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Fe. ~t.* I REFINANCING OF ANOKA COUNTY HRA BONDS RELATING TO THE SAVANNAH OAKS SENIOR HOUSING PROJECT By: Diana Lund, Finance Officer Background: In 1998 the City entered into a Joint Powers agreement with the Anoka County Housing and Redevelopment Authority (HRA) to fund the construction ofthe City's Senior Housing project currently known as Savannah Oaks. There was a total of$4,195,000 in debt issued to fund the project. The County HRA issued a $3,000,000 Revenue bond that was backed by the City's General Obligation Pledge (City's taxing/levying power) and the City issued a $1,195,000 Tax Increment Financing Bond currently being paid with rental revenue and a annual HRA levy and backed by Tax Increment District #4. The City had a separate bond issue as a County HRA can only issue a maximum of three million. The Joint Powers Agreement between the Anoka County HRA and the City stated that first priority would be given to Ramsey residents if they chose to live in the Savannah Oaks building. Second priority would be to family members of Ramsey residents and then last priority would be give to all of Anoka County residents. Anoka County HRA recently contacted the City about refinancing of the HRA bonds due to the current interest rates. They are proposing to remove the City's general obligation pledge in exchange that the Ramsey resident priority be removed when there is a vacancy available. Thus, an opening would be open to all Anoka County residents. If the City were to agree with having the County refund its bonds with the County's General Obligation Pledge as the ultimate source of security, the County will ask for the City to amend the Joint Powers agreement that will remove the City's General Obligation Pledge and revise the priority list for residency. The County is also asking for a 5-year operating deficit agreement, which is similar to what the County has with other HRA- financed senior housing projects. Under this agreement, if project revenues (rent fees) plus the HRA levy are insufficient to pay the operating expenses of the facility (not debt service), the City would be required to fund such a deficit for a period of five years only. If this excess expenditure was ever required, the City has approximately $500,000 from prior year BRA levy collections, currently being held at the County. Ehlers and Associates, who are the County's bonding/financial consultants, will be present to discuss the refinancing. Funding Source: The debt attributed to the project has been financed by the rental revenue of Savannah Oaks and the annual HRA County levy.