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Item 6C v AGENDA ITEM # 6 C NOVEMBER 13, 2006 CITY OF ATLANTIC BEACH CITY COMMISSION MEETING STAFF REPORT AGENDA ITEM: Proposed City of Atlantic Beach, Florida Health Caze Facilities Revenue Bonds (Fleet Landing Project), in aggregate principal amount not to exceed $20,000,000„ SUBMITTED BY: Jim Han~n~_1' DATE: November 6, 2006 BACKGROUND: Naval Continuing Cie Retirement Foundation, Inc., a Florida not-for-profit corporation known as "Fleet Landing" is requesting that the City of Atlantic Beach Issue Health Care Facilities Revenue Bonds for the purpose of expanding their facilities and remodeling some of the ~;xisting facilities. The development of health caze facilities is an authorized public purpose for issuing',tax exempt bonds because it will provide modern and efficient continuing care for the city and county. The City of Atlantic Beach, being an incorporated municipality is a local agency authorized to finance and refinance this project. Fleet Landing requests that the City of Atlantic Beach be the issuer of the bonds in order to obtain the lowest possible interest rates. The City was the original issuer of the existing outstanding bonds in 1989. The outstanding portion of those bonds were refinanced in 1999 in the amount of $45,580,000 by the City. The City benefits from the issuance of the bonds by the expanded development of the health care facility and the positive economic impact on the community. The principal and interest payments of the bonds as well as the issuance cost are entirely the responsibility of Fleet Landing. The issuance of these bonds will be of no cost to the City of Atlantic Beach. RECOMMENDATION: Pass resolution #06-16 authorizing the Mayor to sign the Memorandum of Agreement necessary to enable Fleet Landing to proceed with its financing of the expansion of the Fleet Landing Health Care Facility ATTACHMENTS: • Memo from Alan Jensen, City Attorney • Letter from John Meserve, Executive Director of Fleet Landing • Application for Approval of the Health Care Facility Bonds • Memorandum of Agreement • Resolution 06-16 ,.. ALAN C. JENSEN Attorney at law 935 North Third Streit Post Office )3ox 50457 .lsetttgovillo Beach, Florida 32240-04$7 Telephone (904) 246.2500 November 6, 206 ~' James R. Hanson, City Manager City of Atlantic Beach 800 Seminole Road "~ Atlantic Beach, FL 32233 RE: Fleet Landing Project Health Care Facilities Revenue Bonds Dear Jim: `VIiA FACS)<M)(Y.E (904) 247-5805 T have re~rie~cred all documents provided to me by the attorneys for Fleet Landing, together with the Application Far Approval with attached documents submitted by Fleet I.,anding, including the Resolution and the Memorandum of Agreement, and find no problem with those documents. Y would certainly recommend that the City Commission pass the Resolution and authorize execution of the Memorandum of Agreement. Basically, this is a situation where the City is used as a "conduit" for issuance of the bonds, and the City has previously done virtually the same thing with Fleet Landing in Navernber, 1999. There is no obligation or liability imposed on the City as a result of passage of the Resolution, execution of the Memorandum of Agreement, and subsequent issuance of the bonds. Furthermore, there is no expense to the City either, in that Fleet Landing pays any all expenses incurred by the City. If you have any questions or need anything further from me in this regard, please don't hesitate to contact me. Very truly yours, 7ENSEN ACJ/sky AGENDA ITEM # 6 C NOVEMBER 13, 2006 Facsimile (904) 246-9960 E-Mail; AJensenl..aw a~aol.com Cc: Nelson VanLiere, Finttnce Directoz (via fax) ~. AGENDA ITEM # G C NOVEMBER 13, 2006 ws RESOLUTION NO. 06-16 ~" A RESOLUTION AUTHORIZING THE EXECUTION AND DELIVERY OF A MEMORANDUM OF AGREEMENT WITH NAVAL CONTINUING CARE RETIREMENT FOUNDATION, INC., A FLORIDA NOT-FOR-PROFIT CORPORATION, WITH RESPECT TO FINANCING ALL OR A PART OF THE COST OF A CAPITAL PROJECT CONSISTING OF THE ACQUISITION, CONSTRUCTION AND INSTALLATION OF CERTAIN CAPITAL IlVIPROVEMENTS TO THE CONTINUING CARE RETIIZEMENT FACILITY KNOWN AS "FLEET LANDING," WHICH IS OWNED ~. AND OPERATED BY SAID CORPORATION, AND THE ISSUANCE AND SALE OF CITY OF ATLANTIC BEACH, ~, FLORIDA HEALTH CARE FACILITIES REVENUE BONDS (FLEET LANDING PROJECT), IN AN AGGREGATE PRINCIPAL AMOUNT NOT TO EXCEED $20,000,000, FOR THE PURPOSE ,~, OF FINANCING ALL OR A PART OF THE COST OF SAID PROJECT; ALL PURSUANT TO THE CONSTITUTION OF THE STATE OF FLORIDA, PART II OF CHAPTER 159, FLORIDA STATUTES, AS AMENDED, AND OTHER APPLICABLE PROVISIONS OF LAW. BE IT RESOLVED BY THE CITY COMMISSION OF THE CITY OF ATLANTIC BEACH: SECTION 1. AUTHORITY FOR THIS RESOLUTION. This Resolution is adopted pursuant to the provisions of the Constitution of the State of Florida, Part II of Chapter 159, Florida Statutes, as amended, and other applicable provisions of law (collectively, the "Act"). SECTION 2. FINDINGS. It is hereby found, ascertained, determined and declared that: A. The City of Atlantic Beach (the "Issuer" or the "City") is an incorporated municipality of the State of Florida (the "State") and is a local agency duly authorized by the Act to finance and refinance the acquisition, construction, reconstruction, improvement, rehabilitation, renovation, expansion and enlargement, or additions to, furnishing and equipping of any capital project for any "health care facility" (as defined in the Act), including land, rights in land, buildings and other structures, machinery, equipment, appurtenances and facilities incidental thereto, and other improvements necessary or convenient therefore, and to obtain funds to finance the cost thereof by the issuance of its revenue bonds for the purposes of enhancing and expanding the health care industries, promoting and fostering the economic growth and development of the Issuer and the State, increasing purchasing power and opportunities for gainful employment, advancing and improving the economic prosperity of the State and its inhabitants, improving living conditions and health care, and otherwise providing RESOLUTION NO. 06-16 Page 1 of 5 ~.. AGENDA ITEM # 6 C NOVEMBER 13, 2006 for and contributing to the health, safety and welfare of the people of the State, and the