88-277 M��': -�ITV �L RK ' �
PINK - FINANC COUIICII
CANARY - DEPART ENT G I TY OF SA I NT PAU L File NO. �-���
BLUE - MAVOR
� Council Resolution
Presented By
r ,��� �
Referre To i Committee: Date
Out of ommittee By Date
WHEREAS:
1 . 0 February 16, 1988; the Port 14uthority of the City of Saint Paul adopted
Resolution No. 2927 giving preliminary approval to the issuance of revenue bonds in the
initial principal amount of $390,000 to finance the acquisition and renovation of the
46,277 square foot former Slumberland building located at 630 Pierce Butler Route in St.
Paul for Sp rtan Building Partners with Spartan Manufacturing Company as subtenant in the
facility. iller � Schroeder Financial , Inc. will underwrite the 20-year revenue bond
issue.
2. Th Rort Authority of the City of Saint Paul will submit an application for an
industrial evenue bond allocation from the State of Minnesota Competitive Pool as the
proJect is industrial . The City of Saint Paul 's entitlement allocation will not be af-
fected by t is application.
3. Th Rort Authority of the City of Saint Paul will submit an appiication for an
industrial evenue bond allocation from the State of Minnesota Competitive Pool as the
proJect is ndustrial . The City of Saint Paul 's entitlement allocation wiil not be af-
fected by t is application.
4. La s of Minnesota 1976, Chapter 234, provides that any issue of revenue bonds
authorized y the Port Authority of the City of Saint Paul, shall be issued only with the
consent of he City Councit of the City af Saint Paul, by resolution adopted in accordance
with law;
5. Th Port Authority of the City of Saint Paul has requested that the City Council
give its r uisite consent pursuant to said law to facilitate the issuance of said revenue
bonds by th Port Authority of the City af Saint Paul , subJect to tinal approval of the
details of aid issue by the Port Authorlty of the City of Saint Paul .
COUNCILM N Request d by Depart ent of:
Yeas Drew Nays
Nicosia ln Favor
Rettman
Scheibel
Sonnen __ Agel(1S� BY
Tedesco
Wilson
Form Approved by City Attorney
Adopted by Council Date �
Certified Passed by Council Secretary BY �—•---_=
�
By�
Approved by ;Vlavor: Date _ Approve by Ma r fo ission to Counc'1
.
BY - — —
M�hF'�Y'E -XITV CL RK
PWK - FINqNCE GITY O�'' SAINT PALTL Council ��_��.rf
CANARV - DEPART ENT
BLUE - MAVOR File NO.
Counc�l Resolution
Presented By
Referre To Committee: Date
Out of ommittee By Date
RESOLV D, by the City Council of the City of Saint Paul, that in
accordance ith Laws of Minnesota 1976, Qhapter 234, the City Council hereby consents to
the issuanc of the aforesaid revenue bonds for the purposes described in the aforesaid
Port Author ty Resolution No. 2927 the exact details of which, including, but not limited
to, provisi ns relating to maturities, interest rates, discount, redemption, and for the
issuance of additional bonds are to be de�termined by the Port Authority, pursuant to
resolution dopted by the Port Authority, and the City Council hereby authorizes the is-
suance of a y additional bonds ( including refunding bonds) by the Port Authority, found by
the Port Au hority to be necessary for carrying out the purposes for which the aforesaid
bonds are i sued.
- 2 -
COUNCILM N Requested by Department oE:
Yeas Drew Nays w�
Nicosia �,
Rettman Itl F8v0[
Scheibel �
Sonnen _ Agei(1St BY
Tedesco
'""�°" MAR -� 1988
Form Approved by City Attorney
Adopted by Council Date
Certified Va:- Council re BY
By �
Appro d y :Vlavor: Date �-p� — Z Approved by Mayor for Submission to Council
By _ _ _ By
p�,ISHEp MAR 1 � 1988
Cour�cil Research Center
St. Paul Por Authori t ' � DEPART N NQ �6074
� E,A. Krau .M. Towle , coNrac FEB 2 21 �'02 7
22 - 68 PHOKE
Februar 16, 1988 DATE �,/�� e e
,
SIGN NUlrBER ROUTING ORDER Cli Al1 Lo at'ons for Si nature :
1 Departmen� Director 3 Director of Management/Mayor
_�__.
