City of Lincoln approves bond request for St. Clara’s Manor
Part 1: City attorney seeks waiver of conflict of interest

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[August 18, 2016]  LINCOLN - Though it has not been publicly announced, it has long been known around the community that St. Clara’s Manor, owned by Heritage of Care, is looking into building a new facility at a location near and between the Castle Manor Assisted Living Facility and the Abraham Lincoln Memorial Hospital.

In July, aldermen for the city of Lincoln learned that they would be asked to become involved in this venture by partnering with St. Clara’s to issue Industrial Bonds for the construction of the new facility.

At the July 26th meeting of the Lincoln City Council, City Administrator Clay Johnson asked that a motion regarding the conflict of interest for city attorney Blinn Bates be placed on the agenda for the following week.

Johnson asked that the for a waiver Bates come before the council at a later date regarding an agreement between St. Clara’s Manor and the city of Lincoln.

Bates is the attorney for both entities. If the council had concerns about unbiased representation, then Bates could step aside during discussion on these issues, and a separate attorney could be hired by the city in the discussions with and about St. Clara’s.

Though the subject at hand on July 26th was about the city attorney, Johnson went on to explain a little bit about the bond. It would be in the amount of $9.4 million. The city would be involved, only to the extent that the bond paperwork would pass through the city on its way to the financial institution that would ultimately finance the bond. The city would have zero obligation for payment of the bond, and working agreements regarding repayment would be between St. Clara’s and the financial institution of choice.

The bond amount was $9.4 million because the city under state statutes can only issue $10 million per year in bonds without being penalized with higher interest rates. St. Clara’s had taken into consideration that the city will be issuing a new General Obligation Bond at the end of 2016, in the amount of approximately $500,000. Therefore, they asked for only $9.4 million at this time and anticipated asking for an additional bond issuance in 2017 to complete the project. The second bond would be for a lesser amount of approximately $7.6 million.

At the August 1st voting session of the Lincoln City Council, prior to getting into the voting session, Wanda Lee Rohlfs asked to speak during public participation.

Rohlfs had two issues to discuss. The first, she said that she had reviewed the meeting minutes to be approved in the consent agenda on that night, and had read the account of what she had said at the April 26th meeting.

The council minutes typically run about two months behind before they are ready for approval.

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Rohlfs said the account was not a thorough account of her comments. She said it made it sound like she was making general statements when she was talking about a very specific instance. She said that this came down to transparency and that the council minutes were not transparent because they did not give a solid account of her comments, and told the council if they approved the consent agenda they were showing they approved of the lack of transparency.

Later, the council did approve the April 26th minutes.

Rohlfs then moved on to the bond issue for St. Clara’s Manor. She said she had several concerns and several questions about the bond.

The bond is classified as a Senior Service Industrial bond. The bond, if issued would allow St. Clara’s certain tax and interest rate breaks in the construction of new facility.

Rohlfs asked about the terminology “limited obligation.” She said that indicated the city does have an obligation for the bond, though it had been stated there was no obligation, so she wanted to know what the real obligation would be.

She also asked if there would be a revenue agreement between the city and St. Clara’s Manor. She said if there was an agreement, the city say what it is.

She wanted to know what the IRS statutes for the bond, and why is St. Clara’s asking for two bonds in two different years. She also said that the terminology in the bond documents mentioned that the payments would be made “by or on behalf of” St. Clara’s. She wanted to know who was paying on behalf of the Manor, would that be the city?

Rohlfs said she would email the questions to the aldermen.

Michelle Bauer reminded Rohlfs that the motion before the council on this night was strictly the waiver of conflict of interest for the city attorney and that the discussion and possible vote on the bond issuance would come at a later date.

Later in the evening, the motion was made and passed unanimously to waive the conflict of interest for city attorney Bates.

[Nila Smith]

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