Issuer is further authorized by the Act to pledge and assign as security for the payment of the principal of '"" and interest on such bonds any revenues derived by the Issuer pursuant to financing agreements with respect to such projects. ~" Naval Continuing Care Retirement Foundation, Inc., a Florida not-for-profit corporation (the "Borrower"), owns an existing continuing care retirement facility known as "Fleet Landing" which is located at One Fleet Landing Boulevard, Atlantic Beach, Florida, on a ""` site containing approximately 100 acres. The Borrower has requested that the Issuer take official action expressing the ~"" Issuer's intention to issue and sell its Health Care Facilities Revenue Bonds (Fleet Landing Project), in an aggregate principal amount of not to exceed $20,000,000 (the "Bonds"), for the purpose of financing all or any part of the cost of the acquisition, construction and installation of "" certain capital improvements to Fleet Landing, including without limitation, 35 independent living units consisting of 5 homes and 15 duplexes (each containing 2 units), .a community center ~. containing auditorium, fitness center, lap pool, technology center, dining and kit;hen facilities, and .related facilities, renovations to the existing amenity center, and related facilities, fixtures, furnishings and equipment (collectively, the "Project"). The Project will be owned and operated by the Borrower. ~. B. If the Bonds are issued, the Borrower will be obligated under loan or other financing agreements with the Issuer to operate, repair and maintain the Project at no expense to the Issuer, ~" to make payments sufficient to pay the principal of and premium, if any, and interest on the Bonds when and as the same become due, and for the payment of all other costs incurred by the Issuer in connection with the financing and administration of the Project which are not paid out of the Bond proceeds or otherwise; the Bonds are to be secured by such obligations of the Borrower and by an irrevocable direct-pay letter of credit (including any substitute letter of credit delivered in accordance with the financing documents, the "Letter of Credit") to be issued by Wachovia Bank, National Association; and it is expected that the interest on all or a portion of the Bonds will be excluded from gross income for federal income tax purposes; all as permitted by the Constitution and other laws of the United States and of the State and as authorized by the Act. C. Upon consideration of the information furnished by the Borrower and other available information, it appears that: (1) The Project and the financing of all or a part of the cost of the Project by the Issuer will be in furtherance of the purposes of the Act in that it will encourage the location of the Project in Duval County (the "County") and the State, it will enhance and expand the health care industries, promote and foster the economic growth and development of the Issuer and the State, advance the public purposes providing modern and efficient continuing care facilities in the City and the County, improve living conditions and health care and will serve other predominantly public purposes as set forth in the Act. (2) The Project is appropriate to the needs and circumstances of and shall make a significant contribution to the economic growth and development of the City, the County and the RESOLUTION NO. 06-16 Page 2 of 5 AGENDA ITEM # 6 C NOVEMBER 13, 2006 State, shall preserve and provide gainful employment and shall serve a public purpose by advancing the economic prosperity and the general welfare of the City, the County, the State and ~" its people as stated in Section 159.26, Florida Statutes, as amended. (3) Subject to the condition that the Borrower provide the Letter of Credit to secure the payment of the Bonds, and based upon the financial information heretofore furnished to the Issuer by the Borrower, the Borrower is financially responsible and fully capable and willing to serve the purposes of the Act and fulfill its obligations under the proposed financing agreements for the Project and under any other agreements to be made in connection with the issuance of the Bonds and the use of the Bond proceeds for financing all or a part of the cost of the Project, including the obligation to pay loan payments or other payments in an amount sufficient in the aggregate to pay all of the interest, principal and redemption premiums, if any, on the Bonds, in the amounts and at the times required, the obligation to operate, repair and maintain the Project at the Borrower's own expense, and such other responsibilities as may be imposed under such agreements, due consideration having been given to the financial condition - of the Borrower, its ratio of current assets to current liabilities, net worth, earnings =sends and coverage of all fixed charges, the nature of the industry or business and of the activity involved, the inherent stability thereof and other factors determinative of the capabilities of the Borrower financially and otherwise, to fulfill its obligations consistently with the purposes of the Act, and to the condition that the Bonds be fully secured by the Letter of Credit. (4) The City and other local agencies will be able to cope satisfactorily with the impact of the Project and will be able to provide, or cause to be provided when needed, the b. public facilities, including utilities and public services, that will be necessary for the construction, operation, repair and maintenance of the Project and on account of any increase in population or other circumstances resulting therefrom. (5) The Borrower has requested satisfactory expressions and declarations of intent by the Issuer that, upon the satisfaction of all requirements of law and all conditions to be met, ~ including a public hearing and all findings required by the Internal Revenue Code of 1986, as amended (together with the regulations promulgated thereunder, whether proposed, temporary or final, the "Code"), adoption by the Issuer of a resolution authorizing the Bonds, and the receipt by the Issuer of a bond approving opinion of bond counsel satisfactory to the Issuer, the Bonds will be issued and sold and the proceeds thereof will be made available to finance and