� Finance an Management Services Director 4 City Clerk _
Budget Dir ctor I = RE: $39Q,000 REVENUE BQND ISSUE
2 City Attor ey SPARTAN BUILDING PARTNERS
AT WILL BE A IEVED BY TAKING ACTION QN TH A TACHED TERIALS? (Purpose/
Rationale) :
'The purpos.e o the bond issue is to financ th acquisition and renovation of the 46;277
square foot f rmer Slumberland building loc te at 630 Pierce Butler .Route for Spar�an
Building Part ers with Spartan Manufcturing Co pany as subtenant in the facility.
�
COST BENEFIT B DGETARY AND PERSONNEL IMPACT TICIPATED:
The amount of he revenue bond issue is $39 ,0 0 and wi.11 be for a term of 20 years. There
w:ill be appro .'mately 25 new jabs created a a result of this project -
The Port Auth ity will submit an applicati n or an industrial revenue bond allocation
from the State of Minnesota Competitive Poo a the project is industrial . The City af
Saint Paul 's e titlement allocation will no b affected by this application. ,
FINANCING SOURC AND BUDGET ACTIVITY NUhBER GED OR CREDITF�U: (Mayor's signa-
ture not re-
Total Amount of'Transaction: quired if under
� �10,000) -
Funding Sour e:
Activity Num r: .
ATTACHMENTS Li t and Number All Attachments :
1 . Staff Mem randum �
2. Draft Cit Council Resolution -
3. Port Auth rity �esolution No. 2927
cc. J. Shoholm �
DEPARTMENT REVI C�TY ATTORaEY REV�EW
�Yes No uncil Resolution Required7 � Resol�tion Required? �Yes No
Yes �No I surance Required? Insurance Suffic9ent? �Yes No
Yes X No I surance Attached: `
' (SEE •REVERSE SIDE FO I TRUCTIONS� .
Revised 12/84
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P O ft ����77
.
AUT ORITY
OF THE CI OF 5T. PAUL
Memorandum
TO: OARD OF COMMISSIONERS DATE: Feb. II, 1988
(Feb. 16, 1988 Regular Meeting)
J
FROM: .M. Tow I e •
;'
i
SUBJECT: PPROVAL OF SUBLEASE BETWEEN L.ARSON ENTERPRISES
AND SPARTAN MANUFACTURING COMPANY
SSIGNMENT OF LARSON ENTERPRISES LEASE TO SPARTAN BUILDING PARTNERS
ESOLUTION N0. 2926
UBLIC HEARING - PRELIMINARY AND UNDERWRITING AGREEMENTS
390,000 TAX EXEMPT INDUSTRIAL REVENUE BOND ISSUE
PARTAN BUILDING PARTNERS - OFF-SITE
ESOLUTION N0. 2927
. THE COMPANY AND BACKGROUN❑
Spartan Manufacturing Company, Inc. is located in a 36,000 square foot
building at 2583 University Avenue West within the Westgate Office-
Industrial Center. This building will be acquired and removed by the Port
Authority in connection with the redevelopment of this entire area. The
majority of the stock of Spartan Manufacturing is owned by Richard and
Fritz Magnuson who serve as Chairman and President of the company.
The company manufactures a wide variety of cultured marble and onyx
products such as vanity and countertops, whirlpool systems, wail sections,
etc. The company has shown good growth over the years and anticipates
gross sales in fiscal year 1988 of approximately $3 million. They cur-
rently have 50 employees and anticipate hiring 25 additional people over
the next three years; and the overall project involves the relocation of
this company to a larger f�cility in St. Paul .
. THE PROJECT
Spartan Building Partners will be acquiring the leasehold interest of Lar-
son Enterprises, a Minnesota general partnership, in the 46,277 square
foot building formerly occupied by Slumberland at 630 Pierce Butler Route
in St. Paul . Larson Enterprises has entered into a sublease agreement
with Spartan Manufacturing Company, Inc. which contains an option to ac-
quire these leasehold interests, and it is necessary that this sublease
agreement be approved.
