City Council Meeting Date: November 26, 2024
To: Mayor and City Council
City Administrator
From: Brenda Angelstad, Finance Director
Title
Northfield Hospital and Clinics Refunding
Body
Action Requested:
The Northfield City Council to approve the refunding of Revenue Bonds for the Northfield Hospital + Clinics.
Summary Report:
The City previously issued its (i) Hospital Revenue Bond, Series 2016A (the "Series 2016A Bond"); (ii) Hospital Revenue Bond, Series 2022A (the "Series 2022A Bond"); and (iii) Hospital Revenue Bond, Series 2023A (the "Series 2023A Bond" and, together with the Series 2016A Bond and the Series 2022A Bond, the "Prior Bonds") pursuant to a Second Amended and Restated Indenture of Trust, dated December 1, 2018 (as amended, the "2018 Indenture").
Under the 2018 Indenture, Northfield Hospital and Clinics (the "Hospital") must maintain "Income Available for Debt Service" equal to 100% of the "Principal and Interest Requirements" for all "Parity Debt" during each fiscal year. This is referred to as the "Coverage Requirement." If the Coverage Requirement is not met, the 2018 Indenture allows bondholders to demand acceleration and early repayment of all outstanding bonds.
In fiscal year 2022, although the Hospital made all required payments on its outstanding bonds, it did not meet the Coverage Requirement. Huntington Bank, which holds the Series 2016A Bond, declined to waive this default. As a result, in 2023, the Hospital entered into an agreement with Huntington Bank. Under this agreement, the Hospital committed to repaying the Series 2016A Bond in installments, with full repayment by the end of 2024. A similar arrangement was made with Community Resource Bank, which holds the Series 2022A and Series 2023A Bonds.
To meet its obligations to Huntington Bank and Community Resource Bank, the Hospital now plans to refund and prepay the Prior Bonds by issuing a new Hospital Revenue Refunding Bond, Series 2024B. This bond will be purchased ...
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