refinance the costs of the Project, to the extent of such proceeds. (6) A negotiated sale of the Bonds is required and necessary, and is in the best interest of the Issuer, for the following reasons: the Bonds will be special and limited obligations of the Issuer payable solely from proceeds of the Letter of Credit and other revenues and proceeds derived by the Issuer pursuant to the financing agreements, and the Borrower will be obligated for the payment of all costs of the Issuer in connection with the financing and administration of the Project which are not paid out of the Bond proceeds or otherwise and for operation and maintenance of the Project at no expense to the Issuer; the cost of issuance of the Bonds, which will be borne directly or indirectly by the Borrower, could be greater if the Bonds are sold at public sale by competitive bids than if the Bonds ,are sold at negotiated sale, and a public sale by competitive bids would cause undue delay in the financing of the Project; revenue bonds having the characteristics of the Bonds are typically and usually sold at negotiated sale; ~- RESOLUTION NO. 06-16 Page 3 of 5 AGENDA ITEM # 6 C NOVEMBER 13, 2006 ww the Borrower has requested that a negotiated sale of the Bonds be authorized by the Issuer; and authorization of a negotiated sale of the Bonds is necessary in order to serve the purposes of the ~'' Act. (7) It is proposed that the Issuer and the Borrower enter into a memorandum of ~"" agreement in the form presented at this meeting (the "Memorandum of Agreement"), allowing for the Borrower as independent contractor, and not as agent for the Issuer, to proceed, at its election, with the acquisition, construction, installation and completion of the Project, all at no ~"" cost to the Issuer pending the issuance and sale of the Bonds; and providing among other things expressions and declarations of intent for the Bonds to be issued and sold at negotiated sale upon the terms and conditions hereof and thereof; for the use and application of the proceeds of sale of ~'° the Bonds to pay all or any part of the "cost" (as defined in the Act) of the Project, to the extent of such proceeds; for loan or other financing agreements between the Issuer and the Borrower whereby the Borrower will be unconditionally obligated to operate, repair and maintain the Project at no expense to the Issuer, to make payments sufficient in the aggregate to pay all of the - principal of and interest and redemption premiums, if -any, on the Bonds, and to pay all other ~. costs incurred by the Issuer in connection with the financing and administration of the'i'roject which are not paid out of the Bond proceeds or otherwise; and for such other financing agreements, indentures, and related agreements as shall be necessary or appropriate. (8) The purposes of the Act will be more effectively served if, and it is necessary and desirable and in the best interest of the Issuer that, the Memorandum of Agreement be executed and delivered by and on behalf of the Issuer. ,. SECTION 3. AUTHORIZATION OF MEMORANDUM OF AGREEMENT. ~'" The Memorandum of Agreement in the form and with the contents presented at and filed with the minutes of this meeting, be and the same is hereby approved, and the Mayor- Commissioner and the City Manager of the Issuer, or either of them, are hereby authorized and ~"" directed, in the name and on behalf of the Issuer, to execute and deliver said Memorandum of Agreement. SECTION 4. TEFRA APPROVAL. Because a portion of the Project will be located within the City of Jacksonville, Florida, "` the City Commission hereby requests the Mayor of the City of Jacksonville to approve the issuance of the Bonds by the Issuer solely for purposes of Section 147(fJ of the Internal Revenue Code of 1986, as amended (the "Code"), after the public hearing held in accordance with Section ""~ 147(f) of the Code. SECTION 5. REPEALING CLAUSE. All resolutions or orders and parts thereof in conflict herewith, to the extent of such conflict, are hereby superseded and repealed. ~°" RESOLUTION NO. 06-16 Page 4 of 5 AGENDA ITEM # 6 C NOVEMBER 13, 2006 SECTION 6. EFFECTIVE DATE. This resolution shall take effect immediately. PASSED AND ADOPTED this 13th day of November, 2006. (OFFICIAL SEAL) CITY OF ATLANTIC BEACH, FLORIDA By Mayor-Commissioner ATTEST: City Clerk APPROVED AS TO FORM AND CORRECTNESS: City Attorney RESOLUTION NO. 06-16 Page 5 of 5 AGENDA ITEM # 6 C N NOVEMBER 13, 2006 bV F S Atlantic Beach's World-Class Life Care Community October 31, 2006 City Commission ~• City of Atlantic Beach 800 Seminole Road Atlantic Reach, FL 32233 ,.. Attn: Mr. Jim Hanson, City Manager ~'" Re: Proposed City of Atlantic Beach, Florida Health Care Facilities Revenue Bonds (Fleet Landing Project), in an aggregate principal amount not to exceed $20,000,000 ~. Ladies and Gentlemen: ~" We enclose three copies of the application of Naval Continuing Care Retirement Foundation, Inc. to the City of Atlantic Beach for approval of industrial development revenue bond financing for the purpose of financing certain capital improvements at Fleet Landing. We appreciate very much your consideration of our application and look forward to discussing the application with you at the amity Commission meeting on Monday, November 13. ~'" If you have any questions concerning the application prior to such time, please do hesitate to contact me. c: Alan C. Jenson, City Attorney Chauncey W. Lever, Jr. JACK_564684. t ~. AGENDA ITEM # 6 C NOVEMBER 13, ?006 a. taw NAVAL CONTINUING CARE RETIREMENT FOUNDATION, INC. ~. CONTINUING CARE RETIREMENT FACILITIES ATLANTIC BEACH, FLORIDA ens APPLICATION FOR APPROVAL ~"' INDUSTRIAL DEVELOPMENT REVENUE BOND FINANCING FOR NOT TO EXCEED $20,000,000 TO CITY OF ATLANTIC BEACH, FLORIDA aw «~. OCTOBER 31, 2006 ar. JACK 564469.3 Application for Approval of Proposed City of Atlantic Beach, Florida Health Care Facilities Revenue Bonds (Fleet Landing Project) AGENDA ITEM # 6 C NOVEMBER 13, 2006 "~'' Summary Bonds: Not to exceed $20,000,000. Borrower: Naval Continuing Care Retirement Foundation, Inc., a Florida not for profit corporation, which owns and operates an existing ~"" continuing care retirement facility known as "Fleet Landing." Project Site: Existing continuing care retirement campus located at