. �r= ��-� �7
OARD OF COMMISSIONERS
ebruary II , 1988
age -2-
Larson Enterprises wishes to assign their leasehold interests under the
Port Authority bond issue, Series W, originally issued in 1978 in the
amount of $745,000 for the Brown/B�jork partnership (Hart Ski Manufacturing
Company) which was subsequently assigned to Larson Enterprises with Slum-
berland as a subtenant. The principal balance of this outstanding bond
issue is approximately $600,000.
. FINANCING
Spartan Building Partners as the new tenant is requesting additional tax
exempt Resolution 876 indu�strial revenue bond financing in the amount of
$390,000 for a term of 20 years to assist in the acquisition and renova-
tion of the property. The bond issue will be composed ot the following
items:
Acquisition and Renovation $377,000
Capitalized Interest (2 Mo�nths) 5,200
Discount 7,800
TOTAL $390,000
The required debt service reserve in the amount of $42,200 will be
provided by the tenant by either a letter of credit, cash, or equivalents.
Expenses, estimated to be '$15,000, and additional discount of $3,900 will
be provided by the new tenent at closing.
The building has been appraised by Muske Company at $1 , 140,000, and the
new financing of $390,000 and the outstanding principal of the existing
bonds of $600,000 totals $990,000 or $150,000 under the appraised value.
The tenant will be providing additional equity of approximately $200,000
to complete the acquisition (price $I , 100,000) and to acquire equipment
and make required leasehold improvements.
The Port Authority will receive earnings on the sinking fund and a fiscal
and administrative fee of $350 per month over the term of the issue.
. IERMS OF THE LEASE
The term of the lease will be for 20 years with options to purchase at 10
and 20 years for 10� of the additional bonds being issued plus all terms
and conditions of the existing lease. Spartan Manufacturing Company, Inc.
will extend their sublease agreement with Spartan Building Partners to a
term of 20 years to be co-terminous with the lease agreement under the new
bond issue. Larson Enterprises will not be released from their obliga-
tions under the lease agreement to be assigned.
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B ARD OF COMMISSIONERS
F bruary 11, 1988
P ge -3- �
5 �JNDERWR I T I NG
Miller and Schroeder Financial has agreed to underwrite the 20-year bond
issue at a rate of interest to be set at the time the bonds are soid which
we anticipate will be at our regular March Board meeting.
6 RECOMMENDATIONS
Staff has interviewed the partners in the proJect, the principal stock-
holders of Spartan Manufacturing, and recommends approval of Resolution
No. 2926 which approves the sublease agreement and assignment of lease and
Resolution No. 2927 authorizing the issuance of additional bonds for the
project.
C :ca
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Resolution No. 02 9,�:
RESOLUTION OF
THE PORT AUTHORITY OF THE CITY OF SAINT PAUL
WHEREAS, one of the purposes of Minnesota Statutes,
C apter 469 (hereinafter called "Act" ) , as found and
d termined by the legislature, is to promote the welfare of
t e state by the active, promotion, attraction, encouragement
a d development of economically sound industry and commerce to
p event so far as possible the emergence of blighted and
m rginal lands and areas of chronic unemployment and to aid in
t e development of existing areas of blight, marginal land and
p rsistent unemployment; and
WHEREAS, factors necessitating the active promotion
a d development of economically sound industry and commerce
a e the increasing concentration of population in the
m tropolitan areas and the rapidly rising increase in the
a ount and cost of governm�ntal services required to meet the
ne ds of the increased population and the need for development
of land use which will provide an adequate tax base to finance
th se increased costs and access to employment opportunities
fo such population; and
WHEREAS, The Port Authority of the City of Saint
Pa 1 (the "Authority" ) has received from the Spartan Building
Pa tners (hereinafter referred to as "Company" ) a request that
th Authority issue its revenue bonds (which may be in the
fo m of a single note) to partially finance the acquisition
an renova-tion of facilities for the manufacturing of
cu tured marble and onyx products (hereinafter collectively
ca led the "Project" ) at 630 Pierce Butler Route in the City
of St. Paul, all as is more fully described in the staff
re ort on file; and
� � � ��oz 77
*
WHEREAS, the Project is presently subject to a lease
the "Lease" ) between the Authority and Larson Enterpri�es
(hereinafter referred to as "Larson" ) , and subject to a
