City Council Minutes of March 29, 2018

Date: 
March 29, 2018

 MINUTES OF THE SPECIAL CITY COUNCIL MEETING

MARCH 29, 2018

 

Pursuant to due call and notice thereof, a special meeting of the City Council of the City of Saint Peter was conducted in the Governors' Room of the Community Center on March 29, 2018.

A quorum present, Mayor Zieman called the meeting to order at 8:00 p.m.  The following members were present:  Councilmembers Grams, Brand, Pfeifer, Johnson, and Mayor Zieman.  Absent were Councilmembers Carlin and Kvamme.  The following official was present: City Administrator Prafke.

USDA Conditions Letter Acceptance –  City Administrator Prafke presented a draft resolution accepting the conditions outlined by the United States Department of Agriculture (USDA) for a loan to the City (Hospital) for construction of the 2018 Hospital Expansion Project.  Prafke noted that formal acceptance of the terms of conditions was recommended by both himself and the Hospital Commission and that failure to act before April would result in an increased interest rate for the loan package.  Prafke noted the loan would be for the construction project and for refinancing of the current General Obligation (G.O.) debt on the hospital which would remove the local tax payer obligation related to the G.O. debt.

Hospital CEO Rohrich also addressed the Council to explain that the loan, with the refinancing, would be in the total amount of $45,876,000, at 3.5% interest for 35 years.  Rohrich noted that some of the conditions of the loan included a $137,945 monthly payment (which had been included in the project feasibility study); creation of a debt reserve account that would require the Hospital to put 10% of the monthly loan payment into the account for the next ten years; maintaining at least a 1.25 debt service coverage ratio and at least 60 days of unrestricted cash on hand both of which the Hospital currently far exceeds; and maintaining fidelity bonds on certain employees of the Hospital.

Prafke noted that passing the resolution did not actually issue the debt, but rather established the resources for the debt and the debt, when the loan was finally closed, would result in a long-term mortgage for the project at the end of construction. 

Mayor Zieman asked when the $5,000,000 planned to be issued through a commercial lender would take place.  Rohrich indicated the debt placement was being coordinated by David Drown Associates and local lenders had already been contacted about participating in the bidding process on the loan. 

Rohrich also noted the City Council would have 120 days to change their mind about the loan, but adoption of the resolution would lock in the interest rate and reserve the total amount of the loan for the City’s project. 

In motion by Pfeifer, seconded by Brand, Resolution No. 2018-43 entitled “Resolution Accepting Conditions Of United States Department Of Agriculture (USDA) Financing For 2018 Hospital Expansion Project“ was introduced.  Upon roll call, with all in favor, the Resolution was declared passed and adopted.  A complete copy of Resolution No. 2018-43 is contained in the City Administrator’s book entitled Council Resolutions 22.

There being no further business, a motion was made by Pfeifer, seconded by Grams, to adjourn.  With all in favor, the motion carried and the meeting adjourned at 8:11 p.m.