One Fleet '"" Landing Boulevard, Atlantic Beach, Florida, on a site containing approximately 100 acres. Project: The acquisition, construction and installation of certain capital improvements to the existing continuing care retirement facility known as "Fleet Landing," including without limitation, 35 independent living units consisting of 5 homes and 15 duplexes (each containing two units), a community center containing auditorium, fitness center, lap pool, technology center, dining and kitchen facilities, and related facilities, renovations to the existing amenity center, and related facilities, fixtures, furnishings and equipment. The Project will be owned and operated by the Borrower. Project Cost: Approximately $22,002,410. Borrower equity will provide the balance of the funding necessary to pay project costs. Security for the Irrevocable Direct-Pay Letter of Credit to be issued by Bonds: Wachovia Bank, National Association. Assignment by the City to U.S. Bank National Association, as the bond trustee, of the City's rights under and pursuant to the Loan Agreement-(with the exception of certain rights to indemnification and notices that are retained by the City). Conduit Financing: Any pecuniary liability or obligation of the City shall be limited solely to amounts received by the City from the revenues and other fiuzds derived by the City from the Borrower with respect to the Project, including loan repayments received under the financing agreements. w~. JACK_564469.3 ~. AGENDA ITEM # 6 C NOVEMBER 13, 2006 No Expense to City: The Borrower will pay all costs and expenses of the City relating to the issuance of the Bonds, and will indemnify the City against any liabilities, claims and expenses incurred by the City in any way relating to the issuance of the Bonds. a~. JACK_564469.3 2 ~. s October 31, 2006 City Commission City of Atlantic Beach ~„ 800 Seminole Road Atlantic Beach, Florida 32233 Re: Proposed City of Atlantic Beach, Florida Health Care Facilities Revenue Bonds (Fleet Landing Project) Ladies and Gentlemen: AGENDA ITEM # 6 C NOVEMBER 13, 2006 Naval Continuing Care Retirement Foundation, Inc. (the "Borrower"), a Florida not for profit corporation, owns and operates an existing continuing care retirement facility known as "Fleet Landing" located at One Fleet Landing Boulevard, Atlantic Beach, Florida. The campus includes approximately 100 acres and offers residents a variety of continuing care services. Request Application is hereby made to the City through the City Commission of the City (the "City Commission") for approval and issuance by the City of its Health Care Facilities Revenue Bonds in an aggregate principal amount not to exceed $20,000,000 (the "Bonds") to finance the acquisition, construction and installation of the Project which is more fully described under "The Project." Submitted with this application is the proposed form of resolution (the "Preliminary Resolution") describing the Project and authorizing the execution and delivery of the 1`,Zemorar~dum of Agreement attached thereto relating to the issuance of the Bonds by the City. The Borrower believes and represents to the City Commission: (i) that the Project ~, constitutes a "project" within the meaning of Section 159.27(5), of Chapter 159, Part II, Florida Statutes, as amended (the "Act"), to wit, a "health care facility" within the meaning of Section 159.27(5), Florida Statutes, as amended; (ii) that the Project will serve a paramount public purpose by promoting and fostering the economic growth and development of the City, Duval County (the "County") and the State of Florida (the "State"), increase purchasing power and opportunities for gainful employment, improve living conditions, advance and improve the ~* economic prosperity and the welfare of the State and its inhabitants, advance the public purposes of providing modern and efficient continuing care facilities in the City and the County, and otherwise contribute to the health, safety and welfare of the people of the City, County and the State; and (iii) that the Project, when completed, will comply with all applicable federal, state and local laws, ordinances and regulations to the effect that interest on the Bonds will be excludable from gross income for federal income tax purposes. '~ JACK_564469.3 ~,. AGENDA ITEM # 6 C NOVEMBER 13, 2006 The Project The Project consists of the acquisition, construction and installation of certain capital improvements to the existing continuing care retirement facility known as "Fleet Landing," ,~ including without limitation, 35 independent living units consisting of 5 homes and 1 ~ duplexes (each containing two units), a community center containing auditorium, fitness center, lap pool, technology center, dining and kitchen facilities, and related facilities, renovations to the existing ~,,, amenity center, and related facilities, fixtures, furnishings and equipment. The Project will be owned and operated by the Borrower. The Borrower The Borrower is a Florida not for profit corporation and is an exempt organization described in Section 501(c)(3) of the Internal Revenue Code. The Borrower owns and operates w. the continuing care retirement facility known as "Fleet Landing," which is designed to meet the needs of former military officers, their spouses and others of retirement age. Fleet Landing, initially consisting of 320 independent living units, 26 assisted living units and a skilled nursing center containing 42 skilled nursing beds, was initially financed as a start- up continuing care retirement community through the issuance in 1989 by the City of its 4. Variable Rate Demand Revenue Bonds, Series 1989 (Fleet Landing Project) in the amount of $62,950,000 (the "Series 1989 Bonds"). Fleet Landing opened in 1990 and, after fill-up, $22,000,000 principal amount of the Series 1989 Bonds was repaid primarily from first generation entrance fees. ,,,, The outstanding Series 1989 Bonds were refinanced in 1994 through the issuance by the City of its $21,570,000 Fixed Rate Improvement and Refunding Revenue Bonds, Series 1994A (Fleet Landing Project) and $21,200,000 Variable Rate Demand Improvement and Refunding ~, Revenue Bonds, Series 1994B (Fleet Landing Project) (the "Series 1994 Bonds"). The Series 1994 Bonds also financed