ublease from Larson to Spartan Manufacturing Company (the
' Sublease" ) and Larson ha� agreed to assign to the Company its
ights and obligations under the Lease and the Sublease and
he Company has agreed to purchase Larson' s interest in the
' roject subject to the terms of the Lease and the Sublease;
nd
WHEREAS, the Authority desires to facilitate the
elective development of the community, to retain and improve
its tax base and to help it provide the range of services and
ployment opportunities required by its population, and said
roject will assist the City in achieving that objective by
elping to increase the assessed valuation of the City and
lping maintain a positive relationship between asses�ed
aluation and debt and enhance the image and reputation of the
City; and
WHEREAS, the Project to be financed by revenue bonds
will result in substantial employment opportunities in the
P oject;
WHEREAS, the Authority has been advised by repre-
s ntatives of the Company that conventional, commercial
f 'nancing to pay the capital cost of the Project is available
o ly on a limited basis and at such high costs of borrowing
t at the economic feasibility of operating the Project would
b significantly reduced, but the Company has also advised
t is Authority that but for revenue bond financing, and its
r sulting low borrowing cost, the Project would not be
u dertaken;
WHEREAS, Miller & Schroeder Financial, Inc. (the
" nderwriter" ) has made a proposal in an agreement (the
" nderwriting Agreement" ) relating to the purchase of the
r venue bonds to be issued to finance the Project;
WHEREAS, the Authority, pursuant to Minnesota
S atutes, Section 469. 154, Subdivision 4 did publish a notice,
a copy of which with proof of publication is on file in the
o fice of the Authority, of a public hearing on the proposal
o the Company that the Authority finance the Project
h reinbefore described by the issuance of its industrial
r venue bonds; and
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;
WHEREAS, the Authority did conduct a public hearing
p rsuant to said notice, at which hearing the recommendations
c ntained in the Authority' s staff inemorandum to the
C mmissioners were reviewed, and all persons who appeared at
t e hearing were given an opportunity to express their views
w th respect to the proposal.
NOW, THEREFORE, BE IT RESOLVED by the Commissioners
o the Port Authority of the City of Saint Paul, Minnesota as �
f llows:
1. On the basis of information available to the
A thority it appears, and the Authority hereby finds, that
s id Project constitutes properties, used or useful in
c nnection with one or more revenue producing enterprises
e gaged in any business within the meaning of Subdivision 2 of
S ction 469. 153 of the Act; that the Project furthers the
p rposes stated in Section 469. 153 of the Act and, but for the
w llingness of the Authority to furnish such financing, the
C mpany would not undertake the Project, and that the effect
o the Project, if undertaken, will be to encourage the
d velopment of economically sound industry and commerce and
a sist in the prevention of the emergence of blighted and
m rginal land, and will help to prevent chronic unemployment,
a d will help the City to retain and improve its tax base and
p ovide the range of services and employment opportunities
r quired by its population, and will help to prevent the
m vement of talented and educated persons out of the state and
t areas within the state where their services may not be as
e fectively used and will result in more intensive development
a d use of land within the City and will eventually result in
a increase in the City' s tax base; and that it is in the best
i terests of the port district and the people of the City of
S int Paul and in furtherance of the general plan of
d velopment to assist the Company in financing the Project.
2 . Subject to the mutual agreement of the
A thority, the Company and the purchaser of the revenue bonds
a to the details of the Yease or other revenue agreement as
d fined in the Act, and o�her documents necessary to evidence
a d effect the financing of the Project and the issuance of
t e revenue bonds, the Project is hereby approved and �
a thorized and the issuance of revenue bonds of the Authority
( hich may be in the form of a single note) in an amount not
t exceed approximately $390,000 (other than such additional
r venue bonds as are needed to complete the Project) is
a thorized to finance the costs of the Project and the
r commendations of the Authority' s staff, as set forth in the
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s aff inemorandum to the Commissioners which was presented to
t e Commissioners, are incorporated herein by reference and
a proved.
