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88-988 WHITE - CITV CLERK CO11flC11 G Q PINK - FINANCE G I TY O F SA I NT PA U L CA�NARV --AEPARTMEN7 Q "'� / �� BLUE - MAVOR File NO. - � y Council Resolution �� .,r �� Presented By Referred To Committee: Date Out of Committee By Date WHEREAS, the Housing and edevelopment Authority of the City of Saint Paul, Minnesota (the "HRA" ) and the City Council of the City of Saint Paul have heretofore approved the Redevelopment Plan and Tax Increment Financi g Plan for the "University Avenue/T.H. 280 Redevelopment Project" (th "Westgate Project" ) , and the tax increment financing plan h s been certified by the Ramsey County Auditor in accordance w' th the applicable provisions of Minnesota Statutes, Chapter 469 (the "Act" ) ; and WHEREAS, the Port Authori y of the City of Saint Paul (the "Port Authority" ) has ado ted its Resolution No. 2946, following a public hearing, au horizing the issuance of $10, 000, 000 First Lien Tax Increment Bonds to finance the acquisition and renovation of property in the estgate Project; and WHEREAS, Laws of Minnesot 1976, Chapter 234, provides that any issue of revenue bond authorized by the Port Authority shall be issued only with the onsent of the City Council of the City of Saint Paul, by res lution adopted in accordance with law, and Section 147 (f ) o the Internal Revenue Code of 1986 (the "Code" ) requires tha , in order to qualify for tax exempt status, certain Bonds i sued by the Port Authority must be approved by the City Counci of the City of Saint Paul following a public hearing, which may be held by the Port Authority; and WHEREAS, the City Council has previously approved the issuance by the Port Authority of bonds to finance activities in the Westgate Project, but s ch approval did not follow a public hearing and, therefore, did not meet the requirements of Section 147 (f ) of the Code; and COUNCIL MEMBERS Requested b r nt of: Yeas Nays Dimond �� [n Favor Goswitz Rettman �be;�� Against By Sonnen Wilson Form Appro d by City Attorney Adopted by CounciL• Date �'"_� Certified Passed by Council Secretary B gy, Approved by Navor: Date App y Mayor for miss to Council By ��- �� 1 WHEREAS, the Port Authori y has requested that the City Council give its requisite con ent pursuant to said statute and Code requirements, to faci itate the issuance of said revenue bonds by the Port Authority, s bject to final approval of the details of said issue by the P rt Authority; and WHEREAS, in addition to t e approval requirements already identified above, Section 144 ( ) of the Code requires that the governing body of the area in which qualified redevelopment bond financing is to occur ado t a redevelopment plan covering that area, designating such ar a as a blighted area within the meaning of the Internal Re enue Code and state law, and further requires that the area designated as such by the governing body may not exceed 200 of the total assessed value of real property in the governing body s jurisdiction; and WHEREAS, the City Council of the City of Saint Paul has heretofore found that the area encompassed by the Westgate Project is a blighted area and further finds that such are is typified by excess vacant 1 nd on which structures were previously located, abandoned r vacant buildings, substandard structures, vacancies and deli quencies in payment of real property taxes . NOW THEREFORE, BE IT RESO VED, by the Council of the City of Saint Paul, that: 1 . In accordance with L ws of Minnesota 1976, Chapter 234, the City Council hereby c nsents to the issuance of the aforesaid revenue bonds for pu poses described in the aforesaid Port Authority Resolution No. 946, the exact details of which, including but not limited to, rovisions relating to maturities, interest rates, discount and r demption, are to be determined by the Port Authority pursuant to resolution adopted by the Port Authority, and ,the City C uncil hereby authorizes the issuance of any additional bon s (including refunding bonds ) by the Port Authority, found b the Port Authority to be necessary for