a portion of the cost of acquisition of an additional 4.48 acres of land adjacent to the facility, conversion of the original 26 assisted living units to 38 additional skilled A,,, nursi^g beds (20 of the beds having Alzheimer's special care capability) and construction of a new 60-unit assisted living facility. These additional living facilities were completed in August 1996. The original 26 assisted living units were located in the skilled nursing facility and ~,,, planned for future conversion to skilled nursing. In 1996, the Borrower purchased an additional 13 acres of land adjacent to the facility site. The outstanding Series 1994 Bonds were refinanced for debt service savings in 1999 through the issuance by the City of its $4,580,000 Health Care Facilities Revenue Refunding Bonds, Series 1999 (Fleet Landing Project). ~. Fleet Landing is situated on a site containing approximately 100 acres primarily located within the City of Atlantic Beach, Florida. The Borrower is regulated as a continuing care facility by the State of Florida under the provisions of Chapter 651, Florida Statutes, as amended. 2 '~` JACK_564469.3 ~. e~w Public Purposes and Benefits AGENDA ITEM # 6 C NOVEh1BER 13, 2006 Public Purposes. The Project constitutes a "health care facility" within the meaning of Section 159.27(5), Florida Statutes, as amended. The Supreme Court of Florida has determined ~, that a health care facility serves a paramount public purpose and that the financing of such projects through the issuance of public revenue bonds, under the Florida Industrial Development Act, is valid and constitutional. The Project will advance the public purposes of providing ~,,,, modern and efficient continuing care facilities in the City and the County, which facilities are needed for the welfare and benefit of the City and the County and surrounding areas and are commensurate with a desirable level of health care. Economic Benefits to the Community. It is anticipated that during the period of construction, approximately 30-40 construction jobs will be created. The Borrower presently ~„ employs 272 personnel on a full-time basis. It is estimated that the Project will create approximately 16-18 additional, full-time jobs: ~„ Zoning and Utilities. Zoning for the site is suitable for the Project. There are no unusual requirements for sanitary sewer and water, and sewer and water service is available at the Project site. There is adequate land available to provide for the retention of storm water as required by ~,,, local regulations. Other utility requirements, such as telephone and electricity, are normal and are presently available. Financial Matters The Borrower desires to finance the Project at the most favorable cost possible. The ~, issuance by the City of its industrial development revenue bonds would provide a substantially lower interest cost than any other alternative. Through the use of industrial development revenue bond financing, the total cost of the ~. Project, and the annual costs of operating the Project and providing for all debt service requirements, would be minimized. This would enhance the financial viability of the Project. Estimated Sources and Uses of Funds. The estimated sources and uses of funds for the Project are shown in the following table: Sources of funds: Proceeds of revenue bonds $20,000,000 Equity 2,002,410 Total $22,002.410 Uses of funds: Construction Costs $15,921,937 Site work, roads, fencing, permitting 2,483,084 Architectural and engineering 725,000 Presale marketing 550,000 Furniture, fixtures and equipment 450,000 Capitalized interest 1,572,389 ~" JACK_564469.3 ,~. Security Loan and issuance costs Total 300.000 $22.002.410 AGENDA ITEM # 6 C NOVEMBER 13, 2006 ,,,, The Bonds will be secured by an irrevocable direct-pay letter of credit (the "Letter of Credit") to be issued by Wachovia Bank, National Association (the "Bank"). The Bonds also will be secured by an assignment by the City to U.S. Bank National Association, as the bond ~„ trustee, of the City's rights under the Loan Agreement (with the exception of certain rights to indemnification and notices that are retained by the City). Financial Responsibility The Borrower is satisfied that it will be capable of fulfilling all such obligations, ~,,, including the obligation to make payments sufficient for the payment of all debt service on the Bonds in an aggregate principal amount of up to $18,500,000. ~„ Bond Counsel. Bond counsel is Foley & Lardner LLP, One Independent Drive, Suite 1300, Jacksonville, Florida 32202, (904) 359-8774, Attention: Mr. Chauncey W. Lever, Jr. Certified Public Accountants. The Borrower's certiFed public accountants are Miller & Williams, CPA's, 8834-6 Goodby's Executive Drive, Jacksonville, Florida 32217, (904) 731- 4846, Attention: Mr. Mike Williams. Financial Statements. Included in this application is a copy of the Borrower's financial statements for the most recent fiscal year for which financial statements are available. Costs of Issuer. It is understood and agreed that all expenses incurred by the City with respect to the Bonds shall be borne by the Borrower. Compliance with Applicable Laws. The Project, when completed, will comply with all applicable federal, state and local laws, ordinances and regulations. Conclusion Favorable action upon this application by the City will enable the Borrower to proceed ~'" with the Project, as planned. We trust that the enclosed information is sufficient for your consideration and approval. Please call should you have any questions or comments or require additional data. NAV L CONTINUING CARE RE T~~MENT FOUNDATION, INC. By: Jo Dii*ector 4 JACK 564469.3 ~• MEMORANDUM OF AGREEMENT AGENDA ITEM # 6 C NOVEMBER 13, 2006 MEMORANDUM OF AGREEMENT between CITY OF ATLANTIC BEACH, an incorporated municipality of the State of Florida (the "Issuer" or the "City"), and NAVAL ~" CONTINUING CARE RETIREMENT FOUNDATION, INC., a Florida not for profit corporation (the "Borrower"). ~. 