3 . In accordance with Subdivision 3 of Section
4 9. 154, Minnesota Statutes, the Executive Vice-President of
t e AUTHORITY is hereby authorized and directed to submit the
p oposal for the above described Project to the Commissioner
o Energy and Economic Development, requesting his approval,
a d other officers, employees and agents of the AUTHORITY are
h reby authorized to provide the Commissioner with such
p eliminary information as he may require.
4. There has heretofore been filed with the
A thority a form of Preliminary Agreement between the
A thority and Company, relating to the proposed construction
a d financing of the Project and a form of the Underwriting
A reement. The forms of the agreements have been examined by
t e Commissioners. It is the purpose of the agreements to
e idence the commitment of the parties and their intentions
w th respect to the propos�ed Project in order that the Company
m y proceed without delay with the commencement of the
a quisition, installation and construction of the Project with
t e assurance that there h�as been sufficient "official action"
w thin the meaning of the Internal Revenue Code of 1986, as
a ended, to allow for the issuance of industrial revenue bonds
( ncluding, if deemed appropriate, any interim note or notes
t provide temporary financing thereof) to finance the entire
c st of the Project upon agreement being reached as to the
u timate details of the Project and its financing. Said
A reements are hereby approved, and the President and
S cretary of the Authority are hereby authorized and directed
t execute said Agreements.
5. Upon execution of the Preliminary Agreement by
t e Company, the staff of the Authority is authorized and
d ' rected to continue negotiations with the Company so as to
r solve the remaining issues necessary to the preparation of
t e amendment to lease and other documents necessary to the
a option by the Authority of its final bond resolution and the
i suance and delivery of the revenue bonds; provided that the
P esident (or Vice-President if the President is absent) and
t e Secretary (or Assistant Secretary if the Secretary is
a sent) of the Authority, or if either of such officers (and
h' s alternative) are absent, the Treasurer of the Authority in
lieu of such absent officers, are hereby authorized in
a cordance with the provisions of Minnesota Statutes, Section
475. 06, Subdivision 1, to �ccept a final offer of the
4
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nderwriter made by the Ur�derwriter to purchase said bonds and
o execute an Underwritin� Agreement setting forth such offer
n behalf of the Authority. Such acceptance shall bind the
nderwriter to said offer but shall be subject to approval and
ratification by the Authority in a formal supplemental bond
resolution to be adopted prior to the delivery of said revenue
onds.
6. The revenue bonds ( including any interim note
r notes) and interest thereon shall not constitute an
i debtedness of the Authority or the City of Saint Paul within
he meaning of any constitutional or statutory limitation and
shall not constitute or give rise to a pecuniary liability of
he Authority or the City or a charge against their general
redit or taxing powers and neither the full faith and credit
or the taxing powers of the Authority or the City is pledged
for the payment of the bonds (and interim note or notes) or
interest thereon.
7. In order to facilitate completion of the
revenue bond financing herein contemplated, the City Council
is hereby requested to consent, pursuant to Laws of Minnesota,
1976 , Chapter 234, to the issuance of the revenue bonds
( including any interim note or notes) herein contemplated and
any additional bonds which the Authority may prior to issuance
r from time to time thereafter deem necessary to complete the
roject or to refund such revenue bonds; and for such purpose
he Executive Vice President of the Authority is hereby
authorized and directed to forward to the City Council copies
f this resolution and said Preliminary Agreement and any
a ditional available information the City Council may request.
8. The action� of the Executive Vice-President of
he Authority in causing public notice of the public hearing
and in describing the general nature of the Project and
stimating the principal amount of bonds to be issued to
inance the Project and in preparing a draft of the proposed
pplication to the Commissioner of Energy and Economic
evelopment, State of Mint�esota, for approval of the Project,
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w ich has been available for inspection by the public at the
o fice of the Authority from and after the publication of
n tice of the hearing, are in all respects ratified and
c nfirmed. �
A opted February 15-; 1988. �
A test � �
e ' d t
The P rt Authority of the City
af S int Paul
.���,�...,
�a�� S c e ary
6