carrying out the purposes or which the aforesaid bonds are issued. -2- WNITE - CITV CIERK PINK - FINANCE G I TY O F SA I NT PAU L Council `� (�J y-��; CANPRV - DEPARTMENT X /�' BI.UE �MAVOR File NO• " `�� v - � � � Council Resolution Presented By Referred To Committee: Date Out of Committee By Date 2. The City Council her by ratifies and affirms the findings that it has made prev' ously and in this resolution regarding the need for the red velopment of the Westgate Project, and further certifies that the assessed value of property located in the Westgate Project does n t exceed 20� of the total assessed value of real property in the ity of Saint Paul. COUNCIL MEMBERS Requested by Department of: Yeas Nays Dimond Lo� In Favor coswitz Retttnan '0 s�he;net _ Against BY ��. wilson Adopted by Council: Date JUN 16 1988 Form Approved by City Attorney Certified Ya.se Council Se tar BY B�' �w Approve Mav r. Da �i i �� Appr ved by Mayor for Su issi n j�Council �•�-- PUBIiSHED J U N 2 5 1 88 St. Pau I Port Authori ty DEPARTMEN Np ��e�24 P. K. �eders/�. A. Kraut CONTACT � 224-5686 PHONE May 31 , 1988 DATE reen e e ASSIGN NUMBER FOR ROUTING ORDER Cli All Loca ions for Si nature : ��$� I Department Director 3 Director of Management/Mayor � Finance and Management Services Director 5 City Clerk Budget Director � wm. Wilson. Housing & Econ. Dev. Comm. 2 City Attorney RE: $IO,OOO,OOO Westgate - Tax Exempt Qualified RedeveJopment Bonds WHAT WILL BE ACHIEVED BY TAKING ACTION ON THE TTACHED MATERIALS? (Purpose/ The purpose of the bond issue is to replace int rim financing for Rationale) : acquisition, relocation, demolition and site preparai-ion in he Westgate Office=and Industrial Park. These activities were outlined in the Tax Increment P an for Westgate approved by the City Council on September 22, 1987. This financing is submitte only to meet the TEFRA Hearing r-equirement due to the tax exempt nature of the bonds. The Cit Council has previously approved financing for this project. COST/BENEFIT BUDGETARY AND PERSONNEL IMPACTS NTICIPATED: The Port Authority will issue Tax-exempt Qualif ed Redevelopment Bonds in the amount of $I0,000,000 which will partially replace the In erim Taxable Note approved by the Cii-y Council on December 30, 1987. Interest costs for the p oject will be significantl.y reduced as a result of the sale of the Tax-exempt Bonds. (The Port Authority secured bonding authority in 1987 with a $100,000 deposit with the State of Minne ota) . The Westg�te Project is anticipated 1-0 generate $70,000,000 in investment and up to 1, 50 jobs. New annual real estate taxes of over $2,000,000 will result from the planned develop ent. FINANCING SOURCE AND BUDGET ACTIVITY NUNBER CH RGED OR CREDITED: (Mayor's signa- ture not re- Total Amount of Transaction: quired if under $10,00Q) Funding Source: Activity Number: ATTACHMENTS (List and Number All Attachments) : I. Staff Memorandum 2. Draft City Council Resolution 3. Port Authority Resolution No. 2946 DEPARTMENT REVIEW CITY ATTORNEY REVIEW Yes No Council Resolution Required? Resolution Required? X Yes No Yes X No Insurance Required? Insurance Sufficient? �Yes No Yes X No Insurance Attached: (SEE REVERSE SIDE FOR INSTRUCTIONS) Revised 12/84 E ' Memt�ers: ��'� �� ! - . Bili Wiison, c�air ;�-�� ; (�ITy �� I�TT �'13UI.. Tom Dimond �; � ' ori��zc�� oi, -rf=� �, clr�r cou�:c�ir. Kiki Sonneil � Date: June 8, 198S � r�t�FCrc vocr��rs� 'v'`l1LL.{AP�1 L. V\�1LSON Comrni tee R�por� ,..��>>f:�t�,�n;<<: � Councilman r�To: Saint Paul City C�uncil From : Housing �nd Econo ic Develo;�r��t �ommi�tte� ; . Bifl Wifson, Chair � . . - � �. 1. Resolution adopCing the Lo�rer Catt edral Hi_l.l Flan as part of the Cit} ` ` Comprehensive Plan (CF 88-7�59) � COru�II'ITEE RECOi'II�'IENDL'D TWO WEEK LA OVER 2. An i.nterim ordinance restricting he establishmetlt or enlargement of. ? community residential facilities,, • transitional housing, shelters for batterecl persons, missions and em r.gency tiousing facilities, pendin� • completion of studies of possible amendments to ttie City's Compre- hens:ve P.l_an and/o% 7.oning Re;ula ions, whict� i_nterium ordinance is enacted pursuant to Minnesota Sta utes, Section 362.3.55, subd. 4: (CF 88-828} SENT BACK TO COBNCIL FROM COMriITT �.L: WIT�IOUT RECO:'MENDATION 3. �,e�41u��::on approving Westgate Off ce-Industrial Center $10,000,000 Tax-Exempt Qualif.ied Redet�el.op�ne t Bonds CUMMITTEE RF.COMMEt3DED APPROVAL 4. Memo on Economic Development Str< tegy C�MMITTEE RECOr�1ENDED TWO WF.EK L YOVF.R CI"TY}IALL SEVENT�[ FLOOR SAIN"I' PAUL., �i1NNESOTr\ �5102 672/29S-4646 . g<4.