1. Preliminary Statement. Among the matters of mutual inducement which have resulted in the execution of this Memorandum of Agreement are the following: ~. (a) The Issuer is an incorporated municipality of the State of Florida (the "State") and is a local agency duly organized under the provisions of the Constittrtion of the State of Florida, Part II of Chapter 159, Florida Statutes, as amended, and other applicable provisions ~. of law (collectively, the "Act"). As such, the Issuer is duly authorized and empowered by the Act to provide for the. issuance of and to issue and sell its revenue bonds for the purpose of financing all or any part of she "cost" of any "project," including any project fora "health care ' facility" (as such terms are defined or used in the Act). (b) The Borrower owns an existing continuing care retirement facility known as "Fleet Landing" which is located at One Fleet Landing Boulevard, Atlantic Beach, Florida, on a site which contains approximately 100 acres. '~ (c) The Borrower has requested that the Issuer take official action expressing the Issuer's intention to issue and sell its Health Care Facilities Revenue Bonds (Fleet Landing Project), in an aggregate principal amount of not to exceed $?0,000,000 (the "Bonds"), for the '~' purpose of financing all or any part of the cost of the acquisition, construction and installation of certain capital improvements to Fleet Landing, including without limitation, 35 independent living units consisting of 5 homes and 15 duplexes (each containing 2 units), a community center ~"' containing auditorium, fitness center, lap pool, technology center, dining and kitchen facilities, and related facilities, renovations to the existing amenity center, and related facilities, fixtures, furnishings and equipment (collectively, the "Project"). The Project will be owned and operated ~'" by the Borrower. (d) The Borrower represents that the Project constitutes a capital project for a ~"' "health care facility" and a "project" within the meaning of the Act; and that the Project will preserve and provide employment in the City and the County, and will advance the public purposes of providing modern and efficient continuing care facilities in the City and the County. (e) The Borrower has requested that the Issuer express its intention to issue its revenue bonds for the Project, in an aggregate principal amount of not to exceed $20,000,000 ~` (the "Bonds"), for the purpose of financing all or part of the "cost" (as defined in the Act) of the Project, under a financing agreement (or amendment and supplement to an existing financing agreement between the Issuer and the Borrower), whereby the Borrower will be unconditionally "" obligated to operate, repair and maintain the Project, to make payments sufficient to pay the debt service on the Bonds and to pay all other costs incurred by the Issuer in connection with the financing, the acquisition, construction and installation, and the administration of the Project, ~. ~. JACK 562468.4 ~. AGENDA ITEM # 6 C NOVEMBER 13, 2006 which are not paid out of the Bond proceeds or otherwise. The interest on the Bonds to be exempt from federal income taxation under the laws of the United States of America. (f) The City Commission, by resolution duly passed and adopted has made certain findings and determinations on behalf of the Issuer and has duly approved and authorized '~' the execution and delivery of this Memorandum of Agreement. (g) This Memorandum of Agreement is entered into to permit the Borrower to proceed with commitments for the Project and to incur or pay costs in connection with various phases of the Project (including the costs of the acquisition, construction and installation of the Project and related expenses) and to provide a declaration of intent by the Issuer, prior to the ~' issuance of the Bonds, to issue and sell the Bonds and make the proceeds thereof available to finance all or part of the costs of the Project, to the extent of such proceeds, all in accordance with and subject to the provisions of the Constitution and other laws of the State of Florida, including the Act, the Internal Revenue Code of 1986, as amended (the "Code"), and applicable Treasury Regulations under the Code, and this Memorandum of Agreement. ;~. (h) Because a portion of the Project will be located within the City of Jacksonville, Florida, the Borrower has requested the Issuer to request the Mayor of the City of Jacksonville to approve the issuance of the Bonds by the Issuer solely for purposes of Section 147(f) of the Code, after a public hearing held in accordance with Section 147(1) of the Code. 2. Intentions on the Part of the Issuer. Pursuant to and in accordance with and ~. subject to the limitations of the Constitution and other laws of the State of Florida, including the Act, the Code and applicable Treasury Regulations under the Code, and upon the conditions stated in this Memorandum of Agreement, the Issuer declares its intent as follows: (a) It will authorize the issuance and sale of one or more series of the Bonds, pursuant to the terms of the Act as then in force, for the purpose of financing all or a part of the cost of the Project. (b) It will, at the proper time and subject in all respects to the prior advice, consent and approval of the Borrower, adopt such proceedings and authorize the execution of such documents as may be necessary and advisable for the authorization, sale and issuance of the Bonds, the acquisition, construction and installation of the Project and the financing of the Project, all as shall be provided for or permitted by the Code, authorized by the Act and mutually satisfactory to the Issuer and the Borrower. The Bonds are to be issued under a trust indenture (or a supplement and amendment to an existing trust indenture), between the Issuer and U.S. Bank National Association, as Trustee, pursuant to which the Tnistee shall receive and disburse the proceeds from the sale of Bonds, collect payments from the Borrower under the financing agreements and enforce its obligations under the financing agreements. The Bonds shall not be deemed to constitute a debt, liability or obligation, or a pledge of the faith and credit or taxing power, of the Issuer, of the County, or of the State or of any political subdivision thereof, but the Bonds shall be payable solely fTOm the revenues and proceeds to be derived by the Issuer from the sale, operation or leasing of the Project, including payments received under the financing agreements. The Bonds shall bear interest at such rate or rates, shall be payable at such times and places, shall be in such fornis and denominations, shall be sold in such manner, at such price -~- ,~. AGENDA ITEM # 6 C NOVEMBER 13, 2006 and at such time or times, shall have such provisions for redemption and tender, shall be executed, and shall be secured pursuant to the trust indentures, as hereafter may be requested by '~" the Borrower and acceptable to the Issuer, all on terms complying with the Code, authorized by the Act and mutually satisfactory to the Issuer and the Borrower, subject to the required approval of the City Commission. (c) The interest on the Bonds shall be exempt from federal income taxation, as determined on the basis of an opinion of Bond Counsel approved by the Issuer. ~. 