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Mennonite Village seeks tax-exempt financing; city asked to reestablish hospital facility authority
Summary
Mennonite Village presented a multi‑phase senior‑living expansion with a proposed tax‑exempt bond financing (about $99 million) and asked Albany to reestablish its hospital facility authority so the nonprofit can issue bonds through it; staff outlined procedural steps for January approval.
Mennonite Village representatives told the Albany City Council they plan a multiyear campus expansion and asked the council to reestablish the city’s hospital facility authority so the nonprofit can access tax‑exempt bond financing.
Diane Hood, CEO of Mennonite Village, described a master plan that includes 60 cottages (30 duplexes), a new memory‑care building with 24 private beds and a campus production kitchen. "Our current project is 60 cottages in 30 duplexes," Hood said, and staff noted the development is pre‑sold at about 46.66% with the project financing targeted via tax‑exempt bonds in March 2026. The bond issue was described in staff remarks as approximately $99,000,000.
Greg Blonde, municipal‑finance counsel, explained that nonprofit borrowers typically access federal and state tax treatment by issuing bonds through a government‑created hospital facility authority. He said Oregon statutes require a government conduit for the tax treatment, that the authority is a passive conduit (the nonprofit, not the city, is responsible for paying the bonds), and that the city’s authority — created in 1977 and dormant since 2018 — could be reestablished by council resolution. Blonde described the January process: a required public hearing under the tax code, adoption of a resolution establishing the authority, a brief adjournment as the city to reconvene as the authority for bond action, and subsequent closing documents about a month or two after the council action.
Councilors asked about alternative state programs and the Oregon Facilities Authority; Blonde said senior‑living projects often use local hospital facility authorities because state programs restrict the buyer universe, which can increase borrowing costs for unrated deals. Councilors also asked whether the city would have an ongoing staffing burden; staff said administrative duties for an active authority are light and often reimbursed by the borrower.
Next steps: staff and counsel plan to return in January with the public‑hearing/resolution steps to reestablish the hospital facility authority and, if council approves, enable Mennonite Village to proceed with tax‑exempt bond financing.