��,,6 . . . d�� °� � ��->�� i ' � �?l� �.l� , a � �,�" � �, � FAX (612) 223-5198 PORT AUTHORIN OF THE CIN OF SAINT PAUL TOLL FREE (800) 328-8417 1900 AMHOIST TOWER • 345 ST, PETER STR ET • ST. PAUL, MN. 55102 • PHONE (612) 224-5686 May 31, 1988 Mr. Ken Johnson, Director Planning and Economic Development De artment City of St. Paui 13th Floor - City Hall Annex St. Paul , Minnesota 55102 Re: Westgate Oftice-Industrial Cent r $10,000,000 Tax-Exempt Qualifie Redevelopment Bonds Dear Ken: We submit herewith for your review a d referral to the office of the Mayor, City Council and City Attorney's off ce details pertaining to the issuance of $10,000,000 in tax-exempt Qualified edevelopment Bonds for the Westgate ProJect. This financing is submitte only to meet the TEFRA Hearing require- ment due to the tax exempt nature of the bonds. The City Council has previ- ousiy approved financing for this pr ject. On December 30, 1987, the City Counc I approved the issuance of a $20,000,000 Taxable Note to provide interim fina cing to pay development costs authorized by the Tax Increment Plan tor the We tgate Office-Industrial Center (Council File No. 87-1846). At the time the nterim financing was approved, the Port Authority notified the Council that it had obtained $10,000,000 of bonding authority from the State of Minnesot 's 1987 Unified Pool (secured by a $100,000 Port Authority deposit) in rder that permanent tax-exempt flnancing could be utilized in the project. The Port Authority Board by its Resolution No. 2946 dated April 8, 1988, has given preliminary approval to the is uance of tax-exempt bonds. Final ap- provai ot the sale of bonds will oc ur on June 21, 1988, at the Port Authority�s regularly scheduled meeting. in addition to the staff inemorandum, we are attaching a draft copy of th proposed City Councii Resolution and a copy of Port Authority Resolution N . 2946. Your expeditious handling of the ma ter wili be appreciated. Yours truly, ,ugene A. Kraut, CEO Executive Vice President EAK:sjs cc: Mayor George Latimer EUGENE A.KRAUT,C.I.D. PERRY K.FEDERS,C.PA. C LES M.TOWLE LAWRENCE H.LANGER,P.E. PATRICK E.DEAN,C.PA. EXECUTNE V10E PRESIDENT,C.E.O. ASST.EXEC.VICE PRESIDENT,C.F.O. DIRECTOR NOUSTRL4l DEVELOPMENT CHIEF ENGINEER FINANCE DIRECTOR JAMES F.FAUE,C.I.D. RI HARD A.GIERDAL WILLIAM E.McGNERN DIRECTOR REAL ESTATE OPERATIONS P PERN MANAGER DIRECTOR PUBUC RELAl10NS COMMISSIONERS: GEORGE W.WINTER WILLtAM R.PETERSON ARTHUR N. MAN JEAN M.WEST VICTOR P.REIM JAMES SCHEIBEL ROBERT C.LONG PRESIDEM VICE PRESIDENT SECREfARY ASST.SECREfARV TREASURER PSST.TREASURER COMMISSIONER C,I.D.CERTIFI INDUSTRIAL DEVELOPER .� � � �_. 9�� i� ORT AUTHORITY OF THE CITY OF ST. PAUL Me orandum TO: BOARD OF COMMISSIONERS pA� APRIL 6, 1988 (SPECI AL MEET I NG APR i L 8, 1988) �� FROM: PERRY K. FEDERS � PUBLIC HEARING AND PRELIMINARY PPROVAL OF: SUBJECT: $10,000,000 WESTGATE FIRST LI N TAX INCREMENT BONDS, SERIES 1988-1 RESOLUTION N0. 2946 PREL IM I NARY APPROVAL OF: $2,000,000 TAXABLE SECOND LIE TAX INCREMENT NOTE (WESTGATE, SERIES 1988-2) RESOLUTION N0. 2947 $2,700,000 INFRASTRUCTURE REV NUE BONDS, (WESTGATE, SERIES 1988-3) RESOLUTION N0. 2948 TAXABLE FOURTH LIEN INCREMENT 1270 NOTE (WESTGATE, SERIES 1988-4) RESOLUTION N0. 2949 $800,000 TAXABLE FIFTH LIEN X INCREMENT 1270 NOTE (WESTGATE 1988-5) RESOLUTION N0. 