3. Agreements of the Borrower. Subject to the conditions stated in this Memorandum of Agreement, the Borrower agrees, if it proceeds with the Project, as follows: ~. (a) The Borrower will generally arrange for, manage and carry out the acquisition, construction and installation of the Project, it will advance its own funds for such ~'" purpose as herein provided and, to the extent that the proceeds derived from the sale of the Bonds are not sufficient to complete the Project and to pay all costs incurred in connection therewith and with the financing and administration of the Project, it will supply all additional ~` funds which are necessary therefor. (b) The Borrower will make arrangements for the sale of the Bonds and shall be responsible for compliance with all applicable securities laws, including any disclosure obligations, in connection with the offering and sale thereof. ~" (c) Contemporaneously with the delivery of the Bonds, the Borrower will enter into financing agreements and such other agreements and related documents as shall be necessary or appropriate so that the Borrower will be obligated to operate, maintain and repair ~"' the Project at its own expense, to pay for the account of the Issuer sums sufficient in the aggregate to pay all of the principal of and interest and redemption premiums, if any, on the Bonds when and as the same shall become due and payable, and to pay all other costs incurred ~'" by the Issuer in connection with the financing, construction and administration of the Project, except as may be paid out of the Bond proceeds or otherwise. (d) Contemporaneously with the delivery of the Bonds, the Borrower will enter into financing agreements and such other agreements and related documents as shall be necessary or appropriate so that the Borrower will be obligated to operate, maintain and repair '~" the Project at its own expense, to pay for all of the principal of and interest and redemption premiums, if any, on the Bonds when and as the same shall become due and payable, and to pay all other costs incurred by the Issuer in connection with the financing, construction and ~""' administration of the Project, except as may be paid out of the Bond proceeds or otherwise. (e) The Borrower will cause Wachovia Bank, National Association to issue an ~" Irrevocable Direct-Pay Letter of Credit (including any substitute letter of credit delivered in accordance with the financing documents, the "Letter of Credit"j to secure the payment of the Bonds and will take such further action and adopt such proceedings as may be required to '~ implement its undertakings hereunder. -3- AGENDA ITEM # 6 C NOVEMBER 13, 2006 4. General Provisions. ~" (aj Since it is anticipated that the acquisition, construction and installation of the Project will commence prior to the sale of the Bonds and the Borrower knows and acknowledges that the Issuer will have no funds available to pay the cost of the Project other ~" than Iunds derived from the sale of the Bonds, the Borrower may advance from time to time any funds necessary for the acquisition, construction and installation of the Project, and any such funds when so advanced shall be deemed funds advanced on behalf of the Issuer; provided, ~" however, that the Issuer shall not by virtue of such advances or otherwise through this Memorandum of Agreement acquire any property interest in the Project whatsoever. '"" (b) The Issuer agrees that the Borrower may enter into one or more agreements with a private lender or lenders to provide temporary construction financing and obtain commitments for permanent financing for the Project without vitiating in any manner the ~"" terms of this Agreement. (c) Tl~e Borrower shall act as independent contractor, and not as agent for the "' Issuer, for the acquisition, construction, installation and completion of the Project, and shall provide all services incident to the acquisition, construction and installation of the Project and pay the cost thereof pending reimbursement by the Issuer from the Bond proceeds, and the Issuer ~'" shall have no responsibility for the provision of any such services. (d) The Borrower may engage the services of an underwriter or financial '"~' consultant or adviser and the services of bond counsel or other legal counsel in connection with the offering and sale of the Bonds; provided, however, that the Issuer shall have no liability for the payment if any such firm's compensation or expenses if the Bonds are not sold and issued, ~'" and if the Bonds are sold and issued the Issuer shall be liable for the payment thereof only out of the proceeds of sale of the Bonds. ~"" (e} The Borrower agrees to pay the Issuer's actual out-ol=pocket costs and expenses in connection with the transactions contemplated hereby, whether or not the Bonds are .. issued and sold, provided that if the Bonds are issued and sold, such costs and expenses may be reimbursed out of the proceeds oFthe sale of the Bonds. (~ Alan C. Jensen, Esquire, City Attorney for the City of Atlantic Beach, ~"' Florida, shall serve as counsel for the Issuer and Foley & Lardner LLP, Jacksonville, Florida, counsel for the Borrower, shall serve as Bond Counsel. The Borrower shall be responsible for the payment of all fees, costs and expenses of said counsel for the Issuer and of all fees, costs and ~"" expenses of Bond Counsel, and shall pay the same whether or not the Bonds are issued and sold, provided that if the Bonds are issued and sold such fees, costs and expenses may be paid or reimbursed out of the proceeds of the sale of the Bonds. (g) The Bonds shall not be required to be validated pursuant to the provisions of Chapter 75, Florida Statutes, unless validation shall be deemed advisable or shall be required '~"' by counsel to the Issuer, Bond Counsel or the initial purchaser of the Bonds. (h) If required by the Issuer or its counsel, the Borrower or its counsel, or ~' Bond Counsel, such other rulings, approvals, consents, certificates of compliance, opinions of -4- AGENDA ITEM # 6 C NOVEMBER 13, 2006 counsel and other instruments and proceedings satisfactory to each of them, with respect to the Bonds, the Project, this Memorandum of Agreement, the financing agreements, the trust ~"" indentures, or any other instrument or act contemplated hereby, shall be obtained from such governmental, as well as nongovernmental, agencies and entities as may have or assert competence or jurisdiction over or interest in matters pertinent thereto, and the same shall be in full force and effect at the time of issuance of the Bonds. (i) The intentions of the Issuer to issue the Bonds pursuant to this Memorandum of Agreement and to use the proceeds thereof as herein contemplated are subject to the conditions that (a) the issuance of the Bonds by the Issuer shall have been authorized by a bond resolution of the Issuer; and (b) on or before two years after the Issuer's execution of this Memorandum of Agreement (or such later date as shall be mutually satisfactory to the Issuer and the Borrower), the Issuer and the Borrower shall have agreed to mutually acceptable terms for the Bonds and the sale and delivery thereof and mutually acceptable terms and conditions for the financing agreements and other agreements and documents referred to in Sections 2(b) and 3(c) and the proceedings referred to in Sections 2 and 3 hereof and the initial installment of the Bonds shall have been issued, sold and delivered; provided, however, that the initial installment of the Bonds may not be issued more than one year after the date on which the entire Project shall have been first placed in service or acquired (whichever occurs last), or after the expiration, lapse or repeal of any authority for the issuance of the Bonds under Florida law or of the exclusion of interest on the Bonds from gross income for federal income tax purposes under the Code. (j) If the events set forth in paragraph (i) of this Section do not take place within the times set forth therein or any extensions thereof and the Bonds are not issued as herein contemplated, the Borrower agrees to pay all costs and expenses incurred pursuant to this ~„ Memorandum of Agreement by the Borrower, the fees and expenses of any underwriter, financial consultant or adviser engaged by the Borrower, the costs and expenses of counsel of the Issuer, the fees, costs and expenses of Bond Counsel, and any necessary and reasonable out-of- ~„ pocket costs and expenses incurred pursuant to this Memorandum of Agreement by the Issuer, whereupon this Memorandum of Agreement shall terminate. (k) So long as this Memorandum of Agreement is i.l effect, all risk of loss to the Project will be borne by the Borrower. (1) It is expressly agreed that any pecuniary liability or obligation of the Issuer hereunder shall be limited solely to amounts received by the Issuer from draws under the Letter of Credit and other revenues and other fiends derived by the Issuer from the Borrower with respect to the Project, including loan repayments received under the financing agreements, and nothing contained in this Memorandum of Agreement shall ever be construed to constitute a personal or pecuniary liability or charge against any member, officer, commissioner, employee or agent of the Issuer or its governing body, and in the event of a breach of any undertaking on the part of the Issuer contained in this Memorandum of Agreement, no personal or pecuniary liability or charge payable directly or indirectly from any funds or property of the Issuer shall arise therefrom. The Borrower hereby releases the Issuer from and agrees that the Issuer shall not be liable for, and agrees to defend, indemnify and hold the Issuer harmless against any liabilities, obligations, claims, damages, litigation, costs and expenses (including but not limited to attorneys' fees and expenses) imposed on, incurred by or asserted against the Issuer for any ,~,. -5- ~. AGENDA ITEM # G C NOVEMBER 13, 2006 cause whatsoever pertaining to the Project, the Bonds or this 1Vlemorandum of Agreement, or any transaction contemplated hereby. The provisions of this paragraph shall survive any termination of this Memorandum of Agreement. (m) If at any time prior to the issuance and sale of the Bonds the Issuer shall determine that the business, operations or financial condition of the Borrower is not satisfactory or that the Borrower is not proceeding diligently with the acquisition, construction and installation of the Project or the financing thereof as contemplated hereby, the Issuer may, at its option, terminate this Memorandum of Agreement by written notice to the Borrower. The Issuer shall be discharged of its undertakings under this Memorandum of Agreement if the Borrower ,~ shall not provide at the closing for the issuance of the Bonds assurances satisfactory to the Issuer that no material adverse change has occurred in the representations of the Borrower or in the business, operations or financial condition of the Borrower. (n) Except as otherwise provided in paragraph (m) of this Section, the provisions of this Memorandum of Agreement shall be superseded by any financing agreement entered into by the Issuer and the Borrower in accordance with Sections 2(b) and 3(c) of this Agreement and shall, upon the execution and delivery of such financing agreements, terminate and be of no effect. (o) This Memorandum of Agreement shall become effective when executed and delivered by the Issuer and the Borrower. -6- AGENDA ITEM # 6 C NOVEMBER 13, 2006 IN WITNESS WHEREOF, the parties hereto have entered into this Memorandum of Agreement as of the 13th day of November, 2006. CITY OF ATLANTIC BEACH, FLORIDA By Title: Signed this 13th day of November, 2006. NAVAL CONTINUING CARE ' _ RETIREMENT FOUNDATION, INC:; a Florida not-for-profit corporation B~ Ti -7-