Memorandum

City of Lawrence

City Manager’s Office

TO:	David L. Corliss, City Manager
FROM:	Diane Stoddard, Assistant City Manager
DATE:	March 28, 2013
CC:	Cynthia Wagner, Assistant City Manager
RE:	Presbyterian Manors, Inc. request to authorize the issuance of bonds by the City of Wichita, Kansas and amend the existing interlocal cooperation agreement between the City of Lawrence and the City of Wichita regarding these bonds

Please add this item to the April 23, 2013 City Commission agenda:

Conduct a public hearing and authorize the issuance of Health Care Facilities Revenue Bonds by the City of Wichita on behalf of Presbyterian Manors, Inc. and authorize an amendment to the existing interlocal cooperation agreement between the City of Wichita, Kansas and the City of Lawrence regarding these bonds, if appropriate.

Background:

The City of Lawrence is in receipt of a request from Presbyterian Manors, Inc. that the City of Lawrence authorize the issuance of Health Care Facilities Revenue Bonds by the City of Wichita for its facilities, including its Lawrence facility, and that the City of Lawrence authorize an amendment to the existing interlocal cooperation agreement between the City of Wichita and the City of Lawrence regarding these bonds.

Health Care Facilities Revenue Bonds are a form of Industrial Revenue Bond (IRB) financing.  Cities serve as conduit issuers on these transactions, but are not responsible for repayment of either principal or interest on the bonds.  The recipient of the bond issuance is fully responsible for these payments.  In this particular case, the City of Wichita is the bond issuer.  There is no exposure for the City of Lawrence with this transaction and it allows Presbyterian Manors to access favorable tax exempt financing and a sales tax exemption for its project.  The City of Lawrence has issued Health Care Facilities Revenue Bonds for the Lawrence Memorial Hospital on numerous prior occasions, in arrangements similar to that proposed between the City of Wichita and Presbyterian Manors. 

As explained in the request, the City of Wichita has acted as issuer of bonds on behalf of Presbyterian Manors since 1990 to finance improvements to various facilities across Kansas.  The Presbyterian Manors facility in Lawrence is near the intersection of Bob Billings Parkway and Kasold Drive.  Presbyterian Manors has formally requested the City of Wichita to issue approximately $110 million in health care facilities revenue bonds on its behalf to finance capital expenditures for its Wichita, Kansas facility, finance capital expenditures at other Presbyterian Manors facilities in Kansas, refund prior bonds, and pay bond issuance costs.  Specifically related to Lawrence, Presbyterian Manors expects $600,000 of the proceeds of the bonds to be allocated to capital expenditures at its Lawrence facility and to refund all or a portion of its 2004/2007 bonds, of which approximately $3.4 million was expended at Presbyterian Manors’ Lawrence facility. 

The City of Lawrence previously entered into an interlocal cooperation agreement in 1993 with the City of Wichita to similarly authorize prior City of Wichita bond issuances on behalf of Presbyterian Manors.  Part of this request requires amending this agreement to extend it from its current expiration in 2030 to 2054 to cover the expected term of the new bonds.

Requested Action:

In order to facilitate the request from Presbyterian Manors, the City Commission will need to hold a public hearing and authorize Resolution 7020 authorizing the execution of an amendment to the interlocal cooperation agreement between the City of Lawrence and the City of Wichita regarding the bond issuance, extending the interlocal cooperation agreement to 2054.