII reflect the year in which they are issued instead of 2006. CITY OF SEWARD, ALASKA RESOLUTION 2007-050 Section 4. Resolution 2006-28 remains in full force and effect without further amendment except as stated herein. Section 5. This resolution shall become effective 30 days from adoption and posting. PASSED AND APPROVED by the City Council of the City of Seward, Alaska, this 14th day of May, 2007. THE CITY OF SEWARD, ALASKA v1f~Mf:!0-- AYES: NOES: ABSENT: ABSTAIN: Dunham, Val datta, Schafer, Thomas, Amberg, Shafer None Bardarson None ATTEST: Jo~':C?<~ City Clerk ,,'I'" II II"!I. ........--t Of StIl1;"" ~ ~ ........ '4~ ~ $ ()- ....o?-po~:>:~O ~ .. .'-'>..V ~. ~ (City Seal) :::~ -- ,-,'. :. ." : ~ .- : e i SE1\L : g = - ~ : - ~ \ -.- :: -:.: .... ",,- fl,. ... ~ ..~ \P~ ....~~ 1 ..9J>"*,~ $ ~.~ "<1>-..:.....1... tf-i ,.... ~,,,~ c: OF f>..~ ".... '1'11311\'" u u ~ Council Agenda Statement Meeting Date: May 14, 2007 Through: Phillip Oates, City Manager From: Kristin Erchinger, Finance Director Agenda Item: Long-Term Care Facility Revenue Bonds BACKGROUND & JUSTIFICATION The Seward City Council authorized the issuance of $27 million in revenue bonds to construct a new long-term care facility, on March 13, 2006. Since that time, the facility and infrastructure have been designed on two sites, the City has applied for and been awarded the State’s approval for a Certificate of Need to construct the facility, and the City has received approval from the Alaska Municipal Bond Bank for the issuance of the bonds. In order to complete the loan agreement with the Bond Bank, the City was asked to address two issues of concern to the Bond Bank. First, the Bond Bank board wanted assurance that the City would seek the Bond Bank’s approval prior to the future issuance of additional Parity Bonds backed by the revenues of the long-term care facility. Second, the Bond Bank board members wanted some assurance that the Seward City Council would continue Seward’s long tradition of utilizing the 1% sales tax toward hospital-related capital and operating costs. While the board clearly understands that one Council is unable to bind the actions of future Councils, they wanted some assurance that the intent is to continue utilizing the sales tax for hospital purposes. This added level of assurance tells the Bond Bank that, in the event there is a significant change to the reimbursement methodology currently employed by Medicaid, and such change adversely impacts reimbursements to the long-term care facility, the City would potentially have a revenue source available to assist in the payment of debt service. The City of Seward implemented its current sales tax on March 8, 1982 for the sole purpose of funding the local hospital. The vote was unanimous by those Council members then voting on the Ordinance. A special election was held with 340 voters, where 260 (76%) voted in favor, and 80 (24%) were opposed. Since 1982, 100% of that one cent sales tax has been appropriated each year to hospital operating and capital costs. In addition, the City has contributed additional funds for capital needs. The annual revenues from this one cent sales tax are approximately $900,000. The current hospital bonds mature in 2013. CONSISTENCY CHECKLIST Where applicable, this resolution is consistent with the Seward City Code, Charter, Comprehensive Plans, Land Use Plans, Strategic Plan and City Council Rules of Procedures. Other: FISCAL NOTE The City intends to issue $27 million in Revenue Bonds, with revenues from the co-located hospital and long- term care facility supporting repayment of the debt service. Annual debt payments on the bonds are estimated to be between $1.8 and $2.1 million, depending on the final amortization period selected for repayment. Approved by Finance: ___________________________________ RECOMMENDATION City Council approve Resolution 2007- , authorizing specific additional provisions to the original Bond Resolution approved by the Seward City Council on March 13, 2006.