2950 At a Speciai Meeting on Decembe 8, 1987, the Commission approved the issuance of a $20,000,000 Taxable Canmer tal Revenue Note (Series 1987-3) to finance acquisition and improvements in the 4Vestgate proJect. This Note was issued to Norwest Bank Minnesota on Janua y 12, 1988. Subsequent to that date we have negotiated with both Norwest an First Bank in an attempt to utilize available tax exempt tinancing for the pr Ject. We have received a proposal from First Bank which has been accepted by the Executive Vice President (subJect to the Board�s approval ) which provide the best financing package available. First Bank�s proposal provides for th highest level of tax exempt financing at the lowest cost. The key to the new package is t e issuance of $10,000,000 of Tax Exempt Qualified Redevelopment Bonds. in prior years significant savings due to lower interest rates could be a hieved by issuing tax exempt bonds. Due to Federal Tax Law changes the abi ity to finance industrial park development on a tax ex.smpt basis has decrease dramatically. The proposed bond issue would be one of a ftrst of its kind 1 the nation due to the stringent technical re- quirements which must be met to issue the bonds. One of the items that makes this bond difficult to issue is the fact that debt service payments can only be secured by tax increments re eived from the proJect. When Energy Park was financed, the Port Authority co Id pledge its credit to the bonds until suffi- cient tax increments were gener ted. The Qualified Redevelopment bonds, however, only� allow for a very mall amount of issuer support and in the case of Westgate the maximum Port Au hority support is $800,000. Since the total financing packa e includes a combination of tax exempt and taxable bonds and notes, and Po t Authority secured and unsecured credit, it is necessary to structure the o tstanding credits on a first through fitth Iten of outstanding tax increme ts depending on the purpose of the credlt ex- tended. The attached proposal from Firs Banks describes the general terms of the proposed obligations. The follo ing is a summary ot the key components of each of the financing parts. � ( . � �0 -� (SPECIAL MEETING APRIL 8, 1988) WESTGATE FINANCING - PAGE 2 - 510,000,000 Tax Exempt Firs Lien Tax Increment Bonds, Serles 1988-1. Proceeds of the bonds will initially be held in escrow and may only be used for acquisition, reloc ion, site improvements and capitalized inter- est after certain developmen commitments have been secured f or the Nlestgate ProJect. The bonds and related bank note(s) are payable on a first Iten basis solely fro Westgate tax increments (and in the case of the bonds, the letter of credit proceed ). The effect of issuing tax exempt financing for this significant portion of the total package will have a maJor impact on reducing interest costs. - 52,000,000 Taxable Second L en Tax Increment Note - to be issued to provide additional moneys th t may be advanced by the bank to pay interest on the First Lien Bonds. This note is payable on a second iten basis solely from ProJect tax incr ments. - 52,700,000 Tax Exempt Infra tructure Revenue Bonds, Series 1988-3 - to help finance public improve nts ( i .e., street improvements, landscaping and Iighting) for the proJec . These obligations are payabie on a third lien basis from Westgate tax increments and are further secured under Resolution No. 1270 of the A thority. These bonds, aiso issued on a tax exempt basis, will help to r duce interest costs for the proJect. - Taxable Fourth Lien Tax inc ement 1270 Note, Series 1988-4 - to be issued in an amount not to exceed � ,000,000 if the proceeds of the First Lien Bonds are released from the scrow fund to pay Westgate ProJect costs, or �20,800,000 if sums in the e crow fund are instead applied towards the discharge of the First Lien onds. The Note will pay off the existing taxabie commercial revenue n te issued to Norwest Bank and wili otherwise � heip finance the Westgate Pr Ject. This note is payable on a fourth lien basis from Westgate tax incr ments and is further secured under Resolution No. 1270 of the Authority. - 5800,000 Taxable Fifth L1en ax increment 1270 Note, Series 1988-5 - to help pay interest on the Fir t Lien Bonds. This note is payable on a fifth Iten basis from Westga e tax increments and is further secured under Resolution No. 1270 of the A thority. Much of the proposed financing d es not require additional City Councii ap- proval except for the $10,000,00 Qualified Redevelopment Bonds due to current Federal Tax Laws. The previousl approved Taxable Note encompasses all of the proposed financing except the Qu iified Redevelopment Bonds. The issuance of tax exempt finan ing has been contemplated since the initial stages of discussion on the proJ ct. During 1987 the Port Authority secured $10,000,000 of unused bonding al ocation by depositing $100,000 of our un- restricted funds with the State n anticipation of the future bond sale. if the allocation is not used withi three years the Port Authority wouid forfeit its deposit. Staff recommends approval of the above Resolutions glving preliminary approval to the issuance of the various o ligations as outlined 1n the attached proposai . sjs � �l dd � . � . � . 508AA RESOLUTION N0. 2946 RESOLUTION OF TEiE PORT AUTHORITY OF THE CITY OF SAINT PAUL WHEREAS, The Housing and Redevelopment Authority of the City of Saint Paul, Minnesota ( the "HRA" > and the City Council of the City of Saint Paul ( th "City Council" ) heretofore appcoved the tax increment fi ancing plan for the "University Avenue/T.H. 280 Redevelopment Project" ( the "Westgate Project" ) , and the tax increm nt financing district has been certified by the County Audit r in accordance with the applicable provisions of Minn sota Statutes, Chapter 469 ( the "Act" ) ; and � WHEREAS, the Port Author ' ty of the City of Saint Paul (the "Authority" ) through its Board of Commissioners adopted Resolution No. 2904 giving ap roval to the Westgate Project and the issuance of a 520 , 000 , 000 Taxable Commercial Revenue Note, Series 1987-3 , dated Ja uary 12, 1988 ( the "Prior Note" ) , to help finance the W stgate Project; and WHEREAS, First Bank Natio al Association has executed a Commitment (the "Commitment" ) , a copy of which has been presented to the Port Authorit Commissioners, to provide financing and credit support ( the "Financing Program" ) for the Westgate Project; and WHEREAS, one of the compo ents of the Financing Program provides for the issuance by t e Authority of $10, 000, 000 We�tgate First Lien Tax Increm nt Bonds, Series 1988-1 ( the "First Lien Bonds" ) , execution of a letter of credit in supported oE the bonds and iss ance by the Authority of one or more bank notes evidencing any draws made under said letter of credit (said Authority obligat 'ons being collectively the "Secured Obligations" ) , said S cured Obligations to be issued by the Authority either alone r jointly with the HRA; WHEREAS, for purposes of atisfying certain notice and hearing requirements under Sec ion 147 of the Tax Reform Act of 1986, a notice of hearing o the First Lien Bonds has been duly published; and a hearing hereon has been duly conducted by the Authority Commissioners and WHEREAS, the City Council previously adopted Resolution No. 87-1846 approving issuance of obligations of the Authority to finance the Westgate Projec . , . ��- q � � I . k N(�W, TlIERFFORf:, RF iT �� .�/f n bY �he C�mm i s�i�n�rs o f the Part Authority o£ the City of Saint Paul as follows : 1 . The issuance oF the S cured Obligations, including the First Lien Bonds, to help inance the Westgate Pcoject in a manner consistent with the p ovisions oE the Commitment is hereby given preliminary appro al . 2 . The execution of the ommitment on behalf of the E'ort Authority is hereby ratified a d approved. 3 . The Executive Vice Pr sident of the Port Authority is hereby authorized and directed to request the City Courcil to consent to the issuance of the Secured Obligations as required under Section 147 of the Tax R Form Act of 1986 . 4 . The Executive Vice Pr sident oE the Port Authority is hereby authorized and directed to forward to the City Council copies of this Resolution and opies of any othec information the City Council may request. Adopted: April 8 , 1988 PORT AUTHORdTY OF THE CITY OF SA NT �AUL : '\ %. / � By ` • � �< <^ t � Pr ' ent � / Attest: � � � ' � ,� -��''GG, �f'`;�a�/�-?�'